8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Sep 13, 2021)

Filed September 13, 2021For Securities:AEE

Summary

Ameren Corporation (AEE) announced on September 13, 2021, that Illinois Senate Bill 2408 (SB 2408) was approved by the Illinois General Assembly and is awaiting the governor's signature. This legislation proposes significant changes to the regulatory framework for Ameren Illinois' electric distribution business. If enacted, the bill would allow Ameren Illinois to opt for a new "Multi-Year Plan" to establish rates for its electric distribution business, beginning in 2024, in lieu of traditional rate reviews. The Multi-Year Plan offers a four-year period for rate setting, with opportunities for performance-based adjustments to the authorized return on equity (ROE). These adjustments are tied to specific performance metrics like reliability, supplier diversity, and customer affordability. The bill also introduces a "True-up Cap" that limits annual revenue requirement adjustments, while excluding certain extraordinary costs. Importantly, revenue would remain decoupled from sales volumes, consistent with the current framework.

Key Highlights

  • 1Illinois Senate Bill 2408 (SB 2408) approved by the General Assembly, pending governor's signature.
  • 2SB 2408 introduces a "Multi-Year Plan" option for Ameren Illinois' electric distribution rate setting starting in 2024.
  • 3The Multi-Year Plan allows for four-year rate periods and includes performance-based adjustments to the authorized Return on Equity (ROE).
  • 4Performance metrics for ROE adjustments include reliability, supplier diversity, affordability, customer service, distributed energy resource interconnections, and demand response.
  • 5A "True-up Cap" limits annual revenue requirement adjustments, with specific exclusions for extraordinary costs (e.g., storms, new business, interest rates, taxes).
  • 6Electric distribution revenues will continue to be decoupled from sales volumes under the proposed Multi-Year Plan.
  • 7The bill allows for specific investments in renewable generation and electric vehicle infrastructure, including pilot projects.

Frequently Asked Questions

The main impact is the potential introduction of a new "Multi-Year Plan" for setting electric distribution rates. This plan would allow Ameren Illinois to establish rates for a four-year period, offering more predictability than traditional annual rate reviews, and would incorporate performance-based incentives and penalties for the utility's ROE.

Under the Multi-Year Plan, base electric rates would be established for a four-year period. While there's a "True-up Cap" limiting annual revenue adjustments to 105% of the approved amount, certain costs are excluded from this cap, and reconciliations for actual costs would occur within 24 months. The plan also allows for phased-in increases for the first year, potentially deferring a portion of the increase.

Yes, SB 2408 permits Ameren Illinois to make certain investments in renewable generation and electric vehicle infrastructure. This includes up to $40 million for two pilot projects involving solar generation and battery storage in East St. Louis and Peoria, Illinois.

The "True-up Cap" limits the amount of annual revenue Ameren Illinois can recover from customers for its actual operating costs to no more than 105% of the revenue requirement initially approved for that year under the Multi-Year Plan. This provides some protection against excessive cost recovery, though certain costs are excluded from this cap.