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Two Ameren Merchant Generating Company Energy Centers to Cease Operations
Recently Issued Environmental Rules, Absence of Long-Term Power Capacity Market Drove Decision

ST. LOUIS, Oct. 4, 2011 /PRNewswire/ -- Ameren Energy Resources Company, LLC (AER), the holding company for the merchant generation business of Ameren Corporation (NYSE: AEE), announced today the Meredosia and Hutsonville energy centers will cease operating by the end of 2011.

The shutdown of these centers will result in the elimination of 90 positions at the generating facilities in Meredosia and Hutsonville, Ill. Both energy centers are part of Ameren Energy Generating Company, a subsidiary of AER.  The net generating capacity of Meredosia Energy Center is 369 megawatts—including one 203-megawatt, coal-fired unit and one 166-megawatt, oil-fired unit (Unit 4).  The Hutsonville Energy Center has two coal-fired units with a net generating capacity of 151 megawatts.  

The closure of these facilities is expected to result in a charge to third quarter 2011 earnings. Ameren Energy Generating Company's net investment in the Hutsonville and Meredosia energy centers totaled $26 million and $1 million, respectively, as of June 30, 2011. In addition, the company expects to incur other costs related to employee severance and the closure of these centers that are still being determined.

The two facilities provided approximately 4 percent of Ameren Energy Resources' total generation over the last two years and a lesser percentage of margin.

"We are working to provide alternative employment opportunities and reassignments within AER for many of the 22 management and 68 union-represented employees affected by these decisions," said AER President and Chief Executive Officer Steven R. Sullivan. "It is my sincere hope that any employee desiring a reassignment opportunity can be accommodated.  We will work hard to achieve this objective."

The closure of these units is primarily the result of the expected cost of complying with the Cross-State Air Pollution Rule (CSAPR) issued in July 2011 by the U.S. Environmental Protection Agency. CSAPR requires reductions in sulfur dioxide (SO2) by 73 percent and nitrogen oxide (NOx) by 54 percent from 2005 levels. It is one of a number of regulations expected to require expensive environmental controls on coal-fired generating units across the nation in coming months and years.

"CSAPR tightens the restrictions on SO2 and NOx emissions to the point that we cannot continue to economically operate these units," said Sullivan. "Numerous options to bring these units into compliance were explored, including installing additional environmental controls, but the costs were just too high to be justified. We regret the impact this will have on our employees and the communities where these plants have been important to the local economies."

The Meredosia Energy Center is also the proposed site for the world's first, full-scale, oxy-combustion coal-fired plant for capture and storage of carbon dioxide (CO2).  In 2010, AER announced a cooperative agreement with the U.S. Department of Energy that would provide funding for this project at Unit 4 at Meredosia. It is part of FutureGen 2.0, which calls for transporting the captured CO2 over a pipeline to an Illinois storage facility developed by others.

"Ceasing current operations at Meredosia has no impact on the viability of FutureGen 2.0," said Sullivan. "FutureGen is still several years from needing a generating unit to test clean coal technology. We are currently in discussions with the FutureGen Alliance to determine how Meredosia Unit 4 could best be used for this project."

Another factor driving the closure of operations at these facilities is a lack of a multi-year capacity market managed by the Midwest Independent Transmission System Operator (MISO). "Without the ability to sell capacity several years out, we cannot afford to make the substantial investment for environmental controls that would be required to keep these units in service," said Sullivan. "I suspect that MISO's proposed capacity construct, recently filed with the Federal Energy Regulatory Commission, will lead to the closure of additional non-AER merchant plants in the Midwest over the next few years unless the proposal is significantly modified.

"The Meredosia and Hutsonville energy centers have been venerable plants that have served the state of Illinois well over a number of decades.  While we will miss the plants as part of our fleet, our immediate focus is on the impact to our employees."

Positions affected include 14 management and 39 union-represented employees at Meredosia Energy Center and 8 management and 29 union-represented employees at Hutsonville Energy Center. AER will be offering a range of severance benefits for those employees for whom other opportunities or reassignments are not found.

Ameren's merchant generating operations include AER's Ameren Energy Generating Company's and AmerenEnergy Resources Generating Company's coal-fired plants plus multiple natural gas-fired units and Ameren Energy Marketing, an energy marketing and trading operation.

With assets of approximately $23 billion, Ameren serves 2.4 million electric customers and one million natural gas customers in a 64,000-square-mile area of Missouri and 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 under Risk Factors in Ameren's Form 10-K for the year ended December 31, 2010, and elsewhere in this release and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:

  • regulatory, judicial or legislative actions, including changes in regulatory policies;
  • the effects of, or changes to, the Illinois power procurement process;
  • changes in laws and other governmental actions, including monetary, fiscal and tax policies;
  • changes in laws or regulations that adversely affect the ability of electric distribution companies and other purchasers of wholesale electricity to pay their suppliers, including Ameren Energy Marketing Company;
  • 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 occurred when the electric rate freeze and power supply contracts expired in Illinois at the end of 2006;
  • increasing capital expenditure and operating expense requirements;
  • the effects of participation in the Midwest Independent Transmission System Operator, Inc.;
  • the cost and availability of fuel such as coal and natural gas used to produce electricity; the cost and availability of purchased power; 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;
  • the level and volatility of future prices for power in the Midwest;
  • business and economic conditions, including their impact on interest rates, bad debt expense, and demand for our products;
  • disruptions of the capital markets or other events that make the Ameren companies' access to necessary capital, including short-term credit and liquidity, impossible, more difficult or more costly;
  • our assessment of our liquidity;
  • the impact of the adoption of new accounting guidance and the application of appropriate technical accounting rules and guidance;
  • actions of credit rating agencies and the effects of such actions;
  • the impact of weather conditions and other natural phenomena on us and our customers;
  • generation plant construction, installation and performance;
  • impairments of long-lived assets or goodwill;
  • the effects of strategic initiatives, including mergers, acquisitions and divestitures;
  • the impact of current environmental regulations on power generating companies and the expectation that more stringent requirements, including those related to greenhouse gases, other emissions, and energy efficiency, will be enacted over time, which could limit or terminate the operation of certain of our generating units, increase our costs, result in an impairment of our assets, reduce our customers' demand for electricity or otherwise have a negative financial effect;
  • labor disputes, work force reductions, future wage and employee benefits costs, including changes in discount rates and returns on benefit plan assets;
  • the inability of our counterparties and affiliates to meet their obligations with respect to contracts, credit facilities and financial instruments;
  • the cost and availability of transmission capacity for the energy generated by the Ameren companies' energy centers or required to satisfy energy sales made by the Ameren companies;
  • 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 update or revise publicly any forward-looking statements to reflect new information or future events.

SOURCE Ameren Corporation