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Ameren Files Illinois Commerce Commission Application to Acquire Illinois Power Company, Committing to Infrastructure Upgrades, Limited Employee Reductions and Strong Community Support
Ameren Corporation (NYSE: AEE) today filed its request for expedited Illinois Commerce Commission (ICC) review and approval of its agreement to acquire the stock of Decatur, Ill.-based Illinois Power Company (IP) from Dynegy Inc. (NYSE: DYN). Ameren has requested that the ICC issue a final order by Sept. 15, 2004.

Ameren announced on Feb. 3 the $2.3 billion transaction, which includes Dynegy's 20 percent interest in Electric Energy, Inc, owner of a Joppa, Ill., coal-fired power plant, and 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.

Today's ICC regulatory application and testimony outlines Ameren's plans to open the power supply requirements for the IP customer load to competitive bid after 2006. Ameren made a similar commitment to the ICC in its prior acquisition of CILCORP Inc. from The AES Corporation\-a transaction that closed a year ago. In the filing, Ameren also discusses plans to bid a portion of IP's power supply for 2005 and 2006. The company also reaffirms Ameren's commitments to limit involuntary, acquisition-related IP work force reductions to no more than 25 employees for a period of four years; to keep IP employees and retirees and those retirees' surviving dependents on current IP or appropriate Ameren benefit plans; to honor all existing labor agreements; to invest between $275 million and $325 million in energy infrastructure over the first two years of ownership; to increase total contributions to United Way, civic, charitable and social service organizations in IP's service territory to at least $1.5 million annually; and to strongly support economic development throughout the service areas.

Ameren also discloses its plan to recapitalize IP to reduce its cost of financing. The conditions and commitments that are proposed in the application are directly related to the actions that will be undertaken both to restore IP to financial health and to maintain and enhance the quality of electric and gas service that IP provides to the public.

In addition, as promised, Ameren has distributed checks totaling $300,000 to 20 United Way organizations from across the IP service area. More than half of those organizations received their checks at a Feb. 19 Chamber of Commerce luncheon in Decatur, featuring Gary L. Rainwater, Ameren chairman and chief executive officer, as a speaker.

"As we have said, this transaction is expected to offer a high level of service, strong benefits to the IP-area communities and increased returns for investors," says Rainwater. "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 ICC but also to approval of the Securities and Exchange Commission, the Federal Energy Regulatory 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 either 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.

Forward-Looking Statements

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 companys 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 Amerens generating facilities or required to satisfy energy sales made by Ameren; and

• legal and administrative proceedings.