Newspaper article St Louis Post-Dispatch (MO)

Ameren Accused of Overearning by $44 Million; Smelter Operator and Other Groups Say Missouri Utility Should Reduce Its Electric Rates; Business

Newspaper article St Louis Post-Dispatch (MO)

Ameren Accused of Overearning by $44 Million; Smelter Operator and Other Groups Say Missouri Utility Should Reduce Its Electric Rates; Business

Article excerpt

Ameren Missouri's largest customer says the utility earned $44.6 million more than legally allowed from October 2012 through September 2013, according to documents unsealed Tuesday.

Noranda Aluminum Holding Corp., which operates a smelter in New Madrid, last month filed a complaint against Ameren with the Missouri Public Service Commission, saying the utility made more money than it was allowed.

The amount, though, was unknown until Tuesday, when administrative law judge Morris Woodruff unsealed confidential documents that accuse Ameren Missouri of earning more than the 9.8 percent return on equity allowed by the PSC.

Noranda also says Ameren should be earning a smaller return on equity. Based on estimates from Greg Meyer, a consultant with Brubaker & Associates in Chesterfield who was hired by Noranda to perform the financial analysis, the utility should only earn a return of 9.4 percent on equity. Adjusting for that, Ameren Missouri earned $67.1 million more than it should have from October 2012 through September 2013.

Along with its overearnings complaint, Noranda is seeking a reduction in its electric rates, warning it may have to lay off 150 to 200 workers at its smelter later this year if it doesn't get a break. Eventually, the company says it may have to close the plant and lay off the close to 900 people who work there.

If its plant closes, Noranda says rates for other customers will go up because Ameren will lose about 10 percent of its power demand and be forced to sell electricity in other markets for less than the new rate the smelter is asking for.

Noranda wants the commission to reduce the rate it pays Ameren Missouri to 3 cents per kilowatt hour from roughly 4.1 cents per kilowatt hour. The average residential customer pays 10.3 cents a kilowatt hour, Ameren says.

The change could result in other Ameren consumers paying up to 1.8 percent more, Noranda says. Ameren counters a rate cut for Noranda likely would raise rates for other consumers by 2 percent.

The Office of Public Counsel earlier this month asked that documents be made public detailing Noranda's overearnings allegations. …

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