Ameren announced on Feb. 3 the proposed $2.3 billion transaction. The parties also submitted to FERC several agreements, including a firm capacity power supply contract for the annual purchase by IP of 2,800 megawatts of electricity from Dynegy. That power supply contract extends through 2006 and is expected to supply about 75 percent of IP electric customer requirements.
The FERC application also confirms that Ameren is moving ahead with its plans to join the Midwest Independent Transmission System Operator (MISO) \-the regional transmission system organization that acts as an agent to provide transmission service on behalf of its members, who own the transmission assets. On May 1, 2004, Ameren plans to transfer functional control of the AmerenUE and AmerenCIPS transmission systems to MISO through a contractual agreement with a for-profit independent transmission company, GridAmerica LLC., provided it has received all necessary regulatory approvals.
In February 2004, the Missouri Public Service Commission approved an agreement which authorizes AmerenUE to participate in MISO through a contractual agreement with GridAmerica. AmerenCILCO is already a MISO member. The FERC application also seeks approval for IP to join the MISO. The company's future intent is to eventually have all of Ameren operating companies' transmission systems in MISO and managed through GridAmerica.
"Ameren's acquisition of IP and the resulting electric delivery system upgrades we plan to make will benefit general reliability and access to markets for IP customers and for communities throughout the Midwest," says Gary L. Rainwater, chairman, president and chief executive officer, Ameren Corporation. "As we have said, this transaction will offer a high level of service and increased returns for investors. This acquisition is a natural fit with our core energy growth strategy and will provide benefits to customers, employees, communities and our investors."
The acquisition is subject not only to the approval of the FERC and the Illinois Commerce Commission, where a filing was made March 24, but also to approval of the Securities and Exchange Commission, the Federal Communications Commission, and to the expiration of the waiting period under the Hart-Scott- Rodino Act. No approval is required from shareholders of the company. The company expects to make all remaining regulatory filings within the next several weeks and for regulatory approvals to be completed by year-end 2004. With assets of $14.3 billion, Ameren serves 1.7 million electric customers and 500,000 natural gas customers in a 49,000-square-mile area of Missouri and Illinois. Illinois Power, based in Decatur, Ill., serves 600,000 electric and 415,000 natural gas customers in a 15,000 square-mile territory across Illinois. The company was founded more than 75 years ago and its parent company\- Illinova--was purchased in 2000 by Houston, Texas-based Dynegy Inc.
Statements made in this release, which are not based on historical facts, are "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, the company is 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 elsewhere in this release and in past and subsequent filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations as suggested by such "forward-looking" statements:
• the closing and timing of Ameren's acquisition of Illinois Power and the impact of any conditions imposed by regulators in connection with their approval thereof;
• the effects of the stipulation and agreement relating to the AmerenUE Missouri electric excess earnings complaint case and other regulatory actions, including changes in regulatory policy;
• changes in laws and other governmental actions, including monetary and fiscal policy;
• the impact on the company of current regulations related to the opportunity for customers to choose alternative energy suppliers in Illinois;
• the effects of increased competition in the future due to, among other things, deregulation of certain aspects of the company's business at both the state and federal levels;
• the effects of participation in a Federal Energy Regulatory Commission- approved regional transmission organization, including activities associated with the Midwest Independent System Operator;
• the availability of fuel for the production of electricity, such as coal and natural gas, and purchased power and natural gas for distribution, and the level and volatility of future market prices for such commodities, including the ability to recover any increased costs;
• the use of financial and derivative instruments;
• average rates for electricity in the Midwest;
• business and economic conditions;
• the impact of the adoption of new accounting standards and the application of appropriate technical accounting rules and guidance;
• interest rates and the availability of capital;
• actions of ratings agencies and the effects of such actions;
• weather conditions;
• generation plant construction, installation and performance;
• operation of nuclear power facilities and decommissioning costs;
• the effects of strategic initiatives, including acquisitions and divestitures;
• the impact of current environmental regulations on utilities and generating companies and the expectation that more stringent requirements will be introduced over time, which could potentially have a negative financial effect;
• future wages and employee benefits costs, including changes in returns on benefit plan assets;
• disruptions of the capital markets or other events making the Ameren's access to necessary capital more difficult or costly;
• competition from other generating facilities, including new facilities that may be developed;
• difficulties in integrating AmerenCILCO and Illinois Power with Ameren's other businesses;
• changes in the coal markets, environmental laws or regulations, or other factors adversely impacting synergy assumptions in connection with the CILCORP Inc. and Illinois Power acquisitions;
• cost and availability of transmission capacity for the energy generated by Ameren's generating facilities or required to satisfy energy sales made by Ameren; and
• legal and administrative proceedings.
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