By ANITA SZOKE
of the Journal Star

 

PEORIA — The timing may be awful for those already struggling with their power bills, but Ameren Illinois utility officials say they need another increase in residential delivery service rates for ongoing system improvements and to increase reliability.

 

The request, which was filed with the Illinois Commerce Commission Friday by AmerenCILCO, AmerenCIPS and AmerenIP, would provide a total of $247 million annually in additional revenue, or about $180 million for electricity and about $67 million for gas. The increases, which must be approved by the ICC in an 11-month process, are not expected to take effect before October 2008.

 

AmerenIP customers would be hit the hardest for the delivery of both electricity and gas, followed by AmerenCIPS. AmerenCILCO customers, however, can expect a more modest increase for the delivery of electricity, and potentially a decrease for gas.

 

Company officials agree the timing isn’t ideal, but they say the delivery service rate increase for electricity and natural gas is necessary for the Ameren Illinois utilities to maintain and improve its electric and natural gas infrastructure. That reasoning likely will fall flat with some customers, many of whom continue to struggle to pay their bills after a 10-year freeze on electricity rates was lifted in January, causing scores of customers’ bills to skyrocket.

 

 

Saturday, November 3, 2007

By ANITA SZOKE

of the Journal Star

 

PEORIA - The timing may be awful for those already struggling with utility bills, but Ameren Illinois officials say they need another increase in residential delivery service rates for ongoing system improvements and to increase reliability.
The request, which was filed with the Illinois Commerce Commission on Friday by AmerenCILCO, AmerenCIPS and AmerenIP, would provide $247 million annually in additional revenue, or about $180 million for electricity and $67 million for gas. The increases, which must be approved by the ICC during an 11-month process, are not expected to take effect before October 2008.

 

AmerenIP customers would be hit the hardest for both the delivery of gas and electricity, followed by AmerenCIPS.

 

AmerenCILCO customers can expect a more modest increase for the delivery of electricity and potentially a decrease for gas.

 

Company officials agree the timing isn’t ideal but say the rate increase is necessary for the Ameren Illinois utilities to maintain and improve its electric and natural gas infrastructure. Current rates aren’t enough to recover costs and earn a reasonable return on investments, the utility said.

 

“This additional revenue is essential for the Ameren Illinois utilities to … fulfill our commitment to deliver energy in a safe, reliable and cost-efficient manner to our customers,” said Scott A. Cisel, president and CEO of Ameren Illinois utilities.

 

The utility said it plans to

 

spend $900 million - which includes $45 million in 2008 for the Peoria area -

 

to further improve system reliability and make other capital investments through 2010.

 

“These rate increases are necessary to attract the money needed from investors to make these critical investments in our infrastructure,” Cisel said.

 

But that reasoning likely will fall flat with some customers, many of whom continue to struggle to pay their bills after a freeze on power rates was lifted in January, causing scores of customers’ bills to skyrocket. Although Ameren and Illinois lawmakers earlier this year hammered out a $1 billion rate relief plan that included credits and refund checks to consumers, many consumers still are having difficulties paying their bills.

 

“I understand things are more expensive for companies, but they are getting more and more customers every day or week or year. My paycheck doesn’t go up and up,” Jerry, an Ameren customer who declined to give his last name, told the Journal Star. “Between gas prices, electricity prices, insurance, house payments, car payments - we are strapped.”

 

The Citizens Utility Board, a consumer watchdog group, plans to fight the request.

 

“We are going to be analyzing the rate hike request closely and fighting them at the ICC to make sure customers don’t have to pay a nickel more for power than they should,” said David Kolata, CUB executive director.

 

Delivery rates deal with the cost of distributing power, with delivery costs accounting for roughly one-third of a customer’s bill. The largest portion of the bill is the power supply charge, which is a pass-through to customers without any profit to the utilities.

 

“Reaching this decision is not anything we did quickly,” Cisel said. “We took our time, we carefully thought through the impact to our customers. Obviously, no one likes to pay more for anything, whether it’s the newspaper or the charges from a utility company.”

 

The electric bill for a typical AmerenCILCO residential customer with an annual electric usage of 10,000 kwh and an annual gas usage of 785 therms - and does not heat with electricity - would see an increase of about 2.8 percent, or $2.83 a month.

 

The annual bill for a typical AmerenCILCO all-electric residential customer who uses 18,000 kwh per year would increase about 2.1 percent, or $3 per month.

 

The increases don’t include the ongoing credits that customers will receive in 2008 and into 2009. Some customers, depending on their power usage, could see the increases offset by the continuing rate relief credits on their bills.

 

AmerenCILCO and AmerenIP last received an electric delivery service rate increase in November 2006 (it went into effect in January); while AmerenCIPS customers received a reduction in their delivery rates.

 

The increase in electric delivery rates is driven by significant increases in the costs of delivering power to electric customers, the utility said. Since 1997, electric usage by customers has grown about 11 percent, and the prices in the products that Ameren purchases - poles, distribution lines, line transformers - also continue to rise, the company said.

 

Regarding natural gas delivery service rates, AmerenCILCO and AmerenCIPS last received an increase in 2003, while AmerenIP received a rate increase in 2005. Since then, operating costs have increased significantly, utility officials said, adding that they plan on making investments totaling about $215 million from 2008 to 2010 to enhance the natural gas distribution system.

 

The impact of the proposed natural gas delivery rate adjustments will vary with each of the Ameren Illinois utilities, and actual bills will vary depending on the amount of natural gas each customer uses.

 

The bill for a typical residential AmerenCILCO natural gas customer who uses 785 therms per year is expected to go down 1.8 percent, or $1.33 per month.

 

The typical AmerenCIPS residential customer will see a 7.1 percent increase, or $5.42 per month, while the typical AmerenIP customer will see an 11.6 percent increase, or $8.67 per month.

 

Anita Szoke can be reached at 686-3248 or aszoke@pjstar.com.