8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Dec 17, 2012)

Filed December 17, 2012For Securities:AEE

Summary

Ameren Corporation and its subsidiary Ameren Missouri have reported a significant regulatory event regarding Ameren Missouri's request for an electric service revenue increase. The Missouri Public Service Commission (MoPSC) has approved an increase of approximately $260 million in annual revenues for Ameren Missouri, effective by January 2, 2013. This approval is a key development for investors as it provides greater clarity on future revenue streams and cost recovery mechanisms. The approved increase includes significant components for recovering net fuel costs ($84 million), energy efficiency programs ($80 million), and other non-fuel costs ($96 million). Notably, the MoPSC also approved the continued use of Ameren Missouri's fuel adjustment clause (FAC) with modifications, allowing for a pass-through of 95% of fuel and purchased power cost changes, subject to prudency review. This regulatory decision is crucial for managing operational cost fluctuations and ensuring stable earnings for the utility.

Key Highlights

  • 1MoPSC approved an approximate $260 million annual revenue increase for Ameren Missouri's electric service.
  • 2The revenue increase is effective by January 2, 2013, upon tariff filings.
  • 3Key components of the increase include $84 million for net fuel costs and $80 million for energy efficiency programs.
  • 4Ameren Missouri's fuel adjustment clause (FAC) was approved for continued use, allowing for pass-through of 95% of fuel/purchased power cost changes.
  • 5The FAC now includes transmission charges, which shifts some revenue recovery from base rates to the FAC.
  • 6The MoPSC approved the continuation of vegetation management, infrastructure inspection, and pension/post-employment benefit cost trackers.
  • 7A new storm restoration cost tracking mechanism was established.
  • 8Ameren Missouri's request for plant-in-service accounting treatment and recovery of 2011 severance costs was not approved.

Frequently Asked Questions

The primary impact is the approved increase in annual electric service revenues for Ameren Missouri of approximately $260 million. This is expected to bolster the company's revenue and improve its ability to recover operational costs, including fuel, energy efficiency programs, and other expenses, thereby supporting earnings.

The continued use of the FAC, with 95% pass-through of fuel and purchased power costs and the inclusion of transmission charges, is designed to mitigate earnings volatility related to commodity price fluctuations. While it shifts the recovery of some costs from base rates to the FAC, the order states this change will have no immediate impact on earnings but provides a mechanism for future cost recovery.

Yes, the MoPSC did not approve Ameren Missouri's request for plant-in-service accounting treatment for assets placed in service between rate cases. Additionally, the recovery of its 2011 severance costs was also denied. These denials mean Ameren will need to seek recovery through future rate cases or absorb these costs differently.

The filing indicates that Ameren Missouri is evaluating the order and has not decided whether to seek rehearing or appeal. Similarly, the Missouri Office of Public Counsel and other intervenors may also pursue rehearing or appeals. The outcome of any such actions is uncertain and could impact the final revenue increase and regulatory treatment.