8-KMaterial AgreementsExhibits & Filings

AMEREN CORP 8-K Report, Material Agreement (Jan 13, 2006)

Filed January 13, 2006For Securities:AEE

Summary

Ameren Corporation (AEE) and its subsidiaries filed an 8-K on January 13, 2006, to report a material amendment to their Joint Dispatch Agreement (JDA). This amendment, the Second Amended JDA, was necessitated by an order from the Missouri Public Service Commission (MoPSC) related to the transfer of UE's Illinois service territory to CIPS. The key change revises how margins from third-party sales of excess electricity are allocated between AmerenUE (UE) and Ameren Energy Generating Company (Genco). Previously, profits from these sales were allocated based on each company's load requirements. The new amendment mandates that these margins will be allocated based on generation output, a change that could materially impact the distribution of earnings between UE and Genco. Based on 2005 performance, this shift would have likely resulted in a transfer of approximately $35 to $45 million in electric margins from Genco to UE. Investors should note that the ultimate financial impact is subject to future operating conditions and market prices, and potential adjustments to UE's electric rates by the MoPSC could further affect Ameren's earnings.

Key Highlights

  • 1Ameren Corp. and its subsidiaries entered into a Second Amendment to the Joint Dispatch Agreement (JDA) effective January 10, 2006.
  • 2The amendment was required by a Missouri Public Service Commission (MoPSC) order related to the transfer of AmerenUE's Illinois service territory to AmerenCIPS.
  • 3The core change in the Second Amended JDA is the allocation of margins from third-party sales of excess generation.
  • 4Margins will now be allocated based on generation output, shifting from the previous method based on load requirements.
  • 5Based on 2005 performance, this change would have likely shifted $35-$45 million in electric margins from Ameren Energy Generating Company (Genco) to AmerenUE (UE).
  • 6The Federal Energy Regulatory Commission (FERC) approval is required for the amendment, and its outcome is uncertain.
  • 7Ameren's earnings could be materially impacted by this allocation shift and potential future rate adjustments by the MoPSC.

Frequently Asked Questions

The primary purpose is to comply with a Missouri Public Service Commission (MoPSC) order, which requires a change in how profits (margins) from the sale of excess electricity to third parties are allocated between AmerenUE (UE) and Ameren Energy Generating Company (Genco). The allocation method is changing from being based on load requirements to being based on generation output.

Based on 2005 operating results, the amendment would have likely resulted in a transfer of $35 to $45 million in electric margins from Genco to UE. The ultimate impact on Ameren's earnings could be material and will depend on future operating conditions, native load demand, generation availability, market prices, and potential regulatory rate adjustments by the MoPSC.

The amendment is effective January 10, 2006, but it is subject to acceptance and approval by the Federal Energy Regulatory Commission (FERC). Ameren has filed a joint request for FERC approval, but the outcome of this regulatory review is currently unpredictable.

The amendment was necessitated by an MoPSC order approving the transfer of AmerenUE's electric and natural gas service territory in Illinois to AmerenCIPS. This structural change required a revision to the existing joint dispatch agreement to align with the new operational and regulatory landscape.