ST. LOUIS, April 4, 2008 /PRNewswire-FirstCall/ -- AmerenUE, the
Missouri utility company of Ameren Corporation (NYSE: AEE), will be filing
today a request for a 12.1 percent electric rate increase with the
Missouri Public Service Commission (MoPSC). The increase would allow the
company to continue systemwide reliability improvements for its customers
and cover increases in its costs for fuel, transportation and materials
essential to generating and delivering electricity.
The request would provide a total of $251 million annually in
additional revenue to be used throughout the company's 24,000-square-mile
service territory. The MoPSC Staff will review all of UE's costs, and the
public will have opportunities for comment during the process.
Today's requested increase would mean less than $9 more per month for
the average household -- or less than 30 cents per day. Each household's
increase would vary according to the amount of electricity used.
"Specifically, this increase will enable us to put vulnerable power
lines underground, trim more trees away from lines, and increase
inspections and repairs of power lines and poles," said Thomas R. Voss,
AmerenUE president and chief executive officer. "Fully 70 percent of the
requested increase will go directly into projects at our generating
plants, for fuel for those plants and for improvements in our delivery
system. The rest provides indirect support to these critical investments.
"Today UE -- like our customers -- faces dramatically higher costs for
construction materials and for equipment, such as transformers. The cost
to buy and transport coal -- which represents more than 20 percent of UE's
total costs -- has increased by 33 percent over the past two years."
In addition, UE's cost of maintaining the electric delivery system
infrastructure has also risen significantly. For example, since 2004, the
cost of pole transformers is up approximately 70 percent, wooden utility
poles are up about 40 percent, underground aluminum wire is up about 30
percent and copper wire is up about 100 percent.
"We do not request this increase lightly because we realize our
customers are facing rising costs in other areas," said Voss. "However,
UE's existing rates are insufficient to recover current costs and permit
UE to earn a reasonable return on its investments. Without a reasonable
return, we cannot economically raise the money needed to continue to
improve our system."
Voss added that the company has employed a range of initiatives to
carefully manage its resources and keep electric price increases to a
minimum. In fact, except for a 2 percent increase in 2007, UE has not had
an increase in its rates for more than 20 years and has managed to keep
prices for customers almost 40 percent below the national average.
Today, UE's customers enjoy some of the lowest electric rates in the
nation -- lower than in Cincinnati, Indianapolis and Denver, as well as
Kansas City and Springfield, Mo. Through the company's cost control
efforts, the rates UE customers pay are lower today than they were 20
years ago. Even with this increase, UE electric rates would still be
lower than those charged by other Midwest and Missouri utilities.
"As responsible stewards of our business, we will continue to make the
best use of every UE asset to provide our customers with the reliable and
clean energy they need at a price they can afford," said Voss. "This
increase is needed to fulfill our commitment to our customers to continue
to listen, respond and deliver for them by providing reliable power,
dedicated customer service and vision for the future."
Here are the key factors behind today's request for an increase:
-- Significant increases in fuel costs are a major reason UE is
requesting an increase today. In addition, rising fuel costs and
price volatility are forecasted to continue. These factors have
prompted the company to request to employ a fuel and purchased
power cost recovery mechanism. The MoPSC already has approved
the use of this mechanism for one other Missouri utility.
- This mechanism would enable UE to more quickly recover the
money the company must spend on fuel to run its power
plants and cover its purchased power costs -- without the
time and expense required for a full rate case.
- The MoPSC will continue to have regulatory oversight over
the fuel and purchased power adjusted rates.
- The fuel and purchased power adjustment clause would not
generate additional profits for UE.
- It would also enable UE to pass fuel and purchased power
cost increases -- and decreases -- to its electric
customers closer to the time these costs are incurred.
- The mechanism has been approved by the Missouri legislature
and is already employed in all but two fully regulated
-- Because UE's customers told the company they value reliability
above everything, UE recently launched the Power On Project -- a
three-year, $1 billion initiative, through which UE is spending:
- $300 million to underground the sections of our system most
vulnerable to outages;
- $84 million to expand and upgrade our system inspection,
repair and maintenance programs; and
- an additional $135 million on tree-trimming efforts.
Through Power On, UE is also investing some $500 million in equipment
to reduce emissions from the company's Sioux Power Plant and enable its
coal-fired plants to meet or exceed federal environmental standards years
ahead of requirements. The company is also investing in the development
of wind power and other renewable sources, as well as in promising
technologies to address greenhouse gas emissions.
Power On is the largest single reliability initiative in UE's history
and the largest single corporate investment currently under way in
Additional information about this electric rate case will be available
on the Ameren Web site (www.ameren.com/ueprice).
AmerenUE serves approximately 1.2 million electric and 127,000 natural
gas customers. Ameren Corporation, through its utility companies, serves
approximately 2.4 million electric and nearly one million natural gas
customers over 64,500 square miles in Missouri and 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 pending rate proceedings or future legislative
actions that seek to limit or reverse rate increases;
-- changes in laws and other governmental actions, including
monetary and fiscal policies;
-- prices for power in the Midwest;
-- business and economic conditions, including their impact on
-- disruptions of the capital markets or other events that make
access to necessary capital more difficult or costly;
-- actions of credit rating agencies and the effects of such
-- weather conditions and other natural phenomena;
-- the effects of strategic initiatives, including acquisitions and
-- the impact of current environmental regulations on utilities and
power generating companies and the expectation that more
stringent requirements, including those related to greenhouse
gases, will be introduced over time, which could have a negative
-- 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 or required to satisfy energy sales; and
-- acts of sabotage, war, terrorism or intentionally disruptive
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.
CONTACT: Media, Susan Gallagher, +1-314-554-2175, or Analysts, Bruce
Steinke, +1-314-554-2734, both of AmereneUE
Web site: http://www.ameren.com