Read this in the the St. Louis Post-Dispatch yesterday:
Ameren Corp. boosted earnings by 57 percent in the second quarter, in part because of higher refueling costs last year at its nuclear power plant in Callaway County and warmer weather this spring.
Not surprising. According to an editorial in the same paper, we now now know that Ameren has been hiding the full extent of its profits as one of its large corporate clients, Noranda Aluminum, has charged in a dispute over the rates the utility has been charging:
The dispute over whether Ameren has earned more than the 9.8 percent profit established by the PSC [i.e., Public Service Commission] makes that painfully clear.
The PSC sets that target return on investment whenever a utility seeks a rate hike, by balancing the company’s need for growth and profit with consumers’ need for affordable, consistent rates for electricity. Because Ameren is a monopoly, the PSC’s role is to provide the pressures that might otherwise be provided in a competitive environment. To keep Ameren honest, the company is required to file “surveillance reports” to show whether it is earning more than is allowed.
But the PSC has determined those reports are confidential. So, for several months, a select number of attorneys and others involved in the previous rate case have known what the reports show: That Ameren has over-earned by tens of millions of dollars over the past year.
Late last month, just before the PSC’s hearing on Ameren’s over-earning was to begin, a judge finally opened up the reports. From July 2012 to March 2014, they show a consistent pattern of Ameren earning above its regulated rate of return. It can be argued that money rightfully belongs to Ameren’s consumers, not its shareholders. The over-earning, depending on who is doing the counting, is currently somewhere between about $25 million and $60 million a year.
The editorialist has a point. Given its monopoly status, there ought to be some way to insure that Ameren shows its customers at least as much regard as its shareholders. Instead Ameren has played poormouth and requested rate increases regularly – successfully most of the time, increasing its rates as the Post-Dispatch notes, “more than 40 percent in the past six years.” But the biggest issue I see with Ameren isn’t the question of consumer rates which are still relatively low. In the same article from which the first quote above was taken, I also read that:
CEO Warner Baxter reiterated the company’s concerns with the proposed federal rules regulating carbon dioxide, especially the interim goals that begin in 2020. The proposed rules, which would mainly affect the company’s generating plants in Missouri, “are unworkable from a customer standpoint,” he said.
Even with the proposals, Baxter said, the company isn’t planning to change its long-term resource plans, and it plans to continue using its power plants through the end of their useful life.
“We are not contemplating accelerating the retirement of our coal-fired units as part of our integrated resource plan because we think that’s in the long-term interest of our customers and the state of Missouri,” Baxter said in the call.
Let me recap all that I’ve learned from just one issue of the Post-Dispatch:
— Ameren is swimming in big profits.
— Aneren is attempting to hide this happy circumstance from the public it ostensibly serves in order to gouge yet more profit from its customers.
— Ameren is also relying on old, dirty technology that contributes to climate degradation and is a threat to public health.
— Ameren claims it can’t afford to implement an orderly transition to cleaner energy production without raising rates excessively to do so.
Essentially, this very profitable enterprise claims it can’t handle the cost of doing business in a responsible way without gouging its clients – the same folks it’s been regularly hitting up with rate increases while earning excessive profits. Does any of this inspire trust?
Do you think that this situation has anything to do with the “private” part of that private-public hybrid status that Ameren enjoys? Private entities are, of course, concerned only with the most efficient way to maximize profit, not service. And in the case of Ameren, the private segment of the enterprise seems to have corrupted the public part. On the topic of the failure of the PSC to keep Ameren’s welfare and the public welfare it supposedly represents in equilibrium, the Post-Dispatch editorialist notes that the legislature has little incentive to beef up public oversight given that “Ameren also employs lots of lobbyists and makes lots of campaign donations.” And indeed, a KSHB TV report observed that “Ameren lobbyists give lawmakers the most gifts total of any corporation tracked.”
Does anyone but me think that maybe the issue isn’t confined to the question of whether or not electric rates are fair, but whether our private-public utility is doing what is best for Missouri’s energy future, not to mention the health and welfare of Misourians. Ameren is certainly doing its best to live up to the “private” part of their mission by rigorously fighting for the shareholder’s bottom line, but isn’t it time for the “public” aspect of this supposedly regulated monopoly to manifest itself?