8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Jul 5, 2019)

Filed July 5, 2019For Securities:AEE

Summary

Ameren Corporation (AEE), through its subsidiary Ameren Missouri, has filed a regulatory request with the Missouri Public Service Commission (MoPSC) to decrease annual electric service revenues by approximately $1 million. This filing is a routine regulatory requirement to reset base rates and allows Ameren Missouri to continue using the fuel adjustment clause (FAC). The proposed decrease is driven by several factors, including lower net energy costs and higher weather-normalized sales volumes, partially offset by increased depreciation expense for new infrastructure investments. While the net effect is a modest proposed decrease, investors should note that the company is seeking approval for new electric infrastructure investments and the continued use of various regulatory recovery mechanisms. The MoPSC proceeding is expected to conclude by late April 2020, with new rates potentially effective in late May 2020. Ameren cautions that the final outcome of the rate case, including the exact amount of any rate change and the recovery of costs, remains uncertain.

Key Highlights

  • 1Ameren Missouri filed a request with the MoPSC on July 3, 2019, seeking an annual electric revenue decrease of $1 million.
  • 2This filing is necessary to reset Ameren Missouri's base electric rates every four years and allows for continued use of the fuel adjustment clause (FAC).
  • 3The proposed rate decrease is primarily due to an estimated $100 million reduction in net energy costs and $55 million from higher weather-normalized customer sales.
  • 4Offsetting factors include a $115 million increase in depreciation and amortization expense related to new electric infrastructure investments.
  • 5Ameren Missouri is also requesting continued use of regulatory recovery mechanisms for pension and postretirement benefits, uncertain income tax positions, and excess deferred taxes.
  • 6A decision from the MoPSC is expected by late April 2020, with new rates potentially effective in late May 2020.
  • 7The company acknowledges uncertainty regarding the final approved rate changes and the sufficiency of recovery for its costs and investments.

Frequently Asked Questions

The primary purpose is to fulfill a regulatory requirement to reset Ameren Missouri's base electric rates, which must be done at least every four years. This filing also allows the company to continue using the fuel adjustment clause (FAC) and provides an opportunity to incorporate future wind generation investments into its rate base.

The requested decrease of $1 million is a net result of several factors. Key drivers for the decrease include lower net energy costs (offset by FAC recovery) and higher weather-normalized customer sales volumes. These are partially offset by increased depreciation expenses related to new electric infrastructure investments.

The MoPSC proceeding is expected to take up to 11 months, with a decision anticipated by late April 2020. New rates would then be effective in late May 2020.

No, Ameren Missouri states that it cannot predict the final approved rate changes or whether they will be sufficient to recover its costs and earn a reasonable return on its investments. The outcome of the regulatory process is uncertain.