Ameren Corp. (AEE) said that the Missouri Public Service Commission (MPSU) has approved an electricity rate increase of $226.3 million. The increase in rates will result in a $9 increase in the average monthly bill of a residential customer who uses 1,100 kilowatts of power in a month.
Ameren sought to increase electric rates by $402 million, but the rate approved by MPSU was significantly lower than the one the company had originally asked for. The increase in rates will allow the company to partially recover the higher cost of fuels used to generate electricity in its power plants and also to invest in new infrastructure.
In the last few years the Missouri state regulators had approved increased electricity rates to Ameren. MPSU granted a rate increase of $43 million in 2007 and a rate increase of $163 million in 2009. During the latter part of 2010, the company intends to file for another rate increase.
During the first quarter earnings call, Ameren reaffirmed the adjusted earnings expectation for 2010. The company expects earnings in the range of $2.20 to $2.60 per share.
Our view
We felt the rate approval was necessary so that Ameren could recover the higher input cost of production, add to its infrastructure and assure its customers uninterrupted power supply during the forthcoming summer months. We presently have a neutral outlook on Ameren due to its headwinds in merchant generation, lower demand for electricity and predominantly coal-based generation assets.
Based in St. Louis, Missouri, Ameren engages in the rate-regulated electric and natural gas generation, transmission and distribution, and merchant generation businesses. The major competitors of the company are CenterPoint Energy Inc. (CNP) and Exelon Corp. (EXC).
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