1

MISSOURI COURT OF APPEALS

WESTERN DISTRICT

MISSOURI PUBLIC SERVICE 

COMMISSION,

 Respondent,

 v.

UNION ELECTRIC COMPANY, 

D/B/A AMEREN MISSOURI,

 Appellant.

)

)

)

)

)

)

)

)

)

)

WD79406

OPINION FILED:

December 6, 2016

APPEAL FROM THE 

PUBLIC SERVICE COMMISSION

Before Division One: 

Anthony Rex Gabbert, P.J., Thomas H. Newton, and Alok Ahuja, JJ.

Union Electric Co. d/b/a Ameren Missouri (Ameren or Ameren Missouri) 

appeals a Missouri Public Service Commission order granting Staff’s motion for 

summary determination and denying Ameren’s cross-motion for summary 

determination. The ruling arose from a Staff complaint alleging that Ameren had 

violated the Commission’s Missouri Energy Efficiency Investment Act (MEEIA)1rules 

by using stale “avoided costs” data to calculate Ameren’s performance-incentive award 

under an approved demand-side program investment mechanism (DSIM). At issue is 

whether the Commission’s interpretation of the term “methodology” as used in 4 C.S.R. 

 

1 Section 393.1075. All statutory references are to RSMo Cum. Supp. 2010, unless otherwise indicated.
2

§ 240-20.093(1) (F)2 was reasonable. Ameren contends that “methodology” simply 

encompasses the formula used to calculate its avoided costs. The Commission 

concluded that “methodology” encompasses both the formula and a prescribed data set 

used in the formula to make that calculation. Also at issue is whether it was reasonable 

for the Commission to subject Ameren’s DSIM performance-incentive award to that 

regulation. We affirm.

Factual and Procedural Background

1. Missouri’s Energy-Conservation Statute

The Missouri Legislature enacted MEEIA in 2009 to encourage utilities to 

conduct programs that “modify the net consumption of electricity on the retail 

consumer’s side of the electric meter.” § 393.1075.2(3). Recognizing that lowered 

energy consumption would affect a utility’s revenue and profits, the Legislature stated, 

“It shall be the policy of the state to value demand-side investments equal to traditional 

investments in supply and delivery infrastructure and allow recovery of all reasonable 

and prudent costs of delivering cost-effective demand-side programs.” § 393.1075.3. 

As part of its plan for MEEIA’s implementation and to give utilities incentives to adopt 

demand-side programs, the Legislature allowed the Commission to “develop cost 

recovery mechanisms to further encourage investments in demand-side programs 

including, in combination and without limitation: . . . allowing the utility to retain a 

portion of the net benefits of a demand-side program for its shareholders.” § 

393.1075.5. Following notice-and-comment rulemaking, the Commission finalized its 

MEEIA implementing regulations in February 2011, and this Court upheld the 

 

2 MO. CODE REGS. ANN. tit. 4, §240-20.093(1)(F) (2011).
3

Commission’s four orders of rulemaking in State ex rel. Pub. Counsel v. Pub. Serv. 

Comm'n, 397 S.W.3d 441 (Mo. App. W.D. 2013), including the rule at issue here. 3 

Under the Commission’s rules, a utility’s DSIM may include the “(4) [r]ecovery of lost 

revenues; and (5) [u]tility incentive[s] based on the achieved performance level of 

approved demand-side programs.” 4 C.S.R. § 240-20.093(1)(M). How the latter were 

to be calculated under Ameren’s approved demand-side program is at issue in this 

litigation.

2. Dispute Overview

As discussed in more detail below, while the Commission’s rulemaking was on 

appeal before this Court, Ameren’s plan to adopt demand-side programs for its 

customers was approved by the Commission as modified by the parties. Two 

documents from the approval process are key to understanding this dispute: Ameren’s 

DSIM plan, which would, among other matters, allow the utility to recover both lost 

revenues and a performance incentive, and the modification of that plan negotiated by 

the parties. The modification adopted the DSIM plan with certain changes, and the 

 

3 Section 240-20.093 of 4 C.S.R., which involves the establishment and operation of DSIMs that “allow 

periodic rate adjustments related to recovery of costs and utility incentives for investments in demand -

side programs,” states in relevant part,

Avoided cost or avoided utility cost means the cost savings obtained by substituting 

demand-side programs for existing and new supply-side resources. Avoided costs 

include avoided utility costs resulting from demand-side programs’ energy savings and 

demand savings associated with generation, transmission, and distribution facilities 

including avoided probable environmental compliance costs. The utility shall use the 

same methodology used in its most recently-adopted [sic] preferred resource plan to 

calculate its avoided costs.

4 C.S.R. § 240-20.093(1)(F). Thus, while customers pay less because they use less energy, a separate 

line item on their utility bills adds an amount—a DSIM rate—representing, among other matters, 

“‘[u]tility incentive[s] based on the achieved performance level of approved demand-side programs.’” 

4 C.S.R. § 240-20.093(1)(M). See State ex rel. Pub. Counsel v. Pub. Serv. Comm’n, 397 S.W.3d 441, 

446 (Mo. App. W.D. 2013). Utilities receive a portion of net-shared benefits, which consist of 

estimated avoided costs less the costs of running a demand-side program. 4 C.S.R. § 240-20.093(1)(C).
4

nature and extent of those changes are at issue here, along with how the regulations we 

upheld intersect with those changes. 

Ameren submitted the same underlying data to its independent evaluators to 

calculate two different plan components, the TD-NSB (or throughput-disincentive net 

shared benefits, i.e., lost revenues) and the performance incentive, at the end of the 

three-year program cycle to “true up” the additional DSIM charges that ratepayers had 

been making under the programs. Commission Staff objected to the data used for the 

performance-incentive calculation, and the Commission agreed that, under the plan, 

the modification, and the regulations, Ameren was required to use different, more 

recent data to calculate the avoided costs underlying the performance incentive. While 

the actual dollar amount of the difference between a performance incentive calculated 

using “stale” and “updated” avoided-cost data has not been specified on appeal, Staff 

counsel noted during argument before the Commission that the performance -incentive 

component of Ameren’s DSIM represented about 7 percent of the total that the utility 

could recover under MEEIA as an inducement to adopt demand-side programs, 

assuming that the plan achieved 100 percent of its energy-saving goals. 

“Avoided costs” include those investments that utilities would have made under 

a traditional supply-side program, such as new energy generation and transmission 

facilities and the costs of complying with environmental regulations to build these 

facilities. Shareholders receive a return on those investments in the rates charged to 

customers, which rates also include the costs of the energy used. Increased capacity 

and increased demand result in both higher revenues and better investment returns. 

When customers adopt, under a demand-side program, conservation measures that 
5

lower the revenues which utilities receive due to decreased demand, investment in 

additional supply-side facilities from which utility shareholders can earn a return are 

no longer required. Under MEEIA, as an incentive to encourage the adoption of 

conservation measures, utilities implementing approved demand-side programs can 

charge their customers an additional fee representing a share of both the revenues that 

are lost and the foregone investments in new generating capacity. Under the 

regulations, these foregone investments are calculated as part of the performanceincentive component of a DSIM and are reduced by the utilities’ costs of implementing 

the programs (these are recovered in other ways under a DSIM); they are also pegged 

to the numbers of conservation measures actually adopted and the amount of energy 

saved. At issue here is whether a measure of the energy saved for purposes of the 

performance-incentive award includes an updated estimate of actual energy costs over 

the life of a demand-side program. If so, when such costs rise, shareholders have the 

potential to recover more under a demand-side program, because customers have saved 

more money by decreasing energy usage; when they fall, the shareholder recovery will 

be decreased because customers have saved less money despite decreasing energy 

usage.

3. Ameren’s Plan and Modifications

Ameren filed a three-year demand-side program with the Commission in January 

2012 (MEEIA 1 Plan), while the case challenging MEEIA’s implementing regulations 
6

was pending on appeal.4 The program was based on the utility’s “2013-2015 Energy 

Efficiency Plan” report (report), which was submitted with Ameren’s application and 

included a DSIM. Ameren’s MEEIA 1 Plan was not adopted as filed, but was modified 

under a July 2012 “Unanimous Stipulation and Agreement Resolving Ameren 

Missouri’s MEEIA Filing” (stipulation). The Commission approved the modified 

MEEIA 1 Plan (modified plan) in an August 2012 order. 

The stipulation that the Commission approved states that the DSIM described in 

Ameren’s report was to be adopted “[s]ubject to the terms and conditions contained 

herein” and as “modified to reflect the terms and conditions herein.” Three lengthy 

stipulation paragraphs specifically address and modify Ameren’s recovery of TD-NSB, 

including how this component was to be calculated, and the utility’s performance 

incentive. Nothing in the plan as modified by the stipulation expressly indicates how 

the performance-incentive award is to be calculated other than that it was to be a 

percentage of certain net shared benefits set forth in an appendix. The regulations 

define a utility incentive in terms of annual net shared benefits. 4 C.S.R. § 240-

20.093(1)(EE). They further define “annual net shared benefits” as “the utility’s 

avoided costs measured and documented through evaluation, measurement, and 

verification (EM&V) reports for approved demand-side programs less the sum of the 

programs’ costs. . . .” 4 C.S.R. § 240-20.093(1)(C) (emphasis added). Avoided costs 

 

4 Among the points brought by the utilities (Ameren and Kansas City Power & Light Co.) and the 

Office of Public Counsel were challenges to the Commission’s definition of “lost revenue” and whether 

it had the statutory authority to allow single-issue ratemaking and rate adjustments outside of general 

rate case proceedings. State ex rel. Pub. Counsel, 397 S.W.3d at 450, 454. We decided the case after 

the Commission approved the DSIM subject to the present appeal. Because we agreed that rate 

adjustments could be made outside of general rate case proceedings, Ameren was able to include 

adjustments for lost revenues and its performance incentive by means of “riders” under its plan and the 

modification.
7

are defined as “the cost savings obtained by substituting demand-side programs for 

existing and new supply-side resources.” 4 C.S.R. § 240-20.093(1)(F). These cost 

savings include “avoided utility costs resulting from demand-side programs’ energy 

savings and demand savings associated with generation, transmission, and distribution 

facilities including avoidable environmental compliance costs.” Id. 

Ameren’s MEEIA 1 Plan report contains an extensive discussion of the 

“Throughput Disincentive” (TD) that was approved as modified by the stipulation. 

According to Ameren’s report, “the throughput disincentive is about how the reduction 

in sales volumes impacts the revenues collected by the utility.” During argument before 

the Commission, Staff counsel stated that the TD-NSB was used in Ameren’s DSIM as 

a substitute for the “lost revenue” that may be recovered under MEEIA and that Staff 

did not challenge Ameren’s use of deemed (or “stale”) avoided-cost values in 

calculating TD-NSB.5 TD-NSB is not a term used or defined anywhere in MEEIA or 

in its implementing regulations. And under the regulations, its apparent equivalent—

lost revenue—is not defined in terms of net shared benefits or avoided costs.

The stipulation specifically provides that for purposes of determining Ameren’s 

final recovery for its TD-NSB, the software used in calculating NSB for the MEEIA 1 

Plan would be re-run using only:

(i) the actual number of energy efficiency measures (by type) installed in 

each month up to that point, (ii) the actual program costs in each month 

incurred up to that point; and (iii) for Commercial and Industrial Custom 

measures for which the TRM [Technical Resource Manual] does not 

provide a deemed value, savings determined according to the protocol 

provided for at pages 85 to 98 of the TRM. 

 

5

In fact, Ameren’s TD-NSB calculation used the same stale avoided costs that Staff challenged in the 

context of the utility’s performance incentive. 
8

Further, the stipulation provided that “EM&V [Evaluation, Measurement, and 

Verification] shall not be utilized to calculate the actual NSB for the purposes of 

determining Ameren Missouri’s TD-NSB Share.” In contrast, when discussing the 

performance-incentive component, the stipulation does not state how it will be 

calculated but requires that “[a]ctual net energy savings for each program year will be 

determined through the EM&V.”

The TD-NSB part of the stipulation, including how it will be calculated, accords 

in many respects with a report table—Table 2.12, “Description of Update Process”—

listing “the items associated with estimating net benefits and whether those items will 

be updated for purposes of assessing performance and benefits as part of the 

implementation process.” This table addresses “the mechanics of sharing net benefits” 

as part of implementing the DSIM’s “program expense tracker,” which under the 

MEEIA regulations is linked to the “cost recovery of demand-side program costs” and 

not to a utility’s incentive award. 4 C.S.R. § 240-20.093(1)(M)(2). Items on the list 

represent data that will be used to calculate whether the company makes progress on 

its goal of saving a specified number of kilowatt hours of energy “at the meter.” On 

this list is the item “Avoided Costs,” which has a red “X” instead of a green “√”in the 

“Update?” box beside the phrase, as well as the following description: “The avoided 

energy, capacity, and T&D [transmission & distribution] values are deemed.” Text 

above the table states, “Notice that several items will not be updated, so the focus 

remains on the cost of the programs and the number of measures implemented.” 

Neither the table nor the text refers to the performance-incentive award.
9

While the stipulation is otherwise silent as to the chart appearing in Ameren’s 

report, it further includes a paragraph describing the variances granted to Ameren to 

the extent that the stipulation’s terms and conditions are inconsistent with Commission 

rules. The rule at issue here, with the contested term “methodology” and the use of the 

most recently filed IRP methodology to calculate avoided costs for the performance 

incentive, is not among any of the granted rule variances. As modified by the 

stipulation, Ameren’s performance incentive was to be recovered “[a]fter the 

conclusion of the three-year Plan period,” which explains why the Commission granted 

a number of variances that address the performance incentive but only within the 

context of “timing of recovery” and of “calculation.”

4. Final Recovery Under Ameren’s DSIM

Ameren filed an integrated resource plan (IRP), as required by Chapter 22 rules, 

in 2014, or the first time that an IRP had been filed since the utility calculated avoided 

costs for purposes of submitting its MEEIA 1 Plan to the Commission. The IRP 

included updated avoided-cost data, reflecting changes in the cost of energy since the 

prior IRP had been filed. Ameren then provided data to its EM&V contractors to 

calculate 2014 net shared benefits for use in determining its performance-incentive 

award over the life of its 2013-2015 demand-side program. Unlike the IRP, however, 

the data Ameren submitted to its contractors to calculate the avoided costs for the 

performance incentive had not been updated from its MEEIA 1 Plan submission. The 

EM&V evaluators filed Ameren’s final DSIM reports in May 2015. In June 2015, 

Commission Staff filed a complaint, alleging that Ameren had failed to comply with 4 

C.S.R. § 240-20.093(1)(F) by not providing “its independent evaluation, measurement 
10

and verification contractors [EM&V contractors] with the most recent avoided cost 

information needed for the calculation of the portion of annual net shared benefits that 

are to be awarded to [Ameren] as a performance incentive” under its DSIM for the 

2014 program year.6 Ameren admitted that it had not given its EM&V contractors the 

avoided-cost data used in its most recently adopted IRP. Ameren contended, however, 

that it had performed its obligations under the stipulation approved by the Commission 

because its approved modified plan did not require avoided costs to be updated for the 

performance-incentive award. Ameren also argued that the rule requiring a utility to 

use “the same methodology used in its most recently-adopted [sic] preferred resource 

plan [IRP] to calculate its avoided costs” under its DSIM does not require the use of 

the updated avoided-cost data included in the avoided-cost calculations for its most 

recently adopted IRP. 4 C.S.R. § 240-20.093(1)(F) (emphasis added).7

5. The Commission’s Ruling

The Commission heard oral argument on Staff’s complaint following briefing 

and issued an order in November 2015 granting Staff’s motion for summary 

determination and denying Ameren’s motion for summary determination. As part of 

its findings of fact, the Commission explained what avoided costs are and summarized 

the dispute this way:

Avoided costs are an estimate of future costs over at least a 20-year 

period. At the time Ameren Missouri’s DSIM was created, that estimate 

of avoided costs was based on the methodology used in the preferred 

resource plan set forth in Ameren Missouri’s MEEIA 1 Plan. Ameren 

 

6 The Missouri Department of Economic Development – Division of Energy sought leave to late file 

an application to intervene, and the Commission granted the application. While the intervenor 

participated in the summary determination hearing, it has not appealed t he Commission’s order. 

7 Under Chapter 22 of our Code of State Regulations, a “preferred resource plan” is part of a utility’s 

“integrated resource plan” or IRP and refers to the utility’s long-range supply and demand forecasts 

conducted under the Commission’s resource planning rules. 
11

Missouri made its next Chapter 22 Electric Utility Resource Planning 

Rules triennial IRP filing in 2014. For the 2014 IRP filing, the formula 

used in the methodology did not change, but the numbers plugged into the 

formula used to estimate avoided costs did change. As a result, the 

estimate of avoided costs also changed [due to significant drops in market 

prices for energy].

EM&V, as performed by Ameren Missouri’s contractors, does not 

calculate or otherwise determine the avoided costs used to calculate net 

shared benefits. Instead, the avoided cost estimates are provided to the 

EM&V contractors by Ameren Missouri. When Ameren Missouri 

provided the estimate of avoided costs to its independent EM&V 

contractors for program year 2014, it gave them the estimated avoided 

costs as calculated using the inputs from the 2012 MEEIA 1 Plan 

methodology, not the estimated avoided costs calculated using the inputs 

from the 2014 IRP methodology. Staff asked Ameren Missouri to provide 

the avoided cost estimates using the inputs from the 2014 IRP 

methodology to the EM&V contractors, but Ameren Missouri refused to 

do so, contending that the DSIM established in the 2012 stipulation and 

agreement does not require the use of updated costs estimates.

While the Commission acknowledged that Ameren’s proposed plan did not allow the 

use of updated avoided costs estimates, it noted that the stipulation “provides for

variances from several rules that would otherwise be inconsistent with the provisions 

of the stipulation and agreement, [and that] subsection 4 CSR 240-20.093(1)(F) is not 

one of the rules from which a variance is provided.” Thus, the Commission ruled that 

the utility’s approved DSIM “remains subject to that regulation, and Ameren Missouri 

is required to ‘use the same methodology used in its most recently adopted preferred 

resource plan to calculate its avoided costs’” for purposes of calculating its 

performance incentive.

The Commission determined that, in the context of rule 4 C.S.R. § 240-

20.093(1)(F), “methodology includes both the formula by which avoided costs are to 

be calculated and the inputs used in that formula.” According to the Commission, this 

“interpretation is consistent with the goal of the MEEIA statute, which is to encourage 
12

the electric utility to implement energy-saving measures by protecting the utility’s 

financial interests while also protecting consumers.” This goal, according to the 

Commission, is accomplished by connecting the company’s performance incentive “to 

how much money ratepayers actually saved as a result of the company’s MEEIA 

program.” 

Describing the function of a performance incentive under MEEIA, the 

Commission determined that the disputed rule must be interpreted as requiring the use 

of the most recently used data in calculating that incentive. In this regard, the 

Commission stated,

The sole purpose of a performance incentive under MEEIA is to give the 

utility an earnings opportunity that will place shareholders in a financial 

position comparable to the earnings opportunity they would have had if 

those shareholders had instead made a future supply-side investment. 

Future earnings opportunities from supply-side investments are 

dependent on the dynamic character of the energy marketplace. If energy 

and capacity market prices increase, the utility may be able to earn greater 

profits. Conversely, if those market prices drop, the utility may be able 

to earn less profit on its investment. Thus, it is appropriate that the 

calculation of the utility’s performance incentive should reflect the most 

current market price information available when avoided costs are 

calculated. That is the result obtained when the requirements of 

Commission Rule 4 CSR 240-20093(1)(F) are interpreted correctly, as 

described in Staff’s complaint.

Ameren filed an application for rehearing and request for clarification. Intervenor 

Missouri Division of Energy also filed an application for rehearing. The Commission 

denied the requests for rehearing, but agreed with Ameren that, in making its 

calculation, “the 2014 IRP actual costs begin to apply to the calculation of net benefits 

only after the 2014 IRP was filed.” Ameren filed this appeal.
13

Legal Analysis

Ameren raises three points on appeal, arguing that (1) the Commission erred and 

its order was unreasonable because it incorrectly interpreted and effectively rewrote 

the applicable rule; and its order is arbitrary and capricious and constitutes an abuse of 

discretion because (2) “the Commission relies on financial metrics calculated using 

avoided cost estimates existing when the plan was approved, but then disregards those 

avoided cost estimates in evaluating the operation of the plan that it approved”; and (3) 

its rationales “do not support the Commission’s made-up definition of the term 

‘methodology’ as used in the MEEIA rules.”

Under section 386.510,8 we review a Commission order to determine whether 

the order is lawful and reasonable. Office of Pub. Counsel v. Mo. Pub. Serv. Comm'n, 

409 S.W.3d 371, 375 (Mo. banc 2013). The Commission’s order “has a presumption 

of validity, and the burden of proof is on the appellant to prove that the order is unlawful 

or unreasonable.” Id. Ameren does not challenge the lawfulness of the order.9 

Accordingly, our sole focus in this appeal is on whether it was reasonable. 

A Commission decision “is reasonable where the order is supported by 

substantial, competent evidence on the whole record; the decision is not arbitrary or 

capricious or where the [Commission] has not abused its discretion.” Id. “We consider 

the evidence, along with all reasonable supporting inferences, in the light most 

 

8 RSMo Cum. Supp. 2012.

9 Ameren argues that, because rule 4 C.S.R. § 240-2.117 on summary disposition is similar to Missouri 

Rule of Civil Procedure 74.04, we “must review the record in the light most favorable to the party 

against whom judgment is entered.” We disagree. Ameren has cited no case or rule, nor have we 

located any authority, applying the standard of review for a circuit-court ruling on a motion for 

summary judgment to a Commission ruling on a motion for summary determination.
14

favorable to the Commission’s order.” State ex rel. Pub. Counsel v. Mo. Pub. Serv. 

Comm'n, 289 S.W.3d 240, 246-47 (Mo. App. W.D. 2009). And, “where a decision 

involves the exercise of [Commission] regulatory discretion, Missouri courts have long 

recognized that the Public Service Commission Law delegates a large area of discretion 

to the [Commission] and ‘many of its decisions necessarily rest largely in the exercise 

of sound judgment.’” State ex rel. Mobile Home Estates, Inc. v. Pub. Serv. Comm'n of 

Mo., 921 S.W.2d 5, 9-10 (Mo. App. W.D. 1996) (quoting State ex rel. Dyer v. Pub. Serv. 

Comm'n, 341 S.W.2d 795, 802 (Mo. 1960), cert. denied, 366 U.S. 924 (1961)). Thus, 

“the reviewing court will not substitute its judgment for that of the [Commission] on 

issues within the realm of the agency’s expertise.” Id.

1. Updated Avoided Costs

Ameren first argues that the Commission disregarded the terms of the MEEIA 1 

Plan it approved, because that plan specifically indicated in Table 2.12 that avoided 

costs would not be updated for purpose of calculating the DSIM’s utility-incentive 

component. Citing 4 C.S.R. § 240-20.093(2)(J), Ameren contends that the Commission 

was bound to the DSIM it approved.10 We agree that the Commission was bound to 

the DSIM it approved, but we disagree that the performance-incentive calculation was 

subject to Table 2.12 in Ameren’s proposed MEEIA 1 Plan, because it appears to us 

that the table addressed the TD-NSB calculation and not the performance incentive. 

 

10 This regulation states:

If the commission approves utility incentive component of a DSIM, such utility 

incentive component shall be binding on the commission for the entire term of the 

DSIM, and such DSIM shall be binding on the electric utility for the entire term of the 

DSIM, unless otherwise ordered or conditioned by the commission when approved.

4 C.S.R. § 240-20.093(2)(J).
15

Even if Table 2.12 applied to the performance incentive, the modified plan that the 

Commission approved was based on a stipulation that did not grant the utility a variance 

from section 240-20.093(1)(F), which governs the calculation of the avoided costs that 

are used in determining a utility’s performance incentive, but not lost revenue (or “TDNSB”). Accordingly, the Commission’s approval of the utility-incentive component 

was conditioned on Ameren’s compliance with section 240-20.093(1)(F). The record 

supports the Commission’s reasonable conclusion that the utility-incentive component 

of Ameren’s “approved demand-side program remains subject to the requirements of 

that regulation.”

Neither MEEIA nor its implementing regulations discuss, mention, or define 

“throughput disincentive net shared benefit” (TD-NSB). MEEIA and the implementing 

regulations do, however, address “lost revenue,” narrowly defined as “only those net 

revenues lost due to energy and demand savings from utility demand-side programs 

approved by the commission. . . .” 4 C.S.R. § 240-3.163(1)(Q). This Court upheld the 

lost-revenue definition in State ex rel. Public Counsel, 397 S.W.3d at 454, and rejected 

Ameren’s argument that the definition of “lost revenue” in Chapter 20 should be 

consistent with its definition in Chapter 22 of the regulations, finding that “the 

Commission could have reasonably concluded that the definition of lost revenue used 

in Chapter 22 to address integrated resource planning is not consistent with the 

purposes of the MEEIA.”11 Id. 

 

11 Lost revenue is defined in Chapter 22 as “the reduction between rate cases in billed demand (kW) 

and energy (KWh) due to installed end-use measures, multiplied by the fixed-cost margin of the 

appropriate rate component.” 4 C.S.R. § 240-22.020(36). ). Note that the Commission approved a 

lost-revenue component in Ameren’s DSIM based on “net shared benefits” with deemed avoi ded costs. 

In essence, the Commission allowed Ameren to recover lost revenue “plus,” while the lost-revenue 

definition was still under challenge. It did not, however, grant a variance as to the avoided costs 

calculation applicable under the regulations to a utility incentive.
16

In the report and the modified plan to which Ameren and the Commission agreed, 

TD-NSB, the equivalent of lost revenue, is addressed separately from the performanceincentive component and is subject to different requirements, including how TD-NSB 

would be calculated, using deemed avoided-cost data, both annually and for purposes 

of a “true-up” at the end of the program. The report and the modified plan do not detail 

how the performance incentive is to be calculated for purposes of the EM&V annual 

reports or for trueing up. The regulations define a DSIM utility lost-revenue 

requirement as “the revenue requirement explicitly approved (if any) by the 

commission to provide the utility with recovery of lost revenue based on the approved 

utility lost revenue component of a DSIM.” 4 C.S.R. § 240-20.093(1)(R). Note that 

this definition does not base lost revenue on “net shared benefit.” So while Ameren and 

the Commission agreed that the utility could recover a component dubbed TD-NSB, 

they had to define how it would be calculated because, as a substitute for “lost 

revenue,” no regulation prescribes how a TD-NSB is to be determined for purposes of 

recovery under MEEIA.

12

As to the performance incentive to which Ameren would be entitled under its 

DSIM, the stipulation states that, “using final Evaluation, Measurement and 

Verification (“EM&V”) results (with EM&V to be performed after each of the program 

years 1, 2 and 3), Ameren Missouri will be allowed to recover the performance 

incentive, which is a percentage of NSB [net shared benefit].” The stipulation does not 

further define how net shared benefits are calculated for purposes of the performance 

 

12 The dissenting opinion fails to recognize that while Ameren’s plan and the modification refer to the 

DSIM’s lost-revenue component as TD-NSB, lost revenue is not based under the regulations on net 

shared benefits and thus would not have been subject to the avoided-costs definition or regulatory 

requirement at issue here.
17

incentive. But the implementing regulations do address how the performance incentive 

will be calculated, from expressly defining the incentive as “a portion of annual net 

shared benefits” and specifying the methodology that will be used to calculate NSB 

avoided costs (the same used in the utility’s most recent IRP) to defining EM&V as 

“the performance of studies and activities intended to evaluate the process of the 

utility’s program delivery and oversight and to estimate and/or verify the estimated 

actual energy and demand savings, utility lost revenues, cost effectiveness, and other 

effects from demand-side programs.” 4 C.S.R. § 240.093(1)(Q) & (V) (emphasis 

added). Further, the stipulation does not waive the requirements of 4 C.S.R. § 240-

20.093(1)(F), which thus subjects the performance incentive, based in the regulations 

on net shared benefits, to “the same methodology used in its most recently-adopted 

preferred resource plan to calculate its avoided costs.” Lost revenue and a utility 

incentive are two discrete DSIM recovery components under the regulations, and the 

Commission’s conclusion that the utility incentive was subject to a regulation that was 

not explicitly waived by stipulation was reasonable.

According to Ameren, by including data inputs within the meaning of 

“methodology,” the Commission has rewritten section 240-20.093(1)(F) and 

effectively substituted the word “inputs” for “methodology.” It asserts that the 

dictionary defines “methodology” as “a particular procedure or set of procedures,” or, 

in other words, “the ‘how one goes about’ achieving something or arriving at an 

outcome or a result.” In its view, the rule includes the formula used to conduct a 

calculation, but does not include the inputs used in that formula. Because the 

methodology, but not the avoided-cost data, which Ameren used in its 2014 IRP filing, 
18

was the same as the methodology used in its annual DSIM report for 2014, it contends 

that under its interpretation, it complied with the rule.

We believe that the Commission’s rejection of this interpretation of the rule was 

reasonable for the simple reason that without knowing what data sets are to be used in 

a formula, it would be impossible to use the methodology to make a calculation. If the 

inputs are not defined as part of the procedure, any random data could be “plugged 

into” a formula. In other words, a methodology does not include the input of any 

specific data, but of necessity it does include and must specify which particular set of 

data will be used in the formula. Because the rule states that “[t]he utility shall use the 

same methodology used in its most recently-adopted preferred resource plan to 

calculate its avoided costs,” a utility must use the formula and data sets in its most 

recently adopted IRP as part of using “the same methodology” to calculate its avoided 

costs. 4 C.S.R. § 240-20.093(1)(F). We do not find that the Commission’s 

understanding of section 240-20.093(1)(F) is unreasonable given the authorizing

legislation’s goal, i.e., that a utility adopting demand-side programs be allowed to 

recover “all reasonable and prudent costs of delivering cost-effective demand-side 

programs.” § 393.1075.3. The record supports the Commission’s understanding that 

the avoided-cost calculation is a long-range projection based on probabilities and 

assumptions about a volatile energy market that can trend up or down at any point in 

time. This was, in fact, explained in affidavits filed in support of Ameren’s motion for 

summary determination. To allow a utility to use stale avoided-cost data and 

projections in calculating its performance incentive when markets are actually down, 

however, would allow the shareholders to recover a windfall rather than the reasonable 
19

and prudent costs of delivering demand-side programs. The record supports the 

Commission’s conclusion that “to the greatest extent possible, the Commission 

encourages the use of actual numbers to calculate cost savings. In this case, that 

requires the use of updated estimates.”

It also makes little sense to require a utility to use the same methodology 

underlying its most recently adopted preferred resource plan to calculate its avoided 

costs without also using the most recent data, as well as the formula, in cal culating 

those costs to recover a performance incentive. 4 C.S.R. § 240-20.093(1)(F). The 

dissent does not explain what benefit can be derived from making just the DSIM 

formula used for calculating avoided costs consistent with that used in the most recently 

adopted IRP. Nor can we think of any, thus leading one to question whether this rule 

would have any particular purpose, if “methodology” is not understood as the 

Commission interpreted it. The value of updated data to calculate achieved results, 

however, cannot be overstated. A methodology with stale data inputs will not fairly 

calculate the avoided costs on the basis of which periodic rate adjustments for the 

performance-incentive component of a DSIM are allowed.13 

Finally, Ameren argues that the Commission’s interpretation of “methodology” 

is inconsistent with the use of the same term in another MEEIA rule. That rule defines 

a DSIM’s utility-incentive component as “the methodology approved by the 

commission in a utility’s filing for demand-side program approval to allow the utility 

to receive a portion of annual net shared benefits achieved and documented through 

 

13 See the stated purpose for this regulatory section: “This rule allows the establishment and operation 

of Demand-Side Programs Investment Mechanisms (DSIM), which allow periodic rate adjustments 

related to recovery of costs and utility incentives for investments in demand -side programs.” 4 C.S.R. 

§ 240-20.093.
20

EM&V reports.” 4 C.S.R. § 240-20.093(1)(EE). According to Ameren, “methodology” 

as used here could not include 2014 updated data because this data did not exist when 

the program was approved. Because the term “methodology” as used in this section 

does not refer to the calculation of avoided costs, as it does in the contested rule, we 

do not believe that the Commission’s “methodology” interpretation that includes data 

sets for purposes of making a performance-incentive calculation presents any 

inconsistency or is unreasonable. Point one is denied.

2. Consideration of Certain Factors

Ameren next contends that the Commission’s order was unreasonable because it 

arbitrarily and capriciously failed to carefully consider certain important factors. It 

argues that the rules require a utility to submit a significant amount of information 

when seeking demand-side program approval. Part of that information is an estimate 

of “the impact of the DSIM on customer rates over the next five years,” which estimate 

is derived from comparing the utility’s revenue requirements with and without the 

proposed DSIM. A “significant part” of the “with the proposed DSIM” revenue -

requirement analysis, according to Ameren, depends on “the net benefits to be realized 

from the plan, which in turn depend heavily on the avoided costs estimates used in the 

plan filing.” Because the Commission approves a MEEIA plan “at a given point in 

time,” its decision is based on information then available, i.e., the avoided cost 

estimates calculated in 2012. In its view, the Commission cannot “‘de-approve’ a plan

two or three years later if the avoided cost estimates developed for a later IRP go down 

as compared to the estimates that underlie the MEEIA filing, any more than does the 
21

Commission ‘re-affirm’ the MEEIA plan as being even better if avoided cost estimates 

go up.” Thus, Ameren argues, 

[I]t simply makes no sense to evaluate the level of the incentive the utility 

is to receive arising from the energy savings that its approved demandside programs are determined to have achieved, by using a totally 

different set of avoided cost estimates than was used when the utility and 

the Commission effectively decided, collectively, that the utility should 

pursue the energy efficiency programs.

Arguing from the premise that the Commission approved a plan that did not require it 

to update avoided costs for purposes of calculating its performance incentive, Ameren 

contends that the order reached an unjust result in ignoring these considerations. 

Even if we had not already determined that the modified plan required upda ted 

avoided costs to be used in calculating the utility’s performance incentive, we do not 

believe that requiring it to use updated avoided costs constitutes a failure to consider 

important factors. A performance-incentive award, by its nature, would require that 

the original projections and estimates in an approved plan be updated to make rate 

adjustments that are based on more accurate estimates of costs expended or avoided in 

light of actual conditions over the course of the program. The Commission has not 

“de-approved” or “re-affirmed” Ameren’s modified plan. It has applied its rule 

consistently with the statute which requires “that utility financial incentives are aligned 

with helping customers use energy more efficiently and in a manner that sustains or 

enhances utility customers’ incentives to use energy more efficiently.” § 

393.1075.3(2). Where customers’ savings are less because energy costs have declined, 

their incentives to use energy more efficiently evaporate if their bills are higher becaus e 
22

the net-shared benefit is based on higher energy prices estimated at the program’s 

inception, which price estimates have not proved accurate. This point is denied.

3. Commission Rationale

In the third point, Ameren argues that the Commission’s rationales do not 

support its definition of the term “methodology.” First, it contends that “whatever 

avoided cost estimates are used at whatever point in time they are used will not produce 

a determination of ‘actual savings,’” thus no one will know what was “actually saved.” 

This is so, because “no one knew (or knows) what those costs will actually be over the 

upcoming 20-year period, during which energy efficiency measures installed in 2014 

will continue to ‘live.’” Ameren claims that it makes no sense for the Commission to 

have connected the utility incentive to actual savings. We disagree. 

MEEIA mandates, as a matter of policy, that demand-side programs “[p]rovide 

timely earnings opportunities associated with cost-effective measurable and verifiable 

efficiency savings.” § 393.1075.3(3). By requiring that a utility with an approved 

DSIM use updated avoided-cost data as part of its utility-incentive award calculation, 

the Commission ensures that shareholders receive “timely” earnings linked to 

“measurable and verifiable efficiency savings.” According to Ameren’s senior manager 

of corporate analysis, avoided costs “are based upon national and sometimes 

international market information for items such as gas, coal, electric energy and 

capacity, capital markets, and economic drivers.” They include estimates of avoided 

energy, capacity, and transmission and distribution costs. Ameren determines avoided 

energy costs by establishing ranges of values for variables and addressing best guesses 

as to uncertain factors as follows:
23

[B]y modeling the electric grid (the Eastern Interconnection in the United 

States), including all demand and available generation, using ranges of 

values for key driver variables, or “critical uncertain factors” that are 

likely to affect the market price of electric energy. Ranges of values and 

subjective probabilities for critical uncertain factors are defined through 

extensive discussion, review and analysis with subject matter experts. 

Probabilities for different values are also determined as part of this 

process. The value ranges and probabilities for the various critical 

uncertain factors are then combined to create scenarios represented by 

various combinations of values of critical uncertain factors with a 

commensurate probability. These scenarios are then simulated with a 

dispatch model of the Eastern Interconnection, yielding hourly estimates 

for energy prices for each year of the planning horizon, typically 20 years.

The utility similarly determines avoided capacity and transmission and 

distribution costs by making certain best estimates, comparisons, interpolations, 

adjustments, and evaluations, and concludes that “[a]voided costs are a prediction; an 

estimate, made over a very long period of time.” The Commission understood the 

tentative nature of these estimates and concluded that requiring that they be updated so 

that “the calculation of the utility’s performance incentive [w]ould reflect the most 

current market price information available when avoided costs are calculated,” best 

met Ameren’s obligations under MEEIA and its implementing regulations. We defer to 

its expertise and find that its rationale was not arbitrary and capricious and did not 

constitute an abuse of discretion.

Ameren also contends that the Commission’s stated rationale of “protecting the 

utility’s financial interests while also protecting customers” is a made-up goal that 

appears nowhere in the MEEIA statute. The utility further complains that the 

Commission has changed “the rules of the game in the middle of it, by changing 

avoided cost estimates as the term of the programs proceed.” Ameren characterizes the 
24

Commission’s replacing different avoided-costs estimates for those in place when the 

utility’s DSIM is approved as “an ‘energy and capacity cost lottery.’”

We agree with the Commission that the Legislature intended to protect both 

shareholder and customer interests by (1) allowing the recovery of “all reasonable and 

prudent costs of delivering cost-effective demand-side programs,” (2) requiring that 

the Commission “[e]nsure that utility financial incentives are aligned with helping 

customers use energy more efficiently and in a manner that sustains or enhances utility 

customers’ incentives to use energy more efficiently,” and (3) associating “timely 

earnings opportunities” with “verifiable efficiency savings.” § 393.1075.3. 

Accordingly, the Commission did not make up a goal and did not err in relying on this 

rationale to support its interpretation of the word “methodology.” 14

Regarding Ameren’s allegation that the Commission changed the rules of the 

game thereby effecting a lottery, even if we assume that the Commission’s 

interpretation of “methodology” represented a change, because imposing an incentive 

award is similar in some respects to setting a rate, “the Commission is not bound to 

any set methodology in ensuring a just and reasonable return in setting rates.” State ex 

rel. Praxair, Inc. v. Pub. Serv. Comm'n, 328 S.W.3d 329, 339 (Mo. App. W.D. 2010). 

“The Commission has considerable discretion in rate setting due to the inherent 

complexities involved in the rate setting process. It is not the theory or methodology, 

but the impact of the rate order which counts.” Id. (citations omitted). Indeed, “[i]f 

the total effect of the rate order cannot be said to be unjust and unreasonable, judicial 

 

14 Note that the Commission’s interpretation will also best protect the utility’s shareholders who will 

reap the benefit by collecting a higher performance incentive from ratepayers during those periods 

when energy prices spike. Commission counsel agreed during oral argument that this would be the 

case under its interpretation.
25

inquiry under the Act is at an end. Where ratemaking is at issue, determinations by the 

Commission are favored by a presumption of validity.” Id. (citations omitted). We 

cannot say that a Commission order requiring that Ameren use updated avoided costs 

in calculating net-shared benefits to determine the utility’s performance incentive is 

unjust or unreasonable. Likening future earnings opportunities from supply-side 

investments, which “are dependent on the dynamic character of the energy 

marketplace,” to earnings opportunities from demand-side investments is wholly 

consistent with the Legislature’s policy of valuing “demand-side investments equal to 

traditional investments in supply and delivery infrastructure.” § 393.1075.3. Because 

the performance-incentive award here represents 7 percent of the total that Ameren 

could recover for adopting a demand-side program, assuming 100 percent of its energy 

savings goals were realized, we cannot say that the total effect of the Commission’s 

ruling would be unjust and unreasonable. This point is denied.

Conclusion

The Commission’s order granting Staff’s motion for summary determination and 

requiring that Ameren use the avoided-cost data from its 2014 IRP in calculating the 

incentive award under its modified MEEIA plan in 2014 was supported by substantial, 

competent evidence on the whole record and was accordingly reasonable. 15 We affirm.

/s/ THOMAS H. NEWTON

Thomas H. Newton, Judge

Thomas H. Newton, Judge, writes for the majority. Anthony R. Gabbert, Presiding 

Judge, concurs with the majority.

Alok Ahuja, Judge, writes a dissent.

 

15 The dissenting opinion makes assumptions about the meaning of the stipulation that adopted a 

modified DSIM plan without granting a variance from § 240-20.093(1)(F). We do not believe that 

such assumptions are justified in light of the deference we are required to accord the Commissio n.
1

IN THE MISSOURI COURT OF APPEALS

WESTERN DISTRICT

MISSOURI PUBLIC SERVICE 

COMMISSION,

Respondent,

v.

UNION ELECTRIC COMPANY 

d/b/a AMEREN MISSOURI,

Appellant.

)

)

)

)

)

)

)

)

)

WD79406

FILED: December 6, 2016

 

DISSENTING OPINION 

Under its Commission-approved energy-efficiency program, Ameren is entitled 

to receive, as a performance incentive, a percentage of the “net shared benefits” 

generated by the energy-efficiency measures which are implemented. The dispute in 

this case involves the manner in which “net shared benefits” are calculated. The 

Commission held that, in calculating net shared benefits, Ameren is required to 

employ updated estimates of the costs which are avoided due to decreased electri city 

consumption. Ameren argues that the Commission erred, because its Commissionapproved Energy Efficiency Plan specifies that the avoided cost estimates would not 

be updated during the Plan’s three-year life.

I respectfully dissent from the majority’s affirmance of the Commission 

decision. The Energy Efficiency Plan which Ameren submitted to the Commission 

for approval in 2012 makes absolutely clear that, for purposes of calculating its 
2

performance incentive, Ameren would not be required to update its avoided cost 

estimates during the Plan’s three-year life. Although the majority disputes that 

Ameren’s Plan addressed the calculation of the performance incentive, the 

Commission found that it did, and the parties conceded the point. The Unanimous 

Stipulation which led to the Commission’s approval of the Plan did not address – and 

therefore did not modify – this aspect of Ameren’s Plan. And the regulation cited by 

the Commission and the majority opinion does not alter this outcome, because that 

rule does not require a utility to employ the same avoided cost estimates contained in 

a later preferred resource plan.

Once the Commission approved the performance incentive mechanism 

contained in the Plan and Stipulation, it was bound by the terms of that Plan. The 

Commission cannot “change the rules of the game” midway through Ameren’s 

implementation of the Plan.

The record does not reflect the specific financial consequences of the parties’ 

dispute. In the complaint which commenced this proceeding, however, the 

Commission’s staff alleged that the issue “is worth millions of dollars to [Ameren’s] 

ratepayers.” Presumably Ameren and its shareholders face the identical financial 

impact.

I.

Understanding the specific issue Ameren raises requires a review of the 

Missouri statutes and rules which govern an electric utility’s implementation of an 

energy-efficiency program.
3

The Missouri Energy Efficiency Investment Act is codified at § 393.1075.1 

The Act declares that “[i]t shall be the policy of the state to value demand-side 

investments equal to traditional investments in supply and delivery infrastructure and 

allow recovery of all reasonable and prudent costs of delivering cost-effective 

demand-side programs.” § 393.1075.3. A “demand-side program” is defined as “any 

program conducted by the utility to modify the net consumption of electricity on the 

retail customer’s side of the electric meter, including but not limited to energy 

efficiency measures, load management, demand response, and interruptible or 

curtailable load.” § 393.1075.2(3). While “demand-side programs” are intended to 

reduce electricity consumption, “supply-side programs” increase the supply of 

electricity (such as by increasing a utility’s generating capacity).

Demand-side programs do not fit neatly within the traditional electric utility 

ratemaking model. Traditionally, an electric utility’s rates are designed to permit the 

utility to recover its prudently-incurred fixed and marginal costs, as well as a return 

on investment, through usage-based charges. As a general proposition, a utility’s 

revenues, and its profits, increase if its customers use more electricity.

Demand-side investments operate in a fundamentally different way. The goal 

of demand-side programs is to reduce customer demand for the utility’s product: 

electricity. To the extent a utility’s rates are set using the traditional model, its 

revenues – and profits – will go down if a demand-side program is successful, since 

the utility will collect its per-unit rates on a smaller quantity of electricity consumed. 

Thus, under the traditional ratemaking model, a utility may have a disincentive to 

 

1 Statutory citations refer to the 2000 edition of the Revised Statutes of Missouri, as updated 

through the most recent cumulative and non-cumulative supplements.
4

aggressively implement demand-side energy-efficiency programs. A fundamental 

purpose of the Act is to make demand-side investments as attractive to utilities as 

supply-side investments, with the goal of reducing overall electricity consumption.

In order to “level the playing field” between demand-side and supply-side 

investments, the Act authorizes the Commission to “develop cost recovery 

mechanisms to further encourage investments in demand-side programs including . . . 

allowing the utility to retain a portion of the net benefits of a demand-side program 

for its shareholders.” § 393.1075.5. 

The Commission has adopted detailed regulations to implement the Act. See

§ 393.1075.11 (grant of rulemaking authority); State ex rel. Pub. Counsel v. Pub. 

Serv. Comm’n, 397 S.W.3d 441 (Mo. App. W.D. 2013) (rejecting challenges to the 

Commission’s implementing regulations). As relevant here, the regulations authorize 

utilities to seek Commission approval of a “[d]emand-side programs investment 

mechanism, or DSIM.” Rules 3.163(1)(F), 20.093(1)(M). 2 The regulations provide 

that a DSIM is “a mechanism . . . to encourage investments in demand-side 

programs,” and may include “[r]ecovery of lost revenues” resulting from decreased 

electricity consumption, and a “[u]tility incentive based on the achieved performance 

level of approved demand-side programs.” Id. The utility incentive component is 

implemented through a “DSIM utility incentive revenue requirement,” which is 

designed “to provide the utility with a portion of annual net shared benefits based on 

 

2 Rule citations refer to the Commission’s regulations implementing the Act, which are found 

in Title 4 of the Code of State Regulations, Division 240 (i.e., 4 C.S.R. 240). Several of the relevant 

definitions appear in multiple rules.
5

the approved utility incentive component of a DSIM.” Rules 3.163(1)(J), 

20.093(1)(Q).

This case concerns the manner in which “annual net shared benefits” are to be 

calculated. That calculation will materially affect the performance incentive Ameren 

receives for successful implementation of its Energy Efficiency Plan. The regulations

define “[a]nnual net shared benefits” to mean:

the utility’s avoided costs measured and documented through evaluation, 

measurement, and verification (EM&V) reports for approved demandside programs less the sum of the programs’ costs including design, 

administration, delivery, end-use measures, incentives, EM&V, utility 

market potential studies, and technical resource manual on an annual 

basis.

Rules 3.163(1)(A), 20.093(1)(C). “Avoided cost” is in turn defined to mean:

the cost savings obtained by substituting demand-side programs for 

existing and new supply-side resources. Avoided costs include avoided 

utility costs resulting from demand-side programs’ energy savings and 

demand savings associated with generation, transmission, and 

distribution facilities including avoided probable environmental 

compliance costs. The utility shall use the same methodology used in 

its most recently adopted preferred resource plan to calculate its 

avoided costs.

Rules 3.163(1)(C), 20.093(1)(F).

The performance incentive which a utility is entitled to receive for 

implementing energy-efficiency programs is analogous to the return on investment 

which it would receive for implementing supply-side programs. The terms of the 

performance incentive undoubtedly affect a utility’s decision making in numerous 

ways, including decisions concerning the resources it devotes to demand-side versus

supply-side programs. The Commission’s rules recognize this reliance interest by 

providing that, upon Commission approval, the utility incentive component becomes 

binding on both the Commission and the utility:
6

If the commission approves [the] utility incentive component of a 

DSIM, such utility incentive component shall be binding on the 

commission for the entire term of the DSIM, and such DSIM shall be 

binding on the electric utility for the entire term of the DSIM, unless 

otherwise ordered or conditioned by the commission when approved.

Rule 20.093(2)(J).

II. 

A. 

Ameren submitted its 2013-2015 Energy Efficiency Plan to the Commission 

for approval on January 20, 2012. The Plan unambiguously provides that Ameren 

would not be required to update its avoided cost estimates in calculating its 

performance incentive.

The Plan contained Ameren’s proposal for a demand-side programs investment 

mechanism or DSIM, having “two main components: direct program cost recovery 

and a sharing of net benefits to remove economic disincentives and provide timely 

earnings opportunities.” The Plan explained that the sharing of net benefits was 

intended to address

two main issues: removal of the throughput disincentive and providing 

an earnings opportunity equivalent to a supply-side alternative. 

Removing the throughput disincentive simply makes the utility whole 

for the revenues it would have collected absent the implementation of its 

energy efficiency programs whereas the earnings opportunity 

compensates for the foregone earning opportunities associated with 

supply-side investments.

The Plan explained the “throughput disincentive” in this way:

The implementation of energy efficiency programs causes a 

decrease in electricity sales, which causes the utility to lose revenue 

that it would have otherwise collected. But even more importantly, it 

prevents the utility from recovering a portion of its fixed costs. . . . To 

fully align utility incentives such that the utility can partner with 

third party energy efficiency or conservation efforts, the throughput 

disincentive must be adequately addressed.
7

In addition to eliminating the throughput disincentive, the Plan also explained 

the need to compensate Ameren for the lost earnings opportunities associated with 

foregone supply-side investments:

Sharing a portion of net benefits to cover the aforementioned 

decline in net income only removes the disincentive associated with 

energy efficiency. But without some way to match the earnings 

potential of supply-side projects, the utility will continue to favor 

investments in energy infrastructure projects. . . . Ameren Missouri’s 

2011 [Integrated Resource Plan] . . . called for the construction of a 

combined cycle plant to be completed in 2029. Therefore, if Ameren 

Missouri engaged in energy efficiency it would forfeit the potential 

equity earnings associated with that construction investment. In order 

for energy efficiency investments to be on an equivalent economic 

footing, the earnings opportunities must be equivalent.

Thus, Ameren proposed that it be entitled to a share of net shared benefits to 

compensate it for two separate disincentives associated with demand-side programs: 

(1) the throughput disincentive (representing lost revenues from foregone electricity 

sales); and (2) the loss of earnings opportunities which are associated with supplyside investments (which would be compensated by a “performance incentive”). The 

Plan proposed that each of these disincentives be addressed by permitting Ameren to 

retain a separate specified percentage of net shared benefits.

Ameren estimated that the present value of the total net benefits which would 

be achieved by implementing its Energy Efficiency Plan would be $364.3 million. It 

estimated that the present value of three years’ of lost net income associated with 

decreased electricity consumption (i.e., the throughput disincentive) was $56 million, 

and that the present value of the performance incentive necessary to compensate for 

lost earnings opportunities was $17 million. Ameren therefore proposed a total net 

benefit sharing percentage of 20.2% (assuming that it achieved 100% of the Plan’s 
8

performance targets), which would entitle it to retain a portion of the program’s net 

benefits having a total present value of $73 million.

Determining net shared benefits, and Ameren’s share of those benefits, requires 

consideration of a number of factors. First, total energy savings must be determined 

based on the number and kind of energy-efficiency measures actually implemented by 

Ameren’s customers, and applying a per-measure energy saving amount associated 

with each different measure. Once total energy savings are determined in megawatt 

hours, the energy savings must be converted into a dollar figure using an estimate of 

the avoided costs associated with that reduced electricity usage (including avoided 

costs of energy production, energy transmission and distribution, and environmental 

compliance). The total avoided costs must then be compared with the costs of 

implementing Ameren’s energy-efficiency program, to determine the net monetary 

benefit of the energy-efficiency program. That net monetary benefit, which includes 

avoided costs over a multiple-year period, must be reduced to present value using a 

discount rate. Finally, under the Plan Ameren’s sharing percentage varies depending 

on its performance (in terms of total energy savings) compared to a goal stated in the 

Plan. The Plan specified that Ameren’s performance goal would be adjusted based on 

the number of customers who opted out of the energy-efficiency program. Therefore, 

it would be necessary to determine the actual number of opt-outs before the amount 

of Ameren’s share of net shared benefits could be determined.

Ameren’s Energy Efficiency Plan clearly provides – contrary to the 

Commission’s decision – that the estimates of avoided costs due to decreased energy 
9

consumption would not be updated during the life of the Plan as part of the 

calculation of Ameren’s performance incentive. The Plan explains:

[T]he mechanics of sharing net benefits need to be precisely defined. 

Table 2.12 shows the items associated with estimating net benefits and 

whether those items will be updated for purposes of assessing 

performance and benefits as part of the implementation process. 

Notice that several items will not be updated, so the focus remains on 

the cost of the programs and the number of measures implemented. 

The TRM [Technical Resource Manual] provides significant value in 

simplifying this process as several important inputs are deemed.

Table 2.12 Description of Update Process 

(Emphasis added.) 

As if Table 2.12 and the discussion above it were not clear enough, 

immediately below the table the Plan reiterates that only three items will be updated 

before determining Ameren’s incentive payment: (1) the number of energy-efficiency 

measures actually implemented; (2) the costs of the energy-efficiency program; and 

(3) the percentage of customers who opted out of the program. The Plan explains that 

“when the final performance is judged, the MWh target shall be increased or 
10

decreased according to how the opt-out magnitude actually compared to the planning 

estimate.” The Plan continues:

Once the three year plan implementation is complete, Ameren 

Missouri will update its DSMore model with the evaluated number of 

measures implemented and the final program costs. With that updated 

analysis the final value for net benefits will be calculated and the 

sharing percentage applied.

Thus, under Ameren’s Plan, only three of the values needed to calculate its 

performance incentive would be updated based on actual experience: the number of 

energy-efficiency measures actually implemented; the costs of implementing the 

energy-efficiency program; and the number of customers who opted out of the 

program. The Plan states in no uncertain terms that other variables – including the 

avoided cost estimates – would remain unchanged throughout the Plan’s three-year 

life.

B.

The majority opinion concludes that Table 2.12 and the related discussion in 

Ameren’s Energy Efficiency Plan are irrelevant here. The majority denies “that the 

performance-incentive calculation was subject to Table 2.12 in Ameren’s proposed 

MEEIA 1 Plan,” and instead concludes “that the table addressed the [‘throughput 

disincentive’ or] TD-NSB calculation and not the performance incentive.” Maj. Op. 

at 14.

The majority’s claim that Ameren’s Plan did not address the manner in which 

the performance incentive would be calculated is plainly incorrect, and is remarkable 

from a number of perspectives.
11

1. First, the majority’s reading of Ameren’s Energy Efficiency Plan is 

directly contrary to the Commission’s own reading of the Plan. The Commission 

Report and Order expressly recognized that, under the Plan, Ameren was correct that 

it need not update its avoided cost estimates for purposes of calculating net shared 

benefits. The Commission expressly found that “the DSIM as proposed by Ameren 

Missouri in its 2012 MEEIA filing, specifically, subsection 2.6 and Table 2.12 of that 

filing, does not allow for the use of updated avoided cost estimates.” (Emphasis 

added.) Although the Commission went on to hold that the terms of the Plan were 

subject to the Commission regulations defining “avoided cost,” it conceded that 

Ameren would prevail under the Plan itself. The majority offers no justification for 

rejecting the Commission’s reading of Ameren’s Plan.

2. Equally significant, the Commission has not argued in this appeal that 

Ameren’s Plan did not address the calculation of the performance incentive. Instead, 

as in its Report and Order, the Commission has contended in this Court that the Plan 

does not constitute the “last word” concerning calculation of the performance 

incentive, but is instead subject to the definition of “avoided cost” found in Rules 

3.163(1)(C) and 20.093(1)(F).

In its appellate briefing, Ameren relied heavily on the terms of its Energy 

Efficiency Plan, and on Table 2.12 in particular, to argue that it was not bound to 

update its avoided cost estimates when calculating the performance incentive. If the 

Commission believed that the Plan did not address the performance incentive 

calculation, presumably it would have said so. It is telling that the Commission 

failed to make the argument on which the majority opinion now relies so heavily.
12

3. To my knowledge, no party to this proceeding has advocated the 

majority’s reading of Ameren’s Plan. Before the Commission, both the Commission 

Staff and the Office of Public Counsel conceded that, under Table 2.12, Ameren 

would not be required to update its avoided cost estimates when calculating its 

performance incentive. During oral argument before the Commission, Ameren’s 

counsel described Table 2.12. The following exchange then occurred:

MR. LOWERY [Ameren counsel]: Okay. So if we stop here, I 

think that – if this was the only source of information and we didn't 

have a stipulation that might or might not modify this table, then I 

think that Staff and OPC would both agree we wouldn't be here today, 

there would be no complaint, they would agree that’s what you 

approved, you don't update avoided costs, period. But I agree –

CHAIR HALL: Let me – let me cut to the chase. Do you guys 

agree with that statement?

MR. THOMPSON [Staff counsel]: Could you repeat the 

statement, so I –

MR. LOWERY: If we –

MR. THOMPSON: – can make sure I understand it?

MR. LOWERY: – imagine that we filed the MEEIA plan and the 

Commission just approved it, said –

MR. THOMPSON: Approved it – 

MR. LOWERY: – approved.

MR. THOMPSON: – as filed?

MR. LOWERY: Approved it as filed.

MR. THOMPSON: Right.

MR. LOWERY: In that case I think you would agree that we 

wouldn't be here today.

MR. THOMPSON: I agree. 

MR. OPITZ [Office of Public Counsel]: I agree. 

(Emphasis added.)
13

Although Staff counsel later clarified that the Plan would still be subject to the 

Commission’s rules defining “avoided cost,” the essential point remains: both the 

Commission’s Staff, and the Office of Public Counsel, agreed with Ameren (and with 

the Commission) that Table 2.12 specifies that avoided cost estimates would not be 

updated for purposes of calculating the performance incentive. The majority reaches 

a different conclusion, with no attempt to explain why it adopts a different reading of 

the Plan than all of the interested parties.

4. The majority’s claim that Table 2.12 does not address the calculation of 

the performance incentive disregards the Plan’s clear terms. The Plan makes clear 

that the sharing percentages which Ameren proposed for both the performance 

incentive, and to address the throughput disincentive, would operate on the same 

underlying number: net shared benefits. Ameren’s Plan advocated a 15.4% share of 

net shared benefits to address the throughput disincentive, and a 4.8% share as a 

performance incentive. The Plan then combined the two sharing percentages into a 

single 20.2% share, explaining that “[t]he overall Performance Mechanism must both 

offset the financial disincentive and provide equivalent earning opportunities to 

supply-side alternatives.”

Obviously, the separate percentage shares Ameren advocated to address the 

throughput disincentive, and as a performance incentive, could not be combined 

unless both percentages operated on the same underlying amount. But the majority 

opinion contends that, under Ameren’s Plan, the throughput disincentive sharing 

percentage and the performance incentive percentage would be applied to “net shared 

benefits” which were calculated in two different ways. If the majority were correct, 
14

the Plan’s addition of the two percentages together would have constituted a basic 

arithmetical mistake.

The text surrounding Table 2.12 makes clear that the table is intended to 

address the variables which will be applied in calculating both the throughput 

disincentive share, and the performance incentive share. The combined sharing 

percentages which Ameren proposed, at different performance levels, are depicted 

graphically in Figure 2.6 of the Plan. Immediately below Table 2.12 – which the 

majority contends is relevant only to calculation of the throughput disincentive share 

– the Plan states that “Figure 2.6 shows the sharing percentages that are applicable at 

different performance levels.” Figure 2.6, however, contains sharing percentages that 

combine the throughput disincentive share and the performance incentive share.

5. Finally, the majority’s contention that Ameren’s Plan “do[es] not detail 

how the performance incentive is to be calculated,” Maj. Op. at 16, creates a 

fundamental problem: how then are net shared benefits to be determined for purposes 

of calculating Ameren’s performance incentive? The majority suggests that the 

Commission’s regulations, standing alone, provide sufficient detail. But the 

regulations the majority cites do not address all of the issues which Ameren’s Plan 

indicates are necessary to determine net shared benefits. Given that no party has 

argued that the Commission’s regulations alone provide sufficient information to 

calculate net shared benefits, I fail to see how the majority can so confidently assert 

that Ameren’s Plan (and the Unanimous Stipulation) are irrelevant to that calculation.
15

III. 

As explained in § II above, the Commission correctly found (contrary to the 

majority opinion) that Ameren’s Energy Efficiency Plan, and specifically Table 2.12, 

provided that Ameren would not be required to update its avoided cost estimates 

when calculating the performance incentive. Nothing in the Unanimous Stipulation 

alters the plain and unambiguous statements in Ameren’s Plan that avoided cost 

estimates would not be updated.

The Unanimous Stipulation begins by making clear that the parties agreed that 

Ameren’s Energy Efficiency Plan should be approved, subject to the modifications 

contained in the Stipulation itself.

4. Approval of Plan. Subject to the terms and conditions 

contained herein, the Signatories agree that Ameren Missouri’s demandside program plan should be approved. For purposes of this Stipulation, 

Ameren Missouri’s three-year demand-side program plan (the “Plan”) 

consists of the 11 demand-side programs (“MEEIA Programs”) 

described in Ameren Missouri’s January 20, 2012 MEEIA Report, the 

demand-side programs investment mechanism (“DSIM”) described in 

the MEEIA Report, modified to reflect the terms and conditions herein, 

and the Technical Resource Manual (“TRM”) attached as Appendix A to 

the surrebuttal testimony of Ameren Missouri witness Richard A. 

Voytas.

Therefore, except as modified by the Unanimous Stipulation itself, the parties 

recommended that Ameren’s Plan be approved.

The Unanimous Stipulation provides that “Ameren Missouri will be allowed to 

recover the performance incentive, which is a percentage of [net shared benefits or] 

NSB as described on Appendix B.” Notably, the performance incentive discussion in 

the Unanimous Stipulation describes the use of only two actual, updated figures to 

calculate net shared benefits: (1) the section refers to a determination of actual net 
16

energy savings as determined through the Evaluation, Measurement and Verification 

(“EM&V”) process; and (2) use of the actual number of customer opt-outs. 

Similarly, Appendix B to the Unanimous Stipulation, addressing the performance 

incentive calculation, states that “[a]ctual net benefits are based on actual program 

costs for the three-year MEEIA plan and the actual net MWh savings as determined 

by EM&V.” The Unanimous Stipulation’s discussion of the performance incentive 

makes no reference to any other element of the net shared benefits calculation, and 

expresses no intent to modify any other aspect of the Plan’s discussion of net shared 

benefits and the performance incentive. Instead – and consistent with Table 2.12 –

the Stipulation refers to the use of actual, updated figures only with respect to 

(1) Ameren’s energy-efficiency program costs; (2) the determination of actual energy 

savings (based on the number of energy-efficiency measures actually implemented); 

and (3) the number of customers who opted out of the energy-efficiency program.3

The majority opinion itself acknowledges that “[n]othing in . . . the stipulation 

expressly indicates how the performance-incentive award is to be calculated other 

than that it was to be a percentage of certain net shared benefits set forth in an 

appendix.” Maj. Op. at 6. The consequence is that, since the Unanimous Stipulation 

did not modify the statement in Ameren’s Plan that avoided cost estimates would not 

 

3 The Commission claims in its Brief that “Ameren’s performance incentive is described 

exclusively by the 2012 Stipulation.” That is simply inaccurate. The Unanimous Stipulation does 

not discuss a variety of factors which would be necessary to calculate net shared benefits (such as 

applicable discount rates, or the performance attributes of various energy -efficiency measures). The 

Unanimous Stipulation cannot be interpreted as a “stand-alone” discussion of the performance 

incentive, without reference to Ameren’s Plan. The Unanimous Stipulation itself states that it is not 

a stand-alone description of Ameren’s DSIM, but instead that the DSIM is “described in the MEEIA 

Report, modified to reflect the terms and conditions herein.”
17

be updated in calculating net shared benefits, the terms of the Plan continue to 

govern. 

Although it is not our task to evaluate the wisdom of the Commission’s 

actions, it is worth noting that there are plausible reasons supporting the 

Commission’s approval of the net shared benefits calculation described in Ameren’s 

Plan and in the Unanimous Stipulation. As both the Plan and the Unanimous 

Stipulation explain, the principal values which will vary based on actual program 

implementation are (1) the number of energy-efficiency measures actually 

implemented, and (2) the amount of Ameren’s program costs. These two items are, to 

a substantial degree, within Ameren’s control, and they constitute a reasonable 

measure of the quality of Ameren’s performance. It seems sensible that the amount 

of Ameren’s performance incentive would be based, to a significant degree, on its 

success in implementing energy-efficiency measures, and its success in controlling 

the program’s costs. The avoided cost estimates, on the other hand, may vary over 

time based on a host of extraneous factors over which Ameren has no control, such as 

the performance of national or international capital and energy markets. Holding 

avoided cost estimates constant over the life of the energy-efficiency program, for the 

purpose of calculating Ameren’s performance incentive, is a perfectly rational 

approach.

IV.

The Commission’s order, and the majority opinion, support the use of updated 

avoided cost estimates by referring to Rule 20.093(1)(F), which states that “[t]he 

utility shall use the same methodology used in its most recently adopted pre ferred 
18

resource plan to calculate its avoided costs.” (The identical language appears in Rule 

3.163(1)(C).) The reference to use of “the same methodology” in Rule 20.093(1)(F) 

cannot justify the Commission’s decision.

The Commission’s order concludes that, “in the context of [Rule 20.093(1)(F)], 

methodology includes both the formula by which avoided costs are to be calculated 

and the inputs used in that formula.” (Emphasis added.) As Ameren points out, 

however, the Commission’s interpretation of the word “methodology” is inconsistent 

with dictionary definitions of the term. A “methodology” is defined as “the 

processes, techniques, or approaches employed in the solution of a problem or in 

doing something: a particular procedure or set of procedures.” WEBSTER’S THIRD 

NEW INTERNATIONAL DICTIONARY at 1423 (1993). Under this definition, 

“methodology” refers to the formula or process for calculating avoided costs, not the 

specific numerical values inserted into that formula or process to perform a 

calculation. It is undisputed that Ameren used the same methodology (in the sense of 

the same process) in calculating its avoided cost estimates for purposes of its Energy 

Efficiency Plan, as it used in connection with its 2014 preferred resource plan. 

Nothing in Rule 20.093(1)(F) requires that the avoided cost estimates be updated 

when Ameren adopts a new preferred resource plan.

The Commission’s current reading of Rule 20.093(1)(F) essentially rewrites it. 

Instead of requiring that Ameren “use the same methodology used in its most recently 

adopted preferred resource plan to calculate its avoided costs,” the Commission now 

reads Rule 20.093(1)(F) to require that Ameren “use the same avoided cost estimates

used in its most recently adopted preferred resource plan.” But that is not what the 
19

rule says, and the Commission should not be permitted to rewrite the rule after-thefact.4

In addition, the Commission’s construction of the word “methodology” in Rule 

20.093(1)(F) is inconsistent with the use of the very same word in another relevant 

Commission rule – Rule 20.093(1)(EE). Recall that, under the Commission’s rules, 

“[i]f the commission approves [the] utility incentive component of a DSIM, such 

utility incentive component shall be binding on the commission for the entire term of 

the DSIM.” Rule 20.093(2)(J). Therefore, the Commission is bound by the “utility 

incentive component” of Ameren’s approved Demand-Side Investment Mechanism or 

DSIM. What is the “utility incentive component” by which the Commission is 

bound? Rule 20.093(1)(EE) supplies the answer: the “utility incentive component” 

“means the methodology approved by the commission in a utility’s filing for demandside program approval to allow the utility to receive a portion of annual net shared 

benefits achieved and documented through EM&V reports.” (Emphasis added.)

Therefore, under Rules 20.093(1)(EE) and 20.093(2)(J), the Commission is 

bound by “the methodology” it approved “to allow [Ameren] to receive a portion of 

annual net shared benefits” as a performance incentive. Under the definition of 

 

4 Notably, when the Commission’s Chair stated during oral argument before the Commission 

that Staff’s argument essentially rewrote Rule 20.093(1)(F) to require that “the utility shall use the 

same avoided costs used in its most recently adopted preferred resource plan,” Staff counsel agreed: 

“I think that’s the effect of the rule.” Staff was even more explicit in its briefing to the Commission. 

It argued:

The word ‘methodology’ as used in the rule necessarily encompasses the formula, the 

inputs, and the results of the calculation. What Rule 4 CSR 240-20.093.1(F) requires 

is that the avoided costs from AmMo’s most recently adopted preferred resource 

plan be used in calculating NSB for the purposes of the [performance incentive].

(Emphasis added.) Staff’s arguments – which the Commission adopted – go well beyond the 

language of a rule which merely requires that Ameren use a particular “methodology . . . to calculate 

its avoided costs.”
20

“methodology” adopted in the Commission’s order, the Commission approved – and 

is bound by – “both the formula by which [Ameren’s portion of net shared benefits] 

are to be calculated and the inputs used in that formula.” Under that reading, the 

Commission would be bound by the avoided cost estimates contained in Ameren’s 

Energy Efficiency Plan, because those avoided cost estimates are an essential input in 

determining Ameren’s share of net shared benefits. This reading would create a 

conflict with Rule 20.093(1)(F), however, because the latter rule says that the 

Commission is not bound by “the methodology” approved as part of Ameren’s DSIM, 

but instead that “the methodology” contained in Ameren’s most recent preferred 

resource plan must be used to calculate avoided costs.

This conundrum can be avoided by interpreting the word “methodology” 

consistent with the dictionary definition – as the process or formula employed to 

calculate avoided costs, not the inputs inserted into that formula as part of a 

particular calculation. The Commission cannot “have it both ways,” and interpret the 

word “methodology” differently under Rules 20.093(1)(F) and 20.093(1)(EE).

The majority dismisses the use of the term “methodology” in Rule 

20.093(1)(EE) with the statement that it “does not refer to the calculation of avoided 

costs.” Maj. Op. at 20. But avoided cost estimates are an essential component in the 

calculation of net shared benefits, which is in turn an essential component in 

determining Ameren’s performance incentive amount. The “methodology” to which 

Rule 20.093(1)(EE) refers would plainly include a determination of the relevant 

avoided cost estimates (as Table 2.12 to Ameren’s Plan makes clear).
21

Besides the fact that it is inconsistent with the dictionary, and with the use of 

the term “methodology” in another regulation, the Commission’s – and the majority’s 

– interpretation of the word “methodology” in Rule 20.093(1)(F) also leads to an 

absurd outcome. If the Commission’s current order is correct, and the reference to 

“methodology” in Rule 20.093(1)(F) “includes both the formula by which avoided 

costs are to be calculated and the inputs used in that formula,” then the Commission 

in 2012 approved a DSIM which on its face conflicted with the Commission’s own 

regulations, in two significant respects. First, Ameren’s Energy Efficiency Plan 

employed avoided cost estimates which were different than the avoided cost estimates 

contained in its most recent preferred resource plan (filed in 2011), although the 

avoided cost estimates incorporated into the Plan were derived using the same 

process used in connection with the 2011 preferred resource plan. The Plan 

specifically advised the Commission that “[t]he avoided energy costs [used in the 

Plan] represent an update to the [Integrated Resource Plan] planning scenarios,” and 

provided the Commission with “a description of those updates.” 5 Those avoided cost 

estimates were used, among other things, to determine the cost-effectiveness of 

Ameren’s proposed energy-efficiency program, and to determine the likely impact of 

the energy-efficiency program on customer rates. If the Commission’s current 

interpretation of Rule 20.093(1)(F) were correct, Ameren violated the rule in 2012 

when it used new avoided cost estimates developed specifically for use in conjunction 

 

5 Notably, the Commission itself acknowledges in its Brief that “ the methodology Ameren used 

to calculate avoided costs of energy for its 2012 MEEIA request is not identical to the avoided costs 

as determined in Ameren’s 2011 IRP filing.” The Commission’s Staff made the same concession 

during argument before the Commission: “the avoided costs that Ameren used in its MEEIA plan 

were already a change from the 2011 IRP.” These admissions are curious, since they essentially 

acknowledge that Ameren’s 2012 Plan – which the Commission approved – violated the 

Commission’s current interpretation of Rule 20.093(1)(F).
22

with its Energy Efficiency Plan, rather than the avoided cost estimates from its 2011 

preferred resource plan. Yet, no one objected to the avoided cost estimates Ameren 

used in connection with Plan approval in 2012.

Second, as explained in §§ II above, Ameren’s Energy Efficiency Plan 

unambiguously provides that Ameren’s avoided cost estimates would be “deemed” for 

the purpose of calculating net shared benefits, and that those avoided cost estimates 

would not be updated during the three-year life of the Plan. Yet, according to the 

Commission’s current interpretation of Rule 20.093(1)(F), use of unchanging avoided 

cost estimates is prohibited. On that interpretation, the explicit references in the Plan 

to the use of unchanging, “deemed” avoided cost estimates were patently unlawful at 

the time the Plan was submitted. But the Commission’s Staff expressly advocated the 

approval of this performance incentive mechanism, and the Commission approved it. 

We should hesitate to adopt a reading of Rule 20.093(1)(F) which renders the 

Commission’s 2012 approval of Ameren’s Plan a nullity in any material respect.

The majority also seizes on the fact that the Unanimous Stipulation did not 

give Ameren a variance from Rule 20.093(1)(F). But there was no need for a 

variance, if Rule 20.093(1)(F)’s reference to “the same methodology” is properly 

interpreted. If properly interpreted, the rule is fully consistent with using unchanging 

avoided cost estimates throughout the three-year term of the DSIM. But even if the 

Commission’s current interpretation of Rule 20.093(1)(F) were correct, I would hold 

that the Commission granted Ameren a variance from that rule when it approved 

Ameren’s DSIM. With respect to regulatory variances, the Commission’s rules 

simply provide that, “[u]pon request and for good cause shown, the commission may 
23

grant a variance from any provision of this rule.” Rule 20.093(13). The rule doe s not 

require that variances take any particular form.

Here, as I have described in detail above, Ameren sought approval of a 

Demand-Side Programs Investment Mechanism which expressly provided that 

avoided cost estimates would remain constant throughout the life of the DSIM, and 

which employed avoided cost estimates different from those appearing in Ameren’s 

most-recent preferred resource plan. The Commission’s Staff did not object to the 

avoided costs estimates Ameren used in seeking Plan approval, or to the Plan’s 

specification that the avoided cost estimates would remain unchanged throughout 

program implementation; indeed, Staff itself requested that the Commission approve 

Ameren’s Plan as modified by the Stipulation. The Commission then approved the 

Plan in the form submitted. In these circumstances, if the express terms of the Plan 

are deemed to conflict with Rule 20.093(1)(F), I would hold that the Commission 

granted a variance from the Rule’s requirements when it approved the Plan as 

modified by the Stipulation. Notably, the majority itself essentially acknowledges 

that the Commission gave Ameren an unstated regulatory variance, since it 

acknowledges that the throughput disincentive share which the Commission 

approved, to compensate Ameren for lost revenues, is inconsistent with the definition 

of “lost revenue” contained in the Commission’s own Rules 3.163(1)(Q) and 

20.093.(1)(Y).6

 

6 The Commission also justified its interpretation of Rule 20.093(1)(F) by asserting that i t 

would more closely align Ameren’s performance incentive to the amount consumers “actually saved” 

as a result of the deployment of energy-efficiency measures. But the avoided cost estimates are 

intended as estimates of expected savings over the multi-year life of various energy-efficiency 

measures; they are not simply an accounting of savings actually achieved during any particular 

period of time. Ameren will be recovering a performance incentive based on complex estimates of 

net benefits – not “actual savings” – whether we uphold the Commission’s position or Ameren’s.
24

Conclusion 

For the foregoing reasons, I respectfully dissent from the majority’s affirmance 

of the Commission’s order.

/s/ ALOK AHUJA

Alok Ahuja, Judge