8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Sep 2, 2009)

Filed September 2, 2009For Securities:AEE

Summary

Ameren Corporation (AEE) announced a significant settlement regarding its Taum Sauk hydroelectric facility incident that occurred in December 2005. On August 31, 2009, Ameren and a majority of its property insurance carriers reached an agreement to settle claims related to the incident, including costs for rebuilding the facility and reimbursement for replacement power. This settlement is expected to cover approximately two-thirds of the total property insurance coverage and Ameren anticipates receiving a final payment by October 1, 2009. The company expects to recover 80% to 90% of the total property insurance claim through this settlement and ongoing discussions with remaining carriers. While this settlement provides a substantial recovery, Ameren is still in discussions with three insurance carriers that have not settled and are involved in litigation concerning the rebuild costs. The ultimate financial impact of the Taum Sauk Incident on Ameren and its subsidiary, Union Electric Company (UE), remains uncertain until these remaining claims and litigation are resolved. Recoverable costs from customers will be subject to rate cases and a prior State of Missouri settlement agreement, which limits recovery to certain costs not considered normal operating expenses or unforeseen circumstances. Any unreimbursed costs could materially impact future earnings.

Key Highlights

  • 1Ameren Corp. and certain property insurance carriers have reached a settlement concerning claims related to the 2005 Taum Sauk hydroelectric facility incident.
  • 2The settlement covers costs associated with rebuilding the facility and reimbursement for replacement power.
  • 3Settling insurance carriers are responsible for approximately two-thirds of the total estimated property insurance coverage.
  • 4Ameren expects to recover 80% to 90% of the total property insurance claim through the settlement and ongoing discussions.
  • 5Final payment from settling insurers is expected by October 1, 2009.
  • 6Discussions and litigation continue with three insurance carriers that have not agreed to the settlement.
  • 7The total financial impact on Ameren's results, financial position, and liquidity remains uncertain pending resolution of remaining insurance claims and litigation.

Frequently Asked Questions

The main development is the settlement reached between Ameren Corporation and a significant portion of its property insurance carriers regarding claims stemming from the 2005 Taum Sauk hydroelectric facility incident. This settlement aims to cover rebuilding costs and replacement power expenses.

Following the settlement with the Settling Insurance Companies, Ameren and UE expect to recover between 80% and 90% of the total property insurance claim related to the Taum Sauk Incident through insurance.

No, not all insurance claims are settled. Ameren is still in discussions and facing litigation with three insurance carriers that have not agreed to the settlement terms. The resolution of these remaining claims is pending.

Yes, certain costs associated with the Taum Sauk facility rebuild may be recoverable from UE's electric customers through rates established in future rate cases. However, this recovery must comply with a November 2007 State of Missouri settlement agreement, which limits the types of costs that can be recovered.