8-KOther Events

AMEREN CORP 8-K Report, Corporate Update (Jan 9, 2023)

Filed January 9, 2023For Securities:AEE

Summary

Ameren Corporation, through its subsidiary Ameren Illinois Company, has filed a request with the Illinois Commerce Commission (ICC) to increase annual revenues for natural gas delivery service by approximately $160 million. This filing represents a significant request aimed at recovering infrastructure investments and ensuring a reasonable return on equity. The proposed increase is based on a 10.7% return on common equity and a capital structure of 54% common equity, with a rate base of $2.9 billion. Notably, Ameren Illinois is utilizing a 2024 future test year to mitigate regulatory lag, a common concern for utilities. A decision from the ICC is anticipated by December 2023, with potential new rates taking effect in January 2024. While the company is seeking this increase, the exact amount of approved rate changes and their sufficiency to cover costs and earn a reasonable return remain uncertain pending the ICC's decision.

Key Highlights

  • 1Ameren Illinois filed a request with the ICC for a $160 million increase in annual natural gas delivery revenues.
  • 2The request aims to recover costs and earn a 10.7% return on common equity, with a projected rate base of $2.9 billion.
  • 3A future test year (2024) is being used to reduce regulatory lag.
  • 4The ICC's decision is expected by early December 2023.
  • 5New rates, if approved, are anticipated to be effective by January 2024.
  • 6The actual approved rate increase and its sufficiency are currently unpredictable.

Frequently Asked Questions

This 8-K filing announces that Ameren Illinois Company has formally requested a $160 million increase in its annual revenues for natural gas delivery services from the Illinois Commerce Commission (ICC).

The request is based on Ameren Illinois' need to recover costs and earn a reasonable return on its investments. Specifically, it is based on a projected 10.7% return on common equity, a capital structure with 54% common equity, and a rate base of $2.9 billion.

A 'future test year' (in this case, 2024) is a regulatory mechanism where a utility proposes rates based on projected costs and investments for a future period, rather than historical data. Ameren Illinois is using it to reduce 'regulatory lag,' which is the time delay between when a utility incurs costs and when it can recover those costs through approved rates.

The Illinois Commerce Commission (ICC) is expected to make a decision on Ameren Illinois' request by early December 2023. If approved, the new rates would likely become effective in January 2024.

No, the $160 million is the amount requested by Ameren Illinois. The ICC will review the request and may approve a different amount, or potentially deny the request. Ameren Illinois states it cannot predict the final approved rate change or whether it will be sufficient to recover its costs and earn a reasonable return.