Investments in storm hardening, grid resiliency and energy generation among key customer benefits in rate adjustment request

Rhea-AI Summary

On June 28, Ameren Missouri requested a rate adjustment from the Missouri Public Service Commission (PSC), aiming to implement new electric base rates by mid-2025. The adjustment seeks to recover costs from significant system upgrades and cleaner energy investments, ensuring reliability amidst severe weather events. If approved, the average residential customer using 1,011 kWh/month would see a $17 increase. Despite this, rates will remain below Midwest and national averages. Key investments include upgrading infrastructure, adding smart technology, and incorporating new solar energy centers. Ameren Missouri emphasizes improved reliability and offers flexible payment and assistance options for customers managing economic challenges.

Positive

• Ameren Missouri's electric base rate adjustment seeks to cover costs from major system upgrades and cleaner energy investments.
• The rate adjustment will fund the installation of three new solar energy centers, powering approximately 93,000 homes annually by end-2024.
• Ameren Missouri rates will remain below Midwest and national averages even after the proposed $17/month increase for residential customers.
• Improved reliability noted with a 40% enhancement on circuits involving innovative technology and grid upgrades.

Negative

• If approved, the rate adjustment will increase the average residential electric bill by $17 per month starting mid-2025.

Financial Analyst

Ameren Missouri's request to adjust its electric base rates is a significant development both for the company and its stakeholders. The proposed rate hike of $17 per month for the average residential customer will help the company recover the costs of extensive grid and generation upgrades. Notably, current residential rates are approximately 28% below Midwest and national averages, which gives Ameren some room to increase rates while still remaining competitive.

Financially, this rate adjustment could be positive for Ameren in the long run. By improving grid resiliency and investing in cleaner energy sources, the company can perhaps reduce future operational risks and maintenance costs. However, it's important to consider the potential short-term backlash from customers who may struggle with higher rates, especially in a challenging economic environment. The initiative to offer more energy assistance programs is a strategic move to mitigate this risk.

Investors should also consider the timing of these upgrades and rate adjustments. While the financial benefits might not be immediate, the long-term outlook for Ameren's operational efficiency and reliability could make it a more resilient investment. This strategy aligns with the broader industry trend of upgrading infrastructure to withstand severe weather, which has become more frequent.

Energy Market Analyst

The focus on storm hardening and grid resiliency is a response to increasing severe weather events, reflecting a growing trend in the energy sector. Ameren Missouri's plans to replace aging infrastructure and upgrade substations with smart technology to rapidly detect and isolate damage will likely improve outage response times and customer satisfaction.

The diversification of their energy generation portfolio, including the addition of three new solar energy centers, is noteworthy. By generating cleaner energy, Ameren can decrease its carbon footprint and comply with stricter environmental regulations. This also aligns with evolving consumer preferences towards sustainable energy sources.

For retail investors, it's important to note that while these investments are capital-intensive, they are essential for future-proofing the company against climate risks. The improved grid reliability and reduced outage times could also enhance customer loyalty, which is critical in a regulated utility environment. Additionally, the company's proactive approach in offering flexible rate plans and energy efficiency programs can foster better customer relations and potentially mitigate regulatory scrutiny.

Ameren Missouri files request with state regulators to adjust rates next summer

ST. LOUIS, July 1, 2024 /PRNewswire/ -- On June 28, Ameren Missouri filed with the Missouri Public Service Commission (PSC) a request to adjust its electric base rates next summer. The new rates would take effect in mid-2025 to recover the costs of major electric system upgrades as well as cleaner electricity generation investments to ensure the system remains reliable and resilient for customers. 

"The grid and generation upgrades we are making as part of Ameren Missouri's Smart Energy Plan are improving customer reliability," said Mark Birk, chairman and president of Ameren Missouri, a subsidiary of Ameren Corporation (NYSE: AEE). "We've experienced several severe storms across our service territory over the last year and a half, and the system has performed well. Our storm hardening and smart technology efforts have saved nearly 91,000 customer outages and 36 million outage minutes from January 2023 through the end of May 2024."

Over the next 11 months, the filing will be carefully reviewed by the PSC and other stakeholders. If the request is approved by regulators, the rate adjustment in mid-2025 would cost an average residential electric customer with 1,011 kilowatt-hours of usage about $17 a month. Today, residential rates for Ameren Missouri customers are approximately 28% below Midwest and national averages, according to the Edison Electric Institute Typical Bills and Average Rates Report through June 30, 2023. Ameren Missouri rates will remain well below these averages even if this request is approved. 

Key components of the rate adjustment request include:

• Strengthening the grid and investing in smart technology through Ameren Missouri's Smart Energy Plan to ensure reliable energy for our customers.
  • Replacing aging infrastructure with newer, upgraded power lines with increased capacity supporting resiliency and providing flexibility to reroute power during an outage while crews safely make repairs.
  • Adding new and upgraded substations with smart technology that can more rapidly detect and isolate damage, speeding power restoration.
  • Upgrading utility poles, many fortified with stronger composite materials, that can better withstand severe weather and winds up to 70 mph.
• Maintaining a diverse generation portfolio of reliable, low-cost on-demand energy. As energy demand and extreme weather threats increase, it is more important than ever to maintain the availability of our energy centers to meet the needs of our customers.
  
  
• Providing cleaner energy to the communities we serve through the installation of three new solar energy centers set to be in service at the end of 2024. Combined, they can produce the energy necessary to power approximately 93,000 homes annually. We are also partnering with nonprofits and others by installing solar canopies in parking lots across the region through the Neighborhood Solar program.
  
  
• Offering an enhanced customer experience through rate options that provide customers with more convenience, choice and control over their electric usage. Customer benefits include personalized usage information and various rate options to choose from that specifically meet a customer's lifestyle. Smart meters also enable faster connection when moving or starting service.

A slide presentation with additional details regarding Ameren Missouri's rate review adjustment request is available at AmerenInvestors.com. Customers can also visit AmerenMissouri.com/InvestingInMissouri for more information about the filing.

"We are committed to ensuring the system is reliable for all our customers while keeping costs as low as possible. As a result of the investments we have made, our customers are seeing fewer outages with shorter durations, delivering up to a 40% improvement in reliability on circuits with innovative technology and associated grid upgrades," said Warren Wood, vice president of regulatory and legislative affairs at Ameren Missouri. "These investments, combined with our new renewable energy centers, help ensure we have a reliable and resilient system to serve customers today and into the future."

As the communities we serve manage current economic conditions, Ameren Missouri has made even more energy assistance available. The company offers flexible payment options and connects customers with government and community assistance funding programs through the Low-Income Home Energy Assistance Program (LIHEAP). Customers can view what options are available to them at AmerenMissouri.com/EnergyAssistance.

"We recognize the impact of electric rate adjustments and are working to keep rates as low as possible while maintaining high levels of reliability. We also want our customers to know we're here to help," Birk said. "Any customers in need of assistance should contact us today for information regarding access to energy assistance grants with expanded eligibility requirements and to arrange flexible payment options. We also have energy efficiency programs and energy management tools to make it easier for customers to manage their energy use."

About Ameren Missouri
Ameren Missouri has been providing electric and 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 135,000 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.

 

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SOURCE Ameren Missouri

FAQ

What is the purpose of Ameren Missouri's rate adjustment request?

Ameren Missouri's rate adjustment request aims to recover costs from major electric system upgrades and cleaner energy investments, ensuring reliability and resilience.

When will Ameren Missouri's new electric rates take effect?

If approved, the new electric base rates will take effect in mid-2025.

How much will Ameren Missouri's rate adjustment increase the average residential bill?

The rate adjustment will increase the average residential electric bill by about $17 per month.

What upgrades are included in Ameren Missouri's rate adjustment request?

Key upgrades include strengthening the grid, replacing aging infrastructure, adding smart technology, and installing three new solar energy centers.

Will Ameren Missouri's rates remain competitive after the rate adjustment?

Yes, Ameren Missouri rates will remain below Midwest and national averages even after the proposed increase.