Form 8-K
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported):
|
Commission
File Number
|
Exact
Name of Registrant as Specified in Charter;State
of Incorporation;
Address
and Telephone Number
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IRS
Employer
Identification
Number
|
|
|
(Missouri
Corporation)
1901
Chouteau Avenue
St.
Louis, Missouri 63103
(314)
621-3222
|
|
|
1-2967
|
Union
Electric Company
(Missouri
Corporation)
1901
Chouteau Avenue
St.
Louis, Missouri 63103
(314)
621-3222
|
43-0559760
|
|
1-3672
|
Central
Illinois Public Service Company
(Illinois
Corporation)
607
East Adams Street
Springfield,
Illinois 62739
(217)
523-3600
|
37-0211380
|
|
333-56594
|
Ameren
Energy Generating Company
(Illinois
Corporation)
1901
Chouteau Avenue
St.
Louis, Missouri 63103
(314)
621-3222
|
37-1395586
|
|
2-95569
|
CILCORP
Inc.
(Illinois
Corporation)
300
Liberty Street
Peoria,
Illinois 61602
(309)
677-5271
|
37-1169387
|
|
1-2732
|
Central
Illinois Light Company
(Illinois
Corporation)
300
Liberty Street
Peoria,
Illinois 61602
(309)
677-5271
|
37-0211050
|
|
1-3004
|
Illinois
Power Company
(Illinois
Corporation)
370
South Main Street
Decatur,
Illinois 62523
(217)
424-6600
|
37-0344645
|
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
ITEM
8.01 Other Events.
Reference
is made to Note 3 - Rate and Regulatory Matters to our financial statements
under Part II, Item 8; Outlook and Liquidity and Capital Resources under Part
II, Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations; and Part I, Item 1A. Risk Factors, all in the Form 10-K
for the year ended December 31, 2006, of registrant Ameren Corporation
(“Ameren”) and its registrant subsidiaries, Union Electric Company, doing
business as AmerenUE (“UE”), Central Illinois Public Service Company, doing
business as AmerenCIPS (“CIPS”), Ameren Energy Generating Company (“Genco”),
CILCORP Inc. (“CILCORP”), Central Illinois Light Company, doing business as
AmerenCILCO (“CILCO”), and Illinois Power Company, doing business as AmerenIP
(“IP”) (collectively, the “registrants”), for a discussion of proposed rate
freeze legislation in Illinois applicable to CIPS, CILCO and IP and a discussion
of credit rating changes issued in response to proposed rate freeze legislation.
Reference is also made to the Current Report on Form 8-K filed by Ameren and
certain of its registrant subsidiaries on March 15, 2007. CIPS, CILCO and IP
are
collectively referred to herein as the “Ameren Illinois utilities.”
On
April
20, 2007, the Illinois Senate approved legislation, known as Senate Bill 1592,
that, if enacted into law, would reduce electric rates of CIPS, CILCO and IP
to
the rates which were in effect prior to January 2, 2007. Senate Bill 1592 would
not impact other Illinois utilities. Senate Bill 1592 provides that the cost
of
electric energy reflected in the Ameren Illinois utilities’ electric rates in
effect prior to January 2, 2007 cannot be changed for a period of one year
after
enactment into law. This would prevent the Ameren Illinois utilities from
recovering from retail customers substantial portions of the cost of electric
energy the Ameren Illinois utilities are purchasing under wholesale contracts
for at least one year after enactment into law, and would cause the Ameren
Illinois utilities to underrecover their delivery service costs until the
Illinois Commerce Commission could approve higher delivery service rates. Senate
Bill 1592 also includes a requirement for refunds, with interest, of charges
collected from customers since January 2, 2007 in excess of the pre-January
2,
2007 rates. On March 6, 2007, the Illinois House of Representatives approved
legislation that would apply to all electric utilities in Illinois and which
provides for a three-year rate freeze and included a similar refund requirement.
To become law in Illinois, legislation must be passed by the House and Senate
and signed by the Governor. The Governor has previously expressed support for
rate freeze legislation. Despite passage by the Illinois House of
Representatives of rate freeze legislation and statements by the Illinois
Governor in support of rate freeze legislation, it is uncertain whether Senate
Bill 1592 or any rate freeze legislation will ultimately be enacted into
law.
Ameren,
CIPS, CILCORP, CILCO and IP believe that any legislation reducing electric
rates
to pre-January 2, 2007 levels is unlawful and unconstitutional. In the event
that such legislation is enacted into law, the Ameren Illinois utilities intend
to vigorously pursue all available legal actions and strategies to protect
their
legal and financial interests, including seeking immediate injunctive relief
to
prevent the implementation of such legislation. They believe that such actions
will be successful in both enjoining the implementation of, and ultimately
invalidating, such legislation.
Even
if
efforts to promptly enjoin the implementation of legislation to reduce electric
rates to pre-January 2, 2007 levels were successful, Ameren, CIPS, CILCORP,
CILCO and IP believe that the mere enactment into law of such legislation would
nonetheless result in material adverse consequences to CIPS, CILCORP, CILCO
and
IP until final resolution of any litigation challenging such legislation. These
material adverse consequences would include a significant drop in credit ratings
to deep junk (or speculative) status, requirements to post collateral or other
assurances for certain obligations, a reduction in access to the capital markets
on reasonable terms and higher borrowing costs. These material adverse
consequences could also include higher power supply costs, an inability to
make
timely energy infrastructure investments, disruption in electric and gas service
and significant job losses. Consequently, the Ameren Illinois utilities
anticipate that their results of operations, financial position and liquidity
would be materially adversely affected. Ameren’s results of operations,
financial position and liquidity could also be materially adversely
affected.
If
legislation to reduce electric rates to pre-January 2, 2007 levels is enacted
into law and the implementation of such legislation is not promptly enjoined,
Ameren, CIPS, CILCORP, CILCO and IP believe that their results of operations,
financial position, and liquidity would be materially adversely affected. Any
action, including any legislation to reduce electric rates to pre-January 2,
2007 levels, that impairs the ability of the Ameren Illinois utilities to fully
recover purchased power or distribution costs from their electric customers
in a
timely manner would result in material adverse consequences to CIPS, CILCORP,
CILCO and IP. These material adverse consequences would include a significant
drop in credit ratings to deep junk (or speculative) status, a severe limitation
on their ability to procure reasonable financing from third party lending
sources, higher borrowing costs, higher power supply costs, an inability to
make
timely energy infrastructure investments, requirements to post collateral or
other assurances for certain obligations, the likely disruption in electric
and
gas service, significant job losses, and ultimately the financial insolvency,
and bankruptcy of CIPS, CILCORP, CILCO and IP.
The
Ameren Illinois utilities believe that a constructive, non-legislative solution
to the current rate situation remains in the best interests of all stakeholders,
including the customers of the Ameren Illinois utilities, and the Ameren
Illinois utilities remain committed to working with stakeholders to reach such
a
solution.
Standard
& Poor’s Rating Services, a division of The Mc-Graw Hill Companies
(“S&P”), indicated in its March 9, 2007 report that if Senate Bill 1592 was
passed by the full Senate, the issuer credit ratings on the Ameren Illinois
utilities would be immediately lowered to “BB+”. S&P also indicated in such
report that it would further lower the ratings on the Ameren Illinois utilities
if rate freeze legislation “of any meaningful length” is approved by both
chambers of the Illinois General Assembly, and such ratings may be lowered
precipitously in such circumstance. Moody’s Investors Service Inc. (“Moody’s”)
indicated in its March 12, 2007 report that, in the event of the passage and
enactment of rate freeze legislation, the credit ratings of the Ameren Illinois
utilities could be downgraded well into speculative grade. Moody’s also
indicated in its report that the rating outlook for UE was negative due to,
among other things, the ongoing uncertainty with regards to the Ameren Illinois
utilities and the ability of the Ameren Illinois utilities to provide dividends
to Ameren in the future. On April 2, 2007, Fitch Ratings (“Fitch”) downgraded
the issuer default ratings of Ameren from “A-” to “BBB+” and the issuer default
ratings of each of CIPS, CILCORP and CILCO from “BBB+” to “BB+”, in addition to
other rating downgrades with respect to Ameren, UE, CIPS, CILCORP and CILCO
on
that date. The ratings for Ameren, CIPS, CILCORP, CILCO and IP remain on
“negative watch.” Fitch stated that the downgrade of CIPS, CILCORP and CILCO
“follows the inability of the Illinois utilities to reach an agreement
concerning the recovery of purchased power costs with the Illinois Senate before
it adjourned before the mid-term break” on March 30, 2007 and that the downgrade
of Ameren was “based upon an increased overall corporate risk profile due to the
regulatory environment in Illinois.”
In
addition, if rate freeze legislation is enacted, Ameren, CILCORP and IP will
need to assess whether they are required to record a charge for goodwill
impairment for the goodwill that was recorded when Ameren acquired CILCORP
and
IP. As of December 31, 2006, Ameren had $830 million, CILCORP $542 million
and
IP $213 million of goodwill on their balance sheets. Furthermore, if the Ameren
Illinois utilities are unable to recover their costs from customers, the
utilities could be required to cease applying for the electric portions of
their
businesses Statement of Financial Accounting Standards (“SFAS”) No. 71,
“Accounting for the Effects of Certain Types of Regulation,” which allows the
Ameren Illinois utilities to defer certain costs pursuant to actions of rate
regulators and to recover such costs in rates charged to customers. This could
result in the elimination of the Ameren Illinois utilities’ regulatory assets
and liabilities recorded on their, CILCORP’s and Ameren’s balance sheets and a
one time extraordinary charge on their, CILCORP’s and Ameren’s statements of
income that could be material. As of
December
31, 2006, CIPS, CILCO and IP had regulatory assets, net of deferred taxes,
of
approximately $56 million, $30 million and $152 million, respectively, and
regulatory liabilities, net of deferred taxes, of approximately $100 million,
$55 million and $0, respectively. Ameren’s, CILCORP’s and IP’s assessment of any
goodwill impairment and Ameren’s, CIPS’, CILCORP’s, CILCO’s and IP’s continued
application of SFAS No. 71, for the electric portions of the Ameren Illinois
utilities’ businesses, would include consideration of, among other things, their
views on the ultimate success of their legal actions and strategies to enjoin
the implementation of, and ultimately invalidate, any enacted rate freeze
legislation.
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This
combined Form 8-K is being filed separately by Ameren, UE, CIPS, Genco, CILCORP,
CILCO and IP. Information contained herein relating to any individual registrant
has been filed by such registrant on its own behalf. No registrant makes any
representation as to information relating to any other registrant.
FORWARD-LOOKING
STATEMENTS
Statements
in this report 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 report 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
or legislative actions, including changes in regulatory policies
and
ratemaking determinations, such as the outcome of CIPS, CILCO and
IP rate
rehearing proceedings, or the enactment of legislation reducing electric
rates to 2006 levels and freezing electric rates at such levels or
similar
actions that impair the full and timely recovery of costs in
Illinois;
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the
success of any legal efforts or negotiations with
stakeholders;
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changes
in laws and other governmental actions;
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disruptions
of the capital markets or other events that make access to necessary
capital more difficult or costly;
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the
impact of the adoption of new accounting standards and the application
of
appropriate technical accounting rules and
guidance;
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actions
of credit rating agencies and the effects of such
actions;
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the
inability of our counterparties and affiliates to meet their obligations
with respect to contracts and financial instruments;
and
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legal
and administrative proceedings.
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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.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, each registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized. The signature for each undersigned company shall be deemed
to
relate only to matters having reference to such company or its
subsidiaries.
AMEREN
CORPORATION
(Registrant)
/s/
Martin J. Lyons
Martin
J.
Lyons
Vice
President and Controller
(Principal
Accounting Officer)
UNION
ELECTRIC COMPANY
(Registrant)
/s/
Martin J. Lyons
Martin
J.
Lyons
Vice
President and Controller
(Principal
Accounting Officer)
CENTRAL
ILLINOIS PUBLIC SERVICE COMPANY
(Registrant)
/s/
Martin J. Lyons
Martin
J.
Lyons
Vice
President and Controller
(Principal
Accounting Officer)
AMEREN
ENERGY GENERATING COMPANY
(Registrant)
/s/
Martin J. Lyons
Martin
J.
Lyons
Vice
President and Controller
(Principal
Accounting Officer)
CILCORP
INC.
(Registrant)
/s/
Martin J. Lyons
Martin
J.
Lyons
Vice
President and Controller
(Principal
Accounting Officer)
CENTRAL
ILLINOIS LIGHT COMPANY
(Registrant)
/s/
Martin J. Lyons
Martin
J.
Lyons
Vice
President and Controller
(Principal
Accounting Officer)
ILLINOIS
POWER COMPANY
(Registrant)
/s/
Martin J. Lyons
Martin
J.
Lyons
Vice
President and Controller
(Principal
Accounting Officer)
Date:
April 20, 2007