8-KOther EventsExhibits & Filings

AMEREN CORP 8-K Report, Corporate Update (Nov 28, 2007)

Filed November 28, 2007For Securities:AEE

Summary

Ameren Corporation (AEE) and its subsidiary Union Electric Company (UE) announced a significant settlement agreement on November 28, 2007, with the State of Missouri regarding the December 2005 breach of the upper reservoir at UE's Taum Sauk pumped-storage hydroelectric facility. This settlement resolves lawsuits and claims for damages, requiring UE to rebuild the reservoir, subject to FERC approval. Investors should note that while UE believes insurance will cover most damages and liabilities, up to $8 million annually for replacement power, the company has explicitly agreed not to recover settlement or reconstruction costs from ratepayers, with certain exclusions for unforeseeable circumstances or costs that would have been incurred regardless of the breach.

Key Highlights

  • 1Ameren subsidiary UE reached a settlement with the State of Missouri to resolve claims related to the December 2005 Taum Sauk reservoir breach.
  • 2The settlement requires UE to replace the breached upper reservoir, contingent on Federal Energy Regulatory Commission (FERC) authorization.
  • 3UE anticipates that insurance will cover substantially all damages and liabilities, including settlement costs and up to $8 million annually for replacement power.
  • 4Crucially, UE has agreed not to seek recovery of settlement payments or costs for the new reservoir reconstruction from its ratepayers, with limited exceptions.
  • 5The settlement is subject to court approval after a public review period of 30 to 45 days.

Frequently Asked Questions

The main event is the announcement of a settlement agreement between Ameren's subsidiary, Union Electric Company (UE), and the State of Missouri to resolve legal claims and damages stemming from the December 2005 breach of the Taum Sauk pumped-storage hydroelectric plant's upper reservoir.

UE is required to replace the breached upper reservoir at the Taum Sauk facility, subject to approval from the Federal Energy Regulatory Commission (FERC). The settlement also addresses damages and other relief related to the incident.

No, as part of the settlement, UE has agreed not to recover from ratepayers any monetary or in-kind payments required by the settlement or costs incurred in reconstructing the new upper reservoir. Certain exclusions apply, such as costs for enhancements or those arising from unforeseeable circumstances.

UE believes that insurance will cover the majority of the costs related to the settlement, including damages and up to $8 million annually for replacement power. However, the ultimate financial impact will depend on the final court approval, insurance carrier reviews, and the precise costs of reconstruction.