Ameren Missouri, which provides electricity to 1.2 million customers, is getting serious about making a substantial investment in improving its transmission and distribution infrastructure. The company wants to initiate a $1 billion improvement project to be implemented from 2018-2022. The proposed upgrades include replacing power lines in metro St. Louis, implementing a smart meter program, installing automated distribution technologies, deploying a variety of storm hardening tactics, and upgrading aging substations.
Regulatory Lag May Hinder the Ameren Plan
From a reliability and planning perspective, this sounds great because in theory it should help reduce outages. Unfortunately, Ameren is still trying to figure out how to pay for the improvements. The company claims it can’t fund the upgrades due to declining revenues, a problem accentuated by what the company calls “regulatory lag built into Missouri’s decades-old rate setting process” that “prevents full recovery of the cost of these investments.”
Essentially, Ameren is saying that their desired improvements cannot be done until the entire Missouri rate setting process is changed – quite a monumental ambition. Changing the regulatory process seems only a little less difficult than, say, solving world peace. Therefore, the project seems to be in limbo which is a shame.
As I read about this story, I found myself wondering how many other states have antiquated rate-setting procedures that serve to undermine investments designed to boost reliability. I can pretty much guarantee that Missouri is not the only one. It’s a bit befuddling, since all regulatory bodies want utilities – no matter whether it’s the electric, natural gas or water sector – to improve service and reliability, yet some state systems are apparently setup in a way that hinders the process. It will be interesting to monitor the Ameren situation to see if anything changes. I, for one, won’t be holding my breath…