8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (May 17, 2018)

Filed May 17, 2018For Securities:AEE

Summary

Ameren Corporation (AEE) reported on May 17, 2018, via an 8-K filing, that Senate Bill 564 (SB 564) was approved by the Missouri General Assembly and sent to the governor. This bill, if enacted into law, would significantly alter Missouri utility regulations impacting Ameren Missouri's electric service business. The key provisions include a mandated rate reduction to pass through the benefits of the Tax Cuts and Jobs Act of 2017 (TCJA) to customers, effective retroactively to January 1, 2018. Furthermore, SB 564 introduces an option for electric utilities like Ameren Missouri to elect Plant-in-Service Accounting (PISA). PISA would allow for the deferral and recovery of a significant portion of certain new capital investments made after August 28, 2018, supporting an estimated $1 billion in incremental capital investment over five years. However, these provisions, including rate caps and PISA, are subject to regulatory approval and have specific durations and exclusions.

Key Highlights

  • 1Missouri Senate Bill 564 (SB 564) has been approved by the General Assembly and awaits the governor's action.
  • 2If enacted, SB 564 mandates a rate reduction to pass TCJA tax savings to customers, retroactive to January 1, 2018.
  • 3SB 564 allows electric utilities to elect Plant-in-Service Accounting (PISA) for certain new capital investments.
  • 4PISA enables the deferral and recovery of 85% of depreciation expense and return on new rate base additions (excluding certain generation and new customer premise investments).
  • 5Enactment of SB 564 is expected to support approximately $1 billion in incremental capital investment by Ameren Missouri from 2019-2023.
  • 6The bill imposes a compound annual growth rate cap of 2.85% on prospective customer rate increases for Ameren Missouri, with base rates frozen until April 1, 2020.
  • 7The PISA election and rate cap provisions are set to expire in December 2023, unless extended.

Frequently Asked Questions

If SB 564 becomes law, customers will see a reduction in their electric rates to reflect the tax savings from the Tax Cuts and Jobs Act of 2017, with this reduction applied retroactively from January 1, 2018. Additionally, prospective rate increases would be capped at a 2.85% compound annual growth rate, with base rates frozen until April 1, 2020.

PISA is an accounting method that allows electric utilities to defer and recover 85% of the depreciation expense and return on certain new property, plant, and equipment investments made after August 28, 2018. This mechanism is designed to encourage and facilitate investment in grid modernization and strengthening, with Ameren Missouri estimating it could support approximately $1 billion in capital expenditures between 2019 and 2023.

Yes, PISA deferrals exclude investments related to new coal-fired, nuclear, and natural gas generating units, as well as service to new customer premises. Furthermore, the recovery of PISA-deferred amounts through rates is subject to regulatory review and a 20-year recovery term, alongside the overall customer rate increase caps.

Both the PISA election and the 2.85% customer rate increase cap are effective through December 2023. Ameren Missouri has the option to request an extension of these provisions through December 2028, subject to approval by the Missouri Public Service Commission (MoPSC).