10/11/2008 (2:55 am)

Audit: Ameren needs improvement in Illinois

Filed under: management |

A utility consultant recommended more than 150 improvements to make St. Louis-based Ameren Corp.’s Illinois electric grid less prone to the kind of mass power outages that left hundreds of thousands of customers in the dark following storms in 2006.

The audit by Liberty Consulting Group was presented to the Illinois Commerce Commission during a meeting Wednesday in Chicago. The ICC in December 2006 ordered an investigation of Ameren’s network of poles and wires and its system for restoring power following a storm.

The 585-page audit identified dozens of areas for improvements, some of which the utilities — AmerenIP, CIPS and Cilco — have already taken steps to address. It said the overall condition of Ameren’s electric delivery system was "reasonably good."

"Overall, Liberty found that Ameren companies have done an acceptable job" of building and maintaining their electric distribution system, said Bob Stright, a principal of the Pennsylvania-based firm.

Ameren Illinois spokeswoman Victoria Busch said the utilities, which sell electric service to 1.2 million customers in the southern two-thirds of the state, cooperated with Liberty to help prepare the report and they continue to make improvements recommended in the audit. Many focus on responding better to storm-related outages, such as improving the call center and telephone systems.

The audit showed Ameren’s infrastructure was generally in good shape. "But there is room for improvement," she said.

High winds that accompanied thunderstorms on July 19 and 21, 2006, knocked out power for 300,000 Illinois customers for as long as 10 days, and an ice storm at the end of November snapped limbs and trees and led to 370,000 outages in Illinois for up to eight days. Fueled by angry customers and politicians, the commission ordered the investigation less than a week later.

Hundreds of thousands of AmerenUE customers in the utility’s home state also lost power during the 2006 storms for days at a time. Subsequent investigations by the Missouri Public Service Commission staff led regulators to adopt new rules that establish electric reliability standards and require utilities to file reports on infrastructure and tree-trimming activities.

In Missouri, AmerenUE is spending $100 million a year to "harden" its electric distribution system to make it more storm proof instant cash advance no fax. The spending is part of a larger capital spending plan called "Power On."

In Illinois, Ameren’s primary lapse was lack of oversight of its tree-trimming contractors, according to the Liberty audit. The utilities couldn’t have avoided some damage, but a better job trimming and removing trees can improve reliability and minimize the impact of future storms.

"Better tree-trimming would have reduced the number of outages," Stright said. "Ameren needs to inspect more of its contractors’ work."

The Liberty report also said Ameren didn’t systematically inspect electric poles for strength, likely contributing to the number of outages. And while inspectors found that the utilities worked hard to restore service following the storms, the company’s call center experienced "significant failures" that frustrated customers.

Liberty was hired by the commission and is being paid by St. Louis-based Ameren, according to a copy of the August 2007 contract between the firm and the ICC. It calls for Liberty to be paid up to $2.9 million, including continued monitoring of Ameren’s progress for up to three years, ICC spokeswoman Beth Bosch said.

The audit was delivered to the ICC staff on Aug. 15, but not presented to the commission until Wednesday — two weeks after the ICC approved a $162 million electric and natural-gas rate increase for Ameren.

Bosch said the audit wouldn’t have been a consideration in the rate case even if it had been presented to the commission earlier.

David Kolata, executive director of the Citizens Utility Board, disagreed. Such performance audits may be considered by regulators when setting rates, but it’s uncertain whether the Liberty audit would have had an impact on the commission’s decision in Ameren’s last rate request.

Nonetheless, problems identified in the audit shouldn’t sit well with Ameren customers, many of whom began paying more for electric service last week.

"The consumers that we talk to are skeptical about Ameren," he said. "This raises more red flags."

Kevin McDermott of the Post-Dispatch contributed to this report.

jtomich@post-dispatch.com | 314-340-8320

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