Committeewoman Cara Jensen

AmerenUE should create a separate class of customers for low-income residents to give them discounts, said Missouri regulators, who asked the utility, consumer groups and industrial users for suggestions on how to do it.

At 17 public hearings over the past six weeks on AmerenUE’s proposed 18 percent electric rate increase, a theme emerged among many of the 2,000 participants: They simply cannot afford a bill hike, no matter how small, especially in these tough economic times.

So Kevin Gunn, a Missouri Public Service Commission (PSC) member from Webster Groves, suggested that the utility offer permanently discounted rates to a segment of the population based on the federal poverty level or some other classification. Ohio, for example, caps utility bills to a certain percentage of residents’ incomes.

“What is preventing us from recognizing the unemployed, underemployed or those on disability and fixed incomes who are forced to make the choice between paying their electricity bills or paying for food?” Gunn asked. “This way, people can keep their lights on, Ameren can reduce the amount of bad debt it carries because some of it is uncollectible, and through a discounted rate, we can assist the very lowest-income folks.”

The proposed rate hike would increase the average household’s bill by $15 a month, or $180 a year.

Ameren, consumer groups, industrial users and other interested parties can submit their ideas to the PSC as testimony by Feb. 19, as rebuttal testimony by Feb. 26 or as surrebuttal testimony by March 5.

Richard Mark, senior vice president of customer operations for AmerenUE, said the decision to socialize the cost of one class of customers is a public policy decision best handled by the state legislature and not one utility company.

But AmerenUE has preferences for how to best share the burden of rising infrastructure costs among its customers.

“The rate increase should be spread out more evenly instead of just on residential,” Mark said. “We want the industrial users to share more in the rate increase unlike the last one.”

Ameren residential customers currently pay about 7.7 cents per kilowatt hour, more than twice the rate paid by large companies.

The disparity is because industrial users have successfully lobbied for changes during the state regulatory process. Last week, Missouri Industrial Energy Consumers, an industry lobbying group that includes Noranda Aluminum, AmerenUE’s largest customer, proposed that residential customers pay a 13 percent increase while industrial customers get a decrease, drawing the ire of the Missouri National Association for the Advancement of Colored People (NAACP), which passed a resolution blasting the disparity at its state conference Saturday.

AmerenUE is still working on its suggestions for helping low-income residents, Mark said, but a cap tied to customers’ incomes like the one in Ohio is difficult to implement and isn’t a fix by itself. The utility supports restructured rates paired with energy efficiency programs, he said.

“We have to provide incentives to save energy and make people more conscious of the amount of energy they use,” he said. “A customer may say, ‘My bill has gone up considerably,’ but the rates haven’t gone up that far. The real issue isn’t the bill amount it’s the usage amount. People don’t look at what they use to see if they waste energy with inefficient furnaces and poorly insulated homes. There’s got to be some education.”

Mark called for a complete overhaul of the regulatory process to resemble what he described as the more proactive approaches found in Georgia, South Carolina and Wisconsin, where smaller annual increases are built in ahead of time to avoid customers’ sticker shock from their electric bills.

Mark said AmerenUE’s rates are the fourth-lowest in the United States among private investor-owned utilities and that the company’s requested $402 million rate increase is to help pay off the $500 million in infrastructure upgrades it has already made to boost reliability.

“We had to borrow money to improve the system,” he said, “and now when we go to get it back, there are questions on how much of it we are allowed to recoup.”