8-KMaterial AgreementsOther EventsExhibits & Filings

AMEREN CORP 8-K Report, Material Agreement (Dec 21, 2006)

Filed December 21, 2006For Securities:AEE

Summary

This Form 8-K filing from Ameren Corporation (AEE) on December 21, 2006, announces the entry into significant Power Supply Agreements (PSAs) between its subsidiaries, Ameren Energy Marketing Company ("Marketing Company") and Ameren Energy Generating Company ("Genco"), and also between the Marketing Company and Ameren Energy Resources Generating Company ("AERG"). These agreements, effective January 1, 2007, and extending through December 31, 2022, are designed to centralize the sale and purchase of power generation capacity and associated energy from Genco and AERG's combined fleets. This structured arrangement is intended to streamline operations and potentially optimize resource allocation within Ameren's generation and marketing segments. The PSAs cover a substantial generation capacity of approximately 4,000 megawatts from Genco and 1,100 megawatts from AERG, primarily located in Missouri and Illinois. The agreements detail specific methodologies for calculating "Energy Charges" based on net revenues and "Monthly Capacity Charges" based on operating costs. Importantly, the filing outlines detailed provisions for events of default, including extended forced outages, payment failures, performance breaches, bankruptcy, and failures to provide adequate performance assurance, providing a framework for managing counterparty risk. Investors should view these agreements as a significant step in managing Ameren's power generation and supply operations, with implications for future revenue streams and operational efficiency.

Key Highlights

  • 1Ameren's subsidiaries, Ameren Energy Marketing Company (Marketing Company) and Ameren Energy Generating Company (Genco), entered into a Power Supply Agreement (Genco PSA).
  • 2Ameren Energy Marketing Company also entered into a Power Supply Agreement (AERG PSA) with Ameren Energy Resources Generating Company (AERG).
  • 3Both PSAs are effective from January 1, 2007, through December 31, 2022, with provisions for annual renewal thereafter.
  • 4The agreements cover the sale and purchase of all available capacity and associated energy from Genco's ~4,000 MW generation fleet and AERG's ~1,100 MW generation fleet.
  • 5Detailed formulas are established for calculating the "Energy Charge" and "Monthly Capacity Charge" under both PSAs.
  • 6The filing specifies various "events of default" for each agreement, including provisions for suspension of performance or termination of the PSA.
  • 7These PSAs represent a material definitive agreement impacting Ameren's operational and financial structure for its subsidiaries.

Frequently Asked Questions

The primary purpose of these Power Supply Agreements is to establish a formal framework for Ameren's subsidiary, Ameren Energy Marketing Company, to purchase all available power capacity and associated energy from two other Ameren subsidiaries, Ameren Energy Generating Company (Genco) and Ameren Energy Resources Generating Company (AERG). This aims to centralize and optimize the management of Ameren's generation assets and energy sales.

Both the Genco PSA and the AERG PSA are set to commence on January 1, 2007, and will continue through December 31, 2022. After the initial term, they will continue from year to year unless either party provides at least six months' advance written notice of termination.

The PSAs detail how the "Energy Charge" and "Monthly Capacity Charge" will be calculated. The Energy Charge is derived from the Marketing Company's gross revenues after deducting capacity charges and other expenses, divided by the megawatt-hours generated. The Monthly Capacity Charge is based on the monthly fixed costs of operating the generation fleets of Genco and AERG.

Events of default include extended forced outages (continuing for one year), failure to make payments within five days of notice, failure to cure other performance obligations within fifteen days of notice, bankruptcy or insolvency-related events, and failure to provide adequate "Performance Assurance" (collateral) within three business days of notice if creditworthiness is deemed unsatisfactory.