8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Feb 18, 2011)

Filed February 18, 2011For Securities:AEE

Summary

Ameren Corporation's subsidiary, Ameren Illinois Company (AIC), has filed requests with the Illinois Commerce Commission (ICC) to increase its electric and natural gas delivery service rates. The proposed annual increase for electric delivery is $60 million, based on an 11.25% return on equity and a rate base of $1.997 billion. For natural gas delivery, AIC is seeking an annual increase of $51 million, based on an 11% return on equity and a rate base of $978 million. These rate increase requests utilize a projected 2012 test year, incorporating higher costs and anticipated investments through 2012. AIC is also seeking a rider mechanism to reconcile pension costs annually, allowing for recovery or refund of differences between incurred and allowed pension expenses. The ICC proceedings are expected to last up to 11 months, with decisions due by January 2012. The outcome, timing, and sufficiency of any approved rate changes remain uncertain.

Key Highlights

  • 1Ameren Illinois Company (AIC) filed requests for significant annual rate increases for both electric ($60 million) and natural gas ($51 million) delivery services.
  • 2The rate hike requests are based on proposed returns on equity of 11.25% for electric and 11% for natural gas.
  • 3AIC is utilizing a projected 2012 test year, which includes anticipated higher costs and investments, to justify the rate increases.
  • 4A key component of the filing is the request for a pension cost rider mechanism for annual reconciliation and recovery/refund.
  • 5The Illinois Commerce Commission (ICC) has up to 11 months to review these requests, with decisions expected by January 2012.
  • 6The company acknowledges uncertainty regarding the final approved rate changes, their effective dates, and whether they will adequately cover costs and provide a reasonable return.

Frequently Asked Questions

The primary purpose of this 8-K filing is to inform investors that Ameren Illinois Company (AIC), a subsidiary of Ameren Corporation, has filed requests with the Illinois Commerce Commission (ICC) seeking approval to increase its electric and natural gas delivery service rates.

AIC is requesting an annual increase of $60 million for electric delivery, based on an 11.25% return on equity and a $1.997 billion rate base. For natural gas delivery, the request is for $51 million annually, based on an 11% return on equity and a $978 million rate base.

AIC is using a projected 2012 test year for its rate requests to limit regulatory lag. This means the rate increase is being based on anticipated costs and investments in 2012, rather than just historical costs, to better reflect future operating conditions and investment needs.

The pension cost rider mechanism is a request to allow AIC to annually reconcile and recover or refund any difference between the actual pension expense incurred and the amount allowed for in the rates. This aims to ensure that AIC can recover its pension costs efficiently.