FAQs
			Rate Case Specifics Fuel Adjustment Clause		Included Costs Consumer Questions
Rate Case Specifics
1.	Q.	What will this increase mean to my bill?
	A.	Today’s requested increase would mean less than $9 more per month for the average household—or less than 30 cents per day. Each household’s increase would vary according to the amount of electricity used.
2.	Q.	Your company makes a lot of money, why are you asking for a rate increase?
	A.	UE’s earnings in 2007 were $100 million less than just four years ago—in 2003. UE’s expected returns in 2008 are well below UE’s cost of capital and below the levels allowed by the Missouri Public Service Commission—even in our last rate case.
				UE rates are almost 40 percent below the national average. Chart: Comparison of AmerenUE Average Retail Rates
				A large variety of the costs UE must incur to provide service—such as coal—are rising at an unprecedented pace.
				UE is investing heavily in its infrastructure, and is also incurring expenditures to comply with new Missouri Public Service Commission rules relating to vegetation management and infrastructure inspections.
3.	Q.	Don’t your earlier increases cover these costs?
	A.	No. Since our customers’ rates are typically set based on historical cost levels through a nearly one-year regulatory review, by the time new rates are put in place, they are already inadequate to fully recover the costs that UE will incur once rates do take effect. This makes it very difficult to earn a fair return on investment.    We must seek smaller and more frequent increases so we can continue to invest to provide the reliable service our customers expect and deserve. We cannot continue to wait decades for rate increases.
4.	Q.	What happens if you don’t get this increase?
	A.	A failure to increase revenue and earn a fair return affects UE’s ability to borrow money at reasonable rates—which affects its ability to invest in reliability, environmental controls and programs that support the communities we serve.
5.	Q.	What time period is this rate case based on?
	A.	For the 12 months ended March 31, 2008, but we are asking to be allowed to update costs for known and measurable charges that we incur through June 30, 2008. We will also ask for a further update or “true-up” of selected items through September 30, 2008.
6.	Q.	Why did you choose that period?
	A.	It is the most current period possible relative to the date rates will actually take effect and thus it most closely reflects the costs we are incurring today.
7.	Q.	What happens next in this proceeding?
	A.	If this case follows typical schedules, the staff of the Missouri Public Service Commission and perhaps other intervenors will do an audit and make a filing in late summer. Additional testimony and hearings will follow—with local public hearings this fall and evidentiary hearings late in the year. A decision on the case would follow. We expect a detailed schedule to be set soon. We expect a ruling on the case in approximately 11 months in the spring of 2009. Learn more about the rate process.
8.	Q.	Doesn’t a rate increase really benefit shareholders more than customers?
	A.	We are committed to providing reliable service at a reasonable price—70 cents of every additional dollar we would receive with this increase would go toward the increased costs of generating electricity and improvements in reliability. Through the rate case process, the Missouri Public Service Commission (PSC) is supposed to allow UE the opportunity to earn a fair rate of return on its investment.
				The rates set by the Public Service Commission do not guarantee that UE will earn a fair return—we still must manage our company well to achieve it, which is a tremendous challenge in the rising cost environment we face today.
				But a financially strong company benefits both our customers and our shareholders. If we achieve the return allowed by the PSC, we enjoy a healthier credit rating and pay less interest to borrow money we need to meet our reliability and environmental commitments.
				These borrowing costs ultimately become part of the price our customers pay.
				If we put our business at risk—or fail to provide an adequate return to our investors—the result will be even higher prices for our customers over the long run. UE has not increased its dividends to shareholders for more than a decade.
Fuel Adjustment Clause
9.	Q.	You are asking to implement the fuel adjustment clause. Why should the PSC allow UE to receive automatic fuel adjustments?
	A.	In the filing, we have proposed that we pass on to customers 95 percent of the difference between the amount of fuel costs in the base rates now and the costs we are currently incurring. This adjustment process—which is already allowed for another Missouri utility—will enable us to more quickly recover the money we must spend on rising power plant fuel costs over which we have little control, and which are volatile and uncertain. It will allow for price adjustments—up or down—to cover fluctuating fuel costs. The fuel adjustment does not generate additional profits for UE.
				It avoids the time and expense required for a full rate case driven by fuel cost changes.
				Through this process, consumers would pay only the actual cost UE incurred to pay for fuel and purchased power, which sends appropriate price signals to consumers relative to the electricity use and consumption.
				The process allows us to pass both fuel cost increases—and decreases—to our customers closer to the time we incur them, which improves UE’s financial condition and improves its ability to borrow the large sums of capital it needs at more cost effective rates which, in turn, results in lower long-term rates for customers.
				The PSC will continue to have regulatory oversight over our fuel adjusted rates.
		Enabling legislation is in place to allow for this process, and the fuel adjustment process is already used with one other Missouri utility. In fact, the fuel adjustment clause is used in all but two fully regulated states.
10.	Q.	Why do you need this fuel adjustment clause now when you’ve managed for years without it?
	A.	Fuel costs are an increasingly higher percentage of our total costs, are increasing significantly and are volatile and uncertain.
				Beyond our initiatives to hedge against rising fuel costs, establish long-term contracts for fuel and create alternative transport options for our coal, these costs are really out of our control.
				Our hedging programs cannot completely remove the volatility and uncertainty of these costs. Hedges can only be prudently put in place for limited forward periods, and not all volatility and uncertainty can be hedged away in any event.
				These costs are recoverable in rates and always have been. However this mechanism allows for recovery closer to the time these costs are actually incurred, helping us more effectively manage our finances.
11.	Q.	Do other states allow their utilities to use fuel adjustment and purchase power clauses (FACs)?
	A.			Of the 34 other states where utilities are either fully regulated or where deregulation has been suspended in favor of full regulation, all but one allow their electric utilities to apply to recover fuel and purchase power costs through some type of FAC.
				Ninety percent of all utilities in these 34 other regulated states already have a FAC.
				FACs are even more prevalent in Midwestern states—many of which are served by coal-intensive utilities like AmerenUE. All but one of the utilities in states surrounding Missouri are already operating with the benefit of FACs.
Included Costs
12.	Q.	Of all the costs you mentioned, what is the largest single cost you are incurring that is prompting you to ask for an increase?
	A.	Fuel costs, principally coal and other fuels to run our power plants, and the costs to transport that fuel. They represent 26 percent of the revenue request in this rate filing.
13.	Q.	Are costs related to the Taum Sauk rebuild and the accident in the rates?
	A.	As we have consistently promised, no costs related to the December 14, 2005 breach of the upper reservoir at Taum Sauk Plant are included in this request—we said we would not ask customers to cover accident-related costs, and we have not included those costs in rates. We expect substantially all rebuild costs to be covered by insurance.
14.	Q.	Are 2007 and 2008 storm costs in rates?
	A.	Yes. It is normal and routine to get storm costs recovered.
				The extraordinary storm costs from January 2007 were not included in our last rate case (filed in 2006).
				We filed an accounting authority order in November 2007 that requested that we be allowed to seek recovery of the costs incurred in the Jan. 12-13 ice storms.
				Those storms affected 284,000 customers and involved the use of 5,000 line workers—with crews coming for 16 states to help restore power.
15.	Q.	Will the costs for developing your application for a possible second nuclear unit be included in this rate case?
	A.	Yes. We expect to file that application this summer and the costs incurred to date in developing it are included.
16.	Q.	Precisely what infrastructure improvements have you done since 2006? What is included?
	A.	We launched the $1 billion, three-year Power On Project in 2007 to improve reliability by hardening the system against the increasingly severe weather we are encountering—burying lines in vulnerable areas, increasing tree trimming, increasing pole and line inspections, and investing in environmental improvements at power plants.    Power On costs incurred in 2007 are included in this case. In addition, routine infrastructure replacement costs are included.
17.	Q.	What specific construction and equipment costs are rising?
	A.	The costs of all major construction materials used in our day-to-day business and for our reliability and environmental projects have risen significantly, including steel, copper, aluminum and cement.
				For example, since 2004, the cost of pole transformers is up approximately 70 percent, wooden utility poles are up about 40 percent, underground aluminum wire is up about 30 percent and copper wire is up about 100 percent.
				The costs of transformers and all of our other equipment are higher, due in part to international competition, particularly from China and India. Additionally, fuel costs for the many vehicles we need to deliver reliable service to our customers have risen dramatically—as they have for all of our customers.
18.	Q.	Are executive bonuses included in the amount you are requesting?
	A.	No. The bonuses of senior executives are not included.
19.	Q.	Doesn’t UE pay its executives and employees more than other businesses?
	A.			No. UE compensation is guided by a pay-for-performance policy.
				We monitor local market compensation and benefits data on an ongoing basis.
				And we adjust UE’s base salaries to be under the market level.
				We then provide incentives—based on company and individual performance—for employees to achieve the market rate.
				Employees who perform at an exceptional level can receive total pay above the market level. Our top executives are among the lowest paid in rankings on local and national levels.
20.	Q.	How is UE keeping the lid on its costs?
	A.	UE is managed tightly to limit our costs to those that directly benefit our customers.
				We help keep rapidly growing coal transportation costs down by purchasing our own rail cars, building spurs at our coal-fired plants to provide access to competing rail carriers and using barges to haul some of our coal. And we’re looking to purchase coal from Illinois, rather than from Wyoming, once our new environmental controls are in place.
				We purchase coal—which fuels 76 percent of our electric generation—well in advance of when we need it and use sophisticated financial tools to hedge against fuel cost increases where prudent to do so.
				We’ve built a facility that recycles fly ash for use in cement, which both saves disposal costs and helps the environment.
				We’ve developed partnerships with suppliers to provide quality and competitively priced products while reducing our inventory and warehousing costs.
				And we constantly review and improve our internal systems, processes and procedures to serve our customers more efficiently.
Consumer Questions
21.	Q.	With this rate increase how will your rates compare to other utilities in the Midwest? In Missouri?
	A.	Based on test year data, the proposed residential rate after the increase would be 7.42 cents per kilowatthour (kwh) and the ultimate customer rate would be 6.11 cents per kwh, so these are still lower than Midwest and Missouri utilities.
22.	Q.	Explain how UE rates can be lower than they were years ago when our bills are higher?
	A.	Most homes require much more electricity today than ever before, which results in higher bills for our customers.    Homes are generally larger than they were 20 years ago—adding to heating and cooling costs—and often include multiple refrigerators and more lights, as well as computers, DVDs, larger screen TVs that use more power, electronic games and small appliances that enhance our daily life—as well as the chargers to keep them going. We provide tips to help customers save on electricity. For example, by replacing just 10 traditional incandescent light bulbs with compact fluorescent light bulbs (CFLs), customers can save $120 per year.    In fact, rates are 12 percent lower than 20 years ago but consumption has increased by 30 percent.
23.	Q.	What will UE do to help low income customers who can’t pay their bills now?
	A.	UE has a number of long-standing programs to help low income customers reduce and pay their utility bills.
				For example, UE offers budget billing, which helps customers level their payments and not get behind as the result of one large bill.
				The company also has programs to help all customers—especially low-income customers—reduce their energy consumption.
				And for many years, UE has sponsored a home weatherization program for low-income customers that helps reduce heating and air conditioning energy consumption.
				The company will phase in new energy efficiency programs in 2008 that will specifically target $3 million annually for low-income customers.
24.	Q.	What voice do customers have in this process?
	A.	The PSC, which represents Missouri customers, has an extensive review process for UE’s rate increase request. Customers can provide their input in writing or during numerous local public hearings. Customers also can offset the impact of the increase by following conservation methods.