DECATUR, PEORIA, SPRINGFIELD, Ill., March 7 /PRNewswire-FirstCall/ -- Ameren Corporation's Illinois utility subsidiaries (AmerenCILCO, AmerenCIPS and AmerenIP) today filed a petition with the Illinois Commerce Commission (ICC), seeking approval of a plan to provide approximately a total of $20 million primarily for the relief of residential electric heat customers. Once ICC approval is granted, the relief will be in the form of a one-time credit that will appear on customers' bills perhaps as early as next week.
In addition to this $20-million credit, the Ameren Illinois utilities are asking the ICC to approve significant changes in their Customer Elect Plan (CEP) for phasing in higher electricity rates. If granted, the utilities request would completely eliminate the 3.25 percent interest rate for customers who enroll in the CEP. Furthermore, the length of the phase-in would be extended.
The Ameren Illinois utilities' President & Chief Executive Officer Scott A. Cisel first announced details of these initiatives during testimony he gave on Feb. 27 before the Illinois House of Representatives Committee of the Whole in Springfield.
"These initiatives were finalized following a series of stakeholder forums called by Sen. James Clayborne," said Cisel.
Cisel explained the $20 million cost of the program will not be recovered through rates paid by customers, but instead will be funded entirely by the Ameren Illinois utilities contributions. Approximately $10 million will come from AmerenCIPS and AmerenCILCO, while an additional $10 million will come from the AmerenIP Hazardous Materials Adjustment Clause (HMAC) trust fund. The AmerenIP trust fund was established with company funds in 2004 to cover costs of asbestos-related litigation claims. These funds are available because claims have been less than originally anticipated.
"Over the last few years, we have seen a decline in AmerenIP asbestos settlements. We believe these funds now can better be used to soften the impact of the current rate increases," Cisel said.
"These proposals will place a financial constraint on the Ameren Illinois utilities," Cisel said. "However, we believe this comprehensive proposal will be of real benefit to our customers, while providing the Ameren Illinois utilities with sufficient financial stability to continue providing safe, reliable energy delivery service."
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.
Details of the proposals include:
One-time credit on residential bills. The one-time utility bill reductions would apply to active residential accounts, with credits appearing on electric bills to be issued beginning in March and continuing for approximately 35 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 electricity users would see the following one-time estimated bill credits computed from their usage on their prior monthly bill (actual bill credits will vary slightly by Ameren Illinois utility):
-- About $40 for a customer using 2,000 kilowatt-hours (kWhs) who received a total electric bill of approximately $195. -- About $170 for a customer using 4,000 kWhs who received a total electric bill of approximately $365. -- About $300 for a customer using 6,000 kWhs who received a total electric bill of approximately $540.
Delayed payment schedule for the CEP (the phase-in plan). As presently approved by the ICC, the CEP program calls for the second 14 percent step increase to take effect for usage on and after Jan. 1, 2008. In today's ICC filing, the Ameren Illinois utilities have proposed delaying this increase until early April 2008.
The utilities also propose delaying the third 14 percent step increase (if required) from early January 2009 to early April 2009, and to delay any final step to full rates, if needed, from early January 2010 to early April 2010.
The companies propose to delay the beginning of the deferred balance repayment period from January 2010 to April 2010, extending repayment terms for 36 months without interest being charged to customers.
In addition to the relief plan being filed with the ICC, the Ameren Illinois utilities have pledged to spend an additional $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 fund a pilot percentage of income program with the Illinois Department of Healthcare & Family Services, which would allow low income families to pay a percentage of their income for electric service with the remaining portion of the bill paid from Low Income Home Energy Assistance Program (LIHEAP) 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.
In the event the credit rating of the Ameren Illinois utilities is lowered to non-investment (junk) grade, the companies will eliminate the one-time credit and the CEP program.
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 average.
Ameren Corporation (NYSE: AEE) through its subsidiaries, serves 1.2 million electric and nearly 800,000 natural gas customers in Illinois.
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,
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Web site: http://www.ameren.com/