8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Sep 27, 2005)

Filed September 27, 2005For Securities:AEE

Summary

Ameren Corporation (AEE) has updated its estimate for the potential increase in average electric rates for its Illinois subsidiaries, referred to as the Ameren Illinois Utilities, following the expiration of the legislative electric rate freeze on January 1, 2007. Previously, the company anticipated a 10% to 20% increase, with a significant portion attributed to higher power costs. The revised estimate now suggests a potential increase of 20% to 35% over current bundled rate levels. This updated forecast is based on a new set of assumptions, including August 2005 power prices around $55 per megawatt hour, which now account for approximately 70% of the projected rate increase. Investors should note that these figures are estimates and are subject to significant variability based on numerous factors, including regulatory approvals, future market prices, infrastructure investments, and operating costs. The company acknowledges that the Illinois Commerce Commission (ICC) may not grant the full estimated increase and is engaging in discussions with stakeholders, including the Governor's office, to find a constructive resolution, potentially involving a phased-in rate increase.

Key Highlights

  • 1Ameren Corporation's Illinois subsidiaries (AmerenCIPS, AmerenCILCO, AmerenIP) face a potential average electric rate increase of 20% to 35% in 2007, up from a previous estimate of 10% to 20%.
  • 2The revised estimate is based on updated assumptions, including August 2005 power prices around $55 per megawatt hour.
  • 3Higher power costs are now projected to account for roughly 70% of the estimated rate increase.
  • 4The Illinois Governor has expressed opposition to Ameren's proposed reverse auction process for procuring electricity after the rate freeze expires.
  • 5Ameren is uncertain whether the Illinois Commerce Commission (ICC) will approve the estimated rate increases.
  • 6The company is seeking a 'constructive solution' with stakeholders, which could include a rate increase phase-in plan.

Frequently Asked Questions

The primary driver for the potential increase in Ameren's Illinois electric rates, following the expiration of the legislative rate freeze on January 1, 2007, is the anticipated rise in power costs. Updated assumptions indicate that these higher power costs, based on current market prices, could account for approximately 70% of the estimated overall rate increase.

Ameren has revised its estimated average electric rate increase for its Ameren Illinois Utilities to a range of 20% to 35% over present bundled rate levels, up from a previous projection of 10% to 20% made in March 2005.

The Illinois Governor has publicly opposed Ameren's proposed reverse auction process for procuring electricity and has requested the dismissal of a related proceeding. Ameren is uncertain whether the Illinois Commerce Commission (ICC) will approve the estimated rate increases and is engaging in dialogue with the Governor and other stakeholders to find a resolution, potentially including a phased approach to rate increases.

No, the estimated rate increases are not guaranteed. Ameren states that the figures are based on numerous assumptions about market prices, consumption, infrastructure, operating costs, and regulatory outcomes. The company acknowledges that the ICC may not grant the full estimated increases, and actual results could differ significantly.