Ameren's data center plan could raise rates by $22M yearly

ST. LOUIS – Ameren’s proposal for a new data center could raise electric bills for Missouri customers by about $22 million a year, according to a staff report from the Missouri Public Service Commission.

Utility regulators recommend the Public Service Commission reject Ameren’s proposal, saying that it would raise rates for existing customers while benefiting company shareholders. 

The proposal is part of Ameren’s larger effort prompted by a new state law requiring utilities to create special rates for data centers, which are expected to have energy demands that are unparalleled to what we have seen in previous years.

With such high demands, the regulatory report states that the infrastructure required to support these data centers could cost over $1 billion for a single large load customer. Without a new policy, those costs would be distributed among all customers with their electric bills.

Regulator James A. Busch, director of the industry analysis division of the Missouri Public Service Commission, gave a practical example involving pizza of why he disagrees with Ameren in the written report.

“As a very simple example, consider four friends who decide to buy a $20 pizza. Each of the four hands $5 to the cashier. Just then a fifth friend walks in and joins them. Should this newcomer also give the cashier $5? Or should the newcomer give $1 to each of those who already paid?” Busch wrote. “Ameren Missouri is in the position of the restaurant manager, who would be pleased to accept a $5 gratuity on that $20 pizza.

“Reasonable accounting authority should be ordered to ensure a fair outcome for the existing rate payers, and to avoid unreasonable accumulation of positive regulatory lag to the benefit of shareholders.” 

The staff’s calculations show that a new 100MW data center could increase existing Ameren customers’ bills by about $22 million annually until the data center’s load is included in a rate case. Meanwhile, Ameren would gain $33.5 million in new rate revenue. 

Ameren’s case for data center rates

Ameren officials say that large manufacturers and data centers bring tremendous economic benefits to Missouri. In addition to the construction jobs they provide, they also say that it would bring new revenue in, supporting everything from education to public safety.

Rob Dixon, Ameren’s senior director for economic, community and business development, said, “We’re going to do everything that we possibly can to reasonably ensure that these customers are paying their fair share, and that we’re not unjustly passing costs on to other customers.”

Ameren has also published an FAQ on its website, where the company explains common concerns such as “why build in Missouri?” and provides additional information on their reasoning for the necessity of the data centers.

The utility also emphasized the economic upside of data centers back in May. Rob Dixon highlighted an Ameren-commissioned economic impact study of two potential data centers, saying one site could generate over $10 billion in total economic impact, including more than $125 million in state and local sales tax revenue and $1.5 billion in property tax over 20 years. A second potential project was estimated at $2 billion in economic impact, with over $20 million in sales tax revenues and more than $210 million in property tax revenue over the same period.

Ameren says missing out on these projects could mean losing billions in potential investment to other states, while approving the new rate plan would help secure Missouri’s place in the growing data economy.

Data center companies don’t necessarily have to choose Ameren as their provider, unless they feel the terms are more favorable than supplying the power on their own. For instance, Mastercard’s O’Fallon data center is constructing its own solar field to power its operations separate from Ameren.

Ameren has also proposed provisions such as minimum service terms and a two-year termination notice to protect customers, but the PSC believes that these measures may benefit the utility more than customers.

This proposed rate increase would be in addition to a 15% jump that customers saw around the state of Missouri back in June, when the Public Service Commission approved the rate hike to help fund electric grid upgrades, clean energy investments, and improve reliability. 

A hearing on the case is scheduled for November, with reply briefs due early next year. A final decision by the Public Service Commission should happen shortly after that.