8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Jul 1, 2016)

Filed July 1, 2016For Securities:AEE

Summary

Ameren Corporation, through its subsidiary Ameren Missouri, has filed a request with the Missouri Public Service Commission (MoPSC) to increase its annual electric revenues by approximately $206 million. This proposed increase, representing about a 7.8% rise in base rates, is driven by several factors including significant infrastructure investments, changes in customer sales volumes (notably the idling of Noranda Aluminum's smelter), increased transmission charges, and other operational cost adjustments. The company is seeking regulatory approval to recover these costs and maintain its earnings. The rate request is based on a projected 9.9% return on equity and a rate base of $7.2 billion. A key component of the filing is the request to amortize $81 million in lost fixed cost recovery related to Noranda's reduced sales, reflecting the financial impact of Noranda's bankruptcy and operational idling. Ameren Missouri is also seeking to continue existing regulatory mechanisms for fuel and purchased power costs, and to implement new tracking mechanisms for transmission charges and revenues. Investors should note that the MoPSC proceeding is expected to take up to 11 months, with a final decision anticipated by late April 2017 and new rates potentially effective in late May 2017. Ameren Missouri's ability to recover costs and earn a reasonable return is contingent upon the MoPSC's approval, and the final outcome remains uncertain.

Key Highlights

  • 1Ameren Missouri filed a request for a $206 million (7.8%) annual electric revenue increase with the MoPSC on July 1, 2016.
  • 2The proposed rate increase is primarily driven by $1.4 billion in recent electric infrastructure investments, reduced customer sales volumes (including Noranda Aluminum), and increased transmission charges.
  • 3Ameren Missouri is seeking to amortize $81 million in lost fixed cost recovery related to Noranda Aluminum's bankruptcy and idling of its smelter.
  • 4The company is requesting a 9.9% return on equity and is proposing an electric rate base of $7.2 billion.
  • 5Ameren Missouri seeks to maintain existing cost recovery mechanisms and implement new ones for transmission charges and revenues.
  • 6The MoPSC is expected to issue a decision by late April 2017, with new rates potentially effective by late May 2017.
  • 7The final approved rate increase and its effectiveness are uncertain and subject to MoPSC determination.

Frequently Asked Questions

The primary reasons for Ameren Missouri's rate increase request are to recover costs associated with significant electric infrastructure investments made since its last rate case, to address reduced customer sales volumes (particularly due to the idling of Noranda Aluminum's smelter), and to account for increased transmission charges from entities like the Midcontinent Independent System Operator (MISO).

Noranda Aluminum's idling of its smelter has significantly reduced Ameren Missouri's sales volumes, leading to an estimated $81 million in lost fixed cost recovery. Ameren Missouri is requesting to amortize this amount over ten years as part of the rate case to recover these unrecovered costs.

The Missouri Public Service Commission (MoPSC) proceeding is expected to last up to 11 months. A decision is anticipated by late April 2017, with new rates potentially becoming effective in late May 2017.

Ameren Missouri is requesting a 9.9% return on equity and has proposed an electric rate base of $7.2 billion for Ameren Missouri.