The Associated Press

JEFFERSON CITY, Mo. — Missouri utility regulators on Tuesday approved a roughly $163 million rate increase for customers of AmerenUE, the state’s largest electricity provider.

Public Service Commission staff estimate the average residential consumer will pay $5.88 more per month, an increase of about 8.1 percent.

“It’s going to be a significant rate increase no matter how you slice it,” said Public Counsel Lewis Mills, who advocates for consumers on utility regulation issues.

Before the rate increase becomes effective, the commission plans to consider any post-decision appeals. It’s unclear exactly how long that will take, but commission Chairman Robert M. Clayton III said he plans to finish the process quickly.

The Public Service Commission approved the rate increase by a 3-2 vote. It includes a 10.76 percent return on equity for St. Louis-based AmerenUE, which has 1.2 million electric customers in Missouri. Utility regulators also approved a clause that lets Ameren raise rates when its costs rise for the fuel needed to produce electricity.

AmerenUE last April asked utility regulators for a 12.1 percent rate increase, which the utility estimated would generate $251 million and increase the average household’s electric bill by $9 per month. In its filing with the Public Service Commission, the company cited increasing costs for copper, coal and other necessary materials.

Tuesday’s rate increase is the second time in two years that electric rates have been boosted. In 2007, Ameren was granted a $43 million increase, just a fraction of the $361 million it requested.

Voting for the rate increase were commissioners Jeff Davis, Connie Murray and Terry Jarrett. Clayton and commissioner Kevin Gunn opposed it, favoring an equity return of 10 to 10.2 percent.

Thomas R. Voss, AmerenUE’s president and chief executive officer, said in a written statement that much of the rate increase is needed to improve reliability and to cover fuel, environmental and efficiency improvements.

“We recognize that in today’s difficult economy no one wants to pay higher electric rates, but maintaining reliable electric service will be critical to any economic recovery,” Voss said.

Davis said the economic downturn has been difficult for everyone, including utilities that sell less electricity when businesses cut back. Davis said consumer and utility needs must be balanced.

“Consumers have to decide between prescription drugs, groceries, gasoline and paying their utility bills with the current rates we have now,” said Davis, the commission’s former chairman under Gov. Matt Blunt. “On the other hand, we have to be careful that we don’t cripple our infrastructure at the same time.”

But Clayton, selected by Gov. Jay Nixon to lead the regulatory board, said after the commission’s vote that the permitted profit margin is too high and that Ameren was given too much ability to increase electric rates to account for rising fuel prices.

That permission, called a fuel adjustment clause, lets AmerenUE pass through to consumers 95 percent of the cost for higher fuel prices. The Public Service Commission in 2007 rejected the utility’s request for a fuel adjustment clause.

Critics of granting the request this time contend that little has changed in the volatility of coal and other electricity-generating fuels since the last time Ameren asked.

But Ameren and other supporters of the request said that without the clause, there is a lag in the utility’s recovery of extra expenses when electricity is more costly to produce.

Utility regulators, after a tense exchange between Clayton and Davis, also voted 3-2 on Tuesday to reject an attempt to study Ameren’s proposal to build a second mid-Missouri nuclear reactor. Ameren has filed a federal application for its Callaway 2 facility that would be built near its existing reactor 10 miles southeast of Fulton.

The utility’s attempt to recover the cost of applying to federal nuclear regulators were rejected in Tuesday’s decision because of a 1976 state law that limits the recovery of construction costs.

Ameren has not yet decided whether to build the plant but contends that the 1976 law would make it impossible. Lawmakers are considering legislation that would let utilities charge customers for the interest and other capital costs but not for construction materials before a new power plant starts producing electricity.

Davis, Murray and Jarrett voted against the proposal, suggesting the commission waiting to see what the Legislature does first. Davis proposed holding off until Sept. 1.

AmerenUE is a subsidiary of Ameren Corp., which has 2.4 million electric and 1 million natural gas customers in Missouri and Illinois.

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