Sierra Club Settles Ameren Rate Case with Advances in Energy Conservation

Sierra Club reached a unanimous settlement with Ameren and all other parties in Ameren’s latest proposed rate hike.The settlement drastically limits the fixed customer charges Ameren had proposed in its rate case before the Missouri Public Service Commission (PSC). The settlement also requires Ameren, in its next rate hike proposal, to propose a new rate structure that would encourage energy conservation, and Ameren will be required to hold a stakeholder process to gather input on that rate structure.

“This is a major victory for energy conservation. This is a pocketbook issue. Customers should be rewarded, not punished, for energy conservation,” said Andy Knott, Senior Campaign Representative for the Sierra Club’s Beyond Coal Campaign in Missouri.

Fixed charges discourage energy conservation because they are charged to all customers regardless of how much energy they use.  In the settlement, Ameren has agreed to drop a proposed “energy grid access charge” that would have nearly tripled customer fixed charges from the current $8/month to nearly $23/month over the next few years. Under the settlement, the existing $8/month “customer charge” would increase to only $9/month.

Sierra Club and other allies in this case, including Renew Missouri and the Missouri Division of Energy,  pressed Ameren to restructure its rates to encourage energy conservation in what is called an “inclining block rate” structure. Under such a rate structure, customers who use less energy are charged less per unit of energy (i.e., kilowatt hour)  that they use.

Under the settlement, Ameren has agreed to include an inclining block rate proposal in its next rate proceeding. Ameren typically requests a rate increase every 1 – 2 years. Ameren has also agreed to hold a stakeholder process to seek input on such a rate structure.  Such a rate structure would be a win-win for consumers and the environment by incentivising energy conservation, reducing emissions and other impacts from coal-fired power and eliminating or postponing the need for new power generation.

This rate case also demonstrated significant public interest in energy conservation.  Sierra Club’s organizing work resulted in more than 1,500 comments submitted to the PSC opposing high fixed charges and calling for rates that encourage energy conservation.

The settlement is now undergoing a review by the PSC.