ST. LOUIS, Oct. 4, 2011 /PRNewswire/ -- Ameren Energy Resources Company, LLC (AER), the holding company for the merchant generation business of Ameren Corporation (NYSE: AEE), announced today the Meredosia and Hutsonville energy centers will cease operating by the end of 2011.
The shutdown of these centers will result in the elimination of 90 positions at the generating facilities in Meredosia and Hutsonville, Ill. Both energy centers are part of Ameren Energy Generating Company, a subsidiary of AER. The net generating capacity of Meredosia Energy Center is 369 megawatts—including one 203-megawatt, coal-fired unit and one 166-megawatt, oil-fired unit (Unit 4). The Hutsonville Energy Center has two coal-fired units with a net generating capacity of 151 megawatts.
The closure of these facilities is expected to result in a charge to third quarter 2011 earnings. Ameren Energy Generating Company's net investment in the Hutsonville and Meredosia energy centers totaled $26 million and $1 million, respectively, as of June 30, 2011. In addition, the company expects to incur other costs related to employee severance and the closure of these centers that are still being determined.
The two facilities provided approximately 4 percent of Ameren Energy Resources' total generation over the last two years and a lesser percentage of margin.
"We are working to provide alternative employment opportunities and reassignments within AER for many of the 22 management and 68 union-represented employees affected by these decisions," said AER President and Chief Executive Officer Steven R. Sullivan. "It is my sincere hope that any employee desiring a reassignment opportunity can be accommodated. We will work hard to achieve this objective."
The closure of these units is primarily the result of the expected cost of complying with the Cross-State Air Pollution Rule (CSAPR) issued in July 2011 by the U.S. Environmental Protection Agency. CSAPR requires reductions in sulfur dioxide (SO2) by 73 percent and nitrogen oxide (NOx) by 54 percent from 2005 levels. It is one of a number of regulations expected to require expensive environmental controls on coal-fired generating units across the nation in coming months and years.
"CSAPR tightens the restrictions on SO2 and NOx emissions to the point that we cannot continue to economically operate these units," said Sullivan. "Numerous options to bring these units into compliance were explored, including installing additional environmental controls, but the costs were just too high to be justified. We regret the impact this will have on our employees and the communities where these plants have been important to the local economies."
The Meredosia Energy Center is also the proposed site for the world's first, full-scale, oxy-combustion coal-fired plant for capture and storage of carbon dioxide (CO2). In 2010, AER announced a cooperative agreement with the U.S. Department of Energy that would provide funding for this project at Unit 4 at Meredosia. It is part of FutureGen 2.0, which calls for transporting the captured CO2 over a pipeline to an Illinois storage facility developed by others.
"Ceasing current operations at Meredosia has no impact on the viability of FutureGen 2.0," said Sullivan. "FutureGen is still several years from needing a generating unit to test clean coal technology. We are currently in discussions with the FutureGen Alliance to determine how Meredosia Unit 4 could best be used for this project."
Another factor driving the closure of operations at these facilities is a lack of a multi-year capacity market managed by the Midwest Independent Transmission System Operator (MISO). "Without the ability to sell capacity several years out, we cannot afford to make the substantial investment for environmental controls that would be required to keep these units in service," said Sullivan. "I suspect that MISO's proposed capacity construct, recently filed with the Federal Energy Regulatory Commission, will lead to the closure of additional non-AER merchant plants in the Midwest over the next few years unless the proposal is significantly modified.
"The Meredosia and Hutsonville energy centers have been venerable plants that have served the state of Illinois well over a number of decades. While we will miss the plants as part of our fleet, our immediate focus is on the impact to our employees."
Positions affected include 14 management and 39 union-represented employees at Meredosia Energy Center and 8 management and 29 union-represented employees at Hutsonville Energy Center. AER will be offering a range of severance benefits for those employees for whom other opportunities or reassignments are not found.
Ameren's merchant generating operations include AER's Ameren Energy Generating Company's and AmerenEnergy Resources Generating Company's coal-fired plants plus multiple natural gas-fired units and Ameren Energy Marketing, an energy marketing and trading operation.
With assets of approximately $23 billion, Ameren serves 2.4 million electric customers and one million natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
Forward-looking Statements
Statements in this release not based on historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in Ameren's Form 10-K for the year ended December 31, 2010, and elsewhere in this release and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:
Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.
SOURCE Ameren Corporation