Missouri utility regulators have approved a plan that will allow Ameren to retire its Rush Island coal plant while redirecting investments in the facility toward other, cheaper forms of power generation 鈥 a maneuver that will add a monthly fee to customers鈥 bills but ultimately aims to save them money.
Ameren said Friday that the plan stands to save customers $120 million over 15 years 鈥 or the equivalent of $70 million, in the present day. That total is consistent with earlier estimates provided by the St. Louis-based power utility.
Still, barring a successful appeal, the decision from regulators at the Missouri Public Service Commission will eventually establish a new charge on customers鈥 bills 鈥 although Ameren and others say revenue from the charge will be more than offset by savings in reduced power costs.
Though not yet finalized, that charge is expected to be around $1.50 per month for residential customers, say state utility watchdogs with the Missouri Office of Public Counsel.
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The approved plan enacts a complicated financing technique, called securitization, that has recently been allowed in Missouri and that Ameren has never used before.
The policy enables Ameren to sell about $470 million of ratepayer-backed bonds to investors, in order to cover outstanding investments the company has already made in the Jefferson County coal plant built in the 1970s.
Through the upcoming charge on bills, customers will then pay that total back to the bond investors 鈥 and a return of 2% to 4% 鈥 while Ameren would be able to spend the money on other things, such as renewable energy projects, that are less costly to run than an old coal plant.
Ameren applauded the plan鈥檚 approval by the PSC.
鈥淭his ruling is the right decision for our customers,鈥 said Mitch Lansford, Ameren鈥檚 director of financial reporting.
But some consumer advocates are critical of the deal, saying it locks customers into paying off the entirety of an old coal plant that soon might have had to close amid financial pressures, like scores of others, nationwide.
鈥淚t was not likely to last much longer, just based on the economics. This charge gives (Ameren) a significant benefit, even after it鈥檚 shut down,鈥 said John Coffman, an attorney for the nonprofit Consumers Council of Missouri. 鈥淲e don鈥檛 think Ameren deserves the securitization bailout that they got in this order.鈥
Rush Island is guilty of more than a decade of Clean Air Act violations and faces ongoing court proceedings about how to atone for its illegal emissions. Its long history of legal problems has added controversy to the discussion about when and how to retire the plant, and what customers should have to pay for.
The current goal is to close Rush Island later this year. Ameren said it aims to add the new charge to monthly bills shortly after that happens.