Summary
Ameren Corporation (AEE) announced on October 4, 2011, that it will cease operations at four generating units across its Meredosia and Hutsonville energy centers by the end of 2011. This decision, driven primarily by the uneconomical costs of complying with the EPA's Cross-State Air Pollution Rule (CSAPR) and the lack of a long-term capacity market, impacts 369 megawatts of net generating capacity. The company anticipates recording a significant charge to earnings in the third quarter of 2011 due to asset impairments and severance costs. These shutdowns are expected to result in a total pre-tax charge of approximately $35 million ($26 million for plant book value impairment, $5 million for materials and supplies, and $4 million for severance costs). Ameren also expects to receive cash tax benefits related to these shutdowns and previously recorded asset retirement obligations. This strategic move highlights the increasing cost of environmental compliance and market dynamics impacting older generating facilities.
Key Highlights
- 1Ameren Corporation is ceasing operations at four generating units at its Meredosia and Hutsonville energy centers by year-end 2011.
- 2The decision is primarily driven by the anticipated high costs of complying with the EPA's Cross-State Air Pollution Rule (CSAPR).
- 3A lack of a multi-year capacity market managed by MISO also contributed to the decision, preventing necessary investments in environmental controls.
- 4The shutdown affects 369 megawatts of net generating capacity.
- 5Ameren expects to record a pre-tax charge of approximately $35 million in the third quarter of 2011, including asset impairments and severance costs.
- 6The company anticipates receiving cash tax benefits related to the shutdowns and asset retirement obligations.