Canada December Inflation Slows to 2.3% as Gasoline Price Increases Ease - Bloomberg
January 21st, 2012
Business and Finance
Are Missouri’s two largest utilities coordinating rate case filings to overwhelm consumer advocates?
The state’s top utility regulator wants to know.
In an unusual move, PSC Chairman Kevin Gunn asked attorneys for Ameren Missouri and Kansas City Power & Light in letters sent Tuesday, and is threatening to formally investigate depending on the answers he receives. He gave utilities until Jan. 27 to respond.
“I have some concern over the possibility that rate cases have been timed to overwhelm the resources of the commission staff, the office of Public Counsel and any other intervener,” the letter said. “That would be especially troublesome if there was evidence of communication between the utilities, or internal utility communications, to file rate cases closely together.”
The inquiry reflects a growing concern about dwindling resources for groups responsible for scrutinizing rate requests by investor-owned utilities at a time when such requests are more frequent and complex. Those groups include the PSC staff, which advises commissioners on rate cases, and especially the Office of Public Counsel, which is the main advocate for individual consumers and small businesses.
According to spokespeople for Ameren and KCP&L, the fact that filings were made within days of each other is nothing more than coincidence.
“We take filing a rate case very seriously and have a comprehensive process for determining when we file,” Ameren’s Rita Holmes-Bobo said in an emailed response. “Our decision to file a rate case is based on solid business considerations, including when costs have been incurred and facilities have been put into service.”
Chuck Caisley of KCP&L likewise said the company doesn’t consider what others utilities do, and plans a thorough response to the PSC chairman’s letter by the deadline. He also noted that the utility had indicated as early as February that it would seek a rate increase in late 2011 or early 2012.
Investor-owned utilities in Missouri must give notice at least 60 days prior to filing a rate case that they believe will be contested.
St. Louis-based Ameren, which sells electricity to about 1.2 million customers in St. Louis and eastern and central Missouri, indicated on Nov. 28 its intent to seek an electric rate increase as soon as late January. KCP&L filed a similar notice on Dec. 1.
The PSC has 11 months to rule on a request to increase rates.
Gunn, in an interview, said there’s no proof that utilities purposefully timed the filings so close together. It’s also no guarantee the companies will actually seek rate increases around the same time. Nonetheless, there’s a danger that electric rate cases filed by the state’s largest utilities at the same time “could swamp people that don’t have similar resources.”
Gunn was speaking about the the public counsel, a state office created in the 1970s, that has seen its staff shrink to 10 people and its annual budget decline to about $700,000 — a tiny fraction of the $300 million in profits that Ameren Missouri generated in just the first nine months of 2011.
“We only barely have staff to deal with one rate case at a time,” Public Counsel Lewis Mills Jr. said. And of all the utility rate issues his office deals with, “the 800-pound gorilla are the electric utility rate cases.”
Until last year, funding for the office came from the state’s general revenue fund. But that source was eliminated, and the office now gets its funding from the PSC. Recent efforts to boost the public counsel’s budget have failed.
A new attempt to increase funding for the public counsel’s office is now part of a ballot proposal that also seeks to increase utilities’ reliance on renewable energy resources — a measure that the utility industry lobby says it opposes for a variety of reasons.
In the meantime, Gunn has vowed to make sure the state’s investor-owned utilities aren’t taking advantage of a weakened consumer advocate.
Regardless of the outcome of the inquiry, he said, “I want to make it clear that we’re paying attention.”
U.K. home sellers cut asking prices for a third month in January, according to Rightmove Plc (RMV), which said the property market will remain
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France’s prime minister said Saturday his country will push ahead with cost-cutting measures after its top-tier debt rating was downgraded, a blow with repercussions across financially beleaguered Europe.
Other European countries from Austria to Cyprus assailed ratings agency Standard & Poor’s after a raft of downgrades Friday night. The move may make it more expensive for struggling countries to borrow money, reduce debts and avoid a new recession.
French Prime Minister Francois Fillon struck a somber, measured tone when responding Saturday to the downgrade, which was particularly wounding to France’s self-image and could hurt bailout efforts for struggling eurozone countries. France is central to those efforts, and the downgrade, by pushing up its own borrowing costs, could make it harder for France to help others.
Fillon said the downgrade confirmed his conservative government’s plans for more reforms to bring down debts, despite worries that more austerity measures could suffocate growth.
The downgrade, coming three months before France holds presidential elections, was “an alert that should not be dramatized any more than it should be under-estimated,” he said. He insisted that France is a reliable investment.
Standard & Poor’s stripped France of its coveted AAA status, knocking it down one notch to AA+. It dropped Italy even lower. Germany retained its top-notch rating, but Portugal’s debt was consigned to junk.
Cyprus’ finance minister called Standard & Poor’s two-notch downgrade of his eurozone country to junk status “arbitrary and unfounded.”
Kikis Kazamias said on Saturday that the agency ignored the island’s deficit-cutting measures as well as the discovery of significant offshore natural gas deposits payday loans in one hour. He said the action illustrates once more how credit ratings agencies exacerbate Europe’s debt crisis.
Austria’s chancellor criticized S&P’s decision to strip his country of the top AAA rating, and noted that his coalition government is working on an austerity package.
Werner Faymann wrote on his Facebook page that “Austria’s economic data remain very good.” He added that the decision showed “that Austria must become more independent from the financial markets.”
The man who tops polls ahead of France’s presidential elections, Socialist Francois Hollande, said the downgrade was a punishment for conservative President Nicolas Sarkozy’s policies. He lashed out Saturday at austerity measures saying they were stifling growth and France’s competitivity.
The downgrade brought a downbeat end to a mildly encouraging week for Europe’s heavily indebted nations and served a reminder the 17-country eurozone faces another tough year.
France’s downgrade to AA+ lowers it to the level of U.S. long-term debt, which S&P downgraded last summer. S&P had warned 15 European nations in December that they were at risk for a downgrade.
Stocks fell Friday as downgrade rumors reached the trading floors of Europe and the United States. But the declines were nothing like the wrenching swings of last summer and fall, when the debt crisis threw the markets into turmoil.
French business confidence climbed from a two-year low last month and industrial output increased in November, indicating the euro-region
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The U.S. economy is beginning 2012 on a brighter note in a sign investors may be too pessimistic.
Payrolls rose 200,000 in December, double the gain in November, a Labor Department report showed yesterday. A weekly measure of consumer confidence ended 2011 at a five-month high. And manufacturers reported their business in December grew at the fastest pace in six months. The combination indicates the world
Retailers are starting to pay the price for a discounting binge that was deeper and longer than ever — especially stores that cater to middle-income shoppers.
Look no farther than American Eagle Outfitters Inc. The clothier’s promotions helped boost sales in the past two months by 15 percent to $887 million. But the teen retailer was forced to reduce its fourth-quarter profit forecast on Thursday.
Ditto for Target Corp., J.C. Penney Co. and Kohl’s Corp., which lowered their own fourth-quarter profit forecasts after pouring on the discounts.
“The retailers that cater to the middle class are struggling,” Alison Paul, retail sector leader at Deloitte Touche LLP in Chicago, said in an interview. “Some of them showed great volume numbers, but the proof is in the profit.”
Meanwhile, stores that cater to lower-income shoppers are getting a boost as middle-class consumers trade down.
Discounters Ross Stores Inc., which is based in Pleasanton, Calif., and Framingham, Mass.-based TJX Cos. snagged shoppers seeking discounts on apparel, home goods and accessories.
Ross’ same-store sales gained 9 percent in December, surpassing the average estimate of 4 percent growth, according to Retail Metrics Inc. Sales at TJX increased 8 percent, beating the 2.4 percent estimate.
Americans are spending cautiously amid slow wage growth, limited job gains and depressed real estate values.
One concern is the relatively paltry buying power of young adults, normally prodigious spenders in good times, said Pam Danziger, president at researcher Unity Marketing Inc.
“Middle-of-the-road retailers will continue to struggle to draw consumers in,” Danziger said.
“They’re going to be hampered going forward because 20- and 30-somethings don’t have the money to spend.”
While American Eagle reported that same-store sales gained 12 percent in November and December, the retailer’s “aggressive promotional stance” depressed margins, the company said in a statement.
“For some companies, the profit cut might be worth it because they gained new customers or market share,” said Marshal Cohen, chief industry analyst at NPD Group in Port Washington, N.Y.
“But even this benefit is questionable because people just don’t have more money to spend right now.”
Target, which used such ploys as an “almost last minute sale” on Dec. 8 and 50 percent off the day after Christmas, expects to now earn as little as $1.35 a share. The average estimate of 21 analysts surveyed by Bloomberg was $1.48.
Comparable-store sales rose 1.6 percent last month at the Minneapolis-based chain, missing analysts’ projections for a gain of 3.3 percent.
Macy’s Inc. proved to be one of the few mid-tier retailers to do well as December sales beat estimates and it raised its profit forecast.
Macy’s, the second-largest U.S. department store chain, is skilled at stocking regional stores with appealing merchandise, said Michael Niemira, chief economist at the New York-based International Council of Shopping Centers.
“They’re the exception, because customers identify with Macy’s, and are still loyal in spite of the environment,” Niemira said.
While several retailers that cater to the middle class had to draw shoppers with more discounting than expected, luxury chains continued to increase sales past estimates.
“Luxury consumers are the heavy lifters in the economy, so it makes sense that businesses like Nordstrom and Saks will benefit from their excess spending,” said Unity’s Danziger.
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