AmerenUE Files for Rate Hike - Analyst Blog

Ameren Corporation (AEE) announced that one of its subsidiaries AmerenUE filed a request to the Missouri Public Service Commission (PSC) for an $11.9 million increase in natural gas delivery rates for its 127,000 Missouri gas customers. The delivery rates represent the portion of a customer's total gas bill that goes primarily to cover the costs of construction, operations and maintenance of distribution system that delivers gas to customers.
 
The rate increase of AmerenUE will result in an increase of $7.25 per month in a residential customer’s gas bills, excluding taxes. AmerenUE's delivery rates are regulated, and any alteration must be approved by the PSC through a rate case. However, the rate request will not have any immediate impact on customers’ bills as it will go through the process of PSC review and hearings. AmerenUE expects a decision by May 2011.
 
AmerenUE received the last natural gas rate hike on 2007; since then the company invested $54 million in gas systems improvements, added 175 miles of new gas distribution main and also 9,800 new service lines to homes and businesses. AmerenUE filed for the rate increase to recover the infrastructure investment and higher operating costs since the last rate hike.
 
On May 2010, Ameren received an approval from the  PSC to increase its electricity rates by $226.3 million. The rate hike 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.

During the first quarter earnings call, Ameren reaffirmed the earnings expectation and expects it to range from $2.20 to $2.60 per share for 2010. Ameren’s cash and cash equivalents as of March 31, 2010, were $360 million versus $304 million as of March 31, 2009.

We believe that the rate filing of AmerenUE is not only aimed to recover higher costs but will also enable the company to continue to invest in gas infrastructure and provide safe and reliable service to its customers. We presently have a neutral outlook on Ameren.
 
Based in St. Louis , Missouri , Ameren engages in the rate-regulated electric and natural gas generation, transmission and distribution and merchant generation businesses.