JEFFERSON CITY • Ameren customers in Missouri will see a more than 6 percent cut in their electric rates following action Thursday by state utility regulators.
Members of the Public Service Commission voted unanimously to fast-track the reduction in rates as part of a larger package of legislation approved by state lawmakers in May.
The lower rates would have eventually gone into effect in response to the federal tax cut passed by Congress late last year, which reduced the corporate tax rate from 35 percent to 21 percent.
But the state Legislature’s action requires utilities to pass along the rate cut within 90 days, rather than waiting on the longer, normal review process by the PSC.
People are also reading…
Ameren has estimated the rate cut at $166 million, or nearly 6.1 percent, up from earlier estimates of 4.9 percent.
The reduction will go into effect Aug. 1.
In a statement, Ameren said the company had worked closely with the PSC to “ensure that the benefits of the federal tax reduction are quickly provided to customers.
“The 6 percent rate cut announced today by the Missouri Public Service Commission shows that the bipartisan legislation, which overwhelmingly passed the Missouri legislature less than two months ago, is already having an immediate impact on behalf of our customers,” the statement says.
The state-level changes came after the bill authorizing them survived a 24-hour filibuster in the Senate in February. It then moved through the House on a 125-20 vote on May 17, despite warnings from consumer groups that it will make it easier for utilities to raise rates in later years.
Before leaving office under the cloud of scandal on June 1, former Gov. Eric Greitens signed the package into law.
Sen. Ed Emery, R-Lamar, who sponsored the law, said customers will be protected from future rate spikes and Ameren will work to upgrade its infrastructure.
“This legislation maximizes the federal tax cuts by ensuring that Missouri customers see immediate cuts in their electric rates,” Emery said. “Once these rates are cut, then Missouri customers are protected for the first time ever by rate caps. All of this will happen while Missouri’s utility grid undergoes a billion-dollar modernization investment.”
Ameren, the state’s largest utility, says the legislation will support $1 billion of new infrastructure investment through 2023. It will freeze rates through April 2020. After that, it caps average annual rate increases at 2.85 percent.
For Ameren and other Missouri utilities, the proposal streamlines the otherwise lengthy approval process they undergo when they want to raise rates. When utilities make improvements to their equipment between rate cases, the new facilities begin depreciating immediately and the full cost of capital investments is sometimes not fully recovered by utilities in subsequent rate cases.
Ameren officials have contended for several years that the legislation would encourage infrastructure investment by changing the accounting method for those improvements.