The cost of electricity in the St. Louis area could be going up. Ameren Missouri is planning to ask state regulators this summer for a rate increase.
The utility cites a lack of regulatory reform, the shutdown of the utility’s largest customer along with increased investments and operating costs.
“We are moving forward with plans to file for an electric rate increase in early July,” Ameren Chief Executive Officer Warner Baxter told analysts Wednesday during a conference call.
The utility is dealing with the decision by bankrupt Noranda Aluminum to idle operations at the smelter in New Madrid, Mo. Ameren says traditionally, that plant has been the largest customer for its Missouri operations.
“We expect that that rate case will reflect the reduced usage by Noranda. And as our rates are adjusted next year, then the temporary impact of this earnings decline from the outage would be erased,” Ameren Chief Financial Officer Marty Lyons told analysts.
Specifics about the potential rate increase request are expected to be announced as the summer approaches.
The Noranda shutdown is already affecting the utility’s bottom line. Ameren’s most-recent quarterly report shows the Missouri unit’s profit was $14 million, down from $41 million for the same period a year earlier.
Overall, Ameren’s profit drop was much less dramatic: $105 million, compared to $108 million. Despite the dip, the utility’s net income of 43 cents per share beat analysts’ expectations.
Ameren says the relatively mild winter in much of its service area and the Noranda shutdown are the two key factors driving down profits.
Lyons says the utility should be able to easily deal with the idling, especially if the upcoming rate increase request is approved.
“We expect that that rate case will reflect the reduced usage by Noranda. And as our rates are adjusted next year, then the temporary impact of this earnings decline from the outage would be erased.”
Despite the issues surrounding aluminum smelter in southeast Missouri, it has been a solid year on Wall Street for Ameren.
The Associated Press reports shares have increased 13 percent this year.
As a comparison, the Standard & Poor’s 500 index has only gone up 2 percent.