DECATUR, PEORIA, and SPRINGFIELD, Ill., Feb. 27 /PRNewswire-FirstCall/ -- Ameren Corporation's Illinois utility subsidiaries (AmerenCILCO, AmerenCIPS and AmerenIP) today proposed providing $20 million in the aggregate for relief of residential electric heat customers and others who use large amounts of electricity.
Appearing before the Illinois House Committee of the Whole session today, Ameren Illinois President and Chief Executive Officer Scott A. Cisel said the relief would take the form of a one-time bill credit beginning in March. Customers will not be required to repay this one-time bill reduction credit.
In addition, Cisel said the Ameren Illinois utilities are willing to eliminate the 3.25 percent interest rate for customers who enroll in the Ameren Customer Elect Plan (CEP) for phasing in the higher electricity rates. This charge covered about half of Ameren's financing cost.
"These initiatives were finalized following a series of stakeholder forums called by Sen. James Clayborne of East St. Louis," said Cisel.
"The input provided at these sessions plus the input we have received from other members of the legislature has helped us in refining our comprehensive plan that will allow us to better meet the needs of all our customers."
An Illinois Commerce Commission (ICC) filing will be made to seek approval for implementation of these programs. The Ameren Illinois utilities will not seek recovery of these expenditures from customers. If approved by the ICC, the one-time credit for residential customers would result in a pre-tax charge to Ameren's earnings in 2007 of $20 million, or 6 cents per share. In addition, eliminating the below-market interest rate on deferred amounts under the CEP will increase financing costs for the Ameren Illinois utilities during the deferral period. The actual cost to Ameren will depend on the level of participation in the CEP. The charge for the one-time credit and additional financing costs were not reflected in Ameren's 2007 earnings guidance issued on Feb. 15, 2007.
"We understand the burden higher electricity costs have placed on our customers. Although the utilities are only passing through the supply costs to our customers, these costs are significantly higher than the rates customers have paid for the past 15 to 25 years," said Cisel.
"Though the new rates are now at the national average, we are taking this initiative because the sharp increase in rates has created a significant burden for many of our customers -- a burden that has created a hardship for some customers," Cisel said.
"While we acknowledge these proposals will place a financial constraint on the Ameren Illinois utilities," Cisel said, "this comprehensive proposal will be of real benefit to our customers and provide our utilities with sufficient financial stability to keep the lights on and the natural gas flowing."
Details of the proposals include:
One-time credit on residential bills. These one-time reductions would apply to active residential accounts, with credits appearing on electric bills to be issued beginning in early March and continuing for the subsequent 30 days, until every billing cycle has been completed. For bills issued during early March and through early April, assuming ICC approval of the plan, large residential energy users would see the following one-time estimated bill credits computed from their usage on a prior monthly bill (actual bill credits will vary slightly by Ameren Illinois utility):
-- $40 for a customer using 2,000 kilowatt-hours (kWhs) who paid a total
bill of about $195.
-- $170 for a customer using 4,000 kWhs who paid a total bill of about
$365.
-- $300 for a customer using 6,000 kWhs who paid a total bill of about
$540.
Delayed payment schedule for the CEP (the phase-in plan). The ICC-approved program calls for the second 14 percent step increase to take effect for usage on and after Jan. 1, 2008. Today's proposal would delay this increase until April 1, 2008.
The companies also propose to delay the third 14 percent step increase (if required) from Jan. 1, 2009, to April 1, 2009, and to delay any final step to full rates, if needed, from Jan. 1, 2010, to April 1, 2010.
The companies propose to delay the beginning of deferred balance repayment period from January 2010 to April 2010, extending repayment terms for 36 months without interest.
Cisel also outlined the details of a proposal to spend $15 million for energy assistance and energy efficiency as follows:
-- $6 million would go to energy assistance programs for low-income
customers.
-- $4 million to sponsor a rebate program for energy efficient light
bulbs.
-- $3 million would be allocated for residential energy audits and the
purchase of insulation for homes with electric heat.
-- $1 million would go to customers who pay a percentage of their income
for electric service along with an allocation from federal energy
assistance funds.
-- $1 million would be allocated for various programs addressing energy
efficiency and energy education.
Customers can visit http://www.ameren.com/ for information on how to sign up for the phase-in plan. Once approved, the plan will be described in mailings to homes and businesses in the near future.
BACKGROUND: Since Ameren's Illinois utilities own no generation, the companies must purchase power from the competitive market to provide customers' energy needs. These costs are passed onto customers -- dollar-for- dollar with no mark-up. These wholesale costs are higher than those contracted for in the past. However, even with the 2007 higher electric rates primarily resulting from increased electric supply costs, Ameren Illinois residential customers' electric rates are still at the national averages.
Ameren Corporation (NYSE: AEE) through its subsidiaries, serves 1.2 million electric and nearly 800,000 natural gas customers in 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 elsewhere in this release and in our filings with the Securities and Exchange Commission, could cause
actual results to differ materially from management expectations as suggested by such forward-looking statements:
-- regulatory or legislative actions, including changes in regulatory
policies and ratemaking determinations, such as the outcome of
AmerenUE, AmerenCIPS, AmerenCILCO and AmerenIP rate proceedings or the
enactment of legislation freezing electric rates at 2006 levels or
similar actions that impair the full and timely recovery of costs in
Illinois;
-- the impact of the termination of the joint dispatch agreement;
-- changes in laws and other governmental actions, including monetary and
fiscal policies;
-- the effects of increased competition in the future due to, among other
things, deregulation of certain aspects of our business at both the
state and federal levels, and the implementation of deregulation, such
as when the current electric rate freeze and current power supply
contracts expired in Illinois in 2006;
-- the effects of participation in the Midwest Independent Transmission
System Operator;
-- the availability of fuel such as coal, natural gas and enriched uranium
used to produce electricity; the availability of purchased power and
natural gas for distribution; and the level and volatility of future
market prices for such commodities, including the ability to recover
the costs for such commodities;
-- the effectiveness of our risk management strategies and the use of
financial and derivative instruments;
-- prices for power in the Midwest;
-- business and economic conditions, including their impact on interest
rates;
-- disruptions of the capital markets or other events that make access to
necessary capital more difficult or costly;
-- the impact of the adoption of new accounting standards and the
application of appropriate technical accounting rules and guidance;
-- actions of credit rating agencies and the effects of such actions;
-- weather conditions and other natural phenomena;
-- the impact of system outages caused by severe weather conditions or
other events;
-- generation plant construction, installation and performance, including
costs associated with AmerenUE's Taum Sauk pumped-storage hydroelectric
plant incident and its future operation;
-- recoverability through insurance of costs associated with AmerenUE's
Taum Sauk pumped-storage hydroelectric plant incident;
-- operation of AmerenUE's nuclear power facility, including planned and
unplanned outages, and decommissioning costs;
-- the effects of strategic initiatives, including acquisitions and
divestitures;
-- the impact of current environmental regulations on utilities and power
generating companies and the expectation that more stringent
requirements will be introduced over time, which could have a negative
financial effect;
-- labor disputes, future wage and employee benefits costs, including
changes in returns on benefit plan assets;
-- the inability of our counterparties and affiliates to meet their
obligations with respect to contracts and financial instruments;
-- the cost and availability of transmission capacity for the energy
generated by company facilities or required to satisfy energy sales;
-- legal and administrative proceedings; and
-- acts of sabotage, war, terrorism or intentionally disruptive acts.
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 publicly update or revise any forward-looking statements to reflect new information, future events, or otherwise.
SOURCE: Ameren Corporation
CONTACT: Media: Leigh Morris, +1-217-535-5228, or Natalie Hemmer,
+1-217-424-7541, or Neal Johnson, +1-309-677-5516, or Investors: Bruce
Steinke, +1-314-554-2574, all of Ameren Corporation
Web site: http://www.ameren.com/