DECATUR, PEORIA, SPRINGFIELD, Ill., March 7 /PRNewswire-FirstCall/ -- The Ameren Illinois utilities have been and remain committed to achieving a constructive resolution that ensures our customers are provided with safe, reliable electricity at a reasonable cost. However, the rate rollback bill passed by the Illinois House and today's action by the Senate Environment and Energy Committee threaten to place downstate Illinois on the brink of a catastrophic event that will jeopardize the safe and reliable delivery of energy.
On Tuesday the Illinois House passed, by a vote of 92-5, House Bill 1750 to rollback and freeze rates for three years. Additionally by an 11-0 vote the Senate Environment and Energy Committee today approved Senate Bill 1592, which exempts ComEd and solely targets the Ameren Illinois utilities. The bill would roll back and then freeze electric rates at the 2006 levels for Ameren Illinois customers for at least a six-month period. These actions further heighten the risk of a credit rating downgrade to junk status, which will increase the utilities' financing costs and reduce access to capital, triggering an unfortunate economic reality that no one can afford. Such a credit rating agency downgrade for Ameren Illinois utilities would mean:
-- Immediate steps to lay off employees; -- Nearly all of the companies' contractors would be laid off; -- Reliability projects -- including tree trimming -- would be postponed; -- Connections for new homes and businesses would be delayed; -- Response to customer calls would stretch from seconds today to many minutes; -- Elimination of the proposed $20 million customer credit, primarily for the relief of residential electric heat customers; -- Elimination of the zero-percent interest Customer Elect Plan (CEP) for phasing in higher electricity rates; -- Elimination of the zero-percent deferral assistance program for certain non-residential customers; -- Elimination of the $15 million pledged for energy assistance, energy efficiency programs and aid for low-income customers; and -- All community donations and projects would be discontinued.
"Many people do not believe this serious and unfortunate chain of events will ever happen," said Ameren Illinois utilities President and CEO Scott A. Cisel. "We have tried to achieve a constructive resolution to provide relief to our customers -- especially those with low or fixed incomes -- while maintaining our financial stability. As difficult as these possible actions are to consider, we have simply run out of options."
While rate rollback proposals may sound like an easy fix to consumers and lawmakers, these legislative proposals do not deal with the fundamental problem and do not provide a constructive solution to the post 2006 reality that has placed a hardship on residents, local governments, businesses and organizations.
"Given the serious nature of the situation, the Ameren Illinois utilities remain open to exploring any constructive approaches to modify the reverse auction process and/or consider different methods to purchase electricity on behalf of our customers as well as other long-term solutions," said Cisel.
The reality is any rate rollback affecting all customers will require the Ameren Illinois utilities to spend up to $1 billion or more per year for power than it can recover through the rates established by a process determined by the Illinois General Assembly and the Illinois Commerce Commission (ICC). With the passage of any rate rollback and freeze legislation, the Ameren Illinois utilities would be forced to initiate even more drastic cuts that would only delay the inevitable -- financial insolvency.
To respond to the needs of residential customers, the Ameren Illinois utilities filed a plan today with the Illinois Commerce Commission to provide approximately $20 million primarily for the relief of residential electric heat customers, along with significant changes in their Customer Elect Plan for phasing in higher electricity rates.
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,
+1-217-424-7541, or Erica Abbett, +1-314-206-0646, or Neal Johnson,
+1-309-677-5516, or Investors, Bruce Steinke, +1-314-554-2574, all of Ameren
Web site: http://www.ameren.com/