JEFFERSON CITY, Mo. — In an effort to end the months of wrangling, the Office of Public Counsel filed a compromise settlement in the Ameren rate case Tuesday that has the support of most of Missouri’s consumer groups, including Noranda Aluminum, the massive aluminum smelter in southeastern Missouri.
The proposed stipulation must be approved by the Public Service Commission before taking effect, and currently has the support of the OPC, Consumer Council of Missouri, the Missouri Retailers Association, the Missouri Division of Energy, and the Missouri Industrial Energy Consumers. The stipulation filed will not cost Ameren any money currently being derived from ratepayers.
Ameren, a publicly owned utility, and Noranda have been playing tug-of-war over the electric rate that the aluminum smelter pays. Noranda is Ameren’s largest customer in the state, consuming roughly the same amount of power as the entire city of Springfield and paying about $160 million annually in energy rates, making them the primary opponents of Ameren when they seek to raise electric rates.
Under the proposal, Noranda would pay a rate of $34.00/MWh. The proposal also features several provisions aimed at reducing electric rates for low-income families. Low-income families would be exempt from the approximately $7 per-month charge associated with the Missouri Energy Efficiency Investment Act and would make a lower rate available for families in economically depressed communities of Ameren’s service area.
“Some of these reforms in the Ameren ratemaking process assisting low-income and low-usage consumers are frankly long overdue,” said Joan Bray, President of the Consumers Council of Missouri. “We believe this compromise settlement is the best possible outcome for consumers in this rate case and we are hopeful the Public Service Commission will give their approval.”
Ameren has previously proposed that Noranda be classified as a wholesale consumer of energy, rather than as a retail business. But consumer groups say that will cause rates to go up. The new stipulation proposal comes as Ameren is requesting a $264 million increase and a 10.4 percent return on equity.
Ameren is, by law, limited in how much money it may make in any given year, and has frequently had to deal with accusations of overearning. Ameren counters that Noranda’s rate is far below the cost of service.
“The current stipulation is nothing new,” said Irl Scissors, Executive Director of the Ameren-backed Missourians for a Balanced Energy Future. “Industry experts continue to prove that Noranda is making up their own hardship forecasts. The entire foundation of Noranda’s request for a rate reduction on the backs of other electric consumers is baseless.”
Scissors maintained that Noranda’s stipulation would come “on the backs” of Missouri ratepayers.
“In testimony today, David Woodsmall, representing the Missouri Energy Group, strongly stated that every study PSC, OPC, etc. show that Noranda is paying well below the cost of service, therefore any further rate shift would be unduly discriminatory against all other ratepayers,” Scissors said in a statement. “It remains unconscionable that Noranda is attempting to shift their business risk onto the backs of Missouri consumers while its Wall Street owner Apollo’s CEO “earned” another $331 million and hired Elton John to perform at is birthday party. And we, the ratepayers are supposed to pick up their tab? Enough is enough already.”
Collin Reischman was the Managing Editor for The Missouri Times, and a graduate of Webster University with a Bachelor of Arts in Journalism.
