8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Jul 23, 2007)

Filed July 23, 2007For Securities:AEE

Summary

Ameren Corporation (AEE) filed an 8-K on July 23, 2007, to announce a significant agreement in principle reached by various parties in Illinois regarding electric rates and power procurement. The core of the announcement is a comprehensive program designed to provide approximately $1 billion in rate relief and customer assistance for Illinois electric customers, with $488 million allocated specifically to customers of Ameren's Illinois utilities (AmerenCIPS, AmerenCILCO, and AmerenIP). This agreement is a crucial development for investors as it addresses the aftermath of the January 2007 expiration of a nearly decade-long rate freeze in Illinois, which led to anticipated rate increases. The proposed solution involves significant financial contributions from Ameren's utilities, generation companies, and other Illinois electric generators and utilities. The filing details Ameren's contribution of $150 million over four years, with an estimated impact on earnings per share of 45 cents over the same period. Additionally, the agreement outlines a revamped power procurement process, moving away from the current reverse auction model to a request-for-proposal system, and includes provisions for energy conservation and renewable energy sourcing.

Key Highlights

  • 1Agreement in principle reached among Illinois parties on electric rate relief and power procurement.
  • 2Approximately $1 billion total funding for rate relief and customer assistance in Illinois.
  • 3Ameren Illinois utilities and generation companies to contribute $150 million over four years.
  • 4Estimated $488 million in rate relief and assistance to Ameren Illinois customers.
  • 5Total estimated impact on Ameren's earnings per share is 45 cents over four years (2007-2010).
  • 6Discontinuation of the current reverse auction for power procurement, replaced by a request-for-proposal process.
  • 7Agreement includes provisions for energy conservation and increased procurement of renewable energy sources.
  • 8All pending litigation and regulatory actions by the Illinois Attorney General related to past procurement practices will be withdrawn.

Frequently Asked Questions

This 8-K filing announces a significant agreement in principle reached by various parties in Illinois to address electric rate increases following the expiration of a rate freeze, and to reform the state's power procurement process. It details a substantial rate relief and customer assistance program.

Ameren's Illinois utilities (AmerenCIPS, AmerenCILCO, AmerenIP), along with Ameren Energy Generating Company (Genco) and AmerenEnergy Resources Generating Company (AERG), will collectively contribute $150 million over a four-year period. This includes $60 million from the Ameren Illinois utilities, $62 million from Genco, and $28 million from AERG.

The total estimated impact on Ameren's earnings per share from the rate relief and assistance program is 45 cents over the four-year period from 2007 to 2010. This is broken down by year: 26 cents in 2007, 11 cents in 2008, 7 cents in 2009, and 1 cent in 2010.

The current reverse auction used for power procurement in Illinois will be discontinued and replaced with a new process. Starting in 2008, utilities will contract for power needs through a request-for-proposal process, subject to Illinois Commerce Commission (ICC) review. For June 2009 onwards, procurement will focus on separate baseload, intermediate, and peaking power needs via competitive proposals, managed through an annual Procurement Plan overseen by the IPA and ICC.