8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Jun 12, 2007)

Filed June 12, 2007For Securities:AEE

Summary

Ameren Corporation (AEE) and its subsidiary Union Electric Company (UE), doing business as AmerenUE, filed an 8-K on June 12, 2007, to provide updates on two significant regulatory matters. The first concerns the electric rate order issued by the Missouri Public Service Commission (MoPSC) on May 22, 2007. While the MoPSC authorized an increase in UE's base electric rates of approximately $42 million, effective June 1, 2007, this was substantially lower than the initial $361 million requested. AmerenUE has applied for a rehearing and clarification on key aspects of this order, specifically the rejection of a fuel and purchased power cost recovery mechanism and the authorized return on equity of 10.2%. Other parties are also seeking rehearing regarding the treatment of a power supply contract and the inclusion of certain generating facilities in the rate base. The second update addresses the Taum Sauk pumped-storage hydroelectric facility incident. The MoPSC Staff has filed a motion to open an investigation into UE's electric plant and operational practices following the December 2005 breach of the upper reservoir. AmerenUE disputes the basis for this motion and intends to oppose it. Investors should note that the outcomes of both the rate case rehearing requests and the potential Taum Sauk investigation are currently unpredictable and could significantly impact Ameren's future financial performance and regulatory standing.

Key Highlights

  • 1AmerenUE applied for rehearing and clarification on a recent Missouri Public Service Commission (MoPSC) electric rate order.
  • 2The MoPSC authorized a $42 million rate increase, significantly less than the $361 million initially requested by AmerenUE.
  • 3Key points of contention in the rehearing request include the rejection of a fuel/purchased power cost recovery mechanism and the authorized 10.2% return on equity.
  • 4Other parties are also seeking rehearing, focusing on the treatment of a power supply contract and the inclusion of certain generating facilities' costs in the rate base.
  • 5The MoPSC Staff has moved to open an investigation into AmerenUE's electric plant and operational practices following the Taum Sauk incident.
  • 6AmerenUE believes the basis for the Taum Sauk investigation is inaccurate and intends to oppose the motion.
  • 7The outcomes of both the rate case rehearing and the potential Taum Sauk investigation are uncertain at this time.

Frequently Asked Questions

The Missouri Public Service Commission (MoPSC) authorized an increase in AmerenUE's base electric rates of approximately $42 million, effective June 1, 2007. This is substantially lower than the $361 million originally requested by AmerenUE.

AmerenUE applied for a rehearing and clarification on certain aspects of the MoPSC rate order, including the rejection of its proposed fuel and purchased power cost recovery mechanism and the authorized 10.2% return on equity. Other parties are also seeking rehearing on issues related to power supply contracts and the inclusion of certain generation facility costs.

The Staff of the MoPSC has filed a motion to open an investigation into AmerenUE's electric plant and operational practices in light of the December 2005 Taum Sauk reservoir breach. AmerenUE intends to oppose this motion, believing the grounds for the investigation are inaccurate.

The outcomes of the rate case rehearing and the potential Taum Sauk investigation are currently unpredictable. A less favorable outcome on the rate increase could impact revenue, while the Taum Sauk investigation could lead to further costs or operational restrictions. Investors should monitor these regulatory proceedings closely.