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New Missouri law cuts and caps electric rates, enables acceleration of a smarter, more secure energy grid
Ameren Missouri customers will see an approximate five percent rate cut; Major grid modernization plan to follow, supporting creation of hundreds of jobs
ST. LOUIS, June 6, 2018 /PRNewswire/ -- Electric rates are falling later this summer for Ameren Missouri customers, thanks to a new law updating century-old policies in the state.
In addition to a rate cut, estimated at around five percent for Ameren Missouri customers, the legislation also will benefit customers by capping rates and accelerating utility investments to modernize Missouri's electric grid, which benefits customers by making the grid smarter and more secure.
Missouri Senate Bill 564, which was signed into law earlier this month, was widely supported by customers, business organizations, unions and a bipartisan majority of more than 85 percent of the Missouri General Assembly.
"For years our customers have expressed a desire for more stable and predictable energy bills, as well as a modernized electric grid that is smarter and more resilient to outages," said Michael Moehn, president, Ameren Missouri. "The new law delivers on this important task. We look forward to delivering a plan that will greatly benefit our customers, create jobs, bolster the grid and enable new economic growth in Missouri. We thank the coalition of customers, businesses, community organizations and lawmakers that came together this year to upend the status quo and make energy infrastructure improvement and customer rate stability a reality."
In addition to rate cuts and caps, the legislation makes possible a comprehensive plan that will accelerate the pace of deploying smart grid technologies throughout the Ameren Missouri service territory. The plan will update the energy delivery system with modern infrastructure that will make it more resilient.
Elements of the new law include:
- Rate Cut – By updating century-old regulations, the law fosters the quick return of more than $100 million annually in federal tax savings to Ameren Missouri customers, which translates to a more than five percent rate cut for the average customer.
- Rate Freeze – The bill freezes rate adjustments for Ameren Missouri customers until April 2020.
- Rate Caps – Over the next five years, the law limits Ameren Missouri rate increases to a 2.85 percent compound annual growth rate, applied to electric rates established April 1, 2017. This unprecedented rate cap, the first in Missouri and the most stringent in the United States, represents an average increase of about half the annual average electric rates have gone up each year over the past decade in Missouri, for investor-owned utilities.
- Grid Modernization – A $1 billion plan from Ameren Missouri will create jobs in the state of Missouri, bolster grid security and upgrade the energy delivery system with smart technologies. The full plan, detailing improvements over the next five years, is expected to be submitted to the Missouri Public Service Commission (PSC) by early 2019.
- Solar Energy – The law encourages renewable energy by providing up to $28 million in solar rebates for customers, starting in 2019. The law also calls for Ameren Missouri to allocate $14 million to utility-owned solar by 2023.
- Economic Development – To drive economic growth, rate incentives were established to support Missouri businesses that expand their operations.
"As advocates for families, small businesses and households, we are pleased that the new law provides for the first rate caps in Missouri and will return more than $100 million to consumers within 90 days of becoming law," said Chris Ventura, Midwest executive director of the Consumer Energy Alliance, a national advocate for energy consumers. "We look forward to working together with Missouri policymakers to support building the energy infrastructure that not only provides upgraded capabilities but also protects the pocketbooks of people on fixed incomes or living paycheck to paycheck. Nothing is more important to us than ensuring energy consumers – especially those struggling to make ends meet – are treated fairly. We also support provisions of the new law that help grow Missouri's economy through job creation, as a result of energy grid modernization, and by providing incentives for large energy users who expand their businesses. Business growth helps keep energy costs down for all consumers."
"The rate cuts and caps signed into law will allow businesses to grow, while the economic development incentives included in SB 564 will further enhance Missouri's reputation as a low-cost energy state," said Daniel P. Mehan, president and CEO of the Missouri Chamber of Commerce. "The work done during the 2018 legislative session to make Missouri a better place to create jobs is some of the most productive in the past decade. In particular, the Missouri Chamber of Commerce and Industry is proud to have worked with lawmakers to cut utility bills for Missourians."
While the law included a 90-day deadline for utilities to pass along savings from the federal tax cuts to customers, Ameren Missouri plans to move even quicker to return more than $100 million to customers and reduce rates, which started with a filing with the PSC made on June 1, within hours of the bill becoming law. Subject to Missouri PSC approval, Ameren Missouri hopes to have this rate cut in place for customers as soon as possible later this summer.
Ameren Missouri has been providing electric and natural gas service for more than 100 years, and the company's electric rates are among the lowest in the nation. Ameren Missouri's mission is to power the quality of life for its 1.2 million electric and 130,000 natural gas customers in central and eastern Missouri. The company's service area covers 64 counties and more than 500 communities, including the greater St. Louis area. For more information, visit Ameren.com/Missouri or follow us at @AmerenMissouri or Facebook.com/AmerenMissouri.
Statements in this release not based on historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in Ameren Corporation's Annual Report on Form 10-K for the year ended December 31, 2017, and elsewhere in this release and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:
- regulatory, judicial, or legislative actions, including changes in regulatory policies and ratemaking determinations, such as Ameren Missouri's proceedings with the Missouri PSC to pass through to its customers the effect of the reduction in the federal statutory corporate income tax rate enacted under the Tax Cuts and Jobs Act of 2017 (TCJA), and future regulatory, judicial or legislative actions that change regulatory recovery mechanisms and the resulting impacts on our results of operations, financial position, and liquidity;
- the effects of changes in federal, state, or local laws and other governmental actions, including monetary, fiscal, and energy policies;
- the effects of changes in federal, state, or local tax laws or rates, including additional regulations, interpretations, amendments, or technical corrections to the TCJA, and any challenges to the tax positions we have taken;
- the effects on demand for our services resulting from technological advances, including advances in customer energy-efficiency and private generation sources, which generate electricity at the site of consumption and are becoming more cost-competitive;
- the effectiveness of Ameren Missouri's customer energy-efficiency programs and the related revenues and performance incentives earned under its Missouri Energy Efficiency Investment Act programs;
- our ability to align overall spending, both operating and capital, with frameworks established by our regulators and to recover these costs in a timely manner in our attempt to earn our allowed returns on equity;
- business and economic conditions, including their impact on interest rates, collection of our receivable balances, and demand for our products;
- disruptions of the capital markets, deterioration in credit metrics of the Ameren companies, including as a result of the implementation of the TCJA, or other events that may have an adverse effect on the cost or availability of capital, including short-term credit and liquidity;
- the actions of credit rating agencies and the effects of such actions;
- the impact of weather conditions and other natural phenomena on us and our customers, including the impact of system outages;
- the construction, installation, performance, and cost recovery of generation, transmission, and distribution assets;
- the effects of our increasing investment in potential wind and solar generation projects, our ability to obtain all of the necessary approvals to complete the projects, and the uncertainty as to whether we will achieve our expected returns in a timely manner;
- the effects of strategic initiatives, including mergers, acquisitions, and divestitures;
- the impact of current environmental regulations and new, more stringent, or changing requirements, including those related to carbon dioxide, other emissions and discharges, cooling water intake structures, coal combustion residuals, and energy efficiency, that are enacted over time and that could limit or terminate the operation of certain of Ameren Missouri's energy centers, increase our costs or investment requirements, result in an impairment of our assets, cause us to sell our assets, reduce our customers' demand for electricity or natural gas, or otherwise have a negative financial effect;
- the impact of negative opinions of us or our utility services that our customers, legislators, or regulators may have or develop, which could result from a variety of factors, including failures in system reliability, failure to implement our investment plans or protect sensitive customer information, increases in rates, or negative media coverage;
- the inability of our counterparties to meet their obligations with respect to contracts, credit agreements, and financial instruments;
- legal and administrative proceedings;
- the impact of cyber attacks, which could, among other things, result in the loss of operational control of energy centers and electric and natural gas transmission and distribution systems and/or the loss of data, such as customer, employee, financial, and operating system information; and
- acts of sabotage, war, terrorism, or other intentionally disruptive acts.
New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.
Editor's Note: The final rate cut for Ameren Missouri customers, approved by the Missouri PSC on July 5, was for a 6.1 percent rate cut.
SOURCE Ameren Missouri
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