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Opponents: Utility surcharge bill would allow unfair charges

Opponents: Utility surcharge bill would allow unfair charges

Supporters of Kehoe legislation say claim is baseless

February 27th, 2013 in News

Photo by News Tribune

By the end of this week, supporters expect the Missouri Public Service Commission will have completed its analysis of the potential effects of Sen. Mike Kehoe's bill allowing electric utilities to charge consumers for infrastructure work, even before getting PSC approval.

And, the supporters hope, the bill will have been turned in to the Senate's leaders, so it can be debated by the full, 34-member Senate and sent on its way to the House.

The Senate's Commerce, Consumer Protection, Energy and the Environment Committee voted 8-2 Feb. 20, endorsing a substitute version of the bill that would authorize the electric companies to add "infrastructure system replacement surcharges" to their customers' bills.

But the consumer group called FERAF, the Fair Energy Rate Action Fund, charged earlier last week that the bill would have allowed Ameren Missouri to begin repairing the collapsed Taum Sauk Reservoir and pass the costs along to consumers - until the PSC blocked those charges.

"Newly proposed legislation being pushed by Ameren and other utilities would not only add a brand new fee to Missourians' electric bills, it would force ratepayers to pay for projects that are unneeded or deemed imprudent under current law," a FERAF news release said Feb. 19.

Scott Charton, a spokesman for the regulated utilities' Missouri Electric Alliance, countered: "This claim is 100 percent false, and they know it.

"To suggest that Senate Bill 207 would permit one penny of reimbursement outside of the PSC review and audit process is just flat wrong."

Union Electric Co., which became Ameren in the mid-1990s, built the reservoir in the Ozark hills near Lesterville in the early 1960s for $50 million.

Its pool is used to provide peak electric power.

Water is pumped into the reservoir when power demand is low, then drained through turbines to generate extra electricity for the utility's customers, when needed.

But, in the early hours of Dec. 14, 2005, part of the retaining wall gave way, and more than a billion gallons of water roared down the side of Profit Mountain and raced through the Black River valley, devastating the Johnson's Shut-Ins State Park, obliterating the park ranger's home and injuring the ranger's family.

Investigators eventually determined that the system used to control the water levels failed, allowing the reservoir to become over-filled before the wall collapsed.

Eventually, Ameren paid $180 million to settle all state claims over the collapse, then rebuilt the reservoir for about $490 million.

It reopened in 2010, more than four years after the collapse.

Ameren pledged after the collapse that none of the rebuilding costs would be passed along to consumers.

But FERAF said in its release that the PSC in 2011 "denied an attempt by Ameren to force consumers to pay for part of the rebuilding of the Taum Sauk reservoir, citing Ameren's admission that it took "full responsibility' for the reservoir's collapse."

Under Kehoe's bill, the group said, "ratepayers would be forced to pay for such projects because they meet the legislation's expansive definition of "infrastructure replacement.' Therefore regulators would have no discretion over whether or not such projects become part of the surcharge on Missourians' electric bills."

Charton said that allegation just isn't true.

"Any request for infrastructure reimbursement is subject to Missouri Public Service Commission scrutiny - not just for the initial reimbursement request, but also later in a general rate case, when the PSC gets a second opportunity for review," Charton said. "The legislation clearly defines infrastructure.

"And the legislation only allows reimbursement of dollars already spent to serve customers - and these requests are fully subject to the PSC's stringent audit and prudence review."