-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KMuT3ewH6EkYS/BcfkFV2ObgZKaOrkmOa/76RrcTUsoJH5H0fyIo0Gnr80wvNS4h GadeAI7IIGnXPIOzw+w+5Q== 0000950120-04-000309.txt : 20040430 0000950120-04-000309.hdr.sgml : 20040430 20040430113721 ACCESSION NUMBER: 0000950120-04-000309 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20040430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMEREN CORP CENTRAL INDEX KEY: 0001002910 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 431723446 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-10180 FILM NUMBER: 04768160 BUSINESS ADDRESS: STREET 1: 1901 CHOUTEAU AVE STREET 2: MC 1370 CITY: ST LOUIS STATE: MO ZIP: 63166-6149 BUSINESS PHONE: 431723446 MAIL ADDRESS: STREET 1: 1901 CHOUTEAU AVE STREET 2: MC 1370 CITY: ST LOUIS STATE: MO ZIP: 63103 U-1/A 1 d161051.txt AMEND NO. 1 TO APPL. OR DECL. (As filed April 30, 2004) File No. 70-10180 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO APPLICATION OR DECLARATION ON FORM U-1/A under The Public Utility Holding Company Act of 1935 ---------------------------------------- AMEREN CORPORATION CENTRAL ILLINOIS PUBLIC SERVICE COMPANY UNION ELECTRIC COMPANY 607 East Adams Street 1901 Chouteau Avenue Springfield, Illinois 62739 St. Louis, Missouri 63103 (Name of company or companies filing this statement and address of principal executive offices) ----------------------------------------- AMEREN CORPORATION (Name of top registered holding company parent of each applicant or declarant) ----------------------------------------- Steven R. Sullivan, Senior Vice President Governmental/Regulatory Policy, General Counsel and Secretary Ameren Services Company 1901 Chouteau Avenue St. Louis, Missouri 63103 (Name and address of agent for service) ----------------------------------------- The Commission is requested to mail signed copies of all orders, notices and communications to: Joseph H. Raybuck, Esq. William T. Baker, Jr., Esq. Managing Assistant General Counsel Thelen Reid & Priest LLP Ameren Services Company 875 Third Avenue 1901 Chouteau Avenue New York, New York 10022 St. Louis, Missouri 63103 The Application or Declaration filed in this proceeding on October 16, 2003, is hereby amended and restated in its entirety to read as follows: ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION. ------------------------------------ 1.1. Introduction. ------------ Ameren Corporation ("Ameren"), whose principal business address is at 1901 Chouteau Avenue, St. Louis, Missouri 63103, is a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act")./1/ Ameren directly owns all of the issued and outstanding common stock of Union Electric Company (d/b/a "AmerenUE") and Central Illinois Public Service Company (d/b/a "AmerenCIPS"), and indirectly through CILCORP, Inc. ("CILCORP"), an exempt holding company, all of the issued and outstanding common stock of Central Illinois Light Company (d/b/a "AmerenCILCO"). Together, AmerenUE, AmerenCIPS and AmerenCILCO provide retail and wholesale electric service to approximately 1.7 million customers and retail natural gas service to approximately 500,000 customers in portions of Missouri and Illinois./2/ AmerenUE generates, transmits and distributes electricity and distributes natural gas at retail in a 24,500 square-mile area of central and eastern Missouri and west central Illinois, including the greater St. Louis area. AmerenUE provides electric service to approximately one million customers and natural gas to approximately 130,000 customers. Approximately 94% of AmerenUE's electric customers and 86% of its gas customers are located in Missouri. At December 31, 2003, AmerenUE owned 8,021 MW (net) of generating capacity. AmerenCIPS provides electric and natural gas transmission and distribution service in a 20,000 square-mile area of central and southern Illinois. AmerenCIPS provides electric service to approximately 325,000 customers and natural gas service to approximately 170,000 customers. AmerenCIPS does not own any generating capacity. AmerenUE and AmerenCIPS provide open access transmission service over their combined transmission facilities pursuant to a single Open Access Transmission Tariff ("OATT") on file at the Federal Energy Regulatory Commission ("FERC"). Ameren is a member of the Mid-America Interconnected Network ("MAIN"), which is one of the ten regional electric reliability councils organized for coordinating the planning and operation of the nation's bulk power supply. AmerenUE and AmerenCIPS have received conditional authorization from the FERC to join the Midwest Independent Transmission System Operator, Inc. (the "Midwest ISO") through GridAmerica LLC, a new independent transmission company. Pending receipt of further regulatory approvals, AmerenUE and AmerenCIPS expect to begin - ---------- 1 See Ameren Corporation, et al., Holding Co. Act Release No. 26809 (Dec. 30, 1997) (the "Merger Order"). 2 The Commission authorized the formation of Ameren and its acquisition of AmerenUE and AmerenCIPS in the Merger Order. Ameren was authorized to acquire AmerenCILCO in Ameren Corporation, et al., Holding Company Act Release No. 27645 (Jan. 29, 2003). Ameren has filed an application/declaration in a separate proceeding (File No. 70-10220) for authorization to acquire the common and preferred stock of Illinois Power Company that is currently held by Illinova Corporation. That matter is pending. 1 participating in the Midwest ISO in May 2004. AmerenCILCO is also authorized to participate in the Midwest ISO as a transmission owner. Through its participation in the Midwest ISO, AmerenCILCO provides open access transmission services over its transmission facilities pursuant to the Midwest ISO OATT which is on file at the FERC. In May 2000, AmerenCIPS transferred all of its electric generation facilities to Ameren Energy Generating Company ("Ameren GenCo"), an affiliated generation-only company. Ameren GenCo, which has been certified by the FERC pursuant to Section 32 of the Act as an "exempt wholesale generator" ("EWG"),/3/ has continued to acquire additional generation capacity since that time. Power generated by Ameren GenCo is sold to wholesale purchasers under both cost-based and market-based rates which are subject to the jurisdiction of the FERC. As of December 31, 2003, Ameren GenCo had approximately 4,749 MW (net) of total installed generating capacity. The generation facilities of AmerenUE and those of Ameren GenCo, are dispatched in a coordinated manner in accordance with the terms of a Joint Dispatch Agreement on file at the FERC. The Joint Dispatch Agreement requires each company to serve its load requirements from its own least-cost generation first, but then allows the other company to have access to any available excess generating capacity at cost. Power generated from AmerenCILCO's generating units is not subject to the Joint Dispatch Agreement, but instead is dispatched separately from AmerenCILCO's control area, which is separate from, and adjacent to, the Ameren control area. In addition to AmerenUE, AmerenCIPS and CILCORP, Ameren owns directly all of the issued and outstanding common stock of, inter alia, Ameren Energy Resources Company ("AERC"), which is an intermediate non-utility holding company. AERC directly and indirectly holds the securities of other exempt and authorized non-utility companies, including, insofar as relevant to this Application/Declaration, Ameren GenCo, Ameren Energy Marketing Company ("AEM"), and Ameren Energy Fuels and Services Company ("AFS"), the last two of which are "energy-related" companies under Rule 58. 1.2 Summary of Requested Approvals. ------------------------------- Authorization is sought herein for certain transactions (the "Illinois Asset Transfer") that will result in the acquisition by AmerenCIPS of AmerenUE's electric transmission and distribution assets in Illinois other than those associated with AmerenUE's Venice, Illinois generating plant, its Keokuk, Iowa generating plant, and also minor amounts of property in Illinois to be retained by AmerenUE to ensure the smooth operation of its electric utility system in Missouri (the "Retained Assets"). The Illinois Asset Transfer will also result in the acquisition by AmerenCIPS of AmerenUE's retail gas distribution - ---------- 3 AmerenGenCo. filed an application for EWG status in FERC Docket No. EG00-117-000 on March 23, 2000, as amended on May 18, 2000. The EWG status of Ameren GenCo was affirmed by the FERC in Ameren Energy Generating Company, 92 FERC P. 62,023 (July 14, 2000); Ameren Energy Generating Company, 93 FERC P. 62,210 (December 18, 2000). 2 facilities in Illinois (the assets to be acquired by AmerenCIPS are identified collectively herein as the "Acquired Assets")./4/ The Acquired Assets will be transferred to AmerenCIPS at their net book value. Approximately one-half of the Acquired Assets (designated as "Transferred Assets") will be transferred by AmerenUE directly to AmerenCIPS in consideration for AmerenCIPS' promissory note, the form of which is filed herewith as Exhibit B-3, and approximately one-half of the Acquired Assets (designated as "Dividend Assets") will be transferred to AmerenCIPS by means of a dividend in kind from AmerenUE to Ameren followed by a contribution of the Dividend Assets by Ameren to AmerenCIPS./5/ In connection with the Illinois Asset Transfer, AmerenCIPS will assume certain obligations of AmerenUE that are associated with the Acquired Assets. These transactions will be consummated in accordance with the Asset Transfer Agreement, the form of which is filed herewith as Exhibit B-1. In addition to the foregoing, AmerenUE is requesting authorization herein to acquire from Ameren GenCo four 44 MW combustion turbine generator ("CTG") units and four 35 MW CTG units located at Ameren GenCo's Pinckneyville, Illinois facility (the "Pinckneyville Plant") and two 116 MW CTG units located at Ameren GenCo's Kinmundy, Illinois generation facility (the "Kinmundy Plant") and, in conjunction therewith, to assume certain liabilities and obligations of Ameren GenCo related to such units (the "Generation Transfer"). These assets will also be transferred at their net book value. The terms of these transactions are set forth in the form of Asset Transfer Agreement-Pinckneyville Generation Station between Ameren GenCo and AmerenUE (Exhibit B-5) and the form of Asset Transfer Agreement-Kinmundy Generation Station between Ameren GenCo and AmerenUE (Exhibit B-6). 1.3 Reasons for Proposed Transactions. --------------------------------- As indicated above, AmerenUE provides service to about one million electric customers and 130,000 gas customers in parts of Missouri and Illinois. AmerenUE also provides wholesale full requirements service to certain municipal electric utilities in Missouri. AmerenUE's peak load in 2003 was 8,298 MW. AmerenUE currently owns approximately 8,021 MW (net) of generation capacity. Power from these generation resources, as supplemented by power purchased by AmerenUE from others, is used to supply the demands of its electric service customers. AmerenUE is subject to regulation with respect to retail sales of natural gas and electricity in Missouri by the Missouri Public Service Commission ("MoPSC") and with respect to retail sales of natural gas and electricity in Illinois by the Illinois Commerce Commission ("ICC"). - ---------- 4 An application to implement the Illinois Asset Transfer was previously filed with the Commission in December 2000 in Ameren Corporation, et al., File No. 70-9805. However, that application was subsequently withdrawn by letter dated August 20, 2001 before the application was acted upon by the Commission. 5 The Asset Transfer Agreement provides for AmerenUE to prepare a schedule to be delivered at the time of closing which specifically enumerates the assets, properties and rights to be acquired by AmerenCIPS. The schedule will further designate whether such specific assets are to be conveyed as Dividend Assets or Transferred Assets. The percentages of Acquired Assets that are to be conveyed as Transferred Assets and as Dividend Assets, respectively, will be determined by Ameren immediately prior to the closing. 3 As a regulated electric utility in Missouri, it is incumbent upon AmerenUE to have or to acquire sufficient generating capacity with which to serve the forecasted demands of its electric service customers and to maintain an adequate reserve margin. Standards established by MAIN require AmerenUE to meet certain minimum short-term and long-term planning reserve requirements, which currently are 15% for 2003 and 17% for 2006. In July 2002, AmerenUE entered into a Stipulation and Agreement in order to resolve certain retail rate issues in Missouri. The Stipulation and Agreement (Exhibit B-4 hereto) fixes retail electric service rates for AmerenUE in Missouri that, except under certain specified conditions, will remain in place without modification through June 30, 2006. AmerenUE also agreed to undertake commercially reasonable efforts to make energy infrastructure investments totaling $2.25 billion to $2.75 billion from January 1, 2002 through June 30, 2006. This includes the obligation to acquire 700 MW of new generating capacity, which may be satisfied by the purchase of generation facilities from an affiliate "at net book value." The Stipulation and Agreement also requires AmerenUE to make enhancements to its transmission infrastructure. The Generation Transfer is intended as an efficient means of enabling AmerenUE to meet its generation capacity obligations under the Stipulation and Agreement and under the MAIN standards. AmerenUE needs 991 MW of additional generation resources by 2006 in order to meet the applicable MAIN generation capacity requirements. The Generation Transfer will provide AmerenUE with a total of 548 MW of additional generating capacity, which will be acquired at the net book value of the Pinckneyville and Kinmundy Plants. Because both the Pinckneyville Plant and the Kinmundy Plant are connected directly to the Ameren transmission system with no operating guide restrictions, concerns over the availability of transmission capacity to allow delivery of power from those units reliably to AmerenUE are obviated. Additionally, the Pinckneyville Plant has black start capability and can be ramped up quickly to provide service, which will allow AmerenUE to respond quickly to system emergencies. The regulatory regime under which AmerenUE operates in Illinois is very different from that which exists in Missouri. Although Missouri law does not authorize competition in retail electric service markets, the Illinois Electric Service Customer Choice and Rate Relief Law (the "Customer Choice Law"), which was enacted in 1997, permits retail electric service customers in Illinois to purchase power from alternative power suppliers. Nevertheless, AmerenUE continues to be regulated as an electric public utility in Illinois. Therefore, as long as AmerenUE continues to provide retail electric utility service in Illinois, it will need approval of the ICC to consummate the Generation Transfer. A Petition for Approval of Asset Transfer Agreements with AmerenGenCo was filed by AmerenUE with the ICC in February 2003. However, the ICC Staff expressed concerns about the terms of the Generation Transfer and has recommended that the ICC deny approval of the Generation Transfer as proposed. For that reason, AmerenUE has advised the ICC that it intends to limit its public utility operations to Missouri and to discontinue operating as a public utility subject to ICC regulation. In so doing, AmerenUE explained that the concerns expressed by the ICC Staff regarding the means by which AmerenUE proposes to satisfy its generating capacity needs, juxtaposed with the MoPSC views of this matter, has demonstrated the difficulty for a single company to operate as an electric utility in both a regulated generation jurisdiction such as Missouri and an unregulated generation jurisdiction such as Illinois. 4 Accordingly, on May 30, 2003, AmerenUE filed a Notice of Withdrawal of its petition to the ICC. The effect of the proposed Illinois Asset Transfer is to transfer to and consolidate within AmerenCIPS responsibility for serving electric and gas utility customers in Illinois that are currently served by AmerenUE. Upon the transfer of AmerenUE's retail electric and gas assets in Illinois, AmerenCIPS will succeed to AmerenUE's retail utility operations in Illinois and will provide the retail electric and gas services currently provided by AmerenUE pursuant to the ICC-approved tariffs currently in effect for AmerenUE. The Illinois Asset Transfer will realign the retail electric and gas utility operations of Ameren so that AmerenUE will be regulated as a public utility only in Missouri. Because AmerenUE will not be a regulated utility in Illinois, it will not be required to make regulatory filings in Illinois after the Illinois Asset Transfer./6/ Most significantly, after the Illinois Asset Transfer has been consummated, it will not be necessary for AmerenUE to obtain ICC authorization in order to acquire the Pinckneyville Plant and the Kinmundy Plant from Ameren GenCo. The transfer to AmerenCIPS of retail electric service loads in Illinois that are currently served by AmerenUE will also help to reduce the amount of generation capacity that AmerenUE needs to maintain in order to comply with MAIN generation capacity standards. 1.4 Illinois Asset Transfer-Overview -------------------------------- Pursuant to the Asset Transfer Agreement, AmerenUE will transfer its electric transmission and distribution and gas distribution assets and associated general plant assets and related liabilities in Illinois to AmerenCIPS. AmerenCIPS will not assume any indebtedness of AmerenUE in the transaction. As referenced above, AmerenUE would retain generating facilities and also minor amounts of other facilities in Illinois. AmerenUE will also assign all related obligations to AmerenCIPS, including without limitation, the certificates of public convenience and necessity granted by the ICC authorizing AmerenUE to provide electric utility service and gas utility service in Illinois, environmental permits and obligations, all municipal and county franchises, labor agreements (as applicable), and any other relevant agreements that exist as of the transfer date. After the Illinois Asset Transfer, the Acquired Assets will be utilized by AmerenCIPS in its electric and natural gas utility business in Illinois. At the present time, AmerenUE personnel operate and maintain the Acquired Assets in conjunction with their other responsibilities. It is expected that after the Illinois Asset Transfer has been consummated, certain AmerenUE employees responsible for operation and maintenance of these facilities may be transferred to AmerenCIPS. Other employees of AmerenUE, who are responsible for substation and transmission maintenance and for protective relay installation, testing and maintenance, may also spend a portion of their time operating and maintaining the Acquired Assets for AmerenCIPS for the life of those - ---------- 6 AmerenUE will continue to own and operate generation facilities that are located in Illinois, together with minor amounts of other facilities to ensure the smooth operation of its electric system. However, because it will no longer have a public service obligation to provide retail electric or natural gas service in Illinois, AmerenUE will not be subject to regulatory requirements established by the ICC. 5 facilities./7/ The continued use of AmerenUE personnel will enable AmerenCIPS to avoid the inconvenience and additional costs associated with hiring and training additional personnel for this purpose. The Illinois Asset Transfer is planned to be accomplished in the following manner: 1. AmerenUE will transfer approximately 50% of the Acquired Assets to AmerenCIPS in exchange for AmerenCIPS' subordinated promissory note in a principal amount equal to approximately 50% of the total net book value of such Acquired Assets net of liabilities, or approximately $69 million as of December 31, 2003./8/ 2. AmerenUE will hold the note and receive payments including interest from AmerenCIPS. 3. AmerenUE will declare an "in kind" dividend to Ameren equal to the remaining balance (approximately 50%) of the net book value of the Acquired Assets net of liabilities, or approximately $69 million as of December 31, 2003. 4. Ameren will then contribute the Dividend Assets and associated liabilities to AmerenCIPS. The Commission determined in the Merger Order that the existing electric transmission and distribution facilities of AmerenUE and AmerenCIPS are physically interconnected and operated as a single integrated electric utility system. Likewise, the Commission held in the Merger Order that the combined gas utility properties of AmerenUE and AmerenCIPS constitute an integrated gas utility system. The Illinois Asset Transfer will not affect the coordinated operation of any electric transmission or distribution plant, which will continue to be operated in the same manner, by the same personnel, and with the same degree of safety and reliability, as they are today. Similarly, the transfer of the gas distribution assets of AmerenUE will not affect the coordinated operation of the existing gas utility properties of AmerenUE and AmerenCIPS. - ---------- 7 The Commission recognized in the Merger Order that AmerenUE may provide services to AmerenCIPS, including services of linemen and gas trouble crews, that are incidental to its utility business. These services will be provided at cost in accordance with the standards of the Act and the Commission's rules and regulations under the Act. 8 A list and description of the electric and gas utility assets to be transferred to AmerenCIPS and the associated liabilities are contained in Exhibit B-2 hereto. Exhibit B-2 also shows preliminary accounting entries for the transaction based on estimates, prepared in mid-2003, of the net book value of these assets and associated liabilities as of December 31, 2003. These accounting entries will be revised based on more current estimates and filed by further amendment to this Application/Declaration. 6 1.5 Generation Transfer-Overview ---------------------------- The Pinckneyville Plant and the Kinmundy Plant, which were installed by Ameren GenCo in 2001, are integrated into the Ameren system. The Pinckneyville Plant consists of four simple cycle combustion turbines rated at approximately 44 MW each at summer peak conditions, and four combustion turbines rated at approximately 35 MW each at summer peak conditions. The Kinmundy Plant consists of two combustion turbines with dual fuel capability which are rated at approximately 116 MW each under summer peak conditions. Since their acquisition by Ameren GenCo, these generating units have proven themselves to be superior performing generating assets that have served the Ameren system reliably. Under the terms of the Transfer Agreements, AmerenUE will purchase the Pinckneyville Plant and the Kinmundy Plant for cash and will acquire associated assets and obligations from Ameren GenCo based on the net book value of the assets and obligations being transferred as of the closing date. The net depreciated book value of generation facilities at the Pinckneyville Plant as of December 31, 2003 was approximately $155.3 million ($502/kW). The net depreciated book value of generation facilities at the Kinmundy Plant as of December 31, 2003 was approximately $93.3 million ($411/kW). AmerenUE will also acquire certain assets (fuel stock, materials and supplies and prepaid insurance) and assume certain obligations of Ameren GenCo (primarily property tax accruals) that are associated with the generating units being transferred. The detailed accounting treatment of the Generation Transfer is set forth in Exhibit FS-10. ITEM 2. FEES, COMMISSIONS AND EXPENSES. ------------------------------ A statement of the fees, commissions and expenses incurred or to be incurred in connection with the transactions proposed herein will be supplied by amendment. ITEM 3. APPLICABLE STATUTORY PROVISIONS. ------------------------------- The following sections of the Act and the Commission's rules thereunder are or may be applicable to the transactions proposed herein:
- -------------------------------------------------------------------------------- Sections of the Act Transactions to which section or - ------------------- rule may be applicable - -------------------------------------------------------------------------------- 6(a), 7, 9(a), 10 and 12 Issuance of a promissory note by AmerenCIPS in connection with the acquisition of the Transferred Assets and acquisition thereof by AmerenUE - -------------------------------------------------------------------------------- 9(a)(1), 10 Acquisition of Acquired Assets by AmerenCIPS; acquisition of Pinckneyville and Kinmundy Plant assets by AmerenUE - -------------------------------------------------------------------------------- 7 - -------------------------------------------------------------------------------- 12(b) Assumption of obligations of AmerenUE by AmerenCIPS in connection with Illinois Asset Transfer and assumption of obligations of AmerenGenCo by AmerenUE - -------------------------------------------------------------------------------- 12(c) In-kind distribution of Dividend Assets by AmerenUE to Ameren - -------------------------------------------------------------------------------- 12(b) Contribution of Dividend Assets by Ameren to AmerenCIPS - -------------------------------------------------------------------------------- 12(d), 12(f) Sale of Transferred Assets by AmerenUE to AmerenCIPS - -------------------------------------------------------------------------------- Rules - ----- - -------------------------------------------------------------------------------- 43, 44 Sale of Transferred Assets by AmerenUE to AmerenCIPS - -------------------------------------------------------------------------------- 45 Contribution of Dividend Assets by Ameren to AmerenCIPS and assumption by AmerenCIPS of liabilities of AmerenUE - -------------------------------------------------------------------------------- 46 In-kind distribution of Dividend Assets by AmerenUE to Ameren - --------------------------------------------------------------------------------
AmerenCIPS' acquisition of the Transferred Assets will be exempt from the requirements of Sections 9(a)(1) and 10 pursuant to Section 9(b)(1), as such acquisition will be expressly authorized by the ICC (see Item 4). Section 32 of the Act and Rule 54 thereunder are also generally applicable to the transactions described above. To the extent that other sections of the Act or the Commission's rules thereunder are deemed to be applicable to the Illinois Asset Transfer, such sections and rules should be considered to be set forth in this Item 3. A. Illinois Asset Transfer ----------------------- Section 6(a) of the Act provides that it is unlawful for any registered holding company or subsidiary thereof "to issue or sell any security of such company" except in accordance with an order of the Commission issued pursuant to Section 7 of the Act. Correspondingly, Section 12(b) of the Act requires Commission authorization for a registered public utility holding company or subsidiary thereof "to lend or in any manner extend its credit to or indemnify any company in the same holding-company system." As a result, the issuance of a promissory note by AmerenCIPS to AmerenUE and the assumption by AmerenCIPS of certain obligations of AmerenUE relating to the Acquired Assets require prior 8 Commission approval under Sections 6, 7, and 12(b) of the Act. Section 9(a)(1) of the Act declares that it shall be unlawful for any registered holding company or subsidiary thereof to acquire any utility assets or any securities unless the acquisition of such assets or securities has been approved by the Commission pursuant to Section 10 of the Act. However, Section 9(b)(1) of the Act exempts from the requirements of Section 9(a) any "acquisition by a public-utility company of utility assets the acquisition of which has been expressly authorized by a State commission." Section 12(c) of the Act declares that it shall be unlawful for any registered holding company or subsidiary thereof to declare or pay any dividend on any security except in accordance with such rules and regulations or orders as the Commission may adopt with respect to issuance of dividends. The applicable standards for declaration and payment of dividends are set forth in Rule 46. Section 12(d) of the Act states that it is unlawful for a registered holding company to sell any utility assets in contravention of rules and regulations or orders as the Commission shall adopt. Section 12(f) of the Act requires Commission approval for a subsidiary of a registered holding company to sell utility assets to any affiliate or associate company. As set forth below, the Illinois Asset Transfer complies with all of the applicable provisions of the Act and should be approved by the Commission. 1. Sections 6(a) and 12(b) ----------------------- As indicated, the promissory note to be issued by AmerenCIPS will be in an amount equal to approximately 50% of the net book value of the Transferred Assets, or approximately $69 million as of December 31, 2003. The promissory note will have a fixed rate of interest based on interest rates charged for generally-comparable unsecured five-year notes issued by companies whose credit quality and bond ratings are comparable to those of AmerenCIPS. The yield of 5-year U.S. Treasury Notes and of U.S. Treasury Notes and Bonds having 5 years remaining until maturity may be used as a benchmark to establish the interest rate for the promissory note. Based on the current yield of the 5-year U.S. Treasury Notes plus a credit spread between yields of U.S. Treasury Notes and yields on generally-comparable unsecured corporate notes derived from a variety of external sources, current interest rate levels for the promissory note would be approximately 4.3%. Although the initial term of the promissory note will be five years, payments of amounts due under the promissory note will be based on a ten-year amortization schedule. Accordingly, a balloon payment will become due at the end of the fifth year unless the note's term is extended for an additional five years by agreement of the parties. The promissory note will be unsecured and will be subordinate to all other debt of AmerenCIPS, whether incurred currently or in the future, except indebtedness which, by its terms, provides that such indebtedness is not superior in right of payment of principal of or interest on 9 the promissory note or that such indebtedness is subordinated to all other indebtedness of AmerenCIPS. In addition, AmerenCIPS will assume all obligations of AmerenUE relating to its utility business of transmitting and distributing electricity and natural gas in Illinois. As shown in Exhibit B-2 hereto, these obligations include trade payables relating to such businesses, accounts payable, accrued payroll, accrued vacation liabilities, customer liabilities, environmental liabilities and taxes. AmerenCIPS will also assume all maintenance and labor agreements (as applicable) and any similar agreements relating to the Acquired Assets as those agreements exist on the transfer date. AmerenCIPS will not assume any indebtedness of AmerenUE in the transaction. Section 6(a) requires the issuance of an order of the Commission pursuant to Section 7 of the Act before a registered holding company or subsidiary thereof may issue any security. Section 7(c)(2)(B) of the Act provides that the Commission shall not permit a declaration regarding the issue or sale of any security to become effective unless it finds, inter alia, that "such security is to be issued or sold solely...for the purpose of financing the business of the declarant as a public utility company." Section 7(d) further provides that if the requirements of Section 7(c) and Section 7(g) of the Act are satisfied: The Commission shall permit a declaration regarding the issue or sale of a security to become effective unless the Commission finds that-- (1) the security is not reasonably adapted to the security structure of the declarant and other companies in the same holding company system; (2) the security is not reasonably adapted to the earning power of the declarant. (3) financing by the issue and sale of the particular security is not necessary or appropriate to the economical and efficient operation of a business in which the applicant lawfully is engaged or has an interest; (4) the fees, commissions, or other remuneration, to whomsoever paid, directly or indirectly, in connection with the issue, sale or distribution of the security are not reasonable. (5) in the case of a security that is a guaranty of, or assumption of liability on, a security of another company, the circumstances are such as to constitute the making of such guaranty or the assumption of such liability an improper risk for the declarant. (6) the terms and conditions of the issue or sale of the security are detrimental to the public interest or the interest of investors or consumers. In this case, the promissory note to be issued by AmerenCIPS is to be used for the purpose of financing expansion of its business as a public utility company in Illinois by acquiring the electric utility and gas utility operations of AmerenUE in Illinois. Pursuant to the Asset Transfer Agreement, AmerenCIPS will acquire not only certain transmission and distribution assets, but also AmerenUE's retail electric business in Illinois, including the certificates of public convenience and necessity granted by the ICC authorizing AmerenUE to 10 provide retail electric service in Illinois, environmental permits, all municipal and county franchises, and any other relevant agreements. Additionally, AmerenCIPS will acquire both AmerenUE's gas assets in Illinois and all related obligations, including the certificates of public convenience and necessity granted by the ICC authorizing AmerenUE to provide gas utility service in Illinois, environmental permits, all municipal and county franchises, and any other relevant agreements. As noted above, the Illinois Asset Transfer is being financed in part by the issuance of the promissory note by AmerenCIPS. It is therefore evident that issuance of the promissory note by AmerenCIPS is consistent with Section 7(c)(2)(B) of the Act. The issuance of the promissory note is also consistent with the criteria established in Section 7(d) of the Act. At December 31, 2003, AmerenCIPS' total capitalization ($1,017 million, excluding money pool borrowings) consisted of approximately 47% common stock equity, 5% preferred stock equity, and 48% long-term debt. The acquisition of assets by AmerenCIPS from AmerenUE is being financed in approximately equal parts by the promissory note to be issued by AmerenCIPS and by a capital contribution by Ameren. Because long-term debt and equity of AmerenCIPS will increase in the same amounts, the capital structure of AmerenCIPS after the Illinois Asset Transfer will be substantially the same as its present capital structure. Thus, pro forma financial statements reflecting the Illinois Asset Transfer show that after the Illinois Asset Transfer, the capitalization of AmerenCIPS will be approximately 48% debt, 4% preferred stock, and 48% common equity. The 50% note and 50% dividend structure of the transaction will also maintain a capital structure at AmerenUE that is substantially similar after the Illinois Asset Transfer as compared to the present capital structure. The capital structure of AmerenUE as of December 31, 2003 and the pro forma capital structure of AmerenUE after the Illinois Asset Transfer are as follows:
Security Ratio as of Ratio -------- Dec. 31, 2003 After Transfer ------------- -------------- Long -Term Debt (inc. current maturities) 42% 42% Preferred Stock 2% 3% Common Equity 56% 55% ---- ---- Total 100% 100%
Moreover, the combination of the utility assets of AmerenUE in Illinois with the utility assets of AmerenCIPS will result in savings through elimination of duplicative regulatory burdens in Illinois, without any loss of operating economies and efficiencies. A statement of the fees, commissions and expenses associated with the Illinois Asset Transfer will be provided by amendment to this Application or Declaration (see Item 2 - Fees, Commissions and Expenses). It is believed that 11 the estimated fees and expenses in this matter will bear a fair relation to the book value of the assets being transferred and the benefits to be achieved by AmerenUE and AmerenCIPS as a result of the Illinois Asset Transfer. To the extent that AmerenCIPS is assuming liabilities of AmerenUE that are associated with the Acquired Assets, the assumption of such liabilities is not an improper risk for AmerenCIPS. The Acquired Assets represent a part of a going concern and are capable of generating revenues sufficient to meet the obligations being assumed by AmerenCIPS. It is therefore reasonable for AmerenCIPS to assume the risks associated with the Acquired Assets. Finally, the terms and conditions of the promissory note as described above are not detrimental to the public interest or the interest of investors or consumers. The promissory note will carry a market rate of interest, will have a relatively short term, and will be subordinated to other debt of AmerenCIPS. 2. Sections 12(d) and 12(f) ------------------------ Sections 12(d) and 12(f) of the Act contemplate that where a transaction involves sale of utility assets by one utility in a holding company system to an associate company, the Commission may evaluate the fairness of the consideration to be paid and received for such sale by both the buyer and seller. In Entergy Corporation, et al., Holding Co. Act Release No. 25136, 46 SEC Docket 1560 at 1571 (1990), the Commission ruled that "as noted above in the discussion of section 10(b)(2), the Commission believes that section 12(d) is satisfied by the intrasystem sales of assets at depreciated book value on an after tax basis." The terms of the Illinois Asset Transfer are consistent with this policy. The transfer of the Acquired Assets from AmerenUE to AmerenCIPS on the basis of their net book value as recorded on the books and records of AmerenUE is reasonable for several reasons. The Acquired Assets are primarily electric and natural gas facilities for which there is a limited market. After the Illinois Asset Transfer has occurred, those assets will continue to be used by AmerenCIPS to provide electric and natural gas service at regulated rates that are subject to regulation by the ICC. Electric service customers being transferred from AmerenUE to AmerenCIPS will continue to pay the rates they are currently charged under AmerenUE's tariff at least until December 31, 2006. It is expected that any cost-of-service study performed thereafter in order to evaluate the reasonableness of rates being charged for service to those customers would impute a value to the Acquired Assets based on their book cost depreciated. 3. Sections 9(a)(1) and 10 ----------------------- Section (9)(a)(1) of the Act requires the approval of the Commission pursuant to Section 10 of the Act before a registered holding company or subsidiary thereof may acquire utility assets or any securities. Section 10(b) provides that, if the requirements of Section 10(f) are satisfied, the Commission shall approve an acquisition under Section 9(a) unless the Commission finds that: 12 (1) such acquisition will tend towards interlocking relations or the concentration of control of public-utility companies, of a kind or to an extent detrimental to the public interest or the interests of investors or consumers; (2) in case of the acquisition of securities or utility assets, the consideration, including all fees, commissions, and other remuneration, to whomsoever paid, to be given, directly or indirectly, in connection with such acquisition is not reasonable or does not bear a fair relation to the sums invested in or the earning capacity of the utility assets to be acquired or the utility assets underlying the securities to be acquired; or (3) such acquisition will unduly complicate the capital structure of the holding-company system of the applicant or will be detrimental to the public interest or the interests of investors or consumers or the proper functioning of such holding-company system. Clearly, in this case, the acquisition of the Acquired Assets by AmerenCIPS will not contribute to an undue concentration of control of public utility assets. Both AmerenCIPS and AmerenUE are subsidiaries of Ameren, which, as their corporate parent, has ultimate control over both subsidiaries and their public utility assets. Ameren's control over these assets will not be affected by the proposed Illinois Asset Transfer. The amounts to be paid by AmerenCIPS bear a fair relation to the sums invested in and the earning capacity of the Acquired Assets. The Acquired Assets are being transferred at their book value net of liabilities. At December 31, 2003, the net book value of the transmission and distribution assets to be acquired by AmerenCIPS net of liabilities was $126.2 million, and the net book value of the gas assets to be acquired by AmerenCIPS net of liabilities was $11.7 million. The rates for electric and natural gas service provided by AmerenUE in Illinois are cost-based rates that are predicated in part on the book value of these assets. It is thus evident that the amount to be paid by AmerenCIPS is consistent with Section 10(b)(2) of the Act. As noted above, the acquisition of the Acquired Assets by AmerenCIPS will not unduly complicate its capital structure. Approximately one-half of the Acquired Assets will be transferred to AmerenCIPS through distribution by AmerenUE to Ameren followed by contribution of such assets to AmerenCIPS, and the remainder will be transferred to AmerenCIPS in return for a promissory note. As a result, the transaction will not have a significant effect on the capital structure of AmerenCIPS. The acquisition of the Acquired Assets by AmerenCIPS will not have an adverse effect on the interests of consumers of either AmerenUE or AmerenCIPS. Existing and new retail electric service customers of AmerenCIPS will continue to be served in accordance with tariffs that have previously been approved by the ICC. Rates of captive retail electric service customers currently served by AmerenCIPS are not subject to change prior to January 1, 2007, when the transition to full retail customer choice in Illinois will be completed. 13 AmerenCIPS has an electricity supply agreement with AEM pursuant to which it purchases its full requirements for electricity at demand and energy charges that are fixed and not subject to modification prior to December 31, 2004. Pursuant to an order of the ICC in Docket No. 02-0428, AmerenCIPS will seek to extend this agreement to December 31, 2006 under the same terms and conditions. AEM has sufficient generation capacity available to be able to accommodate the additional load being transferred to AmerenCIPS. The stability provided by this contract will insulate retail electric service customers in Illinois that transfer from AmerenUE to AmerenCIPS from any meaningful risk of a rate increase during the term of that electricity supply agreement. Thereafter, AmerenCIPS will purchase electricity needed to serve all of its customers under competitive market conditions. Finally, AmerenCIPS and AmerenUE have integrated their gas utility operations and rely extensively on support services provided by Ameren Services Company and AFS. Moreover, AmerenCIPS will adopt the service classifications and rates in AmerenUE's retail tariffs for natural gas service in Illinois and will assume the obligations of AmerenUE under certificates of public convenience and necessity granted by the ICC and all municipal and county franchises authorizing AmerenUE to provide gas utility service in Illinois. Therefore, insofar as the natural gas service customers of AmerenUE in Illinois are concerned, the Illinois Asset Transfer will simply result in a change in name of their service provider without having any impact on the quality or cost of service provided. Section 10(c) of the Act provides that, notwithstanding the provisions of Section 10(b), the Commission shall not approve: (1) an acquisition of securities or utility assets, or of any other interest, which is unlawful under the provisions of section 8 or is detrimental to the carrying out of the provisions under section 11; or (2) the acquisition of securities or utility assets of a public utility or public utility holding company unless the Commission finds that such acquisition will serve the public interest by tending towards the economical and the efficient development of an integrated public utility system. The Commission approved the formation of Ameren and its acquisition of AmerenUE and AmerenCIPS in 1997. As indicated above, the Commission concluded in the Merger Order that the combined electric properties of AmerenUE and AmerenCIPS constitute an integrated electric system and that "the proposed acquisition by Ameren of this electric integrated system will `ten[d] towards the economical and efficient development of an integrated public-utility system,' and so as to satisfy the requirements of section 10(c)(2) of the Act."/9/ The Commission further concluded that the gas properties of AmerenUE and AmerenCIPS "constitute a gas integrated system within the meaning of section 2(a)(29)(B) of the Act."/10/ The transfer of the Acquired Assets from AmerenUE - ---------- 9 See Merger Order, 66 SEC Docket at 490, fn. 17. 10 Id. at 491. 14 to AmerenCIPS will not affect the integrated operation of these facilities. It is thus evident that Section 10(c) of the Act does not preclude issuance of a Commission order authorizing acquisition of the Acquired Assets by AmerenCIPS. 4. Section 12(c) ------------- The Dividend Assets are to be transferred through distribution of an in-kind dividend by AmerenUE to Ameren, and a capital contribution by Ameren to AmerenCIPS. Section 12(c) of the Act precludes the declaration or payment of a dividend by a registered holding company or subsidiary thereof: ...in contravention of such rules and regulations or orders as the Commission deems necessary or appropriate to protect the financial integrity of companies in holding-company systems, to safeguard the working capital of public-utility companies, to prevent the payment of dividends out of capital or unearned surplus, or to prevent the circumvention of the provisions of this title or the rules, regulations, or orders thereunder. The only relevant rule adopted by the Commission relating to declaration or payment of dividends by a subsidiary company of a registered public utility holding company is Rule 46(a), which precludes payment of a dividend "out of capital or unearned surplus, except pursuant to a declaration notifying the Commission of the proposed transaction, which has become effective in accordance with the procedure specified in ss.250.23." As of December 31, 2003, AmerenUE had retained earnings of approximately $1.6 billion. The distribution of the Dividend Assets will result in a charge against retained earnings of AmerenUE of approximately $69 million. It is therefore evident that AmerenUE has sufficient retained earnings in which to make an in-kind dividend to Ameren for the purpose of implementing the Illinois Asset Transfer. B. Generation Transfer ------------------- As noted above, Ameren GenCo is an EWG. Section 32(e) of the Act provides in pertinent part that an EWG "shall be exempt from all provisions of this Act." Therefore, the participation of Ameren GenCo in the Generation Transfer does not require Commission authorization. However, the acquisition of the Pinckneyville Plant and the Kinmundy Plant by AmerenUE is subject to the requirements of Sections 9(a)(1) and 10 of the Act, and the assumption by AmerenUE of certain obligations of Ameren GenCo is subject to Rule 45. The standards established by Sections 9(a) and 10 of the Act for acquisition of utility assets by a subsidiary of a registered public utility holding company are set forth above. The Generation Transfer is consistent with these standards. The acquisition of the Pinckneyville Plant and the Kinmundy Plant by AmerenUE will not contribute to an undue concentration of control of public utility assets. AmerenUE and Ameren GenCo are affiliated entities within the Ameren corporate family, and their respective generation facilities are already being dispatched in accordance with the Joint Dispatch Agreement. Because the transaction will involve only the intra-corporate transfer of generation 15 facilities, it will not affect concentration of control of generation assets. Although the Generation Transfer will increase the amount of generation capacity owned by AmerenUE, such capacity is needed by AmerenUE to meet its existing public service obligations in Missouri and maintain an adequate generation capacity reserve margin. The amounts to be paid by AmerenUE bear a fair relation to the sums invested in and the earning capacity of the Pinckneyville Plant and the Kinmundy Plant. As noted above, these plants are to be acquired by AmerenUE at their net book value (i.e., original cost of construction less accumulated depreciation). Power from these units will be sold primarily to retail electric service customers in Missouri at cost-based rates which are subject to regulation by the MoPSC. The transaction will therefore be consistent with the standards for intra-corporate asset transfers cited above. The price at which AmerenUE will acquire the Pinckneyville Plant and the Kinmundy Plant is also consistent with the price of capacity from alternative sources that were considered by AmerenUE. Prior to entering into this transaction, AmerenUE undertook an Asset Mix Optimization Analysis, which showed that the addition of a mix of simple cycle and combined cycle combustion turbines during its planning horizon would satisfy AmerenUE's needs on a least-cost planning basis. AmerenUE then evaluated a number of options for obtaining the energy and capacity needed to meet its reliability and customer service obligations, including the purchase of power from other wholesale energy suppliers, the purchase of existing generation assets from non-affiliated generation owners, and the construction of new capacity, as well as the Generation Transfer. None of these alternatives were entirely satisfactory. In the fall of 2001, AmerenUE issued a Request for Proposals for capacity and energy with the intent of purchasing up to 500 MW of capacity for the time period of 2002 through 2011. The Net Present Value of offers of power submitted in response to this RFP, coupled with the construction of simple cycle combustion turbine generators at the end of the 10-year contracting period (2002-2011), were comparable to the cost to AmerenUE of purchasing the Pinckneyville Plant and the Kinmundy Plant from Ameren GenCo. However, the MoPSC Staff expressed a preference for AmerenUE to own generation facilities rather than to purchase power at wholesale. The possibility of purchasing generation facilities from non-affiliated entities was unsuitable because of concerns over the availability of a reliable transmission path for delivery of power to AmerenUE customers, because of concerns about transmission constraints, and because of concerns about the credit worthiness of such non-affiliated entities. Finally, the cost of purchasing the Pinckneyville Plant and the Kinmundy Plant from Ameren GenCo at net book value was comparable to or less than the estimated cost of building new combustion turbine generating units that offer similar flexibility and operating characteristics. The acquisition of the Pinckneyville Plant and the Kinmundy Plant and associated assets by AmerenUE will not unduly complicate AmerenUE's capital structure. AmerenUE expects to finance the acquisition of these assets with internally-generated cash or a combination of cash and debt such that AmerenUE's capital structure will remain balanced and consistent with its solid financial condition after giving effect to the acquisition of these assets and related financing. 16 The acquisition of the Pinckneyville Plant and the Kinmundy Plant by AmerenUE will not have an adverse effect on the interests of consumers of AmerenUE. As noted above, the Stipulation and Agreement protects existing retail customers of AmerenUE in Missouri from a change in rates for electric service, except in limited circumstances, prior to 2006. Because AmerenUE is transferring its current retail electric service obligations in Illinois to AmerenCIPS, it will no longer have retail customers in Illinois that might be affected by the Generation Transfer. Finally, the acquisition of the Pinckneyville Plant and the Kinmundy Plant by AmerenUE will enhance the integration of those facilities with the existing AmerenUE generating units. As noted above, these units are connected directly to the Ameren transmission system. However, the Joint Dispatch Agreement requires AmerenUE and AmerenGenCo each to serve its load requirements from its own least-cost generation facilities first, before relying on excess generation that may be available from the other company. By acquiring these generating units, AmerenUE will be able to dispatch them in the optimal manner to serve the needs of its retail and wholesale electricity customers without consideration of the use of those units by Ameren GenCo. The transactions proposed herein are also subject to Section 12(b) of the Act and Rule 45 thereunder. Rule 45 permits a subsidiary of a registered holding company to make extensions of credit without interest in connection with service, construction or sales contracts (including sales of materials and supplies); provided that payment is made as soon as reasonably practicable. In this case, the extensions of credit relate to the assumption by AmerenUE of certain obligations of Ameren GenCo that are associated with the Pinckneyville Plant and the Kinmundy Plant. These obligations include accrued property taxes, state and federal deferred tax liabilities, and a small account payable. Payment of these obligations will be made by AmerenUE in the ordinary course of business without interest. C. Rule 54 ------- The transactions proposed herein are also subject to Section 32(h)(4) of the Act and Rule 54 thereunder. Rule 54 provides that, in determining whether to approve any transaction that does not relate to an EWG or "foreign utility company" ("FUCO"), the Commission shall not consider the effect of the capitalization or earnings of any subsidiary which is an EWG or FUCO upon the registered holding company system if paragraphs (a), (b) and (c) are satisfied. Ameren has complied or will comply with the record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3) on the use of the Ameren system's domestic public-utility company personnel to render services to EWGs and FUCOs, and the requirements of Rule 53(a)(4) concerning the submission of copies of certain filings under the Act to retail regulatory commissions. Further, none of the circumstances described in Rule 53(b) has occurred or is continuing. Rule 53(c) is inapplicable by its terms because the proposals contained herein do not involve the issue and sale of securities (including any guarantees) to finance an acquisition of an EWG or FUCO. 17 Rule 53(a)(1) limits a registered holding company's financing of investments in EWGs if such holding company's "aggregate investment" in EWGs and FUCOs exceed 50% of its "consolidated retained earnings." Ameren's "aggregate investment"(as defined in Rule 53(a)(1)(i)) in all EWGs and FUCOs is approximately $425,165,404, which is currently equal to 23.4% of Ameren's "consolidated retained earnings" (as defined in Rule 53(a)(1)(ii)) for the four quarters ended December 31, 2003 of $1,813,903,019. The sale of the Pinckneyville Plant and the Kinmundy Plant by Ameren GenCo to AmerenUE and the associated transactions will have the effect of reducing Ameren's aggregate investment in EWGs. ITEM 4. REGULATORY APPROVALS. -------------------- Applications with respect to transactions contemplated in the Illinois Asset Transfer Agreement have been approved by the ICC and the FERC, and an application with respect to such transactions is currently pending before the MoPSC. A notice of transfer of certain licenses may also be filed with the Federal Communications Commission. No other state commission, and no other federal commission, other than the Commission, has jurisdiction over the proposed transactions associated with the Illinois Asset Transfer. An application with respect to transactions contemplated in the Generation Transfer has been filed with the FERC.11 Although MoPSC approval is not required for the Generation Transfer, the MoPSC has stated in filings with the FERC that this transaction is consistent with and supported by the Stipulation and Agreement, which was approved by the MoPSC in August 2002. Because the Generation Transfer will not occur until the Illinois Asset Transfer has been completed, approval of the ICC will not be required for the Generation Transfer. No other state commission, and no other federal commission, other than the Commission, has jurisdiction over the Generation Transfer. ITEM 5. PROCEDURE. --------- The Commission is requested to publish a notice under Rule 23 with respect to the filing of this Application or Declaration as soon as practicable. It is respectfully requested that the Commission's Order be issued as soon as the rules allow, and that there should not be a 30-day waiting period between issuance of the Commission's order and the date on which the order is to become effective. Ameren, AmerenUE and AmerenCIPS hereby waive a recommended decision by a hearing officer or any other responsible officer of the Commission and consent that the Division of Investment Management may assist in the preparation of the Commission's decision and/or order, unless the Division opposes the matters proposed herein. - ---------- 11 On February 5, 2004, after the conclusion of an evidentiary hearing, an Administrative Law Judge of the FERC issued an Initial Decision in which she concluded that the Generation Transfer is consistent with the public interest and that the Generation Transfer application was therefore approved. This decision is subject to review by the FERC before it becomes final. 18 ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS. ---------------------------------- A. Exhibits. --------- A None. B-1 Form of Illinois Asset Transfer Agreement among Union Electric Company, Central Illinois Public Service Company, and Ameren Corporation (previously filed). B-2 Proposed Listing of Electric Assets and Liabilities and Gas Assets and Liabilities Being Transferred from AmerenUE to AmerenCIPS (filed herewith). B-3 Form of Promissory Note to be issued to AmerenUE by AmerenCIPS (previously filed). B-4 Stipulation and Agreement between the Staff of the MoPSC and AmerenUE dated July 15, 2002 (filed herewith). B-5 Form of Asset Transfer Agreement-Pinckneyville Generating Station (filed herewith). B-6 Form of Asset Transfer Agreement-Kinmundy Generating Station (filed herewith). C None. D-1 Notice to Illinois Commerce Commission of transfer of Electric Distribution and Transmission Assets and Retail Electric Business (filed herewith). D-2 Petition to Illinois Commerce Commission for authorization to transfer certificates of public convenience and necessity issued to AmerenUE to provide retail electric service in Illinois (filed herewith). D-3 Petition to Illinois Commerce Commission for authorization to transfer gas system assets and gas public utility business (filed herewith). D-4 Order of Illinois Commerce Commission relating to transfer of Electric Distribution and Transmission Assets, Retail Electric Business and Certificates of Public Convenience and Necessity, and Approval of Related Tariffs (filed herewith). D-5 [Intentionally Omitted] 19 D-6 Order of Illinois Commerce Commission relating to transfer of gas system assets and gas public utility business (to be filed by amendment). D-7 Application to Missouri Public Service Commission for authorization to transfer assets and related contracts, dated August 25, 2003 (previously filed). D-8 Order of Missouri Public Service Commission (to be filed by amendment). D-9 Application to FERC pursuant to Section 203 of Federal Power Act to transfer FERC-jurisdictional assets associated with Illinois Asset Transfer (filed herewith). D-10 Order of FERC authorizing the Illinois Asset Transfer (filed herewith). D-11 Application to FERC pursuant to Section 203 of the Federal Power Act to transfer FERC-jurisdictional assets associated with the Generation Transfer, dated February 5, 2003 (filed herewith). D-12 Order of FERC authorizing the Generation Transfer (to be filed by amendment). D-13 Report and Order of the MoPSC approving the Stipulation and Agreement identified in Exhibit B-5, dated July 30, 2002 (to be filed by amendment) E Map of combined service areas of AmerenUE and AmerenCIPS (Paper format - Form SE) (to be filed by amendment). F Opinion of Counsel (to be filed by amendment). G Proposed Form of Federal Register Notice (previously filed). B. Financial Statements. --------------------- FS-1 Balance Sheet of Ameren and consolidated subsidiaries, as of December 31, 2003 (incorporated by reference to the Annual Report on Form 10-K of Ameren for the year ended December 31, 2003) (File No. 001-14756). FS-2 Statement of Income of Ameren and consolidated subsidiaries for the year ended December 31, 2003 (incorporated by reference to the Annual Report on Form 10-K of Ameren for the year ended December 31, 2003) (File No. 001-14756). 20 FS-3 Balance Sheet of AmerenUE and consolidated subsidiaries as of December 31, 2003 (incorporated by reference to the Annual Report on Form 10-K of AmerenUE for the year ended December 31, 2003) (File No. 001-02967). FS-4 Statement of Income of AmerenUE and consolidated subsidiaries for the year ended December 31, 2003 (incorporated by reference to the Annual Report on Form 10-K of AmerenUE for the year ended December 31, 2003) (File No. 001-02967). FS-5 Balance Sheet of AmerenCIPS as of December 31, 2003 (incorporated by reference to the Annual Report on Form 10-K of AmerenCIPS for the year ended December 31, 2003) (File No. 001-03672). FS-6 Statement of Income of AmerenCIPS for the year ended December 31, 2003 (incorporated by reference to the Annual Report on Form 10-K of AmerenCIPS for the year ended December 31, 2003) (File No. 001-03672). FS-7 Pro Forma Balance Sheet of AmerenUE (to be filed by amendment). FS-8 Pro Forma Balance Sheet of AmerenCIPS (to be filed by amendment). FS-9 Preliminary Accounting Entries for Transfer of Electric Assets and Liabilities from AmerenUE to AmerenCIPS estimated at December 31, 2003 (see Exhibit B-2). FS-10 Preliminary Accounting Entries for Transfer of Pinckneyville Plant and Kinmundy Plant estimated at April 30, 2003 (to be filed by amendment) ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS. --------------------------------------- None of the matters that are the subject of this Application or Declaration involve a "major federal action" nor do they "significantly affect the quality of the human environment" as those terms are used in section 102(2)(C) of the National Environmental Policy Act. The transactions that are the subject of this Application or Declaration will not result in changes in the operation of AmerenUE or AmerenCIPS that will have an impact on the environment. AmerenUE and AmerenCIPS are not aware of any federal agency that has prepared or is preparing an environmental impact statement with respect to the transactions that are the subject of this Application or Declaration. 21 SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned companies have duly caused this amended Application or Declaration filed herein to be signed on their behalves by the undersigned thereunto duly authorized. AMEREN CORPORATION CENTRAL ILLINOIS PUBLIC SERVICE COMPANY UNION ELECTRIC COMPANY By: /s/ Steven R. Sullivan ---------------------- Name: Steven R. Sullivan Title: Senior Vice President Governmental/Regulatory Policy, General Counsel and Secretary Date: April 30, 2004 22 EX-99 2 exb_2.txt EXHIBIT B-2 - PROPOSED LISTING EXHIBIT B-2 ELECTRIC JOURNAL ENTRIES PROPOSED LISTING OF ELECTRIC ASSETS AND LIABILITIES BEING TRANSFERRED FROM UNION ELECTRIC COMPANY TO CENTRAL ILLINOIS PUBLIC SERVICE COMPANY Union Electric Company (AmerenUE) is transferring its Illinois electric service territory to Central Illinois Public Service Company as follows: 1. All real and personal property located in the State of Illinois owned by AmerenUE (including plant in service and construction work in progress) used in the transmission and distribution of electricity. Excluded from the transfer are the generator lead lines and related equipment connecting Venice and Keokuk plants to the transmission grid. AmerenUE would also retain miscellaneous, minor amounts of property in Illinois to ensure the smooth operation of its electric system, consisting of towers and associated conductors on the Illinois side of the Mississippi River, located at the river's edge, carrying electricity across the river; and communication related equipment located in Illinois. All production facilities at the Venice Plant and Keokuk Plant (including flowage land) are excluded. The cost of these assets are recorded in Accounts 101 and 107 of the Uniform System of Accounts and the related accumulated provision for depreciation and amortization are recorded in Accounts 108 and 111. 2. All non-utility real property located in the State of Illinois, excluding real and personal property located at the Venice Power Plant site and Keokuk Plant flowage land. The cost of these assets are recorded in Account 121 of the Uniform System of Accounts. There is no related accumulated provision for depreciation and amortization. 3. Working funds recorded in Account 135, consisting of petty cash maintained at the East. St. Louis office. 4. Accounts Receivable of Illinois electric customers recorded in Account 142. 5. The provision for uncollectible accounts associated with accounts receivable being transferred to AmerenCIPS (paragraph 4 above). 6. Plant materials and operating supplies located at the Alton Storeroom and truck stock recorded in Account 154. 7. An allocation of undistributed stores expense recorded in Account 163, associated with the plant materials and operating supplies being transferred to AmerenCIPS. 8. Accrued Illinois electric revenues for service not billed at the time of transfer recorded in Account 173. 9. AFUDC temporary differences due to FAS 109 recorded in Account 182. Schedule 2 Page 1 of 11 ELECTRIC JOURNAL ENTRIES 10. Amounts collected for environmental cleanup recorded in Account 186. 11. Accumulated deferred income taxes recorded in Account 190, for the income taxes related to unamortized Investment Tax Credit being transferred to AmerenCIPS. 12. Accrued payroll payable recorded in Account 232. 13. Customer deposits related to Illinois electric customers recorded in Account 235. 14. Accrued vacation liability for electric employees recorded in Account 242. 15. Customer Advances recorded in Account 252. 16. Unamortized investment credit and Federal excess taxes - depreciation both recorded in Account 254. 17. Unamortized Deferred Investment Tax Credits recorded in Account 255, related to the plant assets being transferred to AmerenCIPS. 18. Accumulated Deferred Income Taxes recorded in Account 282 related to the plant being transferred to AmerenCIPS. 19. Deferred Income Tax Liability recorded in Account 283 related to the plant being transferred to AmerenCIPS. 20. Deferred Income Tax Liability related to the deferred gain for tax purposes, but not for book purposes, on transfer. The following appendices provide more detailed listings of the assets identified above: Page 3 lists the asset and liability accounts being transferred to AmerenCIPS by ICC Account. The value shown in this and other schedules are the amounts estimated for AmerenUE books at December 31, 2003. Page 4 lists the amounts being transferred to AmerenCIPS recorded in accounts 101, 107, 108 and 111 by function (paragraph 1 above). Page 5 consists of a listing of the plant material and operating supply amounts being transferred to AmerenCIPS by works headquarters. Schedule 2 Page 2 of 11 PROPOSED ACCOUNTING ENTRIES FOR TRANSFER OF ELECTRIC ASSETS AND LIABILITIES --------------------------------------------------------------------------- FROM UNION ELECTRIC COMPANY TO ------------------------------ CENTRAL ILLINOIS PUBLIC SERVICE COMPANY --------------------------------------- ESTIMATED AS OF DECEMBER 31, 2003 ---------------------------------
Proposed Account NUMBER ACCOUNT DESCRIPTION DEBIT CREDIT ------ ------------------- ----- ------ 102 Utility Plant Purchased or Sold $115,936,328 101 Electric Plant in Service $252,180,591 121 Non-Utility Property 16,199 107 Construction Work in Progress 5,909,161 108 Accumulated Provision for Depreciation 141,413,552 111 Accumulated Provision for Amortization 739,872 135 Working funds 10,900 142 Accounts receivable 5,280,252 144 Provision for Uncollectible Accounts 142,362 154 Plant materials and operating supplies 115,591 163 Undistributed stores expense 4,518 173 Accrued electric revenues 9,921,000 182 Regulatory Asset FAS 109 12,943,155 186 Environmental adjustment clause 190 Accumulated deferred income taxes 4,952,245 232 Payroll Payable 49,429 235 Customer Deposits 1,054,723 242 Accrued Vacation Liability 342,480 252 Customer Advances 142,268 254 Other Regulatory Liabilities 3,636,895 255 Accumulated deferred Investment Tax Credit 5,911,045 282 Accumulated deferred income taxes-Other Property 28,672,932 283 Deferred Income Tax Liability -Other 283 Deferred Income Tax Liability -Deferred Intercompany Gain 16,941,549 145 Notes receivable 5,112,119 216 Retained Earnings 5,112,119 ----------------- ----------------- Balance $308,270,643 $308,270,643 ================= ================= To clear Account 102, Electric Plant Purchased or Sold, and charge Account 145, Note Receivable from Associated Companies for the assets And liabilities transferred to AmerenCIPS. 216 Retained Earnings $57,968,164 145 Notes receivable 57,968,164 102 Utility Plant Purchased or Sold $115,936,328 The total effect (Electric Plant Sold and Other Assets/Liabilities transferred) on notes receivable and retained earning is shown below: 145 Notes receivable 63,080,283 216 Retained Earnings 63,080,283
Schedule 2 Page 3 of 11 Union Electric Company Electric Utility Plant Estimated at December 31, 2003
Account 101 Account 107 Accounts 108 & 111 Accumulated Estimated Construction Amortization & Plant Category Electric Plant Work in Progress Depreciation Net Plant - ------------------------------- -------------------- --------------------- --------------------- --------------------- Transmission $82,724,040 $5,558,704 -$36,747,193 $51,535,551 Distribution 156,263,819 350,457 -98,601,816 58,012,460 General 13,192,732 0 -6,821,033 6,371,699 -------------------- --------------------- --------------------- --------------------- Total Electric 252,180,591 5,909,161 -142,170,042 115,919,710 Account 121 ----------- Non-Utility Property -------- Non-Utility 16,199 16,199 --------------------- -------------------- --------------------- --------------------- --------------------- Total Property and Plant $252,196,790 $5,909,161 -$142,170,042 $115,935,909 ==================== ===================== ===================== =====================
Schedule 2 Page 4 of 11 Union Electric Company Electric Operating Materials & Supplies Transferred to Central Illinois Public Service Company Estimated at December 31, 2003
Storeroom Location Number Balance - -------------------------- ---------- ----------------- Alton 061 $ 115,591.00 $ East St. Louis 054 - --------------------- $ 115,591.00 =====================
Schedule 2 Page 5 of 11 GAS JOURNAL ENTRIES PROPOSED LISTING OF GAS ASSETS AND LIABILITIES BEING TRANSFERRED FROM UNION ELECTRIC COMPANY TO CENTRAL ILLINOIS PUBLIC SERVICE COMPANY Union Electric Company (AmerenUE) is transferring its Illinois gas service territory to Central Illinois Public Service Company as follows: 1. All real and personal property located in the State of Illinois owned by AmerenUE (including plant in service and construction work in progress) used in the production and distribution of natural gas. The cost of these assets are recorded in Accounts 101 and 107 of the Uniform System of Accounts and the related accumulated provision for depreciation is recorded in Account 108. 2. Accounts Receivable of Illinois gas customers recorded in Account 142. 3. The provision for uncollectible accounts associated with accounts receivable being transferred to AmerenCIPS (paragraph 2 above). 4. Fuel stock consisting of propane stored at the Alton Propane Plant recorded in Account 151. 5. Plant materials and operating supplies located at the Alton Storeroom and truck stock recorded in Account 154. 6. Natural gas being held in storage by Mississippi River Transmission Corporation for AmerenUE recorded in Account 164. 7. Accrued Illinois gas revenues for service not billed at the time of transfer recorded in Account 173. 8. AFUDC temporary differences due to FAS 109 recorded in Account 182. 9. Amounts collected for environmental cleanup recorded in Account 186. 10. Accumulated deferred income taxes recorded in Account 190, for the income taxes related to unamortized Investment Tax Credit being transferred to AmerenCIPS. 11. Account payable for the amount of natural gas purchased for resale but not yet paid at the time of transfer to AmerenCIPS recorded in Account 232. 12. Accrued payroll payable recorded in Account 232. 13. Accrued vacation liability for gas employees recorded in Account 242. Schedule 2 Page 6 of 11 14. Unamortized investment credit and Federal excess taxes - depreciation both recorded in Account 254. 15. Environmental cleanup liability at Alton Town Gas Site recorded in Account 253. 16. Unamortized Deferred Investment Tax Credits recorded in Account 255, related to the plant assets being transferred to AmerenCIPS. 17. Accumulated Deferred Income Taxes recorded in Account 282 related to the plant being transferred to AmerenCIPS. 18. Deferred Income Tax Liability recorded in Account 283 related to the plant being transferred to AmerenCIPS. 19. Deferred Income Tax Liability related to the deferred gain for tax purposes, but not book purposes, on transfer. The following appendices provide more detailed listings of the assets identified above: Page 8 lists the asset and liability accounts being transferred to AmerenCIPS by ICC Account. The value shown in this and other schedules are the amounts estimated for AmerenUE books at December 31, 2003. Page 9 lists the amounts being transferred to AmerenCIPS recorded in accounts 101, 107 and 108 by function (paragraph 1 above). Page 10 lists the gas fuel stock being transferred to AmerenCIPS. Page 11 consists of a listing of the plant material and operating supply amounts being transferred to AmerenCIPS by works headquarters. Schedule 2 Page 7 of 11 PROPOSED ACCOUNTING ENTRIES FOR TRANSFER OF GAS ASSETS AND LIABILITIES ---------------------------------------------------------------------- FROM UNION ELECTRIC COMPANY TO ------------------------------ CENTRAL ILLINOIS PUBLIC SERVICE COMPANY --------------------------------------- ESTIMATED AS DECEMBER 31, 2003 ------------------------------
Proposed Account Number Account Description Debit Credit ------ ------------------- ----- ------ 102 Utility Plant Purchased or Sold $14,140,226 101 Gas Plant in Service $29,811,820 107 Construction Work in Progress 58,186 108 Accumulated Provision for Depreciation 15,729,780 142 Accounts receivable 468,157 144 Provision for Uncollectible Accounts 64,499 151 Propane Fuel Stock 137,928 154 Plant materials and operating supplies 79,051 164 Gas storage 197,044 173 Accrued gas revenues 100,000 186 Environmental adjustment clause 409,257 190 Accumulated deferred income taxes 555,916 232 Accounts payable--to natural gas supplier 1,413,500 232 Payroll Payable 19,700 242 Accrued Vacation Liability 52,034 252 Customer Advances 221,372 253 Environmental cleanup deferred credit 1,000,000 254 Other Regulatory Liabilities 468,233 255 Accumulated deferred Investment Tax Credit 220,418 282 Accumulated deferred income taxes-Other Property 1,985,721 283 Deferred Income Tax Liability-Deferred Intercompany Gain 1,892,495 145 Notes receivable 1,212,071 216 Retained Earnings 1,212,071 ----------------- --------------- Balance $35,724,739 $35,724,739 ================= =============== To clear Account 102, Gas Plant Purchased or Sold, and charge Account 145, Note Receivable from Associated Companies for the assets and liabilities transferred to AmerenCIPS. 216 Retained Earnings $7,070,113 145 Notes receivable 7,070,113 102 Utility Plant Purchased or Sold $14,140,226 The total effect (Gas Plant Sold and Other Assets/Liabilities transferred) on notes receivable and retained earning is shown below: 145 Notes receivable 5,858,042 216 Retained Earnings 5,858,042
Schedule 2 Page 8 of 11 Union Electric Company Gas Utility Plant Estimated as of December 31, 2003
ACCOUNT 101 ACCOUNT 107 Accounts 108 -------------- ---------------- --------------- Estimated Construction Accumulated Work in PLANT CATEGORY GAS PLANT Progress Depreciation Net Plant - ------------------- -------------- ---------------- --------------- -------------- Production $815,815 -$794,189 $21,626 Distribution 28,006,763 58,186 -14,182,901 13,882,047 General 989,242 -752,689 236,553 -------------- ---------------- --------------- -------------- Total Gas $29,811,820 $58,186 -$15,729,780 $14,140,226 ============== ================ =============== ==============
Schedule 2 Page 9 of 11 Union Electric Company Gas Fuel Stock Transferred to Central Illinois Public Service Company Estimated at December 31, 2003
PLANT PROPANE NATURAL GAS TOTAL ----- -------- ----------- ----- Alton Propane Plant $150,875 $150,875 Stored by Mississippi River Transmission Co. 46,169 46,169 -------------- -------------- ------------ Total $150,875 $46,169 $197,044 ============== ============== ============
Schedule 2 Page 10 of 11 Union Electric Company Gas Operating Materials & Supplies Transferred to Central Illinois Public Service Company Estimated at December 31, 2003
Storeroom Location Number Balance ----------------- ---------- -------------- Alton 061 $ 79,051.00 East St. Louis 054 $ - -------------- $ 79,051.00 ==============
Schedule 2 Page 11 of 11 EX-99 3 exb_4.txt EXHIBIT B-4 - STIPULATION/AGREEMENT EXHIBIT B-4 BEFORE THE PUBLIC SERVICE COMMISSION OF THE STATE OF MISSOURI The Staff of the Missouri Public ) Service Commission, ) ) Complainant, ) ) v. ) Case No. EC-2002-1 ) Union Electric Company, d/b/a ) AmerenUE, ) ) Respondent. ) STIPULATION AND AGREEMENT ------------------------- As a result of discussions among the Staff of the Commission ("Staff"), the Office of Public Counsel ("Public Counsel"), Union Electric Company d/b/a AmerenUE ("UE"), the State of Missouri - Office of the Attorney General, the Missouri Energy Group ("MEG"), the Missouri Industrial Energy Consumers ("MIEC"), the Missouri Retailers Association, and Doe Run Resources Corporation (collectively "the signatories"), the signatories hereby submit to the Missouri Public Service Commission ("Commission") for its consideration and approval this Stipulation and Agreement (the "Agreement"), in resolution of Case No. EC-2002-1. The signatories state as follows: 1. On July 2, 2001, the Staff filed its complaint and initial direct testimony in this case based on a test year of the twelve months ended June 30, 2000 and an update period through December 31, 2000. The Staff's position was that UE's earnings/revenues were excessive in the range of approximately $213 million to $250 million per year, exclusive of license, occupation, franchise, gross receipts, or other similar fees or taxes, and UE should have its rates reduced. 2. On December 6, 2001, the Commission issued an order granting UE's motion to change the test year from that proposed by the Staff, and set the test year as the twelve month period ending June 30, 2001. 3. On December 26, 2001, the Staff and UE filed a Joint Stipulation With Respect To Procedural Schedule And Related Matters. 4. On January 3, 2002, the Commission issued an Order approving, among other things, a revised procedural schedule for the case, a test year of the twelve months ended June 30, 2001 and an update period through September 30, 2001. 5. Pursuant to the revised schedule, on March 2, 2002, the Staff filed direct testimony based on a test year of the twelve months ending June 30, 2001 with an update period through September 30, 2001. 6. On May 10, 2002, UE and Public Counsel filed their rebuttal testimony. 7. On May 17, 2002, certain intervenors filed their rebuttal testimony. 8. The pre-hearing conference was held during the last week of May. On June 24, 2002, surrebuttal testimony was filed by the Staff, and cross-surrebuttal testimony was filed by UE, Public Counsel, and certain intervenors. 9. On July 11, 2002, the hearing of this case began. 10. The signatories have had on-going discussions in an effort to resolve the issues presented by this case, and have reached an Agreement to settle the case. The following stipulations memorialize the Agreement. STIPULATIONS ------------ The signatories submit to the Commission for its consideration and approval the following terms and conditions for resolution of Case No. EC-2002-1: 1. ONE-TIME CREDIT TO CUSTOMERS a. A one-time credit of $40 million will be made to UE Missouri retail electric customers, which shall be considered final settlement of Case Nos. EM-96-149, EC-2002-1025 and EC-2002-1059, relating to the third sharing period of the second Experimental Alternative Regulation Plan ("EARP"), but is exclusive of license, occupation, franchise, gross receipts, or other similar fees or taxes. As a consequence, Case Nos. EC-2002-1025 and EC-2002-1059 may be closed by the Commission. b. This one-time credit will be applied in the first billing cycle of the first billing period after the Report and Order of the Commission adopting this Agreement becomes final and unappealable. c. This one-time credit will be allocated to customers according to the terms of the second EARP. 2. RATE REDUCTIONS a. UE will file tariffs that will implement an electric rate reduction to be effective as of April 1, 2002, of $50 million, exclusive of license, occupation, franchise, gross receipts, or other similar fees or taxes. The April 1, 2002 reduction shall be allocated as follows: $46 million on an equal percentage reduction to all non-lighting classes, plus an additional $1 million reduction to the Small General Service class ("SGS") and an additional $3 million reduction to the Large Primary Service class ("LPS") to promote economic development in the State of Missouri. A credit reflecting the reduction in rates for the period between April 1, 2002 and the effective date of the tariffs implementing this rate reduction will be applied in the first billing cycle of the first billing period after the effective date of those tariffs, and will be allocated to customer classes consistent with the rate reduction noted above. 3 b. UE will file tariffs, bearing an effective date of April 1, 2003, that will implement an electric rate reduction of $30 million, exclusive of license, occupation, franchise, gross receipts, or other similar fees or taxes. The April 1, 2003 reduction shall be allocated as follows: $26 million on an equal percentage reduction to all non-lighting classes, plus an additional $1 million reduction to SGS and an additional $3 million reduction to LPS to promote economic development in the State of Missouri. c. UE will file tariffs, bearing an effective date of April 1, 2004, that will implement an electric rate reduction of $30 million, exclusive of license, occupation, franchise, gross receipts, or other similar fees or taxes. The April 1, 2004 reduction shall be allocated as follows: $26 million on an equal percentage reduction to all non-lighting classes, plus an additional $1 million reduction to SGS and an additional $3 million reduction to LPS to promote economic development in the State of Missouri. d. The tariffs referred to in subsections a, b, and c above, producing rates on the basis of the assumptions specified in Attachment A, will be filed by UE with the Commission by the later of August 1, 2002, or within five (5) business days of the Report and Order of the Commission adopting this Agreement becoming final and unappealable. e. There shall be no change to Rider B and Rider E. Nothing in this Agreement precludes a signatory or a customer with self-generation from proposing a special contract for Commission approval during the term of this Agreement. f. Rates will be designed to preserve the existing winter/summer rate differential for the residential customer class. g. Beginning January 1, 2003, the rate of interest to be paid on customer deposits in each year should be one percentage point above the prime rate 4 published in the Wall Street Journal as being in effect on the last business day of November of the prior year, except as otherwise required by Commission rule. 3. RATE MORATORIUM a. UE's rates resulting from the rate reductions specified in Section 2 above will continue in effect until June 30, 2006, and thereafter, until changed as a result of a Commission Order. Except as provided in subsections b and c below, no signatory (excluding the Office of the Attorney General) will before January 1, 2006 file a case to change the rates resulting from the reductions specified in Section 2 above. b. No signatory (excluding the Office of the Attorney General) may file a general rate increase case or a general rate decrease case before January 1, 2006 to change UE's rates, unless a significant, unusual event that has a major impact on UE occurs, such as: (i.) terrorist activity or an act of God; (ii.) a significant change in federal or state tax laws; (iii.) a significant change in federal or state utility laws or regulations; or (iv.) an unexpected extended outage or shutdown of a major generating unit(s), other than any major generating unit(s) shut down due to an extended outage at the time of the filing of this Agreement. c. This Agreement will not preclude the exercise of the rights granted to any of the parties pursuant to Section 393.292 RSMo 2000, respecting the funding of nuclear power plant decommissioning. 4. TIMELY INFRASTRUCTURE INVESTMENTS UE commits to undertake commercially reasonable efforts to make energy infrastructure investments totaling $2.25 billion to $2.75 billion from 5 January 1, 2002 through June 30, 2006. This commitment includes the completion or substantial completion of the following construction projects: o 700 MW of new regulated generating capacity, which does not include the replacement of the Venice power plant by new generation, nor the transfer of load to increase available generating capacity, but may include the purchase of generation plant from an Ameren affiliate at net book value; o upgrades to existing plants which will result in 270 MW or greater of additional generating capacity; o replacement of steam generators at the Callaway power plant; o replacement of Venice power plant by new generating capacity, which does not include the transfer of load to increase available generating capacity, but may include the purchase of generation plant from an Ameren affiliate at net book value; and o new transmission lines and transmission upgrades that will increase transmission import capability by 1,300 MW. UE shall provide status updates on these infrastructure commitments to the Staff, Public Counsel, Office of the Attorney General and, under appropriate confidentiality agreements, to representatives of the MIEC, MEG and the Department of Natural Resources, on a quarterly basis. In the event that UE plans to make energy infrastructure investments totaling less than $2.25 billion, UE will immediately report these plans to the Staff, Public Counsel, Office of the Attorney General and, under appropriate confidentiality agreements, to representatives of the MIEC, MEG and the Department of Natural Resources. Such report will explain why these investment plans are in the public interest. In addition, UE will continue its current process of working with the Staff and Public Counsel in its long-term resource planning efforts to ensure that its current plans and commitments are consistent with the future needs of its customers and the energy needs of the State of Missouri. UE will include representatives of the Department of Natural Resources in its future process for long-term resource planning efforts, but under no circumstances shall UE be compelled to disclose any proprietary or confidential information. Nothing in 6 this Agreement shall be construed to impair the Commission's rulemaking authority with respect to resource planning. Further, nothing in this Section would prohibit any signatory to this Agreement from raising issues regarding the prudence and reasonableness of the foregoing infrastructure investment decisions. 5. LOW INCOME CUSTOMER ASSISTANCE A. UE will make an initial $5 million contribution to its Dollar More Program by the later of September 1, 2002 or five (5) business days after the Report and Order of the Commission adopting this Agreement becomes final and unappealable. UE will contribute an additional $1 million to this program on June 30 of every year that the moratorium is in effect (June 30, 2003; June 30, 2004; June 30, 2005 and June 30, 2006). The transactions resulting from establishing and operating this fund will be recorded below-the-line and not treated as a regulated expense on UE's books and records. B. A weatherization fund for the benefit of UE's low-income customers in UE's service territory will be created and administered as determined under Section 11 of this Agreement. UE will make, by the later of September 1, 2002 or five (5) business days after the Report and Order of the Commission adopting this Agreement becomes final and unappealable, an initial contribution of $2 million to this low-income weatherization fund. UE will contribute an additional $0.5 million to this fund on June 30 of every year that this Agreement is in effect (June 30, 2003; June 30, 2004; June 30, 2005 and June 30, 2006). The transactions resulting from establishing and operating this fund will be recorded below-the-line and not treated as a regulated expense on UE's books and records. 6. ECONOMIC DEVELOPMENT FUND 7 UE will make an initial contribution of $5 million to a not-for-profit community development corporation to be known as the Ameren Community Development Corporation ("CDC") by the later of September 1, 2002 or five (5) business days after the Report and Order of the Commission adopting this Agreement becomes final and unappealable. UE will contribute an additional $1 million to this program on June 30 of every year that the Agreement is in effect (June 30, 2003; June 30, 2004; June 30, 2005 and June 30, 2006). These contributions will be administered by the CDC as determined under Section 11 of this Agreement. The transactions resulting from establishing and operating this fund will be recorded below-the-line and not treated as a regulated expense on UE's books and records. 7. RESIDENTIAL AND COMMERCIAL ENERGY EFFICIENCY FUND A residential and commercial energy efficiency fund will be created and administered as determined under Section 11 of this Agreement. UE will make an initial contribution of $2 million to this residential and commercial energy efficiency fund by the later of September 1, 2002 or five (5) business days after the Report and Order of the Commission adopting this Agreement becomes final and unappealable. UE will contribute an additional $0.5 million to the fund on June 30 of every year that the Agreement is in effect (June 30, 2003; June 30, 2004; June 30, 2005 and June 30, 2006). The transactions resulting from establishing and operating this fund will be recorded below-the-line and not treated as a regulated expense on UE's books and records. 8. DEPRECIATION UE shall modify its dismantling costs and/or service lives for certain assets that will result in a reduction in depreciation expense of approximately $20 million annually from current depreciation expense levels. The Staff and UE will undertake a collaborative effort to determine the level of depreciation 8 rates designed to decrease the current depreciation rates by $20 million annually effective April 1, 2002. In the event that such a determination is not made within 30 days of this Agreement being approved by the Commission, UE will be authorized to book effective April 1, 2002, an annual negative amortization of $20 million. However, in any event, UE shall continue to use its current methodology to calculate the net salvage costs of its assets, to recover those net salvage costs through depreciation rates, and to charge those costs to its depreciation reserve. 9. DEMAND RESPONSE OPTION UE will make its best efforts to increase the amount of demand response options (including interruptible load), by 200 megawatts, and to facilitate the infrastructure needed for customer participation, such as special customer equipment including customer-owned generation. A plan to accomplish this will be developed as provided under Section 11 of this Agreement and implemented by UE. 10. TIME OF USE PILOT PROJECT An experimental residential Time Of Use ("TOU") pilot project will be designed, implemented and evaluated as provided under Section 11 of this Agreement. 11. COLLABORATIVE EFFORTS a. The low-income weatherization fund and the residential and commercial energy efficiency fund will be utilized in accordance with plans developed by separate collaborative committees of interested signatories. There shall be a ninety (90) day period after the Commission's Report and Order adopting this Agreement becomes final and unappealable for the separate collaborative committees of interested signatories to develop plans for the utilization of these funds. If a collaborative committee cannot agree on a plan for the 9 utilization of the fund, disagreements must be brought to the Commission for a decision. The separate collaborative committees of interested signatories are to develop the format and frequency of regular reports regarding the status of each of these funds as well as a date for a final report respecting each of these funds. The final report of the separate collaborative committees will contain recommendations regarding the future of each of these funds subsequent to June 30, 2006. (However, UE shall not be obligated to continue this funding after June 30, 2006.) B. A collaborative committee of interested signatories will be established to develop the governance provisions of the CDC. There shall be a ninety (90) day period after the Commission's Report and Order adopting this Agreement becomes final and unappealable for the collaborative committee of interested signatories to finalize plans for the governance of the CDC. The collaborative committee of interested signatories will develop the format and frequency of regular reports regarding the status of this fund as well as a date for a final report respecting the fund. The final report of the collaborative committee will contain recommendations regarding the future of this fund subsequent to June 30, 2006. (However, UE shall not be obligated to continue this funding after June 30, 2006.) c. A collaborative committee of interested signatories will be established to design and evaluate an experimental residential TOU pilot project. There shall be a ninety (90) day period after the Commission's Report and Order adopting this Agreement becomes final and unappealable for the collaborative committee of interested signatories to outline plans for the project design and the post-implementation evaluation of the experimental residential TOU pilot project. If the collaborative committee cannot agree on the project design and a plan for post-implementation evaluation, disagreements must be brought to the Commission for a decision. 10 d. A collaborative committee of interested signatories will be established to design and evaluate demand response options. There shall be a one hundred twenty (120) day period after the Commission's Report and Order adopting this Agreement becomes final and unappealable for the collaborative committee of interested signatories to oversee both the project design and implementation plans of the demand response options. The collaborative committee shall also oversee the post-implementation evaluation of the demand response options. If the collaborative committee cannot agree on the project design and a plan for post-implementation evaluation, disagreements must be brought to the Commission for a decision. The collaborative committee of interested signatories will develop the format and frequency of regular reports regarding the status of demand response options as well as a date for a final report. 12. INTEREST BEARING ACCOUNTS In the event the contributions referenced in Sections 6 and 7 have not been disbursed by the later of the dates referenced in said sections, UE shall place the contributions referenced in Sections 6 and 7 in interest bearing accounts until disbursed. 13. COST OF SERVICE STUDIES No later than January 1, 2006, UE will submit to the signatories a Missouri jurisdictional revenue requirement cost of service study and a Missouri jurisdictional customer class cost of service study covering the twelve months ending June 30, 2005. All underlying workpapers associated with these studies will be provided at that time. 14. EFFECT OF THIS NEGOTIATED SETTLEMENT a. None of the signatories shall be deemed to have approved or acquiesced in any question of Commission authority, accounting authority order principle, cost of capital methodology, capital structure, decommissioning methodology, 11 ratemaking or procedural principle, valuation methodology, cost of service methodology or determination, depreciation principle or method, rate design methodology, jurisdictional allocation methodology, cost allocation, cost recovery, or question of prudence, that may underlie this Agreement, or for which provision is made in this Agreement. b. This Agreement represents a negotiated settlement. Except as specified herein, the signatories to this Agreement shall not be prejudiced, bound by, or in any way affected by the terms of this Agreement: (a) in any future proceeding; (b) in any proceeding currently pending under a separate docket; and/or (c) in this proceeding should the Commission decide not to approve this Agreement, or in any way condition its approval of same. c. The provisions of this Agreement have resulted from extensive negotiations among the signatories and are interdependent. In the event that the Commission does not approve and adopt the terms of this Agreement in total, or approves this Agreement with modifications or conditions that a signatory objects to, it shall be void and no party hereto shall be bound, prejudiced, or in any way affected by any of the agreements or provisions hereof. d. When approved and adopted by the Commission, this Agreement shall constitute a binding agreement between the signatories hereto. The signatories shall cooperate in defending the validity and enforceability of this Agreement and the operation of this Agreement according to its terms. Nothing in this Agreement is intended to impinge, restrict or limit in any way Public Counsel's discovery powers, including the right to access information and investigate matters related to UE. e. This Agreement does not constitute a contract with the Commission. Acceptance of this Agreement by the Commission shall not be deemed as constituting an agreement on the part of the Commission to forego, during the term of this Agreement, the use of any discovery, investigative or other power 12 which the Commission presently has. Thus, nothing in this Agreement is intended to impinge or restrict in any manner the exercise by the Commission of any statutory right, including the right to access information, or any statutory obligation. f. The signatories agree that, in the event the Commission approves this Agreement without modification or condition, then the prefiled testimony of all witnesses in this proceeding may be included in the record of this proceeding without the necessity of such witness taking the witness stand. 15. COMMISSION APPROVAL OF THE AGREEMENT a. The Staff shall file suggestions or a memorandum in support of this Agreement and the other signatories shall have the right to file responsive suggestions or prepared testimony. b. If requested by the Commission, the Staff shall have the right to submit to the Commission an additional memorandum addressing the matter requested by the Commission. Each party of record shall be served with a copy of any such memorandum and shall be entitled to submit to the Commission, within five (5) days of receipt of the Staff's memorandum, a responsive memorandum, which shall also be served on all parties. The contents of any memorandum provided by any party are its own and are not acquiesced in or otherwise adopted by the other signatories to this Agreement, whether or not the Commission approves and adopts this Agreement. c. The Staff shall also have the right to provide, at any agenda meeting at which this Agreement is noticed to be considered by the Commission, whatever oral explanation the Commission requests, provided that the Staff shall, to the extent reasonably practicable, provide the other parties with advance notice of when the Staff shall respond to the Commission's request for such explanation 13 once such explanation is requested from the Staff. The Staff's oral explanation shall be subject to public disclosure, except to the extent it refers to matters that are privileged or protected from disclosure pursuant to any protective order issued in this case. d. If the Commission does not unconditionally approve this Agreement without modification, and notwithstanding its provision that it shall become void thereon, neither this Agreement, nor any matters associated with its consideration by the Commission, shall be considered or argued to be a waiver of the rights that any party has to a hearing on the issues presented by the Agreement, for cross-examination, or for a decision in accordance with Section 536.080 RSMo 2000 or Article V, Section 18 of the Missouri Constitution, and the parties shall retain all procedural and due process rights as fully as though this Agreement had not been presented for approval, and any suggestions or memoranda, testimony or exhibits that have been offered or received in support of this Agreement shall thereupon become privileged as reflecting the substantive content of settlement discussions and shall be stricken from and not be considered as part of the administrative or evidentiary record before the Commission for any further purpose whatsoever. e. In the event the Commission accepts the specific terms of the Agreement, the signatories waive their respective rights to call, examine and cross-examine witnesses, pursuant to Section 536.070(2) RSMo 2000; their respective rights to present oral argument and written briefs pursuant to Section 536.080.1 RSMo 2000; their respective rights to the reading of the transcript by the Commission pursuant to Section 536.080.2 RSMo 2000; their respective rights to seek rehearing, pursuant to Section 386.500 RSMo 2000; and their respective rights to judicial review pursuant to Section 386.510 RSMo 2000. This waiver applies only to a Commission Report And Order respecting this Agreement issued in this proceeding, and does not apply to any matters raised in 14 any subsequent Commission proceeding, or any matters not explicitly addressed by this Agreement. 16. THE TERM OF THIS AGREEMENT This Agreement, once approved by the Commission, will be deemed to have become effective as of the date the Report and Order of the Commission adopting this Agreement becomes final and unappealable, and will expire June 30, 2006, except as specified hereinabove. Respectfully submitted, 15 - ------------------------------------------ ----------------------------------- UNION ELECTRIC COMPANY STAFF OF THE MISSOURI PUBLIC D/B/A AMERENUE SERVICE COMMISSION By: /s/ Steven R. Sullivan By: /s/ Dana K. Joyce ------------------------------ ------------------------------ Steven R. Sullivan, MBE #33102 Dana K. Joyce, MBE #28533 James J. Cook, MBE #22697 Steven Dottheim, MBE #29149 Thomas M. Byrne, MBE #33340 Of Counsel: Robert J. Cynkar Victor J. Wolski Gordon D. Todd Cooper & Kirk, PLLC - ------------------------------------------ ----------------------------------- OFFICE OF THE PUBLIC COUNSEL STATE OF MISSOURI OFFICE OF THE ATTORNEY GENERAL By: /s/ John B. Coffman By: /s/ Ronald Molteni ------------------------------ ------------------------------ John B. Coffman, MBE #36591 Ronald Molteni, MBE #40946 - ------------------------------------------ ----------------------------------- MISSOURI ENERGY GROUP MISSOURI INDUSTRIAL ENERGY CONSUMERS By: /s/ Robert Johnson by Diana Vuylsteke By: /s/ Diana Vuylsteke ------------------------------ ------------------------------ Robert C. Johnson, MBE #15755 Diana M. Vuylsteke, MBE #42419 Lisa C. Langeneckert, MBE #49781 - ------------------------------------------ ----------------------------------- MISSOURI RETAILERS ASSOCIATION DOE RUN RESOURCES CORPORATION By: /s/ Samuel E. Overfelt By: /s/ Robin E. Fulton ------------------------------ ------------------------------ Samuel E. Overfelt, MBE #16386 Robin E. Fulton, MBE #29513 - ------------------------------------------ ----------------------------------- DATED: July 15, 2002 EX-99 4 exb_5.txt EXHIBIT B-5 - TRANSFER AGREE-PINCKNEYVILLE EXHIBIT B-5 ASSET TRANSFER AGREEMENT PINCKNEYVILLE GENERATION STATION BETWEEN AMEREN ENERGY GENERATING COMPANY AND UNION ELECTRIC COMPANY DATED AS OF _________ 1, 2003 TABLE OF CONTENTS PAGE ARTICLE I. TRANSFER OF ASSETS.............................................1 1.1. Transfer of Assets.................................................1 (a) Inventory.....................................................1 (b) Fixed Assets..................................................1 (c) Real Property.................................................2 (d) Leased Property...............................................2 (e) Intellectual Property Rights..................................2 (f) Business Records..............................................2 (g) Contracts.....................................................2 (h) Permits.......................................................2 (i) Insurance.....................................................2 (j) Rolling Stock and Vehicles....................................3 (k) Miscellaneous.................................................3 1.2. Retained Assets....................................................3 (a) Designated Assets.............................................3 (b) Non-Assigned Contracts........................................3 (c) Employee Plan Assets..........................................3 (d) Corporate Records.............................................3 1.3. Assignability and Consents.........................................3 (a) Required Consents.............................................4 (b) Nonassignable Items...........................................4 ARTICLE II. LIABILITIES....................................................4 2.1. Assumption of Liabilities..........................................4 (a) Balance Sheet.................................................4 (b) Trade Payables................................................5 (c) Contracts.....................................................5 (d) Employee Matters..............................................5 (e) Liabilities and Obligations...................................5 2.2. Retained Liabilities...............................................5 (a) Pre-Closing...................................................5 (b) Liabilities Relating to the Transfer of Acquired Assets.......5 -i- TABLE OF CONTENTS (continued) PAGE (c) Employee-Related Liabilities. Transferor represents that there are no employees of Transferor or any Ameren affiliate employed at the Plant.........................................5 (d) Litigation....................................................5 (e) Product, Environmental and Safety Liability...................6 (f) Taxes.........................................................6 (g) Liabilities Relating to Retained Assets.......................6 ARTICLE III. TRANSFER AND EXCHANGE..........................................6 3.1. Payment............................................................6 3.2. Prorations.........................................................7 ARTICLE IV. CLOSING........................................................7 4.1. General............................................................7 4.2. Documents to be Delivered by Transferor............................7 4.3. Documents and Payment to be Delivered by Transferee................8 4.4. Post Closing.......................................................9 ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................9 5.1. Representations and Warranties of Transferor.......................9 (a) Organization and Standing; Power and Authority................9 (b) Conflicts; Defaults...........................................9 (c) Acquired Assets; Title to the Acquired Assets................10 (d) Contracts....................................................11 (e) Environmental and Safety Compliance..........................11 (f) Approvals....................................................13 (g) Real Property................................................13 (h) Leases.......................................................13 5.2. Representations and Warranties of Transferee......................14 (a) Organization and Standing; Corporate Power and Authority.....14 (b) Conflicts; Defaults..........................................14 ARTICLE VI. CONDITIONS TO CLOSING.........................................14 6.1. Conditions to Transferee's Obligations............................14 (a) Representations and Warranties...............................14 -ii- TABLE OF CONTENTS (continued) PAGE (b) Covenants....................................................14 (c) Consents.....................................................14 (d) No Proceeding or Litigation..................................14 (e) Certificate of Transferor....................................15 (f) Certificate; Documents.......................................15 6.2. Conditions to Transferor's Obligations............................15 (a) Representations and Warranties...............................15 (b) Covenants....................................................15 (c) Consents.....................................................15 (d) No Proceeding or Litigation..................................15 (e) Certificate of Transferee....................................15 (f) Certificates; Documents......................................15 (g) Cash Payment.................................................15 ARTICLE VII. COVENANTS OF TRANSFEROR.......................................15 7.1. Conduct of Business...............................................15 ARTICLE VIII. COVENANTS OF TRANSFEREE.......................................16 8.1. Maintenance of, and Access to, Records............................16 8.2. Closing...........................................................16 ARTICLE IX. CERTAIN ADDITIONAL COVENANTS..................................16 9.1. Expenses; Transfer Taxes..........................................16 9.2. Bulk Transfer Laws................................................16 9.3. Regulatory Approvals..............................................16 9.4. Employee Matters..................................................16 ARTICLE X. TERMINATION...................................................16 10.1. Termination.......................................................16 (a) Mutual Consent...............................................17 (b) Court Order..................................................17 (c) Transferee's Conditions......................................17 (d) Transferor's Conditions......................................17 10.2. Effect of Termination...........................................17 ARTICLE XI. INDEMNIFICATION...............................................17 -iii- TABLE OF CONTENTS (continued) PAGE 11.1. Indemnification by Transferee.....................................17 11.2. Indemnification by Transferor.....................................17 11.3. Notice of Claim; Right to Participate in and Defend Third Party Claim.................................................17 11.4. Time Limitations on Claims for Indemnification....................19 ARTICLE XII. MISCELLANEOUS.................................................19 12.1. Amendments........................................................19 12.2. Entire Agreement..................................................19 12.3. Governing Law.....................................................19 12.4. Notices...........................................................19 12.5. Counterparts......................................................19 12.6. Assignment........................................................19 12.7. Waivers...........................................................19 12.8. Third Parties.....................................................20 12.9. Schedules, Addenda and Exhibits...................................20 12.10. Headings..........................................................20 12.11. Certain Definitions...............................................20 12.12. Remedies Not Exclusive............................................20 12.13. Gender and Number.................................................20 SCHEDULES Schedule 1.1(b)...(Fixed Assets) Schedule 1.1(c)...(Real Estate) Schedule 1.1(e)...(Intellectual Property) Schedule 1.1(j)...(Rolling Stock and Vehicles) Schedule 1.2(a)...(Retained Property) Schedule 1.2(b)...(Non-Assigned Contracts) Schedule 1.3(a)...(Required Consents) Schedule 2.1(a)...(Assumed Indebtedness) Schedule 3.1......(Transferee Note) Schedule 4.2(f)...(Existing Indebtedness to be Discharged by Closing) Schedule 5.1(c)...(Title to the Acquired Assets) Schedule 5.1(d)...(Contracts) Schedule 5.1(e)...(Environmental Matters) -iv- ASSET TRANSFER AGREEMENT ------------------------ THIS ASSET TRANSFER AGREEMENT (this "Agreement") dated as of ___________ l, 2003 between Ameren Energy Generating Company, an Illinois corporation ("Transferor") and Union Electric Company, a Missouri corporation d/b/a AmerenUE ("Transferee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Transferor operates plants and related facilities for the generation of electricity which is sold at wholesale through AmerenEnergy Marketing Company ("AEM") and AmerenEnergy, Inc. ("AmerenEnergy"); and WHEREAS, Transferor desires to transfer to Transferee all of its right, title and interest in and to its gas-fired electric generating station located in Pinckneyville, Illinois and located on the real estate described under "Fee Property - Pinckneyville" on Schedule 1.1(c) (Real Estate) (the "Plant"); and WHEREAS, Transferee desires to acquire the Plant from Transferor, upon the terms and subject to the conditions hereinafter set forth, in exchange for the cash purchase price described herein and the assumption by Transferee of certain liabilities and obligations of Transferor specifically disclosed in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and other good and valuable consideration had and received, Transferee and Transferor, on the basis of, and in reliance upon, the representations, warranties, covenants, obligations and agreements set forth in this Agreement, and upon the terms and subject to the conditions contained herein, hereby agree as follows: ARTICLE I. TRANSFER OF ASSETS 1.1. Transfer of Assets. At the Closing (as defined in Section 4.1), Transferee shall acquire from Transferor, and Transferor shall transfer, convey, assign, contribute and deliver to Transferee, all of the assets, properties, rights and interests owned, used, occupied or held by or for the benefit of Transferor in the operation of the Plant wherever situated, as the same shall exist as of the Closing Date, including, without limitation, the following. (a) Inventory. All inventories of products, work-in-process, finished goods, raw materials, coal, oil, gas and other fuel supplies and parts relating to the Plant (collectively, "Inventory" or "Inventories"), including, without limitation, all Inventories located at the facilities listed on Schedule 1.1(c) (Real Estate). (b) Fixed Assets. All tangible personal property, plant and equipment including, without limitation, buildings, structures, generators, turbines, gas supply pipelines and equipment, fixtures, machinery and equipment, maintenance machinery and equipment, vehicles and rolling stock, office furniture and office equipment, other furnishings, leasehold improvements and construction-in-process, and all tangible personal property set forth on Schedule 1.1(b) (Fixed Assets) (collectively, the "Fixed Assets"). (c) Real Property. All real property rights and interests of any kind whatsoever owned by Transferor and relating to the Plant, including the rights and interests identified under the heading "Fee Property" on Schedule 1.1(c) (Real Estate), which consist of: (i) the land more particularly described under such heading, which descriptions are incorporated herein by reference, (ii) any easements or other interests in real property necessary for the operation of the Plant including those described under the heading "Easements" on Schedule 1.1(c) (Real Estate), (iii) all buildings, structures, and leasehold improvements located thereon and all appurtenances relating thereto, and (iv) all fixtures, machinery, apparatus or equipment affixed to said premises, including, without limitation, all of the electrical, heating, plumbing, air conditioning, air compression and all other systems located on said premises, and all other structures, fences and improvements (collectively, the "Fee Property"). (d) Leased Property. All rights and interests under the lease or license agreements (the "Lease Agreements") more particularly described under the heading "Leased Property" on Schedule 1.1(c) (Real Estate) attached hereto, which descriptions are incorporated herein by reference (the premises subject to the Lease Agreements being hereinafter collectively referred to as the "Leased Property"). (e) Intellectual Property Rights. Any and all intellectual property owned or possessed by Transferor and related to the Plant including without limitation, copyrights, trade secrets, trademarks and patents and identified on Schedule 1.1(e). (f) Business Records. All books and records relating to the Plant, including, without limitation, all files, invoices, forms, accounts, correspondence, production records, technical, accounting, manufacturing and procedural manuals, employment records, studies, reports or summaries relating to any Environmental Requirements (as defined in Section 5.1(e)), and other books and records relating to the operation of any of the Acquired Assets (as defined in this Section 1.1) or other assets or properties associated with the Plant, and any confidential information which has been reduced to writing or other tangible medium relating to or arising out of the Plant (collectively, the "Business Records"). (g) Contracts. Subject to Section 1.2(b) and 1.3, all rights, benefits and interests of Transferor in and to all licenses, leases, contracts, agreements, commitments and undertakings relating to the Plant including without limitation those listed on Schedule 5.1(d). (h) Permits. All licenses, permits, approvals, variances, waivers or consents (collectively, the "Permits"), to the extent transferable, issued by any United States, state or local governmental entity or municipality or subdivision thereof or any authority, department, commission, board, bureau, agency, court or instrumentality (collectively, "Governmental Authorities") and used in or necessary to the operation of the Plant. (i) Insurance. All rights, claims and benefits of Transferor in, to or under all insurance policies maintained by Transferor solely for the Plant or the Acquired Assets. 2 (j) Rolling Stock and Vehicles. All vehicles and rolling stock used in the Plant and included as part of Fixed Assets and as more particularly described in Schedule 1.1(j) "Rolling Stock and Vehicles." (k) Miscellaneous. Except for the Retained Assets (as defined in Section 1.2), all other assets, properties, rights and interests of Transferor otherwise employed in or related to the operation of the Plant, of every kind, nature and description, whether tangible or intangible, real, personal or mixed, and wherever situated all of which are to be transferred, conveyed, assigned, contributed and delivered to Transferee at the Closing pursuant to this Agreement. All of the assets, properties, rights and interests owned, used, occupied or held by or for the benefit of the Transferor in the operation of the Plant, which are to be sold, transferred, conveyed, assigned and delivered by Transferor to Transferee at the Closing as contemplated herein, including without limitation, those described in clauses (a) through (k) above, but excluding the Retained Assets, are referred to herein collectively as the "Acquired Assets." 1.2. Retained Assets. Anything in Section 1.1 to the contrary notwithstanding, the following assets (collectively, the "Retained Assets") shall be retained by Transferor, and Transferee shall in no way be construed to have acquired (or to be obligated to acquire) any interest whatsoever in any of the following. (a) Designated Assets. Any of the assets, properties, rights and/or interests, owned, used, occupied or held by or for the benefit of Transferor in the operation of the Plant that are identified on Schedule 1.2(a) (Retained Property) (collectively, the "Designated Assets"). (b) Non-Assigned Contracts. All of the rights and interests, and all of the liabilities and obligations, of Transferor in, under or pursuant to any license, lease, contract, agreement, commitment or undertaking entered into in connection with, or otherwise relating to, the Plant, that are identified on Schedule 1.2(b) (Non-Assigned Contracts) (collectively, the "Non-Assigned Contracts"). (c) Employee Plan Assets. The rights of Transferor or its parent, Ameren Corporation ("Parent") under, and any funds and property held in trust or any other funding vehicle pursuant to, any "employee benefit plan" (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any other bonus, stock option, stock appreciation, stock purchase, severance, termination, lay-off, leave of absence, disability, workers' compensation, pension, profit sharing, retirement, vacation or holiday pay, insurance, deferred compensation or other employee or welfare benefit plan, agreement or arrangement of Transferor or Parent applicable to past, present or future employees employed in connection with the Plant (collectively, "Employee Plans"). (d) Corporate Records. Transferor's minute books, stock books, stock ledger and corporate seal and all other books and records relating to business of the Transferor other than the Plant. 1.3. Assignability and Consents. 3 (a) Required Consents. Schedule 1.3(a) (Required Consents) sets forth, under the heading "Assignability and Consents," a list of all Acquired Assets, including Contracts, Permits and Lease Agreements (but excluding leases of office equipment involving future payments of less than $500,000 in the aggregate), which are non-assignable or non-transferable or cannot be subleased to Transferee without the consent of some other individual, partnership, corporation, association, joint stock company, trust, joint venture, limited liability company or Governmental Authority (collectively, "Person"). Schedule 1.3(a) (Required Consents) sets forth, under the heading "Regulatory Approvals," a list of all necessary approvals of any Governmental Authority whose approval is required for the transactions contemplated by this Agreement. Transferor and Transferee have each commenced and shall continue to take, or cause to be taken by others, all necessary actions required to obtain or satisfy, at the earliest practicable date, all consents, novations, approvals, authorizations, requirements (including filing and registration requirements), waivers and agreements ("Consents") from any Persons necessary to authorize, approve or permit the full and complete conveyance, assignment, sublease or transfer of the Acquired Assets, and to consummate and make effective the transactions contemplated by this Agreement and to continue such efforts as may be required after the Closing Date to facilitate the full and expeditious transfer of legal title, or the sublease, as the case may be, of the Acquired Assets. (b) Nonassignable Items. Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an Agreement to sell, convey, assign, sublease or transfer any Acquired Assets, including Contracts, Permits and Lease Agreements, if an attempted conveyance, assignment, sublease or transfer thereof, without the Consent of another party thereto or a Governmental Authority would constitute a breach of, or in any way affect the rights of Transferor or Transferee with respect to such Acquired Asset ("Nonassignable Items"). Transferor shall use its best efforts and Transferee shall cooperate in all reasonable respects with Transferor to obtain and satisfy all Consents and to resolve all impracticalities of conveyance, assignment, sublease or transfer necessary to convey to Transferee all Nonassignable Items. ARTICLE II. LIABILITIES 2.1. Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, Transferee shall assume, at the Closing and effective as of the Closing Date, and shall thereafter pay, perform and discharge as and when due the following, and only the following, liabilities and obligations of Transferor (collectively, the "Assumed Liabilities"). (a) Balance Sheet. All liabilities and obligations of Transferor as set forth on the unaudited balance sheet (the "Closing Date Balance Sheet") relating to the Plant prepared by Transferor as of the Closing Date, including without limitation the assumed indebtedness identified on Schedule 2.1(a) (Assumed Indebtedness), less payments thereon or discharges thereof prior to the Closing Date. An estimate of the liabilities and obligations shall be prepared for purposes of Section 4.3 as of a date not more than 60 days prior to the Closing Date (the "Estimated Balance Sheet Date"). The actual liabilities and obligations assumed shall be as shown on the Closing Date Balance Sheet prepared as provided in Section 4.4(a). 4 (b) Trade Payables. All liabilities and obligations of Transferor relating to the Plant that constitute trade payables due to suppliers as payment for Inventory included in the Acquired Assets and incurred by Transferor in the ordinary and normal course of business at the Closing Date (in transactions in the ordinary and normal course) and consistent with past practice and the representations, warranties, covenants, obligations and agreements set forth in this Agreement ("Trade Payables"). (c) Contracts. All liabilities and obligations of Transferor arising under the terms of the Contracts other than contracts that constitute Non-Assigned Contracts (the "Assumed Contracts") but only to the extent such liabilities and obligations arise or accrue after the Closing Date in the ordinary and normal course and consistent with the representations, warranties, covenants, obligations and agreements set forth in this Agreement; provided, however, that Transferee shall not assume or be responsible for any such liabilities or obligations which arise from breaches thereof or defaults thereunder by Transferor, all of which liabilities and obligations shall constitute Retained Liabilities (as defined in Section 2.2). (d) Employee Matters. Transferor represents that there are no employees of Transferor or any Ameren affiliate employed at the Plant. (e) Liabilities and Obligations. All liabilities and obligations of Transferor relating to environmental permits, variances or orders issued by local, state or federal governmental authorities as identified on Schedule 5.1(e). 2.2. Retained Liabilities. Except as provided in Section 2.1, Transferor shall retain, and Transferee shall not assume, or be responsible for or liable with respect to, any liabilities or obligations of, Transferor, or otherwise relating to the Plant, whether or not of, associated with, or arising from, any of the Acquired Assets, and whether fixed, contingent or otherwise, known or unknown (collectively referred to hereinafter as the "Retained Liabilities"), including, without limitation, the following. (a) Pre-Closing. All liabilities and obligations relating to, based in whole or in part on events or conditions occurring or existing in connection with, or arising out of, the Plant as operated prior to the Closing Date, or the ownership, possession, use, operation or other disposition prior to the Closing Date of any of the Acquired Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing Date, with the Plant). (b) Liabilities Relating to the Transfer of Acquired Assets. All liabilities and obligations of Transferor or any of its Affiliates (as defined in Section 12.11) except Transferee, or their respective directors, officers, shareholders or agents, arising out of, or relating to, this Agreement or the transactions contemplated hereby, whether incurred prior to, at, or subsequent to the Closing Date. (c) Employee-Related Liabilities. Transferor represents that there are no employees of Transferor or any Ameren affiliate employed at the Plant. (d) Litigation. All liabilities and obligations relating to any litigation, action, suit, claim, notice of violation, investigation, inquiry or proceeding (collectively "Claims") pending on the date hereof, or instituted hereafter, based in whole or in part on events or conditions occurring or 5 existing in connection with, or arising out of, or otherwise relating to, the Plant as operated by Transferor or any of its Affiliates (or any of their respective predecessors-in-interest) except Transferee, or the ownership, possession, use, operation, sale or other disposition prior to the Closing Date of any of the Acquired Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing Date, with the Plant). (e) Product, Environmental and Safety Liability. All liabilities and obligations relating to the Plant or the Acquired Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing Date, with the Plant or the Acquired Assets), based in whole or in part on events or conditions occurring or existing prior to the Closing Date and connected with, arising out of or relating to (i) any dispute for services rendered or goods manufactured, including, without limitation, product warranty Claims and product liability Claims, and Claims for refunds, returns, personal injury and property damage, (ii) Hazardous Materials, Environmental Requirements or Environmental Damages (all as defined in Section 5.1(e)), (iii) Claims relating to employee health and safety, including Claims for injury, sickness, disease or death of any Person, or (iv) compliance with any Laws relating to any of the foregoing. For purposes of this Agreement, the term "Laws" shall mean any statutes, laws, rules, regulations, orders, ordinances, codes and decrees of Governmental Authorities. (f) Taxes. All liabilities and obligations of Transferor or any of its Affiliates other than Transferee (or any of their respective predecessors-in-interest) for any Taxes (as hereinafter defined) due or becoming due by reason of (i) the conduct of the Plant, or (ii) the ownership, possession, use, operation, purchase, acquisition, sale or disposition, of any of the Acquired Assets, including, without limitation, (i) Taxes attributable to the sale of electricity and employee withholding tax obligations; (ii) Taxes imposed on, or accruing as a result of the transfer of the Acquired Assets; and (iii) Taxes attributable to, or resulting from, recapture of depreciation, other tax benefit items, or otherwise arising from the transactions contemplated by this Agreement. For purposes of this Agreement, the term "Tax" or "Taxes" means all net income, gross income, gross receipts, sales, use, ad valorem, personal property, real property, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property or windfall profits, taxes, customs duties or other taxes, fees, assessments or charges of any kind whatsoever, including without limitation, any assessment which Transferor may have had the option to pay in installment payments over a period of time which extends beyond the Closing Date, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority (domestic or foreign). Notwithstanding anything to the contrary in this Section 2.2(f), all real estate property transfer taxes shall be paid by Transferor as provided in Section 9.1 hereof. (g) Liabilities Relating to Retained Assets. All liabilities and obligations relating to, based in whole or in part on events or conditions occurring or existing in connection with, or arising out of, any and all assets, properties, rights and interests which are not being acquired by Transferee hereunder, including, without limitation, the Retained Assets. ARTICLE III. TRANSFER AND EXCHANGE 3.1. Payment. In full consideration for the transfer of the Acquired Assets, but subject to the adjustment, if any, required by Section 3.2, at the Closing, Transferee shall deliver to Transferor cash in the amount equal to the 6 Net Book Value of the Acquired Assets (the "Cash Payment") in immediately available funds transferred to a bank account of Transferor in accordance with instructions delivered to Transferee not later than the business day prior to the Closing, subject to adjustment as provided in Section 4.6(c). Net Book Value shall be calculated as provided in Section 4.3(c). 3.2. Prorations. (a) Transferor and Transferee shall prorate, as of the Closing Date, all real estate taxes payable with respect to the Fee Property (but not including any current assessments against the Fee Property which Transferor is required to have paid in full prior to the Closing Date as provided under Section 2.2(f) herein). (b) Transferee and Transferor shall use their reasonable best efforts to calculate all prorations. The credit that Transferee is entitled to receive from Transferor for the unpaid portion (as of the Closing Date) of the 2002 real estate taxes shall be referred to herein as the "2002 Real Estate Tax Credit", and the credit that Transferee is entitled to receive from Transferor for the 2003 real estate taxes owed for the period during which Transferor owned the Fee Property during the year 2003 shall be referred to herein as the "2003 Real Estate Tax Credit". ARTICLE IV. CLOSING 4.1. General. As used in this Agreement, the "Closing" shall mean the time at which Transferor consummates the assignment, transfer and delivery of the Acquired Assets to Transferee as provided herein by the execution and delivery by Transferor of the documents and instruments referred to in Section 4.2 against delivery by Transferee of the documents and payments provided in Sections 3.1 and 4.3. In the absence of a prior termination of this Agreement by one of the parties in accordance with Article X, the Closing shall take place at the offices of Ameren Corporation, One Ameren Plaza, 1901 Chouteau Avenue, St. Louis, Missouri at 8:00 A.M. on ____________________, or at such other time and place and on such other day as shall be mutually agreed upon in writing by the parties hereto (the "Closing Date"). Legal title, equitable title and risk of loss with respect to the Acquired Assets shall not pass to Transferee until the Acquired Assets are transferred at the Closing, which transfer, once it has occurred, shall be deemed effective for tax, accounting and other computational purposes as of the Closing Date. 4.2. Documents to be Delivered by Transferor. At the Closing, Transferor shall deliver to Transferee. (a) Copies of the resolutions of the Boards of Directors of Transferor authorizing and approving this Agreement and all other transactions and agreements contemplated hereby certified by the respective corporate Secretaries or Assistant Secretaries of Transferor and Parent to be true, correct, complete and in full force and effect and unmodified as of the Closing Date. (b) An instrument transferring the Acquired Assets to Transferee, free and clear of any and all liens, equities, Claims, prior assignments, mortgages, charges, security interests, pledges, conditional sales contracts, collateral 7 security arrangements and other title retention arrangements, restrictions (including, in the case of real property, rights of way, use restrictions, and other variances, reservations or limitations of any nature) or encumbrances whatsoever (collectively, "Liens") other than Permitted Liens. (c) Copies of all Consents to the transfer, assignment or sublease to Transferee of each Acquired Asset that requires such Consent, including, without limitation, orders or approvals of each Governmental Authority required as shown on Schedule 1.3(a) under the heading "Regulatory Approvals". (d) The Officer's Certificate (as defined in Section 6.1(e)) required by Section 6.1(e). (e) Special Warranty Deeds (the "Deed") in recordable form and in form and substance satisfactory to Transferee conveying the Fee Property to Transferee, free and clear of all Liens whatsoever except for Permitted Liens (as defined in Section 5.1(c)). (f) Releases, including, without limitation, termination statements under the Uniform Commercial Code of any financing statements filed against any Acquired Assets, evidencing discharge, removal and termination of all Liens, if any, to which the Acquired Assets are subject (other than Liens relating to Assumed Indebtedness identified on Schedule 2.1(a)) in connection with the indebtedness described in Schedule 4.2(f) (Existing Indebtedness to be Discharged by Closing) which releases shall be effective at or prior to the Closing. (g) FIRPTA Affidavit (a Non-Foreign Person Affidavit as required by Section 1445 of the Internal Revenue Code of 1986, as amended). (h) Such other deeds, endorsements, assignments, affidavits, and other good and sufficient instruments of assignment, conveyance and transfer in form and substance satisfactory to Transferee, as are required to effectively vest in Transferee good and marketable title in and to all of the Acquired Assets, free and clear of any and all Liens other than Permitted Liens. 4.3. Documents and Payment to be Delivered by Transferee. At the Closing, Transferee shall deliver to Transferor. (a) A copy of the resolutions of the Board of Directors of Transferee authorizing and approving this Agreement and all other transactions and agreements contemplated hereby certified by the Secretary or an Assistant Secretary of Transferee to be true, correct, complete and in full force and effect and unmodified as of the Closing Date. (b) The Officer's Certificate required by Section 6.2(e). (c) Transferee will pay to Transferor the estimated Cash Payment based on Net Book Value as of the Estimated Balance Sheet Date, which shall be the book value minus accumulated depreciation of the Transferred Assets as of the Estimated Balance Sheet Date determined in accordance with Generally Accepted Accounting Principles. 8 (d) An instrument of assumption of the Assumed Liabilities. 4.4. Post Closing. (a) Within 90 days after the Closing Date, Transferor shall deliver to Transferee a final Closing Date Balance Sheet. (b) Transferee shall calculate the 2002 Real Estate Tax Credit and the 2003 Real Estate Tax Credit promptly after the relevant tax bills have been received and shall deliver such calculation to Transferor. (c) Promptly upon calculation of the real estate credits referred to in Section 3.2(b), Transferor shall pay to Transferee the 2002 Real Estate Tax Credit and the 2003 Real Estate Tax Credit. If the Closing Date Balance Sheet shows that the estimated Cash Payment paid on the Closing Date was more or less than the actual Cash Payment calculated based on the Closing Date Balance Sheet, the appropriate payment will be made promptly from Transferor to Transferee or vice versa. Payments due to or from the parties under this Section 4.6(c) may be offset against each other. ARTICLE V. REPRESENTATIONS AND WARRANTIES 5.1. Representations and Warranties of Transferor. Subject only to those exceptions and qualifications listed and described (including an identification by section reference to the representations and warranties to which such exceptions and qualifications relate) on the disclosure schedules attached to this Agreement, Transferor hereby represents and warrants to Transferee as follows. (a) Organization and Standing; Power and Authority. Transferor is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois, and has full corporate power and authority to operate the Plant, to own or lease the Acquired Assets, and to enter into and perform this Agreement and the transactions and other agreements and instruments contemplated by this Agreement. This Agreement and all other agreements and instruments executed and delivered or to be executed and delivered by Transferor in connection herewith (collectively, the "Transaction Documents") have been, or upon execution thereof will be, duly executed and delivered by Transferor, as the case may be. This Agreement and the transactions and other agreements and instruments contemplated hereby have been duly approved by the board of directors of Transferor and constitute the valid and binding obligations of Transferor, enforceable in accordance with their respective terms. (b) Conflicts; Defaults. Neither the execution and delivery of this Agreement and the other agreements and instruments executed or to be executed in connection herewith by Transferor, nor the performance by Transferor of the transactions contemplated hereby or thereby, will (i) violate, conflict with, or constitute a default under, any of the terms of Transferor's Articles of Incorporation or By-Laws, or any provisions of, or result in the acceleration of any obligation under, any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including, without limitation, the Contracts, or any order, judgment or decree, relating to the Plant or the Acquired Assets, or by which Transferor or the Acquired Assets are bound, (ii) result in the creation or imposition of any 9 Liens or Claims in favor of any third Person or entity upon any of the Acquired Assets, (iii) violate any law, statute, judgment, decree, order, rule or regulation of any Governmental Authority, (iv) constitute an event which, after notice or lapse of time or both, would result in such violation, conflict, default, acceleration, or creation or imposition of Liens or Claims, (v) constitute an event which, after notice or lapse of time or otherwise would create, or cause to be exercisable or enforceable, any option, agreement or right of any kind to purchase any of the Acquired Assets. Except as set forth on Schedule 5.1(d), no consent, novation, approval, filing or authorization will be required to be obtained or satisfied for the continued performance by Transferee following the Closing of any contract, agreement, commitment or undertaking included in the Acquired Assets. Transferor is not in violation of or in default under its Articles of Incorporation or Bylaws, or any provision of any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including without limitation, the Contracts, or any order, judgment or decree, relating to the Plant or the Acquired Assets, or by which Transferor or the Acquired Assets is bound, or in the payment of any of Transferor's monetary obligations or debts relating to the Plant, and there exists no condition or event which, after notice or lapse of time or both, would result in any such violation or default. (c) Acquired Assets; Title to the Acquired Assets. Except for the Retained Assets, the Acquired Assets are the only assets, properties, rights and interests used by Transferor in connection with the Plant. The Acquired Assets to be conveyed to Transferee under this Agreement constitute all of the assets, properties, rights and interests necessary to operate the Plant in substantially the same manner as operated by Transferor prior to the date of this Agreement. Transferor has good, marketable and exclusive title to, and the valid and enforceable power and unqualified right to use and transfer to Transferee, each of the Acquired Assets, and the Acquired Assets are free and clear of all Liens and Claims of any kind or nature whatsoever, except for Permitted Liens. The consummation of the transactions contemplated by this Agreement (including, without limitation, the transfer or assignment of the Acquired Assets, and all rights and interests therein, to Transferee as contemplated herein) will not adversely affect such title or rights, or any terms of the applicable agreements (whether written or oral) evidencing, creating or granting such title or rights. None of the Acquired Assets are subject to, or held under, any lease, mortgage, security agreement, conditional sales contract or other title retention agreement, or are other than in the sole possession and under the sole control of Transferor except as described on Schedule 5.1(c) (Title to the Acquired Assets). Transferor has the right under valid and existing leases to occupy, use or control all properties and assets leased by it and included in the Acquired Assets. The delivery to Transferee of the instruments of transfer of ownership contemplated by this Agreement will vest good, marketable and exclusive title (as to all Acquired Assets owned by Transferor) or full right to possess and use (as to all Acquired Assets not owned by Transferor) to the Acquired Assets in Transferee, free and clear of all Liens and Claims of any kind or nature whatsoever, except for (i) current real estate Taxes or governmental charges or levies which are a Lien but not yet due and payable, (ii) Liens disclosed as securing specified liabilities on the Closing Date Balance Sheet with respect to which no default exists, (iii) Liens disclosed on Schedule 5.1(c) (Title to the Acquired Assets), under the heading "Liens," and (iv) minor imperfections of title, if any, none of which are substantial in amount, or materially detract from the value or impair the use of the property subject thereto or the operation of the Plant and which have arisen only in the ordinary and normal course of business consistent with past practice (the Liens described in clauses 10 (i), (ii), (iii) and (iv) being collectively referred to herein as "Permitted Liens"). (d) Contracts. Schedule 5.1(d) (Contracts) contains a complete list or description of each material license, contract, agreement, commitment and undertaking relating to the Plant or to which Transferor is a party (collectively referred to as the "Contracts"). (e) Environmental and Safety Compliance. (i) General. Transferee agrees that, except as expressly contained in this Agreement, no representations by or on behalf of Transferor have been made as to the condition of the Real Property and Fixed Assets, any restrictions related to the development of the Real Property and Fixed Assets, the applicability of any governmental requirements pertaining to the Real Property and Fixed Assets, or the suitability of the Real Property and Fixed Assets for any purpose whatsoever. Transferor agrees to assign, transfer or otherwise convey all environmental permits and licenses to Transferee and to take all necessary steps with the appropriate governmental authorities to effectuate such transfers. A list of all applicable permits are set forth on Schedule 5.1(e) (Environmental Matters). (ii) Definitions. (A) For purposes of this Agreement, the term "Hazardous Material" means any substance: (1) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law; or (2) which is or has been identified as a potential "hazardous waste," "hazardous substance," pollutant or contaminant under any federal, applicable state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.ss.ss.9601 et seq.) and/or the Resource Conservation and Recovery Act (42 U.S.C.ss.ss.6901 et seq.); or (3) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, reactive, or otherwise hazardous and has been identified as regulated by any Governmental Authority. (B) For purposes of this Agreement, the term "Environmental Requirements" means all applicable Laws, Permits and similar items of all Governmental Authorities and all applicable judicial, administrative, and regulatory judgments, decrees, orders, writs or injunctions relating to the protection of human health or the environment, including, without limitation: 11 (1) All requirements pertaining to reporting, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of Hazardous Materials; (2) All requirements pertaining to the protection of the health and safety of employees or the public; and (3) All other limitations, restrictions, conditions, standards, prohibitions, obligations, schedules and timetables contained therein or in any notice or demand letter issued, entered, promulgated or approved thereunder. (C) For purposes of this Agreement, the term "Environmental Damages" means any and all Liabilities (as defined in Section 11.1) which are incurred at any time as a result of the existence prior to Closing of Hazardous Material upon, about, beneath the Property or migrating or threatening to migrate to or from the Property, or the existence of a violation of Environmental Requirements pertaining to the Property, regardless of whether the existence of such Hazardous Material or the violation of Environmental Requirements arose prior to the present ownership or operation of the Property, and including without limitation: (1) Damages for personal injury, or injury to property or natural resources occurring upon or off of the Property, foreseeable or unforeseeable, including, without limitation, lost profits, consequential damages, the cost of demolition and rebuilding of any improvements on real property, interest and penalties; (2) Fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other costs incurred in connection with the investigation or remediation of such Hazardous Materials or violation of Environmental Requirements including, but not limited to, the preparation of any feasibility studies or reports or the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration or monitoring work required by any Governmental Authority, or reasonably necessary to make full economic use of the Property or any other property in a manner consistent with its intended use or otherwise expended in connection with such conditions, and including without limitation any attorneys' fees, costs and expenses incurred in enforcing this Agreement or collecting any sums due hereunder; (3) Liability to any third Person or Governmental Authority to indemnify such Person or Governmental Authority for costs expended in connection with the items referenced in subparagraph (iii) of Section 11.2(b); and 12 (4) Diminution of the value of the Property, and damages for the loss of business and restriction on the use of or adverse impact on the marketing of rentable or usable space or of any amenity of the Property. (f) Approvals. Schedule 1.3(a) (Required Consents) sets forth a list of all Consents, which must be obtained or satisfied by Transferor for the consummation of the transactions contemplated by this Agreement, including, without limitation, all Consents, which must be obtained pursuant to Section 1.3(a). All Consents prescribed by any Law, or any contract, agreement, commitment or undertaking, and which must be obtained or satisfied by Transferor for the consummation of the transactions contemplated by this Agreement, or for the continued performance by them of their rights and obligations thereunder, have been, or shall by the Closing have been, made, obtained and satisfied. (g) Real Property. Schedule 1.1(c) entitled "Real Estate" attached hereto contains a true, correct and complete list of all instruments and agreements creating any interest or right in real property relating to the Plant, or owned, leased or occupied by Transferor (including all easements, buildings, structures, fixtures and improvements). True, correct and complete copies of the instruments and agreements identified in such Schedule 1.1(c) have been delivered to Transferee. Each such instrument and agreement is in full force and effect and is a legal, binding, and enforceable obligation of the parties thereto and no event has occurred which constitutes or, with the giving of notice or passage of time, or both, would constitute a default or breach thereunder. Transferor has the right to quiet enjoyment of all real property subject to leaseholds under any such instruments, for the full term of each such lease and any renewal option related thereto. There has been no disturbance of or challenge to the Transferor's quiet possession under each such lease, and no leasehold or other interest of Transferor in such real property is subject to or subordinate to any Liens except Permitted Liens. Neither the whole nor any portion of any real property leased or occupied by Transferor has been condemned, requisitioned or otherwise taken by any Governmental Authority, and, to the best of Transferor's knowledge, no such condemnation, requisition or taking is threatened or contemplated. All buildings, structures, fixtures and appurtenances comprising part of the real properties of Transferor are in good condition and have been well maintained, normal wear and tear excepted, and there are no material physical or mechanical defects of the Fee Property which would interfere with the ongoing operations of the Plant as currently conducted. All water, sewer, gas and drainage facilities required by the present use and operation of the Fee Property by Transferor are installed to the property lines of the Fee Property, are all connected and operating pursuant to valid permits, and are adequate to service the Fee Property in accordance with the present use and operation of the Fee Property by Transferor. The Fee Property complies with all applicable laws and insurance requirements and all zoning, building and other requirements relating to the use or occupancy of all or any portion of the Fee Property. There are no pending, or to the best of Transferor's knowledge, contemplated zoning changes, variances or special zoning agreements affecting or which might affect the Fee Property. (h) Leases. Each of the Leases described on Schedule 1.1(c) entitled "Real Estate" has not been modified, altered, terminated or revoked, and is in full force and effect. Transferor, as the present tenant under each Lease, is not in default under, or in breach of, any of the terms of each Lease, and there are no existing facts or conditions which could give rise to any such breach or 13 default, or any claim against Transferor, under each Lease. Each of the present lessors under each respective Lease is not in default thereunder, or in breach thereof, and there are no existing facts or conditions which could give rise to any such breach or default, or any claim against each lessor under each respective Lease. 5.2. Representations and Warranties of Transferee. Transferee represents and warrants to Transferor that: (a) Organization and Standing; Corporate Power and Authority. Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri, and has full corporate power and authority to make and perform this Agreement, and to perform the transactions contemplated by this Agreement. This Agreement and all other agreements and instruments executed and delivered by Transferee in connection herewith have been duly executed and delivered by Transferee. This Agreement and the transactions and other agreements and instruments contemplated by this Agreement have been duly approved by the board of directors of Transferee (approval of Transferee's shareholders not being required), and constitute the valid and binding obligations of Transferee, enforceable in accordance with their respective terms. (b) Conflicts; Defaults. Neither the execution and delivery of this Agreement by Transferee, nor the performance of its obligations hereunder, will conflict with or constitute a default under any of the terms of Transferee's Articles of Incorporation, as amended, or Bylaws. ARTICLE VI. CONDITIONS TO CLOSING 6.1. Conditions to Transferee's Obligations. The obligation of Transferee to consummate the transactions provided for by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Transferee except for the conditions set forth in subsection (c) (as to Consents of Governmental Authorities) of this Section 6.1. (a) Representations and Warranties. Each of the representations and warranties of Transferor made in Section 5.1 of this Agreement shall be true and correct in all material respects both on the date hereof and as of the Closing Date as though made at such time. (b) Covenants. Transferor shall have performed and complied with all covenants and agreements required to be performed or complied with by it at or prior to the Closing Date. (c) Consents. All Consents of Governmental Authorities and third parties described in Sections 1.3, 5.1(f) and 9.3 and necessary to consummate the transactions contemplated hereunder shall have been obtained and satisfied. (d) No Proceeding or Litigation. No litigation, action, suit, investigation, Claim or proceeding challenging the legality of, or seeking to restrain, prohibit or materially modify, the transactions provided for in this Agreement shall have been instituted and not settled or otherwise terminated. 14 (e) Certificate of Transferor. At the Closing, Transferor shall have delivered to Transferee a certificate (the "Officer's Certificate") signed by Transferor's President or a Vice President, and dated the Closing Date, to the effect that to the best of the knowledge of such officer the conditions specified in Sections 6.1(a), (b), (c) and (d) have been fulfilled. (f) Certificate; Documents. Transferor and the other Persons shall have delivered the certificates and other documents required by Section 4.2. 6.2. Conditions to Transferor's Obligations. The obligations of Transferor to consummate the transactions provided for by this Agreement are subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Transferor except for the conditions set forth in subsection (c) of this Section 6.2. (a) Representations and Warranties. Each of the representations and warranties of Transferee made in Section 5.2 of this Agreement shall be true and correct in all material respects both on the date hereof and as of the Closing Date as though made at such time. (b) Covenants. Transferee shall have performed and complied with all covenants and agreements required to be performed or complied with by it at or prior to the Closing Date. (c) Consents. All Consents of Governmental Authorities, including those described in Section 9.3, necessary to consummate the transactions contemplated hereunder shall have been obtained. (d) No Proceeding or Litigation. No litigation, action, suit, investigation, Claim or proceeding challenging the legality of, or seeking to restrain, prohibit or materially modify, the transactions provided for in this Agreement shall have been instituted and not settled or otherwise terminated. (e) Certificate of Transferee. At the Closing, Transferee shall have delivered to Transferor an Officer's Certificate signed by the President or a Vice President of Transferee, and dated the Closing Date, to the effect that to the best of the knowledge of such officer the conditions specified in Section 6.2(a), (b), (c) and (d) have been fulfilled. (f) Certificates; Documents. Transferee shall have delivered the certificates and other documents required by Section 4.3. (g) Cash Payment. Transferee shall have made the Cash Payment required by Section 3.1. ARTICLE VII. COVENANTS OF TRANSFEROR 7.1. Conduct of Business. During the period from the date hereof through the Closing Date, Transferor shall operate the Plant and the Acquired Assets diligently and in the ordinary and normal course and consistent with past practice and continue normal maintenance, expenditures in connection with the Plant. Transferor shall engage in no transactions in connection with the Plant or the Acquired Assets, including transactions relating to the purchase or sale 15 of goods, raw materials, inventories or other operating or production items, intracorporate or otherwise, with any of its Affiliates from the date hereof until the Closing other than (a) transactions approved by Transferee; or (b) transactions on terms no more favorable to Transferor or its Affiliates than would have been obtainable in arm's-length dealing. ARTICLE VIII. COVENANTS OF TRANSFEREE 8.1. Maintenance of, and Access to, Records. From and after the Closing, Transferee shall, whenever reasonably requested by Transferor, permit Transferor to have access to such business records turned over to Transferee pursuant to this Agreement as may be required by Transferor in connection with any audit or investigation by any Governmental Authority, or any matter relating to insurance coverage or third party Claims, in each such case to the extent relating to the operation of the Plant by Transferor prior to the Closing. Transferee shall preserve and maintain the records relating to the Plant and the Acquired Assets for at least three years after the Closing Date. 8.2. Closing. Transferee shall use its best efforts to cause the conditions set forth in Section 6.2 to be satisfied by the Closing Date. ARTICLE IX. CERTAIN ADDITIONAL COVENANTS 9.1. Expenses; Transfer Taxes. Each party hereto will bear the legal, accounting and other expenses incurred by such party in connection with the negotiation, preparation and execution of this Agreement, the Transaction Documents, and the transactions contemplated hereby. All sales, transfer, recordation and documentary Taxes and fees which may be payable in connection with the transactions contemplated by this Agreement shall be borne by Transferor. 9.2. Bulk Transfer Laws. Transferee hereby waives compliance by Transferor with the laws of any jurisdiction relating to bulk transfers which may be applicable in connection with the transfer of the Acquired Assets to Transferee. 9.3. Regulatory Approvals. Transferor will, and will cause its appropriate Affiliates to, and Transferee will, use, in each case, its best efforts to obtain any authorizations, consents, orders and approvals of any Governmental Authority necessary for the performance of its respective obligations pursuant to this Agreement and any of the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, and will cooperate fully with each other in all reasonable respects in promptly seeking to obtain such authorizations, consents, orders and approvals. 9.4. Employee Matters. Transferor shall retain all liabilities and obligations in respect of its past, present and future employees under the Employee Plans and applicable Laws. ARTICLE X. TERMINATION 10.1. Termination. This Agreement and the transactions contemplated hereby may be terminated at any time prior to the Closing. 16 (a) Mutual Consent. By mutual written consent of Transferor and Transferee. (b) Court Order. By Transferor or Transferee if consummation of the transactions contemplated hereby shall violate any non-appealable final order, decree or judgment of any court or Governmental Authority having competent jurisdiction. (c) Transferee's Conditions. By Transferee, if any condition precedent to Transferee's obligation to effect the Closing as set forth in Section 6.1 is not satisfied, or shall have become incapable of fulfillment, and such condition is not waived, if waivable, by Transferee on or prior to the Termination Date. (d) Transferor's Conditions. By Transferor, if any condition precedent to Transferor's obligation to effect the Closing as set forth in Section 6.2 is not satisfied, or shall have become incapable of fulfillment, and such condition is not waived, if waivable, by Transferor on or prior to the Termination Date. 10.2. Effect of Termination. If this Agreement is terminated pursuant to Section 10.1, written notice thereof shall forthwith be given to the other party and this Agreement shall thereafter become void and have no further force and effect and all further obligations of Transferor and Transferee under this Agreement shall terminate without further liability of Transferor or Transferee. ARTICLE XI. INDEMNIFICATION 11.1. Indemnification by Transferee. From and after the Closing, Transferee shall indemnify, defend and hold Transferor, its Affiliates, and their respective directors, officers, representatives, employees and agents harmless from and against any and all claims, actions, suits, demands, assessments, judgments, losses, liabilities, damages, costs and expenses (including, without limitation, interest, penalties, attorneys' fees to the extent permitted by law, and accounting fees and investigation costs) (collectively, "Liabilities") that may be incurred by Transferor resulting or arising from or related to, or incurred in connection with: (a) the failure of Transferee to assume, pay, perform and discharge the Assumed Liabilities, and (b) any breach of any representation, warranty, covenant, obligation or agreement of Transferee contained herein or in any other Transaction Document. 11.2. Indemnification by Transferor. From and after the Closing, Transferor shall indemnify, defend and hold Transferee, its Affiliates, and their respective directors, officers, representatives, employees and agents harmless from and against any and all Liabilities that may be incurred by Transferee resulting or arising from, related to or incurred in connection with: (i) the failure of Transferor to assume, pay, perform and discharge the Retained Liabilities and (ii) any breach of any representation, warranty, covenant, obligation or agreement of Transferor contained herein or in any other Transaction Document. 11.3. Notice of Claim; Right to Participate in and Defend Third Party Claim. (a) If any indemnified party receives notice of the assertion of any Claim, the commencement of any suit, action or proceeding, or the imposition of any penalty or assessment by a third party in respect of which indemnity may be sought hereunder (a "Third Party Claim"), and the indemnified party intends to 17 seek indemnity hereunder, then the indemnified party shall promptly provide the indemnifying party with prompt written notice of the Third Party Claim, but in any event not later than 30 calendar days after receipt of such notice of Third Party Claim. The failure by an indemnified party to notify an indemnifying party of a Third Party Claim shall not relieve the indemnifying party of any indemnification responsibility under this Article XI, unless such failure materially prejudices the ability of the indemnifying party to defend such Third Party Claim. (b) The indemnifying party shall have the right to control the defense, compromise or settlement of the Third Party Claim with its own counsel (reasonably satisfactory to the indemnified party) if the indemnifying party delivers written notice to the indemnified party within seven days following the indemnifying party's receipt of notice of the Third Party Claim from the indemnified party acknowledging its obligations to indemnify the indemnified party with respect to such Third Party Claim in accordance with this Article XI, and establishes security in form and substance reasonably satisfactory to the indemnified party to secure the indemnifying party's obligations under this Article XI with respect to such Third Party Claim; provided, however, that the indemnifying party shall not enter into any settlement of any Third Party Claim which would impose or create any obligation or any financial or other liability on the part of the indemnified party if such liability or obligation (i) requires more than the payment of a liquidated sum, or (ii) is not covered by the indemnification provided to the indemnified party hereunder. In its defense, compromise or settlement of any Third Party Claim, the indemnifying party shall timely provide the indemnified party with such information with respect to such defense, compromise or settlement as the indemnified party shall request, and shall not assume any position or take any action that would impose an obligation of any kind on, or restrict the actions of, the indemnified party. The indemnified party shall be entitled (at the indemnified party's expense) to participate in the defense by the indemnifying party of any Third Party Claim with its own counsel. (c) In the event that the indemnifying party does not undertake the defense, compromise or settlement of a Third Party Claim in accordance with subsection (b) of this Section 11.3, the indemnified party shall have the right to control the defense or settlement of such Third Party Claim with counsel of its choosing; provided, however, that the indemnified party shall not settle or compromise any Third Party Claim without the indemnifying party's prior written consent, unless (i) the terms of such settlement or compromise release the indemnified party or the indemnifying party from any and all liability with respect to the Third Party Claim, or (ii) the indemnifying party shall not have acknowledged its obligations to indemnify the indemnified party with respect to such Third Party Claim in accordance with this Article XI and established security in form and substance reasonably satisfactory to the indemnified party to secure the indemnifying party's obligations under this Article XI with respect to such Third Party Claim. The indemnifying party shall be entitled (at the indemnifying party's expense) to participate in the defense of any Third Party Claim with its own counsel. (d) Any indemnifiable Claim hereunder that is not a Third Party Claim shall be asserted by the indemnified party by promptly delivering notice thereof to the indemnifying party. If the indemnifying party does not respond to such notice within 60 days after its receipt, it shall have no further right to contest the validity of such Claim. 18 11.4. Time Limitations on Claims for Indemnification. The right of Transferee to indemnification for any breach of any representation or warranty shall apply only to those claims for indemnification which are given pursuant to this Agreement on or before the date which is one year following the Closing Date. ARTICLE XII. MISCELLANEOUS 12.1. Amendments. This Agreement may be amended only by a writing executed by each of the parties hereto. 12.2. Entire Agreement. This Agreement and the other agreements expressly provided for herein, including the Transaction Documents, set forth the entire understanding of the parties hereto with respect to the subject matter hereof, and supersede all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, between the parties. 12.3. Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Illinois, without regard to its conflicts of law doctrine. 12.4. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given (a) when received if personally delivered, (b) within 5 days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) within 12 hours after being sent by telecopy, with confirmed answerback, or (d) within 1 business day of being sent by priority delivery by established overnight courier. Any party by written notice to the other given in accordance with this Section 12.4 may change the address or the contact to whom notices or copies thereof shall be directed. 12.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together will constitute one and the same instrument. 12.6. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of each party hereto, but no rights, obligations or liabilities hereunder shall be assignable by either party without the prior written consent of the other party. 12.7. Waivers. Except as otherwise provided herein, Transferee or Transferor (acting on behalf of itself and its appropriate Affiliates), may waive in writing compliance by any of the other party hereto (to the extent such compliance is for the benefit of the party giving such waiver) with any of the terms, covenants or conditions contained in this Agreement or in any of the other Transaction Documents (except such as may be imposed by law). Any waiver by either party of any violation of, breach of, or default under, any provision of this Agreement or any of the other Transaction Documents, by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement or any of the other Transaction Documents. 19 12.8. Third Parties. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person or entity other than Transferee and Transferor any rights or remedies under or by reason of this Agreement. 12.9. Schedules, Addenda and Exhibits. The Schedules, Addenda and Exhibits attached to this Agreement are incorporated herein and shall be part of this Agreement for all purposes. 12.10. Headings. The headings in this Agreement are solely for convenience of reference and shall not be given any effect in the construction or interpretation of this Agreement. 12.11. Certain Definitions. For purposes of this Agreement, the term "Affiliate" shall mean any Person that directly, or indirectly through one or more Persons, controls, is controlled by, or is under common control with, the Person specified or, directly or indirectly, is related to or otherwise associated with any such Person or entity. 12.12. Remedies Not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy and each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or hereafter existing at law or in equity or by statute or otherwise. No remedy shall be deemed to be a limitation on the amount or measure of damages resulting from any breach of this Agreement. The election of any one or more remedies shall not constitute a waiver of the right to pursue other available remedies. 12.13. Gender and Number. The masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others whenever the context so indicates. [SIGNATURE PAGE FOLLOWS] 20 IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date first above written. AMEREN ENERGY GENERATING COMPANY, an Illinois, corporation By: ------------------------------------ Print Name: Title: UNION ELECTRIC COMPANY, d/b/a AmerenUE, a Missouri corporation By: ------------------------------------ Print Name: Title: ASSET TRANSFER AGREEMENT SCHEDULE 1.1(B) FIXED ASSETS - PINCKNEYVILLE See attached. ASSET TRANSFER AGREEMENT SCHEDULE 1.1(C) REAL ESTATE - PINCKNEYVILLE FEE PROPERTY- PINCKNEYVILLE - --------------------------- Legal descriptions of all real estate held in fee simple by Ameren Energy Generating Company to be transferred to Union Electric Company are attached hereto. EASEMENTS - --------- None. LEASED PROPERTY - --------------- None. PERMITS - ------- Perry County Highway - Resolution, dated December 13, 1999, signed by Don Hirsch, County Clerk, Perry County for underground communications cables Route 1. Perry County Highway - Resolution, dated December 13, 1999, signed by Don Hirsch, County Clerk, Perry County for overhead conductor cables Route 1. Perry County Highway - Resolution, dated January 24, 2000, signed by Don Hirsch, County Clerk, Perry County for eight buried cables, conduits across and under Route 1. Permit #99-8, dated November 15, 1999, permitting construction work on County Highway right-of-way on White Walnut Road. Permit #99-10, dated December 7, 1999, permitting construction work on County Highway right-of-way on FAS Route 1821 Section 44RS in Pinckneyville, Illinois. EXHIBIT A (PERRY COUNTY, ILLINOIS) TRACT 1 - ------- The West Seventeen acres of even width of the Northwest Quarter of the Southeast Quarter, EXCEPT One and One-Half acres being described as follows: Commencing at the point of intersection of the North line of said Quarter-Quarter Section with the East line of a lane running along the West side of said Quarter-Quarter Section; thence run East on the land line 24 rods to a point; thence run South along a line parallel with the West line of said Quarter-Quarter Section 10 rods to a point; thence West 24 rods to the East line of said lane; thence North on the East line of said lane to the point of beginning, all being a part of Section Five (5), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, in Perry County, Illinois, EXCEPT coal, oil, gas and other minerals in and underlying said property; AND The Southwest Quarter of the Northeast Quarter and the East Half of the Northeast Quarter of the Southeast Quarter of Section Five (5) EXCEPT the undivided one-half interest in and to the oil and gas in and underlying said premises AND EXCEPT the coal underlying said premises; and the West One-Half of the Northeast Quarter of the Southeast Quarter of Section Five (5), EXCEPT the coal underlying said lands; all in Township Five (5) South, Range Two (2) West of the Third Principal Meridian, in Perry County, Illinois; AND The West One-Half of the Northwest Quarter of the Southwest Quarter of Section Four (4), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, Perry County, Illinois, EXCEPT the undivided one-half interest in and to the oil and gas in and underlying said premises, AND EXCEPT the coal underlying said premises; TRACT 2 Beginning at the point of intersection of the North line of the Northwest Quarter of the Southeast Quarter of Section Five (5), in Township Five (5) South, Range Two (2) West of the Third Principal Meridian with the East line of the lane or roadway running along the West side of said Northwest Quarter of the Southeast Quarter, then run East on the land line sixteen (16) rods, then South ten (10) rods parallel with the West line of the said Northwest Quarter of the Southeast Quarter, then West sixteen (16) rods to the East line of said lane, then North on the East line of said lane to the place of beginning, in the County of Perry, State of Illinois. TRACT 3 Commencing at the point of intersection of the North line of the Northwest Quarter of the Southeast Quarter of Section 5, Township 5 South, Range 2 West of the Third Principal Meridian, with the East line of the lane or roadway running along the West side of said Northwest Quarter of the Southeast Quarter, thence run East on the land line 16 rods to the point of beginning, thence East on the land line 8 rods to a point; thence South along a line parallel with the West line of the said Northwest Quarter of the Southeast Quarter 10 rods to a point, thence West along a line parallel to the North line of the Northwest Quarter of the Southeast Quarter 8 rods to a point, thence North to the point of beginning, EXCEPT the coal, oil, gas and other minerals in and underlying said tract of land. Situated in the County of Perry, in the State of Illinois. TRACT 4 Commencing at the Northeast corner of the Southwest Quarter of the Southwest Quarter, Section 5, Township 5 South, Range 2 West of the Third Principal Meridian, thence run West along the land line a distance of 38.27 feet for the point of beginning, thence from said point of beginning South along the West right-of-way line of White Walnut Road a distance of 208 feet, thence run West parallel with the North land line of said Southwest Quarter of the Southwest Quarter a distance of 416 feet, thence run North parallel with the West right-of-way line of White Walnut Road a distance of 208 feet, thence run East along the North land line of the said Southwest Quarter of the Southwest Quarter a distance of 416 feet to the point of beginning. Situated in the County of Perry, in the State of Illinois. TRACT 5 The Southwest Quarter (SW 1/4) of the Northeast Quarter (NE 1/4) and the Southeast Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of Section Eight (8), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, Perry County, Illinois. AND, the Southeast Quarter (SE 1/4) of the Southeast Quarter (SE 1/4) of Section Five (5), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, Perry County, Illinois. EXCEPT: Commencing at the Northwest corner of the Southeast Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of Section Eight (8), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, Perry County, Illinois; thence East along the North line of said Quarter-Quarter Section, a distance of 313.75 feet; thence South parallel with the West line of said Quarter-Quarter Section, a distance of 208.75 feet; thence West parallel with the North line of said Quarter-Quarter Section to the West line of said Quarter-Quarter Section; thence continuing North along the West line of said Quarter Quarter Section to the point of beginning, containing 1.50 acres more or less. TRACT 6 The North 1/2 of the Northwest 1/4 of Section 8, except the following: Beginning at the Northeast corner of the Northeast 1/4 of the Northwest 1/4 of said Section 8, then run West 20 rods, then South 80 rods, then East 20 rods and North 80 rods to the beginning, containing in said exception 10 acres, in Township 5 South, Range 2 West of the Third Principal Meridian. Situated in the County of Perry, State of Illinois. TRACT 7 The surface only of the East Quarter (E 1/4) of the Northeast Quarter (NE 1/4) of the Northwest Quarter (NW 1/4) of Section Eight (8), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, situated in the County of Perry in the State of Illinois. TRACT 8 The surface only of a part of the Southwest Quarter (SW 1/4) of the Northwest Quarter (NW 1/4) of Section 8, Township 5 South, Range 2 West of the Third Principal Meridian, Perry County, Illinois, more particularly described as follows, to wit: Commencing at the Northeast corner of said Quarter-Quarter Section; thence running westerly on the North line of said Quarter-Quarter section to the West right of way line of a public road (White Walnut Road), thence southerly along the West right of way line of said public road a distance of 320 feet; thence westerly on a line parallel with the North line of said Quarter-Quarter section a distance of 290 feet; thence northerly on a line parallel with the West right of way line of said public road (White Walnut Road) a distance of 320 feet to the North line of said Quarter-Quarter section; thence easterly along the North line of said Quarter-Quarter section a distance of 290 feet to the point of beginning. Situated in the County of Perry, in the State of Illinois. TRACT 9 Commencing at the Northwest corner of the Southeast Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of Section Eight (8), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, thence East along the North line of said Quarter Quarter section, a distance of 313.75 feet, thence South parallel with the West line of said Quarter Quarter section, a distance of 208.75 feet, thence West parallel with the North line of said Quarter Quarter section to the West line of said Quarter Quarter section, thence continuing North along the West line of said Quarter Quarter section to the point of beginning, containing 1.50 acres, more or less, situated in the County of Perry and State of Illinois. TRACT 10 The Northeast 1/4 of the Southwest 1/4 of Section 8, Township 5 South, Range 2 West, Third Principal Meridian, Perry County, Illinois. TRACT 11 The surface only of the Southeast Quarter of the Southwest Quarter, and the Southwest Quarter of the Southwest Quarter of Section 5, Township 5 South, Range 2 West of the Third Principal Meridian, Perry County, Illinois. LESS AND EXCEPT THE FOLLOWING DESCRIBED PROPERTY: Commencing at the Northeast corner of said Southwest Quarter of the Southwest, thence run West along the land line a distance of 38.27 feet for the point of beginning, thence from said point of beginning South along the West right of way line of White Walnut Road a distance of 208 feet, thence run West parallel with the North land line of said Southwest Quarter of the Southwest Quarter a distance of 416 feet, thence run North parallel with the West right of way line of the White Walnut Road a distance of 208 feet, thence run East along the North land line of the said Southwest Quarter of the Southwest Quarter a distance of 416 feet to the point of beginning and containing in said exception 2 acres, more or less; situated in the County of Perry, in the State of Illinois. ALSO: The coal and other minerals in and underlying the following described real estate to wit: A. The Southeast Quarter (SE1/4) of the Southwest Quarter (SW1/4), and the Southwest Quarter (SW1/4) of the Southwest Quarter (SW1/4) of Section Five (5), and the East One-Fourth of the Northeast Quarter of the Northwest Quarter (E1/4NE1/4NW1/4) of Section Eight (8), Township Five (5) South, Range Two (2) West of the Third Principal Meridian, LESS AND EXCEPT the following described property: Commencing at the Northeast corner of said Southwest Quarter (SW1/4) of the Southwest Quarter (SW1/4), thence run west along the land line a distance of 38.27 feet for the point of beginning, thence from said point of beginning south along the west right of way line of White Walnut Road a distance of 208 feet; thence run west parallel with the north land line of said Southwest Quarter (SW1/4) of the Southwest Quarter (SW1/4) a distance of 416 feet, thence run north parallel with the west right of way line of White Walnut Road a distance of 208 feet, thence run east along the north land line of said Southwest Quarter (SW1/4) of the Southwest Quarter (SW1/4) a distance of 416 feet to the point of beginning and containing in said exception two (2) acres, more or less; B. A part of the Southwest Quarter of the Northwest Quarter of Section 8, Township 5 South, Range 2 West of the Third Principal Meridian, more particularly described as follows, to wit: Commencing at the Northeast corner of said Quarter Quarter Section; thence running Westerly on the North line of said Quarter Quarter Section to the West right of way line of a public road (White Walnut Road); thence Southerly along the West right-of-way line of said public road a distance of 320 feet; thence Westerly on a line parallel with the North line of said Quarter Quarter Section a distance of 290 feet; thence Northerly on a line parallel with the West right-of-way line of said public road (White Walnut Road) a distance of 320 feet to the North line of said Quarter Quarter Section; thence Easterly along the North line of said Quarter Quarter Section a distance of 290 feet to the point of beginning, containing 2.13 acres, more or less. Situated in Perry County, State of Illinois. ASSET TRANSFER AGREEMENT SCHEDULE 1.1(E) INTELLECTUAL PROPERTY - PINCKNEYVILLE None. ASSET TRANSFER AGREEMENT SCHEDULE 1.1(J) ROLLING STOCK AND VEHICLES - PINCKNEYVILLE None. ASSET TRANSFER AGREEMENT SCHEDULE 1.2(A) RETAINED PROPERTY - PINCKNEYVILLE None. ASSET TRANSFER AGREEMENT SCHEDULE 1.2(B) NON-ASSIGNED CONTRACTS - PINCKNEYVILLE None. ASSET TRANSFER AGREEMENT SCHEDULE 1.3(A) REQUIRED CONSENTS - PINCKNEYVILLE ASSIGNABILITY AND CONSENTS - -------------------------- The Acquired Assets, including Contracts, Permits and Lease Agreements (but excluding leases of office equipment involving future payments of less than $500,000 in the aggregate), which are non-assignable or non-transferable or cannot be subleased to Transferee without the consent of some Persons, are identified on Schedule 5.1(d). REGULATORY APPROVALS - -------------------- The following is a list of all necessary approvals of any Governmental Authority for the transfer of assets: Illinois Commerce Commission Federal Energy Regulatory Commission Also refer to Schedule 5.1(e). ASSET TRANSFER AGREEMENT SCHEDULE 2.1(A) ASSUMED INDEBTEDNESS - PINCKNEYVILLE ASSUMED INDEBTEDNESS - -------------------- None ASSUMED LIABILITIES - ------------------- See attached Balance Sheet of Ameren Energy Generating Company as of September 30, 2002 (to be updated in accordance with the Asset Transfer Agreement). ASSET TRANSFER AGREEMENT SCHEDULE 4.2(F) EXISTING INDEBTEDNESS TO BE DISCHARGED BY CLOSING - PINCKNEYVILLE None. ASSET TRANSFER AGREEMENT SCHEDULE 5.1(C) TITLE TO THE ACQUIRED ASSETS - PINCKNEYVILLE None. ASSET TRANSFER AGREEMENT SCHEDULE 5.1(E) ENVIRONMENTAL MATTERS - PINCKNEYVILLE PINCKNEYVILLE POWER PLANT - ------------------------- AIR - --- 1. United States Environmental Protection Agency (USEPA) approval to modify alternative monitoring program for Pinckneyville Power Plant. 2. Acid Rain Program Phase II permit for units CT01, CT02, CT03 and CT04, issued 5/11/2000 and expires 12/31/2004. 3. Acid Rain Program Phase II permit for units CT05, CT06, CT07 and CT08 issued 5/26/2001 and expiration 12/31/2004.. 4. Application for Title V air operating permit submitted to IEPA is currently on public notice until 12/31/2004. Facility ID No. 145842AAA, App. No. 01050020. Operating permit issued 11/26/2002. Expiration 11/26/07. 5. USEPA Certificate of Representation for assignment of Designated Representative and Alternative Designated Representative under Acid Rain Program. 6. Corporate Agreement of Representation for assignment of Designated Representative and Alternate Designated Representative under Acid Rain Program. 7. Authorized Account Representative for NOx SIP call revision to USEPA. 8. Corporate Agreement of NOx Budget Trading Program Agreement of Representation. WATER - ----- 1. IEPA NPDES permit number IL 0075906. 2. IEPA State Operating permit number 2000-EE-0708-1. 3. IEPA State Permit to construct (dechlorination system) 2002-EN-0514. WASTE/LAND MANAGEMENT - --------------------- 1. Hazardous Waste ID Notification - ILR000079145. 2. State waste generator numbers - 1210405027 3. SPCC plan.
ASSET TRANSFER AGREEMENT SCHEDULE 5.1(D) CONTRACTS - PINCKNEYVILLE NAME OF COMPANY DATE OF CONTRACT PURPOSE CONSENT REQUIRED CONSENT RECEIVED --------------- ---------------- ------- ---------------- ---------------- 1. Natural Gas Pipeline 12/17/99 Interconnection Agreement for No. Company of America1/1/ gas-fired electric generation Station (gas) 2. Natural Gas Pipeline 6/1/00 Operation and Maintenance No Company of America/1/ Agreement for gas facilities (gas) 3. Natural Gas Pipeline 11/17/99 Transportation Rate Schedule No Company of America1/1/ FTS Contract No. 116646 (gas) Amendment No. 001, dated No 11/18/99 to Rate Schedule FTS Agreement - Contract No. 116656 (gas) 4. Natural Gas Pipeline 8/17/01 Transportation Rate Schedule No Company of America1/1/ FTS Agreement Contract No. 119506 (gas) 5. Natural Gas Pipeline 11/18/99 Point Operator Allocation No Company of America1/1/ Agreement - Contract No. 116595 (gas) 6. Natural Gas Pipeline 11/3/99 Interruptible Transportation No Company of America/1/ Rate Discount Agreement Contract No. 116589 (gas) ASSET TRANSFER AGREEMENT SCHEDULE 5.1(D) CONTRACTS - PINCKNEYVILLE NAME OF COMPANY DATE OF CONTRACT PURPOSE CONSENT REQUIRED CONSENT RECEIVED --------------- ---------------- ------- ---------------- ---------------- 7. Natural Gas Pipeline 5/12/00 Letter Agreement for Interruptible No Company of America/1/ Balancing Service (gas) Contract No. 117638 8. Ameren Services, as agen 11/9/99 Transmission System Interconnection Yes for Union Electric Company Agreement - Pinckneyville, Illinois and Central Illinois Public Service (electric) Company as assigned to Ameren Energy Generating Company on 5/1/2000 9. Ameren Services, as agent 11/9/99 Parallel Operating Agreement - Yes for Union Electric Company Pinckneyville, Illinois (electric) and Central Illinois Public Service Company as assigned to Ameren Energy Generating Company on 5/1/2000 10. City of Pinckneyville 3/10/01 Road Use Agreement in connection No the construction of a power generating facility in Perry County, Illinois 1/16/01 Extension of Road Use Agreement Expiration: 12/31/01 11. Perry County Highway 12/29/00 Perry County Road Use Agreement No Engineer permitting Ameren trucks to haul Over Perry County roads Expiration: 12/31/01 ASSET TRANSFER AGREEMENT SCHEDULE 5.1(D) CONTRACTS - PINCKNEYVILLE NAME OF COMPANY DATE OF CONTRACT PURPOSE CONSENT REQUIRED CONSENT RECEIVED --------------- ---------------- ------- ---------------- ---------------- 12. Perry County Enterprise 6/29/01 Abatement of County and Municipal No Zone taxes pursuant to enterprise zone Schedule - period 10 years 13. City of Pinckneyville 1/11/02 Water Supply Sale Agreement No for development of water system improvements and to supply potable water until improvements are completed Expiration: 12/31/2011 renewable For 10 year periods 14. Siemens Westinghouse Operating 5/12/01 Operation and Maintenance No Services Company/1/ Agreement for Gibson City, Kinmundy, Pinckneyville, Elgin And Columbia Power Plants 15. Eugene Pick 3/1/01 License Agreement for use of the No (Licensee) real estate by Licensee for farming crops (Parts of Section 4, Section 5 and Section 8 Township 5 South, Range 2 West of the Third Principal Meridian Perry County, Illinois) 16. General Electric Company 8/21/00 Purchase of eight (8) Gad Turbines No and Illinois Material Supply - ---------- 1 At time of transfer, this contract may be assigned or released in part to Union Electric Company or restructured to create a new and separate contract with Union Electric Company ASSET TRANSFER AGREEMENT SCHEDULE 5.1(D) CONTRACTS - PINCKNEYVILLE PURCHASE ORDERS - --------------- NAME OF COMPANY DATE OF CONTRACT PURPOSE CONSENT REQUIRED CONSENT RECEIVED --------------- ---------------- ------- ---------------- ---------------- General Electric Company PO #333971 - purchase of parts No on an as-required basis for Pinckneyville General Electric Company PO #064060 - as-needed No field service on LM6000's (Pinckneyville Phase I)
EX-99 5 exb_6.txt EXHIBIT B-6 -TRANSFER AGR-KINMUNDY EXHIBIT B-6 ASSET TRANSFER AGREEMENT KINMUNDY GENERATION STATION BETWEEN AMEREN ENERGY GENERATING COMPANY AND UNION ELECTRIC COMPANY DATED AS OF _________ 1, 2003 TABLE OF CONTENTS PAGE ARTICLE I. TRANSFER OF ASSETS..............................................1 1.1. Transfer of Assets...................................................1 (a) Inventory.......................................................1 (b) Fixed Assets....................................................1 (c) Real Property...................................................2 (d) Leased Property.................................................2 (e) Intellectual Property Rights....................................2 (f) Business Records................................................2 (g) Contracts.......................................................2 (h) Permits.........................................................2 (i) Insurance.......................................................2 (j) Rolling Stock and Vehicles......................................3 (k) Miscellaneous...................................................3 1.2. Retained Assets......................................................3 (a) Designated Assets...............................................3 (b) Non-Assigned Contracts..........................................3 (c) Employee Plan Assets............................................3 (d) Corporate Records...............................................3 1.3. Assignability and Consents...........................................3 (a) Required Consents...............................................4 (b) Nonassignable Items.............................................4 ARTICLE II. LIABILITIES.....................................................4 2.1. Assumption of Liabilities............................................4 (a) Balance Sheet...................................................4 (b) Trade Payables..................................................5 (c) Contracts.......................................................5 (d) Employee Matters................................................5 (e) Liabilities and Obligations.....................................5 2.2. Retained Liabilities.................................................5 (a) Pre-Closing.....................................................5 (b) Liabilities Relating to the Transfer of Acquired Assets.........5 -i- TABLE OF CONTENTS (continued) PAGE (c) Employee-Related Liabilities....................................5 (d) Litigation......................................................5 (e) Product, Environmental and Safety Liability.....................6 (f) Taxes...........................................................6 (g) Liabilities Relating to Retained Assets.........................6 ARTICLE III. TRANSFER AND EXCHANGE..........................................6 3.1. Payment..............................................................6 3.2. Prorations...........................................................7 ARTICLE IV. CLOSING.........................................................7 4.1. General..............................................................7 4.2. Documents to be Delivered by Transferor..............................7 4.3. Documents and Payment to be Delivered by Transferee..................8 4.4. Post Closing.........................................................9 ARTICLE V. REPRESENTATIONS AND WARRANTIES..................................9 5.1. Representations and Warranties of Transferor.........................9 (a) Organization and Standing; Power and Authority..................9 (b) Conflicts; Defaults.............................................9 (c) Acquired Assets; Title to the Acquired Assets..................10 (d) Contracts......................................................11 (e) Environmental and Safety Compliance............................11 (f) Approvals......................................................13 (g) Real Property..................................................13 (h) Leases.........................................................13 5.2. Representations and Warranties of Transferee........................14 (a) Organization and Standing; Corporate Power and Authority.......14 (b) Conflicts; Defaults............................................14 ARTICLE VI. CONDITIONS TO CLOSING..........................................14 6.1. Conditions to Transferee's Obligations..............................14 (a) Representations and Warranties.................................14 -ii- TABLE OF CONTENTS (continued) PAGE (b) Covenants......................................................14 (c) Consents.......................................................14 (d) No Proceeding or Litigation....................................14 (e) Certificate of Transferor......................................15 (f) Certificate; Documents.........................................15 6.2. Conditions to Transferor's Obligations..............................15 (a) Representations and Warranties.................................15 (b) Covenants......................................................15 (c) Consents.......................................................15 (d) No Proceeding or Litigation....................................15 (e) Certificate of Transferee......................................15 (f) Certificates; Documents........................................15 (g) Cash Payment...................................................15 ARTICLE VII. COVENANTS OF TRANSFEROR........................................15 7.1. Conduct of Business.................................................15 ARTICLE VIII. COVENANTS OF TRANSFEREE........................................16 8.1. Maintenance of, and Access to, Records..............................16 8.2. Closing.............................................................16 ARTICLE IX. CERTAIN ADDITIONAL COVENANTS...................................16 9.1. Expenses; Transfer Taxes............................................16 9.2. Bulk Transfer Laws..................................................16 9.3. Regulatory Approvals................................................16 9.4. Employee Matters....................................................16 ARTICLE X. TERMINATION....................................................16 10.1. Termination.........................................................16 (a) Mutual Consent.................................................17 (b) Court Order....................................................17 (c) Transferee's Conditions........................................17 (d) Transferor's Conditions........................................17 10.2. Effect of Termination...............................................17 ARTICLE XI. INDEMNIFICATION................................................17 -iii- TABLE OF CONTENTS (continued) PAGE 11.1. Indemnification by Transferee.......................................17 11.2. Indemnification by Transferor.......................................17 11.3. Notice of Claim; Right to Participate in and Defend Third Party Claim...................................................17 11.4. Time Limitations on Claims for Indemnification......................19 ARTICLE XII. MISCELLANEOUS..................................................9 12.1. Amendments..........................................................19 12.2. Entire Agreement....................................................19 12.3. Governing Law.......................................................19 12.4. Notices.............................................................19 12.5. Counterparts........................................................19 12.6. Assignment..........................................................19 12.7. Waivers.............................................................19 12.8. Third Parties.......................................................20 12.9. Schedules, Addenda and Exhibits.....................................20 12.10. Headings............................................................20 12.11. Certain Definitions.................................................20 12.12. Remedies Not Exclusive..............................................20 12.13. Gender and Number...................................................20 SCHEDULES Schedule 1.1(b) (Fixed Assets) Schedule 1.1(c) (Real Estate) Schedule 1.1(e) (Intellectual Property) Schedule 1.1(j) (Rolling Stock and Vehicles) Schedule 1.2(a) (Retained Property) Schedule 1.2(b) (Non-Assigned Contracts) Schedule 1.3(a) (Required Consents) Schedule 2.1(a) (Assumed Indebtedness) Schedule 3.1 (Transferee Note) Schedule 4.2(f) (Existing Indebtedness to be Discharged by Closing) Schedule 5.1(c) (Title to the Acquired Assets) Schedule 5.1(d) (Contracts) Schedule 5.1(e) (Environmental Matters) -iv- ASSET TRANSFER AGREEMENT ------------------------ THIS ASSET TRANSFER AGREEMENT (this "Agreement") dated as of ___________ l, 2003 between Ameren Energy Generating Company, an Illinois corporation ("Transferor") and Union Electric Company, a Missouri corporation d/b/a AmerenUE ("Transferee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Transferor operates plants and related facilities for the generation of electricity which is sold at wholesale through AmerenEnergy Marketing Company ("AEM") and AmerenEnergy, Inc. ("AmerenEnergy"); and WHEREAS, Transferor desires to transfer to Transferee all of its right, title and interest in and to its gas-fired electric generating station located in Kinmundy, Illinois and located on the real estate described under "Fee Property - Kinmundy" on Schedule 1.1(c) (Real Estate) (the "Plant"); and WHEREAS, Transferee desires to acquire the Plant from Transferor, upon the terms and subject to the conditions hereinafter set forth, in exchange for the cash purchase price described herein and the assumption by Transferee of certain liabilities and obligations of Transferor specifically disclosed in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and other good and valuable consideration had and received, Transferee and Transferor, on the basis of, and in reliance upon, the representations, warranties, covenants, obligations and agreements set forth in this Agreement, and upon the terms and subject to the conditions contained herein, hereby agree as follows: ARTICLE I. TRANSFER OF ASSETS 1.1. Transfer of Assets. At the Closing (as defined in Section 4.1), Transferee shall acquire from Transferor, and Transferor shall transfer, convey, assign, contribute and deliver to Transferee, all of the assets, properties, rights and interests owned, used, occupied or held by or for the benefit of Transferor in the operation of the Plant wherever situated, as the same shall exist as of the Closing Date, including, without limitation, the following. (a) Inventory. All inventories of products, work-in-process, finished goods, raw materials, coal, oil, gas and other fuel supplies and parts relating to the Plant (collectively, "Inventory" or "Inventories"), including, without limitation, all Inventories located at the facilities listed on Schedule 1.1(c) (Real Estate). (b) Fixed Assets. All tangible personal property, plant and equipment including, without limitation, buildings, structures, generators, turbines, gas supply pipelines and equipment, fixtures, machinery and equipment, maintenance machinery and equipment, vehicles and rolling stock, office furniture and office equipment, other furnishings, leasehold improvements and construction-in- process, and all tangible personal property set forth on Schedule 1.1(b) (Fixed Assets) (collectively, the "Fixed Assets"). (c) Real Property. All real property rights and interests of any kind whatsoever owned by Transferor and relating to the Plant, including the rights and interests identified under the heading "Fee Property" on Schedule 1.1(c) (Real Estate), which consist of: (i) the land more particularly described under such heading, which descriptions are incorporated herein by reference, (ii) any easements or other interests in real property necessary for the operation of the Plant including those described under the heading "Easements" on Schedule 1.1(c) (Real Estate), (iii) all buildings, structures, and leasehold improvements located thereon and all appurtenances relating thereto, and (iv) all fixtures, machinery, apparatus or equipment affixed to said premises, including, without limitation, all of the electrical, heating, plumbing, air conditioning, air compression and all other systems located on said premises, and all other structures, fences and improvements (collectively, the "Fee Property"). (d) Leased Property. All rights and interests under the lease or license agreements (the "Lease Agreements") more particularly described under the heading "Leased Property" on Schedule 1.1(c) (Real Estate) attached hereto, which descriptions are incorporated herein by reference (the premises subject to the Lease Agreements being hereinafter collectively referred to as the "Leased Property"). (e) Intellectual Property Rights. Any and all intellectual property owned or possessed by Transferor and related to the Plant including without limitation, copyrights, trade secrets, trademarks and patents and identified on Schedule 1.1(e). (f) Business Records. All books and records relating to the Plant, including, without limitation, all files, invoices, forms, accounts, correspondence, production records, technical, accounting, manufacturing and procedural manuals, employment records, studies, reports or summaries relating to any Environmental Requirements (as defined in Section 5.1(e)), and other books and records relating to the operation of any of the Acquired Assets (as defined in this Section 1.1) or other assets or properties associated with the Plant, and any confidential information which has been reduced to writing or other tangible medium relating to or arising out of the Plant (collectively, the "Business Records"). (g) Contracts. Subject to Section 1.2(b) and 1.3, all rights, benefits and interests of Transferor in and to all licenses, leases, contracts, agreements, commitments and undertakings relating to the Plant including without limitation those listed on Schedule 5.1(d). (h) Permits. All licenses, permits, approvals, variances, waivers or consents (collectively, the "Permits"), to the extent transferable, issued by any United States, state or local governmental entity or municipality or subdivision thereof or any authority, department, commission, board, bureau, agency, court or instrumentality (collectively, "Governmental Authorities") and used in or necessary to the operation of the Plant. (i) Insurance. All rights, claims and benefits of Transferor in, to or under all insurance policies maintained by Transferor solely for the Plant or the Acquired Assets. 2 (j) Rolling Stock and Vehicles. All vehicles and rolling stock used in the Plant and included as part of Fixed Assets and as more particularly described in Schedule 1.1(j) "Rolling Stock and Vehicles." (k) Miscellaneous. Except for the Retained Assets (as defined in Section 1.2), all other assets, properties, rights and interests of Transferor otherwise employed in or related to the operation of the Plant, of every kind, nature and description, whether tangible or intangible, real, personal or mixed, and wherever situated all of which are to be transferred, conveyed, assigned, contributed and delivered to Transferee at the Closing pursuant to this Agreement. All of the assets, properties, rights and interests owned, used, occupied or held by or for the benefit of the Transferor in the operation of the Plant, which are to be sold, transferred, conveyed, assigned and delivered by Transferor to Transferee at the Closing as contemplated herein, including without limitation, those described in clauses (a) through (k) above, but excluding the Retained Assets, are referred to herein collectively as the "Acquired Assets." 1.2. Retained Assets. Anything in Section 1.1 to the contrary notwithstanding, the following assets (collectively, the "Retained Assets") shall be retained by Transferor, and Transferee shall in no way be construed to have acquired (or to be obligated to acquire) any interest whatsoever in any of the following. (a) Designated Assets. Any of the assets, properties, rights and/or interests, owned, used, occupied or held by or for the benefit of Transferor in the operation of the Plant that are identified on Schedule 1.2(a) (Retained Property) (collectively, the "Designated Assets"). (b) Non-Assigned Contracts. All of the rights and interests, and all of the liabilities and obligations, of Transferor in, under or pursuant to any license, lease, contract, agreement, commitment or undertaking entered into in connection with, or otherwise relating to, the Plant, that are identified on Schedule 1.2(b) (Non-Assigned Contracts) (collectively, the "Non-Assigned Contracts"). (c) Employee Plan Assets. The rights of Transferor or its parent, Ameren Corporation ("Parent") under, and any funds and property held in trust or any other funding vehicle pursuant to, any "employee benefit plan" (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any other bonus, stock option, stock appreciation, stock purchase, severance, termination, lay-off, leave of absence, disability, workers' compensation, pension, profit sharing, retirement, vacation or holiday pay, insurance, deferred compensation or other employee or welfare benefit plan, agreement or arrangement of Transferor or Parent applicable to past, present or future employees employed in connection with the Plant (collectively, "Employee Plans"). (d) Corporate Records. Transferor's minute books, stock books, stock ledger and corporate seal and all other books and records relating to business of the Transferor other than the Plant. 1.3. Assignability and Consents. 3 (a) Required Consents. Schedule 1.3(a) (Required Consents) sets forth, under the heading "Assignability and Consents," a list of all Acquired Assets, including Contracts, Permits and Lease Agreements (but excluding leases of office equipment involving future payments of less than $500,000 in the aggregate), which are non-assignable or non-transferable or cannot be subleased to Transferee without the consent of some other individual, partnership, corporation, association, joint stock company, trust, joint venture, limited liability company or Governmental Authority (collectively, "Person"). Schedule 1.3(a) (Required Consents) sets forth, under the heading "Regulatory Approvals," a list of all necessary approvals of any Governmental Authority whose approval is required for the transactions contemplated by this Agreement. Transferor and Transferee have each commenced and shall continue to take, or cause to be taken by others, all necessary actions required to obtain or satisfy, at the earliest practicable date, all consents, novations, approvals, authorizations, requirements (including filing and registration requirements), waivers and agreements ("Consents") from any Persons necessary to authorize, approve or permit the full and complete conveyance, assignment, sublease or transfer of the Acquired Assets, and to consummate and make effective the transactions contemplated by this Agreement and to continue such efforts as may be required after the Closing Date to facilitate the full and expeditious transfer of legal title, or the sublease, as the case may be, of the Acquired Assets. (b) Nonassignable Items. Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an Agreement to sell, convey, assign, sublease or transfer any Acquired Assets, including Contracts, Permits and Lease Agreements, if an attempted conveyance, assignment, sublease or transfer thereof, without the Consent of another party thereto or a Governmental Authority would constitute a breach of, or in any way affect the rights of Transferor or Transferee with respect to such Acquired Asset ("Nonassignable Items"). Transferor shall use its best efforts and Transferee shall cooperate in all reasonable respects with Transferor to obtain and satisfy all Consents and to resolve all impracticalities of conveyance, assignment, sublease or transfer necessary to convey to Transferee all Nonassignable Items. ARTICLE II. LIABILITIES 2.1. Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, Transferee shall assume, at the Closing and effective as of the Closing Date, and shall thereafter pay, perform and discharge as and when due the following, and only the following, liabilities and obligations of Transferor (collectively, the "Assumed Liabilities"). (a) Balance Sheet. All liabilities and obligations of Transferor as set forth on the unaudited balance sheet (the "Closing Date Balance Sheet") relating to the Plant prepared by Transferor as of the Closing Date, including without limitation the assumed indebtedness identified on Schedule 2.1(a) (Assumed Indebtedness), less payments thereon or discharges thereof prior to the Closing Date. An estimate of the liabilities and obligations shall be prepared for purposes of Section 4.3 as of a date not more than 60 days prior to the Closing Date (the "Estimated Balance Sheet Date"). The actual liabilities and obligations assumed shall be as shown on the Closing Date Balance Sheet prepared as provided in Section 4.4(a). 4 (b) Trade Payables. All liabilities and obligations of Transferor relating to the Plant that constitute trade payables due to suppliers as payment for Inventory included in the Acquired Assets and incurred by Transferor in the ordinary and normal course of business at the Closing Date (in transactions in the ordinary and normal course) and consistent with past practice and the representations, warranties, covenants, obligations and agreements set forth in this Agreement ("Trade Payables"). (c) Contracts. All liabilities and obligations of Transferor arising under the terms of the Contracts other than contracts that constitute Non-Assigned Contracts (the "Assumed Contracts") but only to the extent such liabilities and obligations arise or accrue after the Closing Date in the ordinary and normal course and consistent with the representations, warranties, covenants, obligations and agreements set forth in this Agreement; provided, however, that Transferee shall not assume or be responsible for any such liabilities or obligations which arise from breaches thereof or defaults thereunder by Transferor, all of which liabilities and obligations shall constitute Retained Liabilities (as defined in Section 2.2). (d) Employee Matters. Transferor represents that there are no employees of Transferor or any Ameren affiliate employed at the Plant. (e) Liabilities and Obligations. All liabilities and obligations of Transferor relating to environmental permits, variances or orders issued by local, state or federal governmental authorities as identified on Schedule 5.1(e). 2.2. Retained Liabilities. Except as provided in Section 2.1, Transferor shall retain, and Transferee shall not assume, or be responsible for or liable with respect to, any liabilities or obligations of, Transferor, or otherwise relating to the Plant, whether or not of, associated with, or arising from, any of the Acquired Assets, and whether fixed, contingent or otherwise, known or unknown (collectively referred to hereinafter as the "Retained Liabilities"), including, without limitation, the following. (a) Pre-Closing. All liabilities and obligations relating to, based in whole or in part on events or conditions occurring or existing in connection with, or arising out of, the Plant as operated prior to the Closing Date, or the ownership, possession, use, operation or other disposition prior to the Closing Date of any of the Acquired Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing Date, with the Plant). (b) Liabilities Relating to the Transfer of Acquired Assets. All liabilities and obligations of Transferor or any of its Affiliates (as defined in Section 12.11) except Transferee, or their respective directors, officers, shareholders or agents, arising out of, or relating to, this Agreement or the transactions contemplated hereby, whether incurred prior to, at, or subsequent to the Closing Date. (c) Employee-Related Liabilities. Transferor represents that there are no employees of Transferor or any Ameren affiliate employed at the Plant. (d) Litigation. All liabilities and obligations relating to any litigation, action, suit, claim, notice of violation, investigation, inquiry or proceeding (collectively "Claims") pending on the date hereof, or instituted hereafter, based in whole or in part on events or conditions occurring or 5 existing in connection with, or arising out of, or otherwise relating to, the Plant as operated by Transferor or any of its Affiliates (or any of their respective predecessors-in-interest) except Transferee, or the ownership, possession, use, operation, sale or other disposition prior to the Closing Date of any of the Acquired Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing Date, with the Plant). (e) Product, Environmental and Safety Liability. All liabilities and obligations relating to the Plant or the Acquired Assets (or any other assets, properties, rights or interests associated, at any time prior to the Closing Date, with the Plant or the Acquired Assets), based in whole or in part on events or conditions occurring or existing prior to the Closing Date and connected with, arising out of or relating to (i) any dispute for services rendered or goods manufactured, including, without limitation, product warranty Claims and product liability Claims, and Claims for refunds, returns, personal injury and property damage, (ii) Hazardous Materials, Environmental Requirements or Environmental Damages (all as defined in Section 5.1(e)), (iii) Claims relating to employee health and safety, including Claims for injury, sickness, disease or death of any Person, or (iv) compliance with any Laws relating to any of the foregoing. For purposes of this Agreement, the term "Laws" shall mean any statutes, laws, rules, regulations, orders, ordinances, codes and decrees of Governmental Authorities. (f) Taxes. All liabilities and obligations of Transferor or any of its Affiliates other than Transferee (or any of their respective predecessors-in-interest) for any Taxes (as hereinafter defined) due or becoming due by reason of (i) the conduct of the Plant, or (ii) the ownership, possession, use, operation, purchase, acquisition, sale or disposition, of any of the Acquired Assets, including, without limitation, (i) Taxes attributable to the sale of electricity and employee withholding tax obligations; (ii) Taxes imposed on, or accruing as a result of the transfer of the Acquired Assets; and (iii) Taxes attributable to, or resulting from, recapture of depreciation, other tax benefit items, or otherwise arising from the transactions contemplated by this Agreement. For purposes of this Agreement, the term "Tax" or "Taxes" means all net income, gross income, gross receipts, sales, use, ad valorem, personal property, real property, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property or windfall profits, taxes, customs duties or other taxes, fees, assessments or charges of any kind whatsoever, including without limitation, any assessment which Transferor may have had the option to pay in installment payments over a period of time which extends beyond the Closing Date, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority (domestic or foreign). Notwithstanding anything to the contrary in this Section 2.2(f), all real estate property transfer taxes shall be paid by Transferor as provided in Section 9.1 hereof. (g) Liabilities Relating to Retained Assets. All liabilities and obligations relating to, based in whole or in part on events or conditions occurring or existing in connection with, or arising out of, any and all assets, properties, rights and interests which are not being acquired by Transferee hereunder, including, without limitation, the Retained Assets. ARTICLE III. TRANSFER AND EXCHANGE 3.1. Payment. In full consideration for the transfer of the Acquired Assets, but subject to the adjustment, if any, required by Section 3.2, at the Closing, Transferee shall deliver to Transferor cash in the amount equal to the 6 Net Book Value of the Acquired Assets (the "Cash Payment") in immediately available funds transferred to a bank account of Transferor in accordance with instructions delivered to Transferee not later than the business day prior to the Closing, subject to adjustment as provided in Section 4.6(c). Net Book Value shall be calculated as provided in Section 4.3(c). 3.2. Prorations. (a) Transferor and Transferee shall prorate, as of the Closing Date, all real estate taxes payable with respect to the Fee Property (but not including any current assessments against the Fee Property which Transferor is required to have paid in full prior to the Closing Date as provided under Section 2.2(f) herein). (b) Transferee and Transferor shall use their reasonable best efforts to calculate all prorations. The credit that Transferee is entitled to receive from Transferor for the unpaid portion (as of the Closing Date) of the 2002 real estate taxes shall be referred to herein as the "2002 Real Estate Tax Credit", and the credit that Transferee is entitled to receive from Transferor for the 2003 real estate taxes owed for the period during which Transferor owned the Fee Property during the year 2003 shall be referred to herein as the "2003 Real Estate Tax Credit". ARTICLE IV. CLOSING 4.1. General. As used in this Agreement, the "Closing" shall mean the time at which Transferor consummates the assignment, transfer and delivery of the Acquired Assets to Transferee as provided herein by the execution and delivery by Transferor of the documents and instruments referred to in Section 4.2 against delivery by Transferee of the documents and payments provided in Sections 3.1 and 4.3. In the absence of a prior termination of this Agreement by one of the parties in accordance with Article X, the Closing shall take place at the offices of Ameren Corporation, One Ameren Plaza, 1901 Chouteau Avenue, St. Louis, Missouri at 8:00 A.M. on ____________________, or at such other time and place and on such other day as shall be mutually agreed upon in writing by the parties hereto (the "Closing Date"). Legal title, equitable title and risk of loss with respect to the Acquired Assets shall not pass to Transferee until the Acquired Assets are transferred at the Closing, which transfer, once it has occurred, shall be deemed effective for tax, accounting and other computational purposes as of the Closing Date. 4.2. Documents to be Delivered by Transferor. At the Closing, Transferor shall deliver to Transferee. (a) Copies of the resolutions of the Boards of Directors of Transferor authorizing and approving this Agreement and all other transactions and agreements contemplated hereby certified by the respective corporate Secretaries or Assistant Secretaries of Transferor and Parent to be true, correct, complete and in full force and effect and unmodified as of the Closing Date. (b) An instrument transferring the Acquired Assets to Transferee, free and clear of any and all liens, equities, Claims, prior assignments, mortgages, charges, security interests, pledges, conditional sales contracts, collateral 7 security arrangements and other title retention arrangements, restrictions (including, in the case of real property, rights of way, use restrictions, and other variances, reservations or limitations of any nature) or encumbrances whatsoever (collectively, "Liens") other than Permitted Liens. (c) Copies of all Consents to the transfer, assignment or sublease to Transferee of each Acquired Asset that requires such Consent, including, without limitation, orders or approvals of each Governmental Authority required as shown on Schedule 1.3(a) under the heading "Regulatory Approvals". (d) The Officer's Certificate (as defined in Section 6.1(e)) required by Section 6.1(e). (e) Special Warranty Deeds (the "Deed") in recordable form and in form and substance satisfactory to Transferee conveying the Fee Property to Transferee, free and clear of all Liens whatsoever except for Permitted Liens (as defined in Section 5.1(c)). (f) Releases, including, without limitation, termination statements under the Uniform Commercial Code of any financing statements filed against any Acquired Assets, evidencing discharge, removal and termination of all Liens, if any, to which the Acquired Assets are subject (other than Liens relating to Assumed Indebtedness identified on Schedule 2.1(a)) in connection with the indebtedness described in Schedule 4.2(f) (Existing Indebtedness to be Discharged by Closing) which releases shall be effective at or prior to the Closing. (g) FIRPTA Affidavit (a Non-Foreign Person Affidavit as required by Section 1445 of the Internal Revenue Code of 1986, as amended). (h) Such other deeds, endorsements, assignments, affidavits, and other good and sufficient instruments of assignment, conveyance and transfer in form and substance satisfactory to Transferee, as are required to effectively vest in Transferee good and marketable title in and to all of the Acquired Assets, free and clear of any and all Liens other than Permitted Liens. 4.3. Documents and Payment to be Delivered by Transferee. At the Closing, Transferee shall deliver to Transferor. (a) A copy of the resolutions of the Board of Directors of Transferee authorizing and approving this Agreement and all other transactions and agreements contemplated hereby certified by the Secretary or an Assistant Secretary of Transferee to be true, correct, complete and in full force and effect and unmodified as of the Closing Date. (b) The Officer's Certificate required by Section 6.2(e). (c) Transferee will pay to Transferor the estimated Cash Payment based on Net Book Value as of the Estimated Balance Sheet Date, which shall be the book value minus accumulated depreciation of the Transferred Assets as of the Estimated Balance Sheet Date determined in accordance with Generally Accepted Accounting Principles. 8 (d) An instrument of assumption of the Assumed Liabilities. 4.4. Post Closing. (a) Within 90 days after the Closing Date, Transferor shall deliver to Transferee a final Closing Date Balance Sheet. (b) Transferee shall calculate the 2002 Real Estate Tax Credit and the 2003 Real Estate Tax Credit promptly after the relevant tax bills have been received and shall deliver such calculation to Transferor. (c) Promptly upon calculation of the real estate credits referred to in Section 3.2(b), Transferor shall pay to Transferee the 2002 Real Estate Tax Credit and the 2003 Real Estate Tax Credit. If the Closing Date Balance Sheet shows that the estimated Cash Payment paid on the Closing Date was more or less than the actual Cash Payment calculated based on the Closing Date Balance Sheet, the appropriate payment will be made promptly from Transferor to Transferee or vice versa. Payments due to or from the parties under this Section 4.6(c) may be offset against each other. ARTICLE V. REPRESENTATIONS AND WARRANTIES 5.1. Representations and Warranties of Transferor. Subject only to those exceptions and qualifications listed and described (including an identification by section reference to the representations and warranties to which such exceptions and qualifications relate) on the disclosure schedules attached to this Agreement, Transferor hereby represents and warrants to Transferee as follows. (a) Organization and Standing; Power and Authority. Transferor is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois, and has full corporate power and authority to operate the Plant, to own or lease the Acquired Assets, and to enter into and perform this Agreement and the transactions and other agreements and instruments contemplated by this Agreement. This Agreement and all other agreements and instruments executed and delivered or to be executed and delivered by Transferor in connection herewith (collectively, the "Transaction Documents") have been, or upon execution thereof will be, duly executed and delivered by Transferor, as the case may be. This Agreement and the transactions and other agreements and instruments contemplated hereby have been duly approved by the board of directors of Transferor and constitute the valid and binding obligations of Transferor, enforceable in accordance with their respective terms. (b) Conflicts; Defaults. Neither the execution and delivery of this Agreement and the other agreements and instruments executed or to be executed in connection herewith by Transferor, nor the performance by Transferor of the transactions contemplated hereby or thereby, will (i) violate, conflict with, or constitute a default under, any of the terms of Transferor's Articles of Incorporation or By-Laws, or any provisions of, or result in the acceleration of any obligation under, any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including, without limitation, the Contracts, or any order, judgment or decree, relating to the Plant or the Acquired Assets, or by which Transferor or the Acquired Assets are bound, (ii) result in the creation or imposition of any 9 Liens or Claims in favor of any third Person or entity upon any of the Acquired Assets, (iii) violate any law, statute, judgment, decree, order, rule or regulation of any Governmental Authority, (iv) constitute an event which, after notice or lapse of time or both, would result in such violation, conflict, default, acceleration, or creation or imposition of Liens or Claims, (v) constitute an event which, after notice or lapse of time or otherwise would create, or cause to be exercisable or enforceable, any option, agreement or right of any kind to purchase any of the Acquired Assets. Except as set forth on Schedule 5.1(d), no consent, novation, approval, filing or authorization will be required to be obtained or satisfied for the continued performance by Transferee following the Closing of any contract, agreement, commitment or undertaking included in the Acquired Assets. Transferor is not in violation of or in default under its Articles of Incorporation or Bylaws, or any provision of any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including without limitation, the Contracts, or any order, judgment or decree, relating to the Plant or the Acquired Assets, or by which Transferor or the Acquired Assets is bound, or in the payment of any of Transferor's monetary obligations or debts relating to the Plant, and there exists no condition or event which, after notice or lapse of time or both, would result in any such violation or default. (c) Acquired Assets; Title to the Acquired Assets. Except for the Retained Assets, the Acquired Assets are the only assets, properties, rights and interests used by Transferor in connection with the Plant. The Acquired Assets to be conveyed to Transferee under this Agreement constitute all of the assets, properties, rights and interests necessary to operate the Plant in substantially the same manner as operated by Transferor prior to the date of this Agreement. Transferor has good, marketable and exclusive title to, and the valid and enforceable power and unqualified right to use and transfer to Transferee, each of the Acquired Assets, and the Acquired Assets are free and clear of all Liens and Claims of any kind or nature whatsoever, except for Permitted Liens. The consummation of the transactions contemplated by this Agreement (including, without limitation, the transfer or assignment of the Acquired Assets, and all rights and interests therein, to Transferee as contemplated herein) will not adversely affect such title or rights, or any terms of the applicable agreements (whether written or oral) evidencing, creating or granting such title or rights. None of the Acquired Assets are subject to, or held under, any lease, mortgage, security agreement, conditional sales contract or other title retention agreement, or are other than in the sole possession and under the sole control of Transferor except as described on Schedule 5.1(c) (Title to the Acquired Assets). Transferor has the right under valid and existing leases to occupy, use or control all properties and assets leased by it and included in the Acquired Assets. The delivery to Transferee of the instruments of transfer of ownership contemplated by this Agreement will vest good, marketable and exclusive title (as to all Acquired Assets owned by Transferor) or full right to possess and use (as to all Acquired Assets not owned by Transferor) to the Acquired Assets in Transferee, free and clear of all Liens and Claims of any kind or nature whatsoever, except for (i) current real estate Taxes or governmental charges or levies which are a Lien but not yet due and payable, (ii) Liens disclosed as securing specified liabilities on the Closing Date Balance Sheet with respect to which no default exists, (iii) Liens disclosed on Schedule 5.1(c) (Title to the Acquired Assets), under the heading "Liens," and (iv) minor imperfections of title, if any, none of which are substantial in amount, or materially detract from the value or impair the use of the property subject thereto or the operation of the Plant and which have arisen only in the ordinary and normal 10 course of business consistent with past practice (the Liens described in clauses (i), (ii), (iii) and (iv) being collectively referred to herein as "Permitted Liens"). (d) Contracts. Schedule 5.1(d) (Contracts) contains a complete list or description of each material license, contract, agreement, commitment and undertaking relating to the Plant or to which Transferor is a party (collectively referred to as the "Contracts"). (e) Environmental and Safety Compliance. (i) General. Transferee agrees that, except as expressly contained in this Agreement, no representations by or on behalf of Transferor have been made as to the condition of the Real Property and Fixed Assets, any restrictions related to the development of the Real Property and Fixed Assets, the applicability of any governmental requirements pertaining to the Real Property and Fixed Assets, or the suitability of the Real Property and Fixed Assets for any purpose whatsoever. Transferor agrees to assign, transfer or otherwise convey all environmental permits and licenses to Transferee and to take all necessary steps with the appropriate governmental authorities to effectuate such transfers. A list of all applicable permits are set forth on Schedule 5.1(e) (Environmental Matters). (ii) Definitions. (A) For purposes of this Agreement, the term "Hazardous Material" means any substance: (1) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law; or (2) which is or has been identified as a potential "hazardous waste," "hazardous substance," pollutant or contaminant under any federal, applicable state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.ss.ss.9601 et seq.) and/or the Resource Conservation and Recovery Act (42 U.S.C.ss.ss.6901 et seq.); or (3) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, reactive, or otherwise hazardous and has been identified as regulated by any Governmental Authority. (B) For purposes of this Agreement, the term "Environmental Requirements" means all applicable Laws, Permits and similar items of all Governmental Authorities and all applicable judicial, administrative, and regulatory judgments, decrees, orders, writs or injunctions relating to the protection of human health or the environment, including, without limitation: 11 (1) All requirements pertaining to reporting, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of Hazardous Materials; (2) All requirements pertaining to the protection of the health and safety of employees or the public; and (3) All other limitations, restrictions, conditions, standards, prohibitions, obligations, schedules and timetables contained therein or in any notice or demand letter issued, entered, promulgated or approved thereunder. (C) For purposes of this Agreement, the term "Environmental Damages" means any and all Liabilities (as defined in Section 11.1) which are incurred at any time as a result of the existence prior to Closing of Hazardous Material upon, about, beneath the Property or migrating or threatening to migrate to or from the Property, or the existence of a violation of Environmental Requirements pertaining to the Property, regardless of whether the existence of such Hazardous Material or the violation of Environmental Requirements arose prior to the present ownership or operation of the Property, and including without limitation: (1) Damages for personal injury, or injury to property or natural resources occurring upon or off of the Property, foreseeable or unforeseeable, including, without limitation, lost profits, consequential damages, the cost of demolition and rebuilding of any improvements on real property, interest and penalties; (2) Fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other costs incurred in connection with the investigation or remediation of such Hazardous Materials or violation of Environmental Requirements including, but not limited to, the preparation of any feasibility studies or reports or the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration or monitoring work required by any Governmental Authority, or reasonably necessary to make full economic use of the Property or any other property in a manner consistent with its intended use or otherwise expended in connection with such conditions, and including without limitation any attorneys' fees, costs and expenses incurred in enforcing this Agreement or collecting any sums due hereunder; (3) Liability to any third Person or Governmental Authority to indemnify such Person or Governmental Authority for costs expended in connection with the items referenced in subparagraph (iii) of Section 11.2(b); and 12 (4) Diminution of the value of the Property, and damages for the loss of business and restriction on the use of or adverse impact on the marketing of rentable or usable space or of any amenity of the Property. (f) Approvals. Schedule 1.3(a) (Required Consents) sets forth a list of all Consents, which must be obtained or satisfied by Transferor for the consummation of the transactions contemplated by this Agreement, including, without limitation, all Consents, which must be obtained pursuant to Section 1.3(a). All Consents prescribed by any Law, or any contract, agreement, commitment or undertaking, and which must be obtained or satisfied by Transferor for the consummation of the transactions contemplated by this Agreement, or for the continued performance by them of their rights and obligations thereunder, have been, or shall by the Closing have been, made, obtained and satisfied. (g) Real Property. Schedule 1.1(c) entitled "Real Estate" attached hereto contains a true, correct and complete list of all instruments and agreements creating any interest or right in real property relating to the Plant, or owned, leased or occupied by Transferor (including all easements, buildings, structures, fixtures and improvements). True, correct and complete copies of the instruments and agreements identified in such Schedule 1.1(c) have been delivered to Transferee. Each such instrument and agreement is in full force and effect and is a legal, binding, and enforceable obligation of the parties thereto and no event has occurred which constitutes or, with the giving of notice or passage of time, or both, would constitute a default or breach thereunder. Transferor has the right to quiet enjoyment of all real property subject to leaseholds under any such instruments, for the full term of each such lease and any renewal option related thereto. There has been no disturbance of or challenge to the Transferor's quiet possession under each such lease, and no leasehold or other interest of Transferor in such real property is subject to or subordinate to any Liens except Permitted Liens. Neither the whole nor any portion of any real property leased or occupied by Transferor has been condemned, requisitioned or otherwise taken by any Governmental Authority, and, to the best of Transferor's knowledge, no such condemnation, requisition or taking is threatened or contemplated. All buildings, structures, fixtures and appurtenances comprising part of the real properties of Transferor are in good condition and have been well maintained, normal wear and tear excepted, and there are no material physical or mechanical defects of the Fee Property which would interfere with the ongoing operations of the Plant as currently conducted. All water, sewer, gas and drainage facilities required by the present use and operation of the Fee Property by Transferor are installed to the property lines of the Fee Property, are all connected and operating pursuant to valid permits, and are adequate to service the Fee Property in accordance with the present use and operation of the Fee Property by Transferor. The Fee Property complies with all applicable laws and insurance requirements and all zoning, building and other requirements relating to the use or occupancy of all or any portion of the Fee Property. There are no pending, or to the best of Transferor's knowledge, contemplated zoning changes, variances or special zoning agreements affecting or which might affect the Fee Property. (h) Leases. Each of the Leases described on Schedule 1.1(c) entitled "Real Estate" has not been modified, altered, terminated or revoked, and is in full force and effect. Transferor, as the present tenant under each Lease, is not in default under, or in breach of, any of the terms of each Lease, and there are no existing facts or conditions which could give rise to any such breach or 13 default, or any claim against Transferor, under each Lease. Each of the present lessors under each respective Lease is not in default thereunder, or in breach thereof, and there are no existing facts or conditions which could give rise to any such breach or default, or any claim against each lessor under each respective Lease. 5.2. Representations and Warranties of Transferee. Transferee represents and warrants to Transferor that: (a) Organization and Standing; Corporate Power and Authority. Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri, and has full corporate power and authority to make and perform this Agreement, and to perform the transactions contemplated by this Agreement. This Agreement and all other agreements and instruments executed and delivered by Transferee in connection herewith have been duly executed and delivered by Transferee. This Agreement and the transactions and other agreements and instruments contemplated by this Agreement have been duly approved by the board of directors of Transferee (approval of Transferee's shareholders not being required), and constitute the valid and binding obligations of Transferee, enforceable in accordance with their respective terms. (b) Conflicts; Defaults. Neither the execution and delivery of this Agreement by Transferee, nor the performance of its obligations hereunder, will conflict with or constitute a default under any of the terms of Transferee's Articles of Incorporation, as amended, or Bylaws. ARTICLE VI. CONDITIONS TO CLOSING 6.1. Conditions to Transferee's Obligations. The obligation of Transferee to consummate the transactions provided for by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Transferee except for the conditions set forth in subsection (c) (as to Consents of Governmental Authorities) of this Section 6.1. (a) Representations and Warranties. Each of the representations and warranties of Transferor made in Section 5.1 of this Agreement shall be true and correct in all material respects both on the date hereof and as of the Closing Date as though made at such time. (b) Covenants. Transferor shall have performed and complied with all covenants and agreements required to be performed or complied with by it at or prior to the Closing Date. (c) Consents. All Consents of Governmental Authorities and third parties described in Sections 1.3, 5.1(f) and 9.3 and necessary to consummate the transactions contemplated hereunder shall have been obtained and satisfied. (d) No Proceeding or Litigation. No litigation, action, suit, investigation, Claim or proceeding challenging the legality of, or seeking to restrain, prohibit or materially modify, the transactions provided for in this Agreement shall have been instituted and not settled or otherwise terminated. 14 (e) Certificate of Transferor. At the Closing, Transferor shall have delivered to Transferee a certificate (the "Officer's Certificate") signed by Transferor's President or a Vice President, and dated the Closing Date, to the effect that to the best of the knowledge of such officer the conditions specified in Sections 6.1(a), (b), (c) and (d) have been fulfilled. (f) Certificate; Documents. Transferor and the other Persons shall have delivered the certificates and other documents required by Section 4.2. 6.2. Conditions to Transferor's Obligations. The obligations of Transferor to consummate the transactions provided for by this Agreement are subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Transferor except for the conditions set forth in subsection (c) of this Section 6.2. (a) Representations and Warranties. Each of the representations and warranties of Transferee made in Section 5.2 of this Agreement shall be true and correct in all material respects both on the date hereof and as of the Closing Date as though made at such time. (b) Covenants. Transferee shall have performed and complied with all covenants and agreements required to be performed or complied with by it at or prior to the Closing Date. (c) Consents. All Consents of Governmental Authorities, including those described in Section 9.3, necessary to consummate the transactions contemplated hereunder shall have been obtained. (d) No Proceeding or Litigation. No litigation, action, suit, investigation, Claim or proceeding challenging the legality of, or seeking to restrain, prohibit or materially modify, the transactions provided for in this Agreement shall have been instituted and not settled or otherwise terminated. (e) Certificate of Transferee. At the Closing, Transferee shall have delivered to Transferor an Officer's Certificate signed by the President or a Vice President of Transferee, and dated the Closing Date, to the effect that to the best of the knowledge of such officer the conditions specified in Section 6.2(a), (b), (c) and (d) have been fulfilled. (f) Certificates; Documents. Transferee shall have delivered the certificates and other documents required by Section 4.3. (g) Cash Payment. Transferee shall have made the Cash Payment required by Section 3.1. ARTICLE VII. COVENANTS OF TRANSFEROR 7.1. Conduct of Business. During the period from the date hereof through the Closing Date, Transferor shall operate the Plant and the Acquired Assets diligently and in the ordinary and normal course and consistent with past practice and continue normal maintenance, expenditures in connection with the Plant. Transferor shall engage in no transactions in connection with the Plant or the Acquired Assets, including transactions relating to the purchase or sale 15 of goods, raw materials, inventories or other operating or production items, intracorporate or otherwise, with any of its Affiliates from the date hereof until the Closing other than (a) transactions approved by Transferee; or (b) transactions on terms no more favorable to Transferor or its Affiliates than would have been obtainable in arm's-length dealing. ARTICLE VIII. COVENANTS OF transferee 8.1. Maintenance of, and Access to, Records. From and after the Closing, Transferee shall, whenever reasonably requested by Transferor, permit Transferor to have access to such business records turned over to Transferee pursuant to this Agreement as may be required by Transferor in connection with any audit or investigation by any Governmental Authority, or any matter relating to insurance coverage or third party Claims, in each such case to the extent relating to the operation of the Plant by Transferor prior to the Closing. Transferee shall preserve and maintain the records relating to the Plant and the Acquired Assets for at least three years after the Closing Date. 8.2. Closing. Transferee shall use its best efforts to cause the conditions set forth in Section 6.2 to be satisfied by the Closing Date. ARTICLE IX. CERTAIN ADDITIONAL COVENANTS 9.1. Expenses; Transfer Taxes. Each party hereto will bear the legal, accounting and other expenses incurred by such party in connection with the negotiation, preparation and execution of this Agreement, the Transaction Documents, and the transactions contemplated hereby. All sales, transfer, recordation and documentary Taxes and fees which may be payable in connection with the transactions contemplated by this Agreement shall be borne by Transferor. 9.2. Bulk Transfer Laws. Transferee hereby waives compliance by Transferor with the laws of any jurisdiction relating to bulk transfers which may be applicable in connection with the transfer of the Acquired Assets to Transferee. 9.3. Regulatory Approvals. Transferor will, and will cause its appropriate Affiliates to, and Transferee will, use, in each case, its best efforts to obtain any authorizations, consents, orders and approvals of any Governmental Authority necessary for the performance of its respective obligations pursuant to this Agreement and any of the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, and will cooperate fully with each other in all reasonable respects in promptly seeking to obtain such authorizations, consents, orders and approvals. 9.4. Employee Matters. Transferor shall retain all liabilities and obligations in respect of its past, present and future employees under the Employee Plans and applicable Laws. ARTICLE X. TERMINATION 10.1. Termination. This Agreement and the transactions contemplated hereby may be terminated at any time prior to the Closing. 16 (a) Mutual Consent. By mutual written consent of Transferor and Transferee. (b) Court Order. By Transferor or Transferee if consummation of the transactions contemplated hereby shall violate any non-appealable final order, decree or judgment of any court or Governmental Authority having competent jurisdiction. (c) Transferee's Conditions. By Transferee, if any condition precedent to Transferee's obligation to effect the Closing as set forth in Section 6.1 is not satisfied, or shall have become incapable of fulfillment, and such condition is not waived, if waivable, by Transferee on or prior to the Termination Date. (d) Transferor's Conditions. By Transferor, if any condition precedent to Transferor's obligation to effect the Closing as set forth in Section 6.2 is not satisfied, or shall have become incapable of fulfillment, and such condition is not waived, if waivable, by Transferor on or prior to the Termination Date. 10.2. Effect of Termination. If this Agreement is terminated pursuant to Section 10.1, written notice thereof shall forthwith be given to the other party and this Agreement shall thereafter become void and have no further force and effect and all further obligations of Transferor and Transferee under this Agreement shall terminate without further liability of Transferor or Transferee. ARTICLE XI. INDEMNIFICATION 11.1. Indemnification by Transferee. From and after the Closing, Transferee shall indemnify, defend and hold Transferor, its Affiliates, and their respective directors, officers, representatives, employees and agents harmless from and against any and all claims, actions, suits, demands, assessments, judgments, losses, liabilities, damages, costs and expenses (including, without limitation, interest, penalties, attorneys' fees to the extent permitted by law, and accounting fees and investigation costs) (collectively, "Liabilities") that may be incurred by Transferor resulting or arising from or related to, or incurred in connection with: (a) the failure of Transferee to assume, pay, perform and discharge the Assumed Liabilities, and (b) any breach of any representation, warranty, covenant, obligation or agreement of Transferee contained herein or in any other Transaction Document. 11.2. Indemnification by Transferor. From and after the Closing, Transferor shall indemnify, defend and hold Transferee, its Affiliates, and their respective directors, officers, representatives, employees and agents harmless from and against any and all Liabilities that may be incurred by Transferee resulting or arising from, related to or incurred in connection with: (i) the failure of Transferor to assume, pay, perform and discharge the Retained Liabilities and (ii) any breach of any representation, warranty, covenant, obligation or agreement of Transferor contained herein or in any other Transaction Document. 11.3. Notice of Claim; Right to Participate in and Defend Third Party Claim. (a) If any indemnified party receives notice of the assertion of any Claim, the commencement of any suit, action or proceeding, or the imposition of any penalty or assessment by a third party in respect of which indemnity may be sought hereunder (a "Third Party Claim"), and the indemnified party intends to 17 seek indemnity hereunder, then the indemnified party shall promptly provide the indemnifying party with prompt written notice of the Third Party Claim, but in any event not later than 30 calendar days after receipt of such notice of Third Party Claim. The failure by an indemnified party to notify an indemnifying party of a Third Party Claim shall not relieve the indemnifying party of any indemnification responsibility under this Article XI, unless such failure materially prejudices the ability of the indemnifying party to defend such Third Party Claim. (b) The indemnifying party shall have the right to control the defense, compromise or settlement of the Third Party Claim with its own counsel (reasonably satisfactory to the indemnified party) if the indemnifying party delivers written notice to the indemnified party within seven days following the indemnifying party's receipt of notice of the Third Party Claim from the indemnified party acknowledging its obligations to indemnify the indemnified party with respect to such Third Party Claim in accordance with this Article XI, and establishes security in form and substance reasonably satisfactory to the indemnified party to secure the indemnifying party's obligations under this Article XI with respect to such Third Party Claim; provided, however, that the indemnifying party shall not enter into any settlement of any Third Party Claim which would impose or create any obligation or any financial or other liability on the part of the indemnified party if such liability or obligation (i) requires more than the payment of a liquidated sum, or (ii) is not covered by the indemnification provided to the indemnified party hereunder. In its defense, compromise or settlement of any Third Party Claim, the indemnifying party shall timely provide the indemnified party with such information with respect to such defense, compromise or settlement as the indemnified party shall request, and shall not assume any position or take any action that would impose an obligation of any kind on, or restrict the actions of, the indemnified party. The indemnified party shall be entitled (at the indemnified party's expense) to participate in the defense by the indemnifying party of any Third Party Claim with its own counsel. (c) In the event that the indemnifying party does not undertake the defense, compromise or settlement of a Third Party Claim in accordance with subsection (b) of this Section 11.3, the indemnified party shall have the right to control the defense or settlement of such Third Party Claim with counsel of its choosing; provided, however, that the indemnified party shall not settle or compromise any Third Party Claim without the indemnifying party's prior written consent, unless (i) the terms of such settlement or compromise release the indemnified party or the indemnifying party from any and all liability with respect to the Third Party Claim, or (ii) the indemnifying party shall not have acknowledged its obligations to indemnify the indemnified party with respect to such Third Party Claim in accordance with this Article XI and established security in form and substance reasonably satisfactory to the indemnified party to secure the indemnifying party's obligations under this Article XI with respect to such Third Party Claim. The indemnifying party shall be entitled (at the indemnifying party's expense) to participate in the defense of any Third Party Claim with its own counsel. (d) Any indemnifiable Claim hereunder that is not a Third Party Claim shall be asserted by the indemnified party by promptly delivering notice thereof to the indemnifying party. If the indemnifying party does not respond to such notice within 60 days after its receipt, it shall have no further right to contest the validity of such Claim. 18 11.4. Time Limitations on Claims for Indemnification. The right of Transferee to indemnification for any breach of any representation or warranty shall apply only to those claims for indemnification which are given pursuant to this Agreement on or before the date which is one year following the Closing Date. ARTICLE XII. MISCELLANEOUS 12.1. Amendments. This Agreement may be amended only by a writing executed by each of the parties hereto. 12.2. Entire Agreement. This Agreement and the other agreements expressly provided for herein, including the Transaction Documents, set forth the entire understanding of the parties hereto with respect to the subject matter hereof, and supersede all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, between the parties. 12.3. Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Illinois, without regard to its conflicts of law doctrine. 12.4. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given (a) when received if personally delivered, (b) within 5 days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) within 12 hours after being sent by telecopy, with confirmed answerback, or (d) within 1 business day of being sent by priority delivery by established overnight courier. Any party by written notice to the other given in accordance with this Section 12.4 may change the address or the contact to whom notices or copies thereof shall be directed. 12.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together will constitute one and the same instrument. 12.6. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of each party hereto, but no rights, obligations or liabilities hereunder shall be assignable by either party without the prior written consent of the other party. 12.7. Waivers. Except as otherwise provided herein, Transferee or Transferor (acting on behalf of itself and its appropriate Affiliates), may waive in writing compliance by any of the other party hereto (to the extent such compliance is for the benefit of the party giving such waiver) with any of the terms, covenants or conditions contained in this Agreement or in any of the other Transaction Documents (except such as may be imposed by law). Any waiver by either party of any violation of, breach of, or default under, any provision of this Agreement or any of the other Transaction Documents, by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement or any of the other Transaction Documents. 19 12.8. Third Parties. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person or entity other than Transferee and Transferor any rights or remedies under or by reason of this Agreement. 12.9. Schedules, Addenda and Exhibits. The Schedules, Addenda and Exhibits attached to this Agreement are incorporated herein and shall be part of this Agreement for all purposes. 12.10. Headings. The headings in this Agreement are solely for convenience of reference and shall not be given any effect in the construction or interpretation of this Agreement. 12.11. Certain Definitions. For purposes of this Agreement, the term "Affiliate" shall mean any Person that directly, or indirectly through one or more Persons, controls, is controlled by, or is under common control with, the Person specified or, directly or indirectly, is related to or otherwise associated with any such Person or entity. 12.12. Remedies Not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy and each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or hereafter existing at law or in equity or by statute or otherwise. No remedy shall be deemed to be a limitation on the amount or measure of damages resulting from any breach of this Agreement. The election of any one or more remedies shall not constitute a waiver of the right to pursue other available remedies. 12.13. Gender and Number. The masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others whenever the context so indicates. [SIGNATURE PAGE FOLLOWS] 20 IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date first above written. AMEREN ENERGY GENERATING COMPANY, an Illinois corporation By:___________________________________ Print Name: Title: UNION ELECTRIC COMPANY, d/b/a AmerenUE, a Missouri corporation By:___________________________________ Print Name: Title: ASSET TRANSFER AGREEMENT SCHEDULE 1.1(b) FIXED ASSETS - KINMUNDY See attached. ASSET TRANSFER AGREEMENT SCHEDULE 1.1(c) REAL ESTATE - KINMUNDY FEE PROPERTY - ------------ Legal description of all real estate held in fee simple by Ameren Energy Generating Company to be transferred to Union Electric Company is as follows: Commencing at the Southeast corner of the Southeast Quarter (SE1/4) of the Southeast Quarter (SE1/4) of Section 19, Township Four (4) North, Range Two (2) East of the Third Principal Meridian, Marion County, Illinois, and running 10 rods North and thence 16 rods West, thence 10 rods South and thence 16 rods East to the place of beginning containing 1 acre. AND The Northwest Quarter of the Northwest Quarter and the North Half of the Southwest Quarter of the Northwest Quarter of Section 29, Township 4 North, Range 2 East of the Third Principal Meridian, containing 60 acres, more or less. Situated in Marion County, Illinois. EASEMENTS - --------- None. LEASED PROPERTY - --------------- None. PERMITS - ------- Highway Permit - Illinois Department of Transportation, dated 4/5/00, District Serial No. 7-16076 - Permission and authorization to do certain work on right-of-way of State Highway FA-149 - Patoka-Kinmundy Blacktop. ASSET TRANSFER AGREEMENT SCHEDULE 1.1(e) INTELLECTUAL PROPERTY - KINMUNDY None. ASSET TRANSFER AGREEMENT SCHEDULE 1.1(j) ROLLING STOCK AND VEHICLES - KINMUNDY None. ASSET TRANSFER AGREEMENT SCHEDULE 1.2(a) RETAINED PROPERTY - KINMUNDY None. ASSET TRANSFER AGREEMENT SCHEDULE 1.2(b) NON-ASSIGNED CONTRACTS - KINMUNDY None. ASSET TRANSFER AGREEMENT SCHEDULE 1.3(a) REQUIRED CONSENTS - KINMUNDY ASSIGNABILITY AND CONSENTS - -------------------------- The Acquired Assets, including Contracts, Permits and Lease Agreements (but excluding leases of office equipment involving future payments of less than $500,000 in the aggregate), which are non-assignable or non-transferable or cannot be subleased to Transferee without the consent of some Persons, are identified on Schedule 5.1(d). REGULATORY APPROVALS - -------------------- The following is a list of all necessary approvals of any Governmental Authority for the transfer of assets: Illinois Commerce Commission: Federal Energy Regulatory Commission: Also refer to Schedule 5.1(e). ASSET TRANSFER AGREEMENT SCHEDULE 2.1(a) ASSUMED INDEBTEDNESS - KINMUNDY ASSUMED INDEBTEDNESS - -------------------- None ASSUMED LIABILITIES - ------------------- See attached Balance Sheet of Union Electric Company as of September 30, 2002 (to be updated in accordance with the Asset Transfer Agreement). ASSET TRANSFER AGREEMENT SCHEDULE 4.2(f) EXISTING INDEBTEDNESS TO BE DISCHARGED BY CLOSING - KINMUNDY None. ASSET TRANSFER AGREEMENT SCHEDULE 5.1(c) TITLE TO THE ACQUIRED ASSETS - KINMUNDY None. ASSET TRANSFER AGREEMENT SCHEDULE 5.1(d) CONTRACTS - KINMUNDY
NAME OF COMPANY DATE OF CONTRACT PURPOSE CONSENT REQUIRED CONSENT RECEIVED --------------- ---------------- ------- ---------------- ---------------- 1. Natural Gas Pipeline 3/18/99 Interconnection Agreement for Yes Company of America/1/ gas-fired electric generation Station - Kinmundy and Gibson City locations (gas) 2. Natural Gas Pipeline 6/1/00 Operation and Maintenance No Company of America/1/ Agreement for gas facilities (gas) 3. Natural Gas Pipeline 11/17/99 Transportation Rate Schedule No Company of America/1/ FTS Contract No. 116646 (gas) Amendment No. 001, dated No 11/18/99 to Rate Schedule FTS Agreement - Contract No. 116656 (gas) 4. Natural Gas Pipeline 8/17/01 Transportation Rate Schedule No Company of America/1/ FTS Agreement Contract No. 119506 (gas) 5. Natural Gas Pipeline 11/18/99 Point Operator Allocation No Company of America/1/ Agreement - Contract No. 116595 (gas)
ASSET TRANSFER AGREEMENT SCHEDULE 5.1(d) CONTRACTS - KINMUNDY
NAME OF COMPANY DATE OF CONTRACT PURPOSE CONSENT REQUIRED CONSENT RECEIVED --------------- ---------------- ------- ---------------- ---------------- 6. Natural Gas Pipeline 11/3/99 Interruptible Transportation No Company of America/1/ Rate Discount Agreement Contract No. 116589 (gas) 7. Natural Gas Pipeline 5/12/00 Letter Agreement for Interruptible No Company of America/1/ Balancing Service (gas) Contract No. 117638 8. Ameren Services, as agent 11/15/02 Transmission System Interconnection No for Union Electric Company Agreement - Kinmundy Project and Central Illinois Public (electric) Service Company 9. Ameren Services, as agent 11/15/02 Parallel Operating Agreement - Yes for Union Electric Company Kinmundy Project (electric) and Central Illinois Public Service Company 10. Steve Logston 11/28/01 Farming No P.O. Box 33 Vernon, IL 62892 11. FMC Water Company 3/21/00 Water Purchase Agreement No provision 12. Illinois Department of 6/20/00 Agricultural Import Mitigation No provision Agriculture Agreement
ASSET TRANSFER AGREEMENT SCHEDULE 5.1(d) CONTRACTS - KINMUNDY
NAME OF COMPANY DATE OF CONTRACT PURPOSE CONSENT REQUIRED CONSENT RECEIVED --------------- ---------------- ------- ---------------- ---------------- 13. Siemens Westinghouse Power 1/19/99 construction work No Corporation/1/ 14. Siemens Westinghouse 5/12/01 Operation and Maintenance No Operating Services Agreement for Gibson City, Company/1/ Kinmundy, Pinckneyville, Elgin And Columbia 1 At time of transfer, this contract may be assigned or released in part to Union Electric Company or restructured to create a new and separate contract with Union Electric Company
ASSET TRANSFER AGREEMENT SCHEDULE 5.1(e) ENVIRONMENTAL MATTERS KINMUNDY PLANT - -------------- AIR - --- 1. Illinois Environmental Protection Agency (IEPA) air construction permit for units KCTG-1 and KCTG-2. Facility ID 121803AAA; Application No. 99020027 issued on 10/24/2000. 2. United States Environmental Protection Agency (USEPA) approval to modify alternative monitoring program for Kinmundy Power Plant. 3. Acid Rain Program Phase II permit for units KCTG-1 and KCTG-2. 4. Application for Title V air operating permit submitted to IEPA revision for new owner/operator and is pending. 5. USEPA Certificate of Representation under the Acid Rain Program revision for new owner/operator, with submittal to IEPA. 6. Corporate Agreement of Representation for assignment of Designated Representative and Alternative Designated Representative under Acid Rain Program. 7. Authorized Account Representative for NOx SIP call revision to USEPA. 8. Corporate Agreement of NOx Budget Trading Program Agreement of Representation. WATER - ----- 1. IEPA NPDES permit number IL0075001. 2. IEPA State Construct/Operating permit number 2001-EE-1724. WASTE/LAND MANAGEMENT - --------------------- 1. Hazardous Waste ID Notification - ILR 000079152. 2. State Waste generator number - 1210405011 3. SPCC plan. EX-99 6 exd_1.txt EXHIBIT D-1 - NOTICE OF TRANSFER EXHIBIT D-1 STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION Union Electric Company d/b/a AmerenUE ) ) Notice of transfer of distribution and ) transmission assets and retail electric ) business to an affiliate and entry into ) Docket No. various agreements pursuant to ) Section 16-111(g) of the Illinois Public ) Utilities Act. - -------------------------------------------------------------------------------- NOTICE OF TRANSFER OF ELECTRIC DISTRIBUTION AND TRANSMISSION ASSETS AND RETAIL ELECTRIC BUSINESS AND ENTRY IN VARIOUS AGREEMENTS PURSUANT TO SECTION 16-111(G) OF THE ILLINOIS PUBLIC UTILITIES ACT - -------------------------------------------------------------------------------- James J. Cook Christopher W. Flynn Ameren Services Company Jones, Day, Reavis & Pogue One Ameren Plaza 77 West Wacker 1901 Chouteau Avenue Suite 3500 P.O. Box 66149 Chicago, Illinois 60601-1692 St. Louis, Missouri 63166-6149 (312) 782-3939 (voice) (314) 554-2237 (voice) (312) 782-8585 (fax) (314) 554-4014 (fax) cflynn@jonesday.com jjcook@ameren.com - ----------------- EXHIBIT D-1 Pursuant to Section 16-111(g) of the Illinois Public Utilities Act ("Act"), 220 ILCS 5/16-111(g), Union Electric Company d/b/a Ameren UE ("AmerenUE") hereby gives the Commission notice of AmerenUE's intent to transfer all of its Illinois distribution assets and all Illinois transmission assets other than associated with AmerenUE's Venice, Illinois generating plant ("T&D Assets") and associated liabilities and its Illinois retail electric business, to an affiliate, Central Illinois Public Service Company d/b/a Ameren CIPS ("AmerenCIPS"). (AmerenUE and AmerenCIPS shall be referred to jointly as the "Ameren Companies".) Concurrently with this Notice, AmerenUE and AmerenCIPS are filing a petition requesting that the Commission authorize AmerenUE to transfer its Illinois retail gas assets and associated liabilities and business to AmerenCIPS. INTRODUCTION - ------------ The principal purposes of the transfers of the electric and gas properties and businesses relate to the restructuring of the Illinois operations of the Ameren Corporation ("Ameren"), the parent of both AmerenUE and AmerenCIPS. Ameren is a registered holding company subject to regulation by the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 ("PUHCA"). AmerenUE provides retail electric and gas service to the public in that portion of the St. Louis metropolitan area located in the State of Illinois ("Metro East"). AmerenUE also provides retail electric and gas service in the State of Missouri. AmerenCIPS provides electric and gas service in the State of Illinois. Ameren previously restructured AmerenCIPS' operations by means of a sale of all of AmerenCIPS' generating assets to an affiliate and by having a separate affiliate assume all of AmerenCIPS' marketing responsibilities. AmerenCIPS now operates as a pure "wires" business. 1 Ameren now seeks to: i) separate all Illinois regulated utility operations from the electric generation and marketing functions; and ii) consolidate all of Ameren's Illinois regulated operations in a single entity, AmerenCIPS. Upon the transfer of AmerenUE's retail electric and gas assets and businesses in Illinois, AmerenCIPS will succeed to AmerenUE's retail utility operations, and will provide the retail electric and gas services currently provided by AmerenUE pursuant to the tariffs currently in effect for AmerenUE. For its part, AmerenUE will cease to operate as a public utility in this State. AmerenUE will transfer its T&D Assets and liabilities, as well as its gas assets and liabilities, to AmerenCIPS by two means: i) approximately half will be transferred in the form of a dividend; and ii) approximately half will be transferred in exchange for a promissory note in the amount of approximately $51 million. These two components will be referred to jointly as the "Transfer". "AmerenUE will retain ownership of the Venice generating plant. The Transfer will not adversely affect either the reliability of electric service provided to Metro East retail electric customers or the rates that those customers are charged during the mandatory transition period under the Illinois Customer Choice Law and Rate Relief Law of 1997 ("Customer Choice Law"). 220 ILCS 5/16-111(g) (1999). AmerenCIPS will obtain the generating supply necessary to serve the Metro East electric load under AmerenCIPS' existing power supply agreement ("PSA") with Ameren Energy Marketing Company ("AEMC") After the Transfer, Metro East electric customers will continue to pay the rates they are currently charged under AmerenUE's retail tariffs, through at least December 31, 2004, when the retail rate freeze expires, and until such time as the Commission approves a change in those rates. 2 THE TRANSFER IS CONSISTENT WITH MARKET RESTRUCTURING - ---------------------------------------------------- The Customer Choice Law implemented a comprehensive restructuring of the electric industry in Illinois. The restructuring package includes mandatory rate cuts for residential consumers and phases in the opportunity for all consumers to choose their electric supplier. Other parts of the package provide utilities the opportunity to quickly and efficiently restructure, reorganize and transfer assets in order to adjust to the competitive market. The proposal to transfer AmerenUE's T&D Assets and associated liabilities to AmerenCIPS, and thereby separate the Metro East delivery operations from generation and marketing, is fully authorized and, indeed, encouraged by the Customer Choice Law, as well as by previous statements and actions of the Commission. The Commission and others in the state have expressed the belief that competition would be enhanced where competitive generation and related marketing functions were physically or functionally separated from the utility transmission and distribution system. For example, in the Commission's "Report to the Senate President: Analysis of Electric Restructuring with Particular Emphasis on S. B. 55," dated August 15, 1997, the Commission observed that spin-off of generation assets would be one manner in which to address market power concerns. (Id., pp. 9-14). Likewise, in its Order implementing affiliate transaction rules, the Commission noted its preference that the unregulated generation and marketing function be separated from the utility transmission and distribution functions. (Order, Rulemaking on Non-Discrimination in Affiliate Transactions for Electric Utilities, Docket Nos. 98-0013 and 98-0035 cons.) (September 14, 1998, pp. 8-9). The pace of change and restructuring in the Illinois energy market has greatly accelerated. In addition to approving the transfer of AmerenCIPS' generating assets to Ameren Energy Generating Company ("Ameren Generating"), the 3 Commission also has approved the sale or transfer of Illinois Power's generating assets to an affiliate; the sale of IP's Clinton unit to an unaffiliated entity; the sale of Commonwealth Edison's fossil plants to Edison Mission Energy; and the transfer of ComEd's nuclear units to an affiliated generating company. As demonstrated herein, and as shown in the accompanying data, the Transfer will not threaten the provision of safe and reliable electric service within Metro East, nor will it cause the Metro East customers to be subject to a request for a rate increase in Metro East pursuant to the provisions of Section 16-111(d) of the Act. Accordingly, the requirements established by Illinois law necessary to transfer the assets in question have been fully satisfied and the Transfer should be approved without the need for a hearing. STATUTORY BASIS FOR NOTICE - -------------------------- Section l6-111(g) provides, in relevant part, that: During the mandatory transition period, an electric utility may, without obtaining any approval of the Commission other than that provided for in this subsection and notwithstanding any other provision of this Act or any rule or regulation of the Commission that would require such approval: sell, assign, lease or otherwise transfer assets to an affiliated. . . entity, and as part of such transaction enter into service agreements, power purchase agreements, or other agreements with the transferee; provided, however, that the prices, terms and conditions of any power purchase agreement must be approved or allowed into effect by the [FERC]. . . . DESCRIPTION OF THE PARTIES TO THE PROPOSED TRANSFER - --------------------------------------------------- AMERENUE. AmerenUE is a subsidiary of Ameren. AmerenUE provides electric service to over 1 million customers and gas service to 130,000 customers in Missouri and Illinois. AmerenUE has approximately 62,000 electric and 18,000 gas customers in Illinois; its principal service area is in Missouri. 4 AMERENCIPS. AmerenCIPS also is a subsidiary of Ameren. AmerenCIPS provides electric service to approximately 320,000 customers and gas service to approximately 170,000 customers, all in the State of Illinois. AmerenCIPS' principal source of supply of electric power and energy is the PSA that it has with AEMC. AEMC. AEMC is a wholly-owned subsidiary of Ameren Energy Resources Company ("Resources"), which is a first-tier subsidiary of Ameren. AEMC markets power and energy at wholesale as a power marketer and at retail as an alternative retail electric supplier ("ARES") in Illinois. AEMC obtains power and energy from Ameren Generating at wholesale under a contract approved by the FERC, and supplies power and energy to AmerenCIPS and other customers at wholesale and retail. AEMC also assumed AmerenCIPS' energy entitlement under its power supply agreement with Electric Energy Inc. AMEREN GENERATING. Ameren Generating is also a wholly-owned subsidiary of Resources. Ameren Generating acquired, with the Commission's approval, all of the generating capacity of AmerenCIPS. Ameren Generating has also acquired, and is in the process of acquiring, additional regional generating resources. Ameren Generating supplies AEMC with AEMC's full requirements (including the AmerenCIPS load) under a power supply agreement. DESCRIPTION OF THE PROPOSED TRANSFER - ------------------------------------ ASSETS AND OBLIGATIONS TO BE TRANSFERRED ---------------------------------------- AmerenUE will transfer the T&D Assets, and its retail electric business, including its various certificates, franchises and licenses authorizing it to provide retail electric service in Illinois, to AmerenCIPS. The transmission facilities will continue to be managed by its affiliate, Ameren Services Company. AmerenUE will also assign various obligations to AmerenCIPS, including all of the maintenance and labor agreements (as applicable), as those agreements 5 exist as of the Transfer Date, and any other similar agreements that exist as of the Transfer Date. The specific assets and obligations to be transferred are described in the Asset Transfer Agreement that accompanies this Notice as Appendix A, and are set further in the proposed accounting entries included at Appendix C. MECHANICS OF THE TRANSFER ------------------------- The transfer of the combined electric and gas assets is planned to be accomplished in the following manner: 1. AmerenUE will transfer approximately 50% of the combined assets net of liabilities to AmerenCIPS in exchange for a promissory note in an amount equal to approximately 50 percent of the total net book value, estimated to be approximately $51 million. 2. AmerenUE will hold the note and receive payments including interest from AmerenCIPS. 3. AmerenUE also will declare an "in kind" dividend to Ameren equal to the remaining balance (approximately 50 percent) of the net book value of the combined assets net of liabilities, estimated to be approximately $51 million. 4. Ameren will then transfer the dividended assets and liabilities to AmerenCIPS as a capital contribution. 6 RESULT OF THE TRANSFER ---------------------- The effect of the various components of the transaction is that, as of the Transfer Date, AmerenUE will no longer provide retail electric service in Illinois. AmerenCIPS will own all of the T&D Assets that AmerenUE possesses as of the Transfer Date, and will supply the former AmerenUE Illinois load pursuant to the existing AmerenCIPS-AEMC PSA. DESCRIPTION OF SUPPLY AND SERVICE AGREEMENTS - -------------------------------------------- As indicated above, there are two new and one existing agreement that will be involved or affected in the transfer of AmerenUE's retail electric business to AmerenCIPS. AMERENUE/AMERENCIPS/AMEREN CORPORATION ASSET TRANSFER AGREEMENT --------------------------------------------------------------- Under this agreement, AmerenUE will transfer to AmerenCIPS the assets and liabilities discussed herein. As noted, a copy of the form of this agreement is attached as Appendix A. AMERENUE/AMERENCIPS PROMISSORY NOTE ----------------------------------- Under this note, AmerenCIPS will pay AmerenUE approximately 50% of the net book value of the transferred assets. A copy of a form of promissory note is attached as Appendix B. AMERENCIPS/AEMC PSA ------------------- As noted, this is the existing agreement under which AmerenCIPS would obtain power and energy to serve the Metro East load. Until the PSA expires on December 31, 2004, AEMC must provide AmerenCIPS with its full requirements (including planning and operating reserve requirements and ancillary service generation products). Commencing January 1, 2005, AmerenCIPS would obtain its full requirements from market sources. "Market sources" could include AEMC, Ameren Generating or another affiliate, if any of these entities offered the most economic source of power and energy. There should be ample capacity to supply Metro East's future needs at a reasonable, competitive cost. 7 Under the PSA, AmerenCIPS pays fixed demand and energy charges, based on AmerenCIPS' actual usage, for bundled load. The effect of setting the demand and energy charges for bundled service load requirements in this way is to insulate Metro East retail customers from risk that those charges could escalate. Even if, for example, a unit were lost and purchased power costs were to increase, or if maintenance or fuel costs were to increase for any one of numerous reasons, the same, fixed demand and energy rates would apply. Pricing for capacity and energy used to provide unbundled generation services differs. AmerenCIPS (like AmerenUE), offers certain unbundled electric power products. Specifically, AmerenCIPS offers a "Power Purchase Option" ("PPO") pursuant to Section 16-110 of the Act, "Partial Requirements Power Service" ("PRPS") pursuant to Section 16-104(f), and a "No Notice Power Service" ("NNPS"), which is a default service for customers who suddenly find themselves without a supplier. Under the PPO, PRPS and NNPS tariffs, AmerenCIPS may charge customers a "market value." Under these tariffs, the market value would be established in advance of the time that service is provided. Hence, there is a risk that the projected "market value" could be inadequate to cover the actual cost of serving these customers. Under the PSA, AEMC charges AmerenCIPS for power and energy supplied to serve these customers an amount equal to the charge that AmerenCIPS charges these customers under the PPO, PRPS and NNPS tariffs. Accordingly, the effect of these sales on AmerenCIPS is revenue-neutral, and AEMC assumes the risk that the "market value" charge is adequate to cover the cost of serving these customers. The PSA is subject to the jurisdiction of, and has been approved by, FERC. 8 SATISFACTION OF NOTICE REQUIREMENTS - ----------------------------------- Section 16-111(g) provides that an electric utility intending to transfer assets to an affiliated entity and, as part of that transaction, enter into various agreements, must provide the Commission with at least 30 days notice of the transaction, which must include certain information. The information required under Section 16-111(g) is provided as follows: (i) A COMPLETE STATEMENT OF THE ENTRIES THAT THE ELECTRIC UTILITY WILL MAKE ON ITS BOOKS AND RECORDS OF ACCOUNT TO IMPLEMENT THE PROPOSED TRANSACTION TOGETHER WITH A CERTIFICATION FROM AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT THAT SUCH ENTRIES ARE IN ACCORD WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The statement of entries and required certification are attached as Appendices C and D, respectively. (ii) A CERTIFICATION FROM THE CHIEF ACCOUNTING OFFICER OF THE UTILITY THAT THE ACCOUNTING ENTITIES ARE IN ACCORD WITH COST ALLOCATION GUIDELINES PREVIOUSLY APPROVED BY THE COMMISSION FOR AMERENUE AND ITS AFFILIATES The required certification is attached hereto as Appendix E. (iii) A DESCRIPTION OF HOW THE ELECTRIC UTILITY WILL USE THE PROCEEDS OF ANY SALE, ASSIGNMENT, LEASE OR TRANSFER TO RETIRE DEBT OR OTHERWISE REDUCE OR RECOVER THE COST OF SERVICES PROVIDED BY SUCH ELECTRIC UTILITY There will be no gain on the transfer. (iv) A LIST OF ALL FEDERAL APPROVALS OR APPROVALS REQUIRED FROM DEPARTMENTS AND AGENCIES OF THIS STATE, OTHER THAN THE COMMISSION, THAT THE ELECTRIC UTILITY HAS OR WILL OBTAIN BEFORE IMPLEMENTING THE TRANSACTION The following approvals are required: i) from FERC, approval for the transfer of jurisdictional (i.e., transmission) assets under Section 203 of the Federal Power Act; ii) from the Missouri Public Service Commission, approval for a disposition of assets by a Missouri public utility; and iii) from the SEC, approval under Sections 9(a)(1) and 12(b) of PUHCA. 9 (v) AN IRREVOCABLE COMMITMENT BY THE ELECTRIC UTILITY THAT IT WILL NOT, AS A RESULT OF THE TRANSACTION, IMPOSE ANY STRANDED COST CHARGES THAT IT MIGHT OTHERWISE BE ALLOWED TO CHARGE RETAIL CUSTOMERS UNDER FEDERAL LAW OR INCREASE THE TRANSITION CHARGES THAT IT IS OTHERWISE ENTITLED TO COLLECT UNDER ARTICLE XVI AmerenUE and its successor service provider in Metro East, AmerenCIPS, irrevocably commit that they will not as a result of the transaction, impose any stranded cost charges that they might otherwise be allowed to charge retail customers under federal law or increase the transition charges that they are otherwise entitled to collect under Article XVI. (vi) ELIMINATION OF ELECTRIC FUEL ADJUSTMENT CLAUSE AmerenUE eliminated the Metro East retail electric fuel clause on May 1, 1999 (vii)(A) AND(B) A DESCRIPTION OF HOW SERVICE OBLIGATIONS UNDER THE ACT WILL BE IN A SAFE AND RELIABLE MANNER AND PROJECTED RETURNS ON EQUITY THROUGH DECEMBER 31, 2004, WITH AND WITHOUT THE PROPOSED TRANSFER As discussed above, AmerenCIPS has a reliable source of supply in the PSA. Upon termination of the PSA at the end of the mandatory transition period, AmerenCIPS will enter into appropriate supply contracts in the wholesale market. Accordingly, AmerenCIPS will have full access to all market power supply options. Post-Transfer projected returns on equity, with and without the Transfer, are set forth in Appendix F to this Notice. Those projections establish that there is no strong likelihood that AmerenCIPS' ratepayers would be subject to a request for an electric rate increase. THE TRANSFER SHOULD BE APPROVED - ------------------------------- Under Section 16-111(g), the Commission may reject the Transfer only if it finds that the Transfer will render an electric utility unable to provide tariffed services in a safe and reliable manner and/or that there is a "strong 10 likelihood" that the proposed transaction will render an electric utility being entitled to request an increase in its base rates during the mandatory transition period pursuant to Section 16-111(d). There is no basis on which to reject the Transfer. As explained above, after the transaction, AmerenCIPS will provide safe and reliable utility service. The PSA, initially, and later the wholesale market, will provide AmerenCIPS with a safe and reliable source of electric supply. Moreover, the Transfer will not affect the operation of any transmission or distribution plant, which will continue to be operated in the same manner, and with the same degree of safety and reliability, as today. Further, the projected returns on equity provided in Appendix F amply demonstrate that there is very little risk that AmerenCIPS would be entitled to request a base rate increase under Section 16-111(d). That subsection authorizes a utility to seek a base rate increase where it can demonstrate that the two-year average of its return on equity is below the average of the monthly yields of 30 year Treasury bonds for the same period. Treasury bond yields have averaged approximately 5.79% for the two year period ending June, 2000. By contrast, and based on very conservative assumptions, the lowest annual projected return on equity, with the transaction, shown on Appendix F is significantly above that level. As explained in the accompanying testimony of Mr. Craig Nelson, Vice President - Corporate Planning of Ameren Services Company, if AmerenUE maintains the Metro East operations, it would have to contract for additional capacity, and would be susceptible to significant changes in market prices, an increase in the cost of fuel or operations, or a significant loss of customer base that would lower returns significantly. However, as explained above, the PSA guarantees that generation-related costs cannot increase before January 1, 2005, and are frozen at their current level. Hence, there is very little risk - and 11 certainly "no strong likelihood" - that Metro East customers would be subject to a rate increase during the transition period as a result of the Transfer. WHEREFORE, for all the reasons set forth herein, AmerenUE respectfully gives the Commission notice of its intent to transfer its Illinois electric transmission and distribution assets and its Illinois retail electric business to AmerenCIPS and to enter into certain agreements in connection therewith. Respectfully submitted, Union Electric Company d/b/a AmerenUE By: /s/ James J. Cook ----------------- One of its attorneys James J. Cook Ameren Services Company One Ameren Plaza 1901 Chouteau Avenue P.O. Box 66149 St. Louis, Missouri 63166-6149 (314) 554-2237 (voice) (314) 554-4014 (fax) jjcook@ameren.com Christopher W. Flynn Jones, Day, Reavis & Pogue 77 West Wacker Suite 3500 Chicago, Illinois 60601-1692 (312) 782-3939 (voice) (312) 782-8585 (fax) cflynn@jonesday.com 12 EXHIBIT D-1 VERIFICATION Warner L. Baxter, Vice President and Controller of Union Electric Company, being first duly sworn, states that he has read the foregoing Notice, that he is familiar with the statements therein, and that the statements therein are true and correct to the best of his knowledge. /s/ Warner L. Baxter -------------------- Warner L. Baxter Subscribed and sworn to before me this 28th day of September, 2000. /s/ Debby Anzalone - --------------------------- Notary Public Stamp: My Commission Expires: April 18, 2002 VERIFICATION Craig D. Nelson, Vice President of Central Illinois Public Service Company, being first duly sworn, states that he has read the foregoing Notice, that he is familiar with the statements therein, and that the statements therein are true and correct to the best of his knowledge. /s/ Craig D. Nelson -------------------------- Craig D. Nelson Subscribed and sworn to before me this 28th day of September, 2000. /s/ Debby Anzalone - ------------------- Notary Public Stamp: My Commission Expires: April 18, 2002 LIST OF APPENDICES Title Appendix - ----- -------- Form of Asset Transfer Agreement. . . . . . A Form of Promissory Note. . . . . . . B Statement of Accounting Entries. . . . . . C Statement of Certified Public Accountant. . . . . D Statement of Chief Financial Officer . . . . E Return on Equity Analysis (Confidential). . . . . F Direct Testimony of Craig D. Nelson. . . . . G Direct Testimony of Robert J. Mill . . . . . H Metro East Bundled Electric Service Tariffs . . . . I Metro East Delivery Services Tariffs. . . . . J Load Resource Plan (Confidential) . . . . . K EX-99 7 exd_2.txt EXHIBIT D-2 - PETITION TO ILLINOIS COMMERCE EXHIBIT D-2 STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION Union Electric Company, d/b/a AmerenUE ) Central Illinois Public Service Company, ) d/b/a AmerenCIPS ) ) Docket No. 00-0650 Petition for (i) transfer of retail electric ) business and associated certificates of ) public convenience and necessity; and ) (ii) approval of related tariffs. ) PETITION -------- Union Electric Company, d/b/a AmerenUE ("AmerenUE") and Central Illinois Public Service Company, d/b/a AmerenCIPS ("AmerenCIPS") (jointly, the "Ameren Companies") request: (i) to the extent required under Sections 7-102 and 7-203 of the Illinois Public Utilities Act ("IPUA"), that the Commission approve the transfer from AmerenUE to AmerenCIPS of all of AmerenUE's line and/or area certificates of public convenience and necessity previously issued by the Commission to provide retail electric service in Illinois (the "Certificates") and AmerenUE's Illinois retail electric business/1/; and (ii) that the Commission approve certain tariffs described herein pursuant to Section 9-201 of the IPUA. Concurrently with this Petition, AmerenUE has filed a notice under Section 16-111(g) of the IPUA of AmerenUE's intent to transfer to AmerenCIPS all of AmerenUE's electric transmission and distribution assets and liabilities (except for limited facilities pertaining to AmerenUE's Venice, Illinois generating plant) and AmerenUE's retail electric business and Certificates to AmerenCIPS. The Ameren Companies believe that AmerenUE's retail electric business and Certificates are assets that may be transferred pursuant to Section 16-111(g). - -------------------- /1/ This does not include certificates for the Venice Power Plant located in Illinois and associated lines providing transmission service to St. Louis, Missouri. However, to the extent that the Commission concludes otherwise, the Ameren Companies submit this Petition. In support of their Petition, the Ameren Companies state as follows: 1. AmerenUE provides electric service to over 1 million customers and gas service to 130,000 customers in Missouri and Illinois. AmerenUE's principal service territory is in Missouri; it serves approximately 62,000 electric customers and 18,000 gas customers in Illinois in the St. Louis metropolitan area ("Metro East"). 2. AmerenCIPS is also a combination gas and electric utility. AmerenCIPS provides electric service to approximately 325,000 customers and gas service to approximately 170,000 customers, all in the State of Illinois. 3. AmerenUE and AmerenCIPS are both first tier subsidiaries of Ameren Corporation, a registered holding company under the federal Public Utilities Holding Company Act of 1935. AmerenUE and AmerenCIPS came under common control pursuant to the merger of AmerenUE and CIPSCO, Inc., AmerenCIPS' previous parent company. The Commission approved that merger in Docket No. 95-0551 in late 1997. The merger became effective on December 31,1997. 4. The Ameren Companies now seek to structure their electric operations along state lines. Under their proposal, AmerenCIPS would be responsible for all of their regulated electric operations in Illinois; AmerenUE would be responsible for all of their regulated electric operations in Missouri. 5. At the same time that the Ameren Companies seek to transfer AmerenUE's Illinois electric operations to 2 AmerenCIPS, they are also seeking, in a separate filing, to effectuate the transfer of AmerenUE's retail gas operations in Illinois to AmerenCIPS as well. As a result of these transactions, AmerenUE's only Illinois business would be the operation of an electric generating plant in Venice, Illinois. AmerenUE would not offer utility service to the public in Illinois, and, accordingly, AmerenUE would cease to be or operate as a public utility within the meaning of the Act. 6. As indicated above, the Ameren Companies are notifying the Commission of the transfer of electric assets under Section 16-111(g). To the extent that the Commission concludes that the Certificates and AmerenUE's retail electric business and Certificates are not assets within the meaning of Section 16-111(g), the Ameren Companies seek approval of the transfer of the Certificates and the retail electric business in this Petition under Sections 7-102 and 7-203 of the IPUA. 7. Section 7-102 of the IPUA provides, inter alia, that: (b) No public utility may purchase, lease, or in any other manner acquire control, direct or indirect, over the franchises, licenses, permits, plants, equipment, business or other property of any other public utility. (c) No public utility may assign, transfer, lease, mortgage, sell (by option or otherwise), or otherwise dispose of or encumber the whole or any part of its franchises, licenses, permits, plant, equipment, business, or other property, but the consent and approval of the Commission shall not be required for the sale, lease, assignment or transfer (1) by any public utility of any tangible personal property which is not necessary or useful in the performance of its duties to the public, or (2) by any railroad of any real or tangible personal property. (d) No public utility may by any means, direct or indirect, merge or consolidate its franchises, licenses, permits, plants, equipment, business or other property with that of any other public utility. 3 220 ILCS 5/7-102 (1999). The Commission may grant a request under under Section 7-102 if it finds that the public will be convenienced thereby. 8. Section 7-203 of the Act provides that: No franchise, license, permit or right to own, operate, manage or control any public utility shall be assigned, transferred or leased nor shall any contract or agreement with reference to or affecting any such franchise, license, permit or right be valid or of any force or effect whatsoever, unless such assignment, lease, contract, or agreement shall have been approved by the Commission. 220 ILCS 5/7-203 (1999). 9. The public will be convenienced by the transfer of AmerenUE's electric Certificates and retail electric business to AmerenCIPS, for all the reasons discussed in the notice submitted under Section 16-111(g). In particular, if AmerenUE maintains the Metro East operations, it would have to contract for additional capacity, and would be susceptible to significant changes in market prices, an increase in the cost of fuel or operations, or a significant loss of customer base that would lower returns significantly. By contrast, AmerenCIPS has available to it under an existing power supply agreement, ample capacity to serve the Metro East load. 10. Moreover, the transfer would hold no detriment for any customer. AmerenCIPS has the managerial, technical and financial qualifications to provide retail electric service in AmerenUE's existing Illinois retail electric service territory. AmerenCIPS owns and operates a retail electric distribution system several times larger than the AmerenUE Illinois system. 11. AmerenCIPS would adopt the service classifications and rates in AmerenUE's tariffs for use in the Metro East area. 4 Accordingly, customers would see no change in service classifications or rates, until such time as the Commission determines that such change would be appropriate. 12. So that AmerenCIPS may begin to provide electric service as of the time of the transfer, the Ameren Companies also request pursuant to Section 9-201 of the Act that the tariffs attached hereto as Appendices A and B become effective as of the transfer. 5 WHEREFORE, for all the reasons stated herein, Union Electric Company and Central Illinois Public Service Company respectfully request that the Commission approve the transfer of Union Electric Company's Illinois retail electric business, including its Certificates, to Central Illinois Public Service Company. Dated: September 29, 2000 Respectfully submitted, Dated: September 29, 2000 Respectfully submitted, Union Electric Company d/b/a AmerenUE Central Illinois Public Service Company d/b/a Ameren CIPS By: /s/ James J. Cook ----------------- One of their attorneys James J. Cook Ameren Services Company One Ameren Plaza 1901 Chouteau Avenue P.O. Box 66149 St. Louis, Missouri 63166-6149 (314) 554-2237 (voice) (314) 554-4014 (fax) jjcook@ameren.com - ----------------- Christopher W. Flynn Jones, Day, Reavis & Pogue 77 West Wacker Suite 3500 Chicago, Illinois 60601-1692 (312) 782-3939 (voice) (312) 782-8585 (fax) cflynn@jonesday.com - ------------------- 6 VERIFICATION Craig D. Nelson, Vice President of Central Illinois Public Service Company, being first duly sworn, states that he has read the foregoing Petition, that he is familiar with the statements therein, and that the statements therein are true and correct to the best of his knowledge. /s/ Craig D. Nelson ------------------- Craig D. Nelson Subscribed and sworn to before me this 29th day of September, 2000. /s/ Carol A. Head - ----------------- Notary Public Stamp: My Commission Expires Sept. 23, 2002 7 Table of Contents ----------------- Appendix - -------- A Metro East Bundled Electric Service Tariffs B Metro East Delivery Services Tariffs EX-99 8 exd_3.txt EXHIBIT D-3 - PETITION TO ILLINOIS COMMERCE EXHIBIT D-3 STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION Union Electric Company d/b/a AmerenUE, ) Central Illinois Public Service Company, ) d/b/a Ameren CIPS ) ) No. 03-______ Petition for approval of transfer of gas ) system assets and gas public utility ) business and for approval of entry into ) various agreements related thereto. ) - -------------------------------------------------------------------------------- PETITION FOR APPROVAL OF TRANSFER OF GAS SYSTEM ASSETS AND GAS PUBLIC UTILITY BUSINESS AND FOR APPROVAL OF ENTRY INTO VARIOUS AGREEMENTS RELATED THERETO - -------------------------------------------------------------------------------- Steven R. Sullivan Joseph H. Raybuck Edward C. Fitzhenry Ameren Services Company One Ameren Plaza 1901 Chouteau Avenue P.O. Box 66149 St. Louis, Missouri 63166-6149 (314) 554-2098 (voice) SRS (314) 554-2976 (voice) JHR (314) 554-3533 (voice) ECF (314) 554-4014 (fax) srsullivan@ameren.com jraybuck@ameren.com efitzhenry@ameren.com STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION Union Electric Company d/b/a AmerenUE, ) Central Illinois Public Service Company, ) d/b/a Ameren CIPS ) ) No. 03-______ Petition for approval of transfer of gas ) system assets and gas public utility ) business, and for approval of entry into ) various agreements related thereto. ) PETITION -------- Union Electric Company, d/b/a AmerenUE ("AmerenUE"), and Central Illinois Public Service Company, d/b/a AmerenCIPS ("AmerenCIPS") (jointly, the "Ameren Companies"), request the Illinois Commerce Commission's ("Commission") expedited approval, subject to Sections 6-102, 7-101, 7-102, 7-203 and 9-201 of the Illinois Public Utilities Act ("IPUA" or the "Act"), for the transfer of AmerenUE's Illinois public utility gas business, including all physical and intangible assets, and certificates and other pertinent licenses and agreements, as more fully described below, to AmerenCIPS, and for approval of the Asset Transfer Agreement and a promissory note between AmerenCIPS and AmerenUE. The Ameren Companies previously requested approval for substantially the same transaction from the Commission in Docket No. 00-0648. At the same time, the Ameren Companies provided notice of their intent to transfer AmerenUE's Illinois electric business to AmerenCIPS in Docket Nos. 00-0650 and 00-0655 (consol.). The Commission issued an order affirming the notice of the transfer of the electric business, but, while the gas proceeding was pending, AmerenUE encountered an unanticipated delay in a related proceeding before the Missouri Public Service Commission. Ultimately, the Ameren Companies sought and received an order from the Commission dismissing Docket No. 00-0648, without prejudice. The Ameren Companies believe the issues that caused them to withdraw their Petition in Docket No. 00-0648 can be resolved or are otherwise moot. Accordingly, the Ameren Companies again come before this Commission seeking approval to transfer AmerenUE's Illinois retail gas business to AmerenCIPS. The consolidation of these regulated Illinois retail utility businesses into a single company, doing business in a single state, should diminish the prospects of jurisdictional conflicts in the future and further the public convenience, among other benefits. In support of their Petition, the Ameren Companies state as follows: 1. AmerenUE is a combination gas and electric utility. AmerenUE provides natural gas and/or gas transportation service to approximately 18,200 customers in Alton, Illinois and the immediate vicinity, of which approximately 16,900 are residential customers, 1,290 are commercial customers, and 10 are large industrial firm, interruptible, and transportation customers. The major portion of the gas purchased by AmerenUE for the Alton area is transported to the area by Mississippi River Transmission Corporation, an interstate pipeline, and the remaining portion is transported to Alton by Illinois Gas Transmission Company (formerly known as Illini Pipeline), an intrastate pipeline, through its interconnection with Natural Gas Pipeline Company of America ("NGPL"), an interstate pipeline. In addition, AmerenUE has a propane air-mixing plant for supplementing its natural gas supply on days of peak requirements. AmerenUE has no on-system storage capability; it either contracts for such services from the interstate pipelines with which it deals or obtains storage services from third-party suppliers. AmerenUE's peak usage day in 2003 occurred on January 23, 2003, when a throughput of 26,684 MMBtu was experienced on its distribution system. AmerenUE currently owns and operates approximately 294 miles of gas distribution mains to serve its customers in Illinois. 2 2. AmerenCIPS is also a combination gas and electric utility. AmerenCIPS provides natural gas and/or gas transportation service to over 170,000 customers in 267 communities in central and southern Illinois. AmerenCIPS has approximately 153,000 residential customers, 17,000 commercial customers, and 309 large industrial firm, interruptible, and transportation customers. The major portion of the gas purchased by AmerenCIPS is transported to the area by the following interstate pipelines: Panhandle Eastern Pipe Line Company, Texas Eastern Transmission Corporation, Trunkline Gas Company, NGPL, Texas Gas Transmission Corporation and Midwestern Gas Transmission Company. AmerenCIPS' gas system is also connected to two other Illinois gas utility systems: Northern Illinois Gas Company and, its affiliate, Central Illinois Light Company, d/b/a AmerenCILCO. AmerenCIPS owns and operates four gas storage reservoirs directly connected to its system and either contracts for additional storage services from the interstate pipelines with which it deals, or obtains such services from third-party suppliers. AmerenCIPS also has a propane air-mixing plant for supplementing its supply. AmerenCIPS' peak demand in 2003 occurred on January 23, 2003, with a total demand of 300,960 MMBtu. AmerenCIPS currently owns and operates approximately 4,950 miles of gas transmission and distribution mains to serve its customers in Illinois. 3. AmerenUE and AmerenCIPS are both first tier subsidiaries of Ameren Corporation ("Ameren"), a registered holding company, under the federal Public Utility Holding Company Act of 1935 ("PUHCA"). AmerenUE and AmerenCIPS came under common control pursuant to the merger of AmerenUE and CIPSCO Incorporated, AmerenCIPS' previous parent company. The Commission approved that merger in Docket No. 95-0551, in late 1997. The merger became effective on December 31, 1997. 3 4. In connection with the merger, AmerenUE and AmerenCIPS projected that certain benefits from joint operation of their gas facilities and businesses would accrue. Subsequent to the merger, both companies filed retail gas rate cases that reflected, among other things, the benefits of joint operation. The Commission approved new rates for both companies that reflected those benefits. Those rates became effective in February 1999. Both companies have since filed for gas rate relief in November 2002 in Docket Nos. 02-0798, 03-0008, and 03-0009 (consol.), and a final order from the Commission is expected in October 2003. 5. AmerenUE and AmerenCIPS both rely extensively on support services provided by a common service company, Ameren Services Company, and also receive services from Ameren Energy Fuels and Services Company. 6. The Ameren Companies now seek to structure their gas utility operations along state lines. Under their proposal, AmerenCIPS would acquire AmerenUE's gas utility operations in Illinois; AmerenUE would remain responsible for all gas utility operations in Missouri. 7. Previously, the Ameren Companies obtained approval in Docket Nos. 00-0650 and 00-0655 (consol.) to effectuate the transfer of AmerenUE's retail electric operations in Illinois to AmerenCIPS. The Commission issued an order in that consolidated proceeding affirming the notice of AmerenUE's intent to transfer to AmerenCIPS nearly all of its Illinois electric assets./1/ - -------------------- /1/ Since the time of the Commission's Order in Docket Nos. 00-0650 and 00-0655 (consol.), AmerenUE has determined that, due to federal and state permitting issues, it will retain a limited number of the assets for which it sought transfer authority. Specifically, for example, AmerenUE will not transfer to AmerenCIPS certain transmission towers located in Illinois near the Mississippi River which are covered by a general permit that covers transmission towers in Missouri, as well. 4 8. As a result of the electric and gas asset and business transfers, AmerenUE's only Illinois assets would be electric generating plants in Venice, Illinois, and Keokuk, Iowa, and a limited number of transmission towers and related facilities. AmerenUE would not offer utility service to the public in Illinois, and, accordingly, AmerenUE would cease to be, or operate as, a state regulated public utility within the meaning of the Act. 9. AmerenUE will transfer its gas assets and associated general plant assets and related liabilities, and customers, in Illinois to AmerenCIPS. These assets and liabilities are described in the form of the Asset Transfer Agreement, which is Schedule 1 to the testimony of Mr. Craig Nelson, and are set forth in the proposed accounting entries which are provided for in Schedule 2. AmerenUE's propane air-mixing plant for supplementing natural gas on days of peak requirements is included in the assets and obligations to be transferred. 10. AmerenUE will also assign all related obligations to AmerenCIPS, including, without limitation, the certificates of public convenience and necessity granted by the Commission authorizing AmerenUE to provide gas utility service in Illinois, environmental permits, all municipal and county franchises, supply contracts, maintenance and labor agreements (as applicable), any other relevant agreements that exist as of the Closing Date (defined under the Asset Transfer Agreement as the date the transaction closes), and all obligations covered by AmerenUE's existing Illinois gas tariffs and riders. A. AmerenUE will transfer approximately 50% of the combined electric and gas assets net of liabilities to AmerenCIPS in exchange for a promissory note in an amount equal to approximately 50% of the total net book value, estimated to be approximately $69 million. 5 B. AmerenUE will hold the promissory note and receive payments, including interest at market rate, from AmerenCIPS. C. AmerenUE also will declare an "in kind" dividend to Ameren equal to the remaining balance (approximately 50%) of the net book value of the combined assets net of liabilities, estimated to be approximately $69 million. D. Ameren will then transfer the dividended assets and liabilities to AmerenCIPS as a capital contribution. E. The promissory note will have an initial five-year term, with a ten-year amortization schedule, with a balloon payment at the end of the fifth year, unless the note's term is extended for an additional five years by agreement of the parties. (The promissory note is attached to Mr. Nelson's testimony as Schedule 3.) The note will be subordinated to all other debt of AmerenCIPS. 11. The transfer of the gas operations to AmerenCIPS would not have any any adverse impact on AmerenUE's or AmerenCIPS' customers. As noted, many support services are already provided by Ameren Services Company and Ameren Energy Fuels and Services Company. Further, the rates as set by the Commission in Docket Nos. 02-0978, 03-0008, and 03-0009 (consol.) will remain in place. The Ameren Companies have no current intention of consolidating the rates or seeking single tariff pricing. Hence, the transfer will affect the provision of retail gas service in name only. 6 12. The transfer is likely to produce some unquantifiable cost savings, anticipated in the form of reduced administrative and regulatory related expenses. As discussed, the benefits of coordinated operation have already been reflected in retail rates. 13. The re-structuring proposed herein requires the Commission's approval under Sections 6-102, 7-101, 7-102 and 7-203 of the IPUA. 14. Section 6-102(a) provides that, to issue a note, a public utility requires an order of the Commission authorizing such issue. The Commission must find in the order that ". . . the money, property or labor to be procured or paid for by such issue is reasonably required for the purpose or purposes specified in the order." 220 ILCS 5/6-102(a). 15. The Asset Transfer Agreement and the promissory note require approval under Section 7-101(3), which provides that, "No . . . financial or similar contract and no contract or arrangement for the purchase, sale, lease or exchange of any property, or for the furnishing of any service, property or thing, hereafter made with any affiliated interest . . . shall be effective until it has first been filed with and consented to by the Commission. . ." 220 ILCS 5/7-101(3). 16. Section 7-102 provides, inter alia, that, unless approved by the Commission: (a) No public utility may purchase, lease, or in any other manner acquire control, direct or indirect, over the franchises, licenses, permits, plants, equipment, business or other property of any other public utility. (b) No public utility may assign, transfer, lease, mortgage, sell (by option or otherwise), or otherwise dispose of or encumber the whole or any part of its franchises, licenses, permits, plant, equipment, business, or other property, but the consent and approval of the Commission shall not be required for the sale, lease, assignment or transfer (1) by any public utility of any tangible personal property which is not necessary or useful in the performance of its duties to the public, or (2) by any railroad of any real or tangible personal property. 7 (c) No public utility may by any means, direct or indirect, merge or consolidate its franchises, licenses, permits, plants, equipment, business or other property with that of any other public utility. 220 ILCS 5/7-102(a)-(c). The Commission may grant a request under Section 7-102 if it finds that the public will be convenienced thereby. 17. Section 7-203 of the Act provides that: No franchise, license, permit or right to own, operate, manage or control any public utility shall be assigned, transferred or leased nor shall any contract or agreement with reference to or affecting any such franchise, license, permit or right be valid or of any force or effect whatsoever, unless such assignment, lease, contract, or agreement shall have been approved by the Commission. 220 ILCS 5/7-203. 18. The public will be convenienced by the transfer of AmerenUE's gas operations to AmerenCIPS. It will be more practical and efficient for the two companies to organize themselves along state lines. This would simplify the reporting process, for example, because AmerenCIPS and AmerenCILCO would be the only Ameren entities regulated in Illinois. The reduction in reporting requirements and overall reduction in administration will, in time, reduce operating costs and expenses, and enhance regulatory efficiencies. 19. Moreover, the transfer would pose no detriment to any customer. AmerenCIPS is plainly qualified to provide gas service in Illinois. AmerenCIPS owns and operates a gas system several times larger than the AmerenUE Illinois system. AmerenCIPS clearly has the managerial, technical and financial qualifications to provide gas service in AmerenUE's existing Illinois gas service territory. Additionally, AmerenCIPS proposes to initially adopt the service classifications and rates in AmerenUE's tariffs for use in the Alton 8 area, where AmerenUE provides retail gas service. Accordingly, AmerenCIPS is not proposing any change in service classifications or rates in this proceeding. If AmerenCIPS determines in the future that changes in such classifications or rates are appropriate, it will propose such changes in a separate proceeding. 20. So that AmerenCIPS may begin to provide gas service as of the time of the transfer, the Ameren Companies also request pursuant to Section 9-201 of the Act that the tariffs attached as Schedule 2 to the testimony of Mr. Jon Carls become effective as of the transfer. 21. In support of its Petition, the Ameren Companies are submitting herewith the prepared direct testimonies of Mr. Nelson and Mr. Carls, Ameren Exhibits 1.0 and 2.0, respectively. 22. In order to coordinate its resource needs and requests for regulatory approval, the Ameren Companies request expedited treatment of its Petition. The Ameren Companies request an order from the Commission in the first quarter 2004. Action by this date will allow AmerenUE to make necessary arrangements for capacity and energy needs for the summer of 2004 and thereafter. The Ameren Companies intend to transfer the electric and gas assets, customers and certificates on the same date. In order to facilitate resource planning for the summer of 2004 regarding the electrical requirements of AmerenUE, the parties are requesting expedited treatment of this Petition. WHEREFORE, for all the reasons stated herein, Union Electric Company, d/b/a AmerenUE, and Central Illinois Public Service Company, d/b/a AmerenCIPS, respectfully request that the Illinois Commerce Commission approve the transfer of Union Electric Company's Illinois retail gas operations, including its certificates and plant, and customers, to Central Illinois Public Service Company, and approve the entry of the Ameren Companies into the promissory note and the Asset Transfer Agreement. 9 Dated: October 22, 2003 Respectfully submitted, Union Electric Company d/b/a AmerenUE Central Illinois Public Service Company d/b/a Ameren CIPS By: /s/ Edward C. Fitzhenry ----------------------- One of their attorneys Steven R. Sullivan Senior Vice President Governmental/Regulatory Policy, General Counsel & Secretary Joseph H. Raybuck Managing Assistant General Counsel Edward C. Fitzhenry Associate General Counsel Ameren Services Company One Ameren Plaza 1901 Chouteau Avenue P.O. Box 66149 St. Louis, Missouri 63166-6149 (314) 554-2098 (voice) SRS (314) 554-2976 (voice) JHR (314) 554-3533 (voice) ECF (314) 554-4014 (fax) srsullivan@ameren.com jraybuck@ameren.com efitzhenry@ameren.com 10 VERIFICATION Warner L. Baxter, Executive Vice President & Chief Financial Officer of Union Electric Company, d/b/a AmerenUE, being first duly sworn, states that he has read the foregoing Petition, that he is familiar with the statements therein, and that the statements therein are true and correct to the best of his knowledge. /s/ Warner L. Baxter -------------------- Warner L. Baxter Subscribed and sworn to before me this 22nd day of October, 2003. /s/ Valerie W. Whitehead - ------------------------ Notary Public My Commission Expires: December 10, 2006 VERIFICATION Craig D. Nelson, Vice President - Corporate Planning of Ameren Services Company, and Vice President of Central Illinois Public Service Company, d/b/a AmerenCIPS, being first duly sworn, states that he has read the foregoing Petition, that he is familiar with the statements therein, and that the statements therein are true and correct to the best of his knowledge. /s/ Craig D. Nelson ------------------- Craig D. Nelson Subscribed and sworn to before me this 22nd day of October, 2003. /s/ Valerie W. Whitehead - ------------------------ Notary Public My Commission Expires: December 10, 2006 EX-99 9 exd_4.txt EXHIBIT D-4 - ORDER OF ILLINOIS COMMERCE EXHIBIT D-4 STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION CENTRAL ILLINOIS PUBLIC SERVICE : COMPANY : (AMERENCIPS) : UNION ELECTRIC COMPANY : 00-0650 (AMERENUE) : : PETITION FOR (I) TRANSFER OF RETAIL ELECTRIC : BUSINESS AND ASSOCIATED CERTIFICATES OF : PUBLIC CONVENIENCE AND NECESSITY; AND (II) : (CONSOLIDATED) APPROVAL OF RELATED TARIFFS (7-102, 7-203, : 9-201 OF THE IPUA) : : ILLINOIS COMMERCE COMMISSION : ON ITS OWN MOTION : 00-0655 -VS- : UNION ELECTRIC COMPANY : : PROCEEDING PURSUANT TO SECTION 16-111(G) OF : THE PUBLIC UTILITIES ACT CONCERNING PROPOSED : TRANSFER OF DISTRIBUTION AND TRANSMISSION : ASSETS TO AN AFFILIATE AND ENTRY INTO VARIOUS : AGREEMENTS. (NOTICE OF TRANSFER FILED : October 2, 2000) : ORDER ----- By the Commission: I. PROCEDURAL HISTORY On September 29, 2000, Union Electric Company ("AmerenUE") and Central Illinois Public Service Company ("AmerenCIPS") (jointly, "Ameren" or the "Ameren Companies") filed a Petition seeking the Commission's approval pursuant to Sections 7-102 and 7-203 of the Public Utilities Act (220 ILCS 7-102 et seq.) (the "Act") of the transfer to AmerenCIPS of AmerenUE's certificates of convenience and necessity related to AmerenUE's provision of retail electric service in Illinois. On October 2, 2000, AmerenUE submitted a Notice pursuant to Section 16-111(g) of the Act, giving the Commission notice of AmerenUE's intent to transfer all of its Illinois distribution assets and all Illinois transmission assets other than those associated with AmerenUE's Venice, Illinois generating plant ("T&D Assets") and associated liabilities and its Illinois retail electric business, to AmerenCIPS. On October 4, 2000, the Commission issued an order in Docket No. 00-0655 setting the Notice for hearing pursuant to the provisions of Section 16-111(g). At a prehearing conference before a duly authorized Hearing Examiner, at the Commission's offices in Springfield, Illinois, pursuant to notice as required by law, Docket Nos. 00-0650 and 00-0655 were consolidated. The Ameren Companies and the Staff appeared at the prehearing by counsel. Thereafter, the Illinois Industrial Energy Consumers ("IIEC"), consisting of four customers of AmerenUE, filed a petition to intervene, which was granted by the Hearing Examiner. On November 17, 2000, an evidentiary hearing was held in the consolidated proceeding. The Ameren Companies, the Staff and IIEC appeared at the hearing by counsel. The Ameren Companies presented three witnesses: Craig D. Nelson, Robert J. Mill and Kevin Redhage. The Staff presented five witnesses: David Borden, Phil Hardas, Karen Goldberger, Bruce Larson and Michael Luth. IIEC presented one witness, Robert Stephens. At the conclusion of the hearing, the record was marked "heard and taken." Thereafter, the Ameren Companies submitted a late-filed exhibit, which reflected an agreed upon amendment to the asset transfer agreement. II. PARTIES TO THE PROPOSED TRANSFER AmerenUE. AmerenUE is a subsidiary of Ameren Corporation ("AmerenCo"). AmerenUE provides electric service to over 1 million customers and gas service to 130,000 customers in Missouri and Illinois. AmerenUE has approximately 62,000 electric and 18,000 gas customers in Illinois; its principal service area is in Missouri. AmerenCIPS. AmerenCIPS also is a subsidiary of AmerenCo. AmerenCIPS provides electric service to approximately 320,000 customers and gas service to approximately 170,000 customers, all in the State of Illinois. AmerenCIPS' principal source of supply of electric power and energy is the power supply agreement ("PSA") that it has with Ameren Energy Marketing Company ("AEMC"). AEMC. AEMC is a wholly-owned subsidiary of Ameren Energy Resources Company ("Resources"), which is a first-tier subsidiary of AmerenCo. AEMC markets power and energy at wholesale as a power marketer and at retail as an alternative retail electric supplier ("ARES") in Illinois. AEMC obtains power and energy from AmerenCo Generating at wholesale under a contract approved by the FERC, and supplies power and energy to AmerenCIPS and other customers at wholesale and retail. AEMC also assumed AmerenCIPS' energy entitlement under its power supply agreement with Electric Energy Inc. Ameren Generating. Ameren Generating is also a wholly-owned subsidiary of Resources. Ameren Generating acquired, with the Commission's approval, all of the generating capacity of AmerenCIPS. Ameren Generating has also acquired, and is in the process of acquiring, additional regional generating resources. Ameren Generating supplies AEMC with AEMC's full requirements (including the AmerenCIPS load) under a power supply agreement. 2 III. SUMMARY OF THE TRANSFER The Ameren Companies explained that the principal purposes in Illinois of the transfers of the electric and gas properties and businesses relate to the restructuring of the Illinois operations of AmerenCo, the parent of both AmerenUE and AmerenCIPS. AmerenCo is a registered holding company subject to regulation by the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 ("PUHCA"). AmerenUE provides retail electric and gas service to the public in that portion of the St. Louis metropolitan area located in the State of Illinois ("Metro East"). AmerenUE also provides retail electric and gas service in the State of Missouri. AmerenCIPS provides electric and gas service in the State of Illinois. AmerenCo previously restructured AmerenCIPS' operations by means of a sale of all of AmerenCIPS' generating assets to an affiliate and by having a separate affiliate assume all of AmerenCIPS' marketing responsibilities. AmerenCIPS now operates as a pure "wires" business. AmerenCo now seeks to: i) separate all Illinois regulated utility operations from the electric generation and marketing functions; and ii) consolidate all of AmerenCo's Illinois regulated operations in a single entity, AmerenCIPS. Upon the transfer of AmerenUE' s retail electric and gas assets and businesses in Illinois, AmerenCIPS will succeed to AmerenUE' s retail utility operations, and will provide the retail electric and gas services currently provided by AmerenUE pursuant to the tariffs currently in effect for AmerenUE. For its part, AmerenUE will cease to operate as a public utility in this State. The Ameren Companies explained that AmerenUE will transfer its T&D Assets and liabilities, as well as its gas assets and liabilities, to AmerenCIPS by two means: i) approximately half will be transferred in the form of a dividend; and ii) approximately half will be transferred in exchange for a promissory note in the amount of approximately $51 million. These two components will be referred to jointly as the "Transfer." AmerenUE will retain ownership of the Venice generating plant. The Ameren Companies contend that the Transfer will not adversely affect either the reliability of electric service provided to Metro East retail electric customers or the rates that those customers are charged during the mandatory transition period under the Illinois Customer Choice Law and Rate Relief Law of 1997 ("Customer Choice Law"). 220 ILCS 5/16-111(g). AmerenCIPS will obtain the generating supply necessary to serve the Metro East electric load under AmerenCIPS' existing power supply agreement with AEMC. After the Transfer, Metro East electric customers will continue to pay the rates they are currently charged under AmerenUE's retail tariffs, through at least December 31, 2004, when the retail rate freeze expires, or until such time as the Commission approves a change in those rates. IV. ASSETS AND OBLIGATIONS TO BE TRANSFERRED AmerenUE will transfer the T&D Assets, and its retail electric business, including its various certificates, franchises and licenses authorizing it to provide retail electric service in Illinois, to AmerenCIPS. The transmission facilities will continue to be managed by its affiliate, Ameren Services Company. AmerenUE will also assign various obligations to AmerenCIPS, including 3 all of the maintenance and labor agreements (as applicable), as those agreements exist as of the Transfer Date, and any other similar agreements that exist as of the Transfer Date. The specific assets and obligations to be transferred are described in the Asset Transfer Agreement that accompanied the Notice as Appendix A, and are set out further in the proposed accounting entries included at Appendix C to the Notice. V. MECHANICS OF THE TRANSFER The transfer of the combined electric and gas assets is planned to be accomplished in the following manner: 1. AmerenUE will transfer approximately 50% of the combined assets net of liabilities to AmerenCIPS in exchange for a promissory note in an amount equal to approximately 50 percent of the total net book value, estimated to be approximately $51 million. 2. AmerenUE will hold the note and receive payments including interest from AmerenCIPS. 3. AmerenUE also will declare an "in kind" dividend to AmerenCo equal to the remaining balance (approximately 50 percent) of the net book value of the combined assets net of liabilities, estimated to be approximately $51 million. 4. AmerenCo will then transfer the dividended assets and liabilities to AmerenCIPS as a capital contribution. VI. SUPPLY AND SERVICE AGREEMENTS There are two new agreements and one existing agreement that will be involved or affected in the transfer of AmerenUE' s retail electric business to AmerenCIPS. AmerenUE/AmerenCIPS/Ameren Corporation Asset Transfer Agreement --------------------------------------------------------------- Under this agreement, AmerenUE will transfer to AmerenCIPS the assets and liabilities discussed herein. AmerenUE/AmerenCIPS Promissory Note ----------------------------------- Under this note, AmerenCIPS will pay AmerenUE approximately 50% of the net book value of the transferred assets. AmerenCIPS/AEMC PSA ------------------- As noted, this is the existing agreement under which AmerenCIPS would obtain power and energy to serve the Metro East load. Until the PSA expires on December 31, 2004, AEMC must provide AmerenCIPS with its full requirements (including planning and operating reserve requirements and ancillary service generation products). Commencing January 1, 2005, AmerenCIPS would obtain its full requirements from market sources. "Market sources" could include AEMC, Ameren Generating or another affiliate, if any of these entities offered the most economic source of power and energy. Ameren asserts that there should be 4 ample capacity to supply Metro East's future needs at a reasonable, competitive cost. Under the PSA, AmerenCIPS pays fixed demand and energy charges, based on AmerenCIPS' actual usage, for bundled load. The Ameren Companies explained that the effect of setting the demand and energy charges for bundled service load requirements in this way is to insulate Metro East retail customers from risk that those charges could escalate. Even if, for example, a unit were lost and purchased power costs were to increase, or if maintenance or fuel costs were to increase for any one of numerous reasons, the same, fixed demand and energy rates would apply. Pricing for capacity and energy used to provide unbundled generation services differs. AmerenCIPS (like AmerenUE), offers certain unbundled electric power products. Specifically, AmerenCIPS offers a "Power Purchase Option" ("PPO") pursuant to Section 16-110 of the Act, "Partial Requirements Power Service" ("PRPS") pursuant to Section 16-104(f), and a "No Notice Power Service" ("NNPS"), which is a default service for customers who suddenly find themselves without a supplier. Under the PPO, PRPS and NNPS tariffs, AmerenCIPS may charge customers a "market value." Under these tariffs, the market value would be established in advance of the time that service is provided. Ameren stated that, hence, there is a risk that the projected "market value" could be inadequate to cover the actual cost of serving these customers. Under the PSA, AEMC charges AmerenCIPS for power and energy supplied to serve these customers an amount equal to the charge that AmerenCIPS charges these customers under the PPO, PRPS and NNPS tariffs. Accordingly, the effect of these sales on AmerenCIPS is revenue-neutral, and AEMC assumes the risk that the "market value" charge is adequate to cover the cost of serving these customers. The PSA is subject to the jurisdiction of, and has been approved by, FERC. VII. REASONS FOR THE TRANSFER The Ameren Companies explained that there are several reasons for the Transfer: 1. AmerenUE's forecast shows that an additional supply of power and energy beyond its current generation capacity will be required through 2004 and beyond in order to provide for its Missouri and Illinois customers' needs and maintain a 15% reserve margin. AmerenUE forecasts capacity shortfalls of 327 MW in 2001, 410 MW in 2002, 462 MW in 2003, and 583. MW in 2004. These shortfalls will have to be met through the purchase of power and energy at market prices or with the addition of new AmerenUE generation capacity. 2. The transfer of AmerenUE's Metro East service territory in Illinois to AmerenCIPS would include the transfer of 520 MW of net load. This transfer would, for all practical purposes, alleviate AmerenUE's capacity shortfall through 2004. 3. AmerenCIPS has a PSA with AEMC that provides full requirements for AmerenCIPS, which will automatically cover the transferred load, thus assuring Metro East customers an adequate power supply. The PSA will insulate Metro East customers remaining 5 on bundled tariffs from the volatility of market prices through 2004. 4. The transfer will insulate these customers remaining on bundled tariffs from any meaningful risk of a rate increase through the term of the PSA, December 31, 2004. 5. The transfer will assure an adequate power supply for the former AmerenUE Metro East customers, while maintaining the same rates that were in existence before the transfer. AmerenCIPS intends to maintain the same rate schedules that were in existence immediately prior to the transfer. 6. Ameren anticipates administrative cost savings after the transfer. The elimination of one utility in Illinois will decrease the number of regulatory filings required of Ameren. As an example, Section 16-125(b) of the Public Utilities Act, 220 ILCS 5/1-101 et seq. requires each utility in Illinois to file an electric reliability report including the results of a survey of customers. The transfer will enable Ameren to consolidate the reports and eliminate the cost of a separate and redundant survey in the former AmerenUE territory. It will also provide for a single point of contact in AmerenCIPS for regulatory matters in Illinois. 7. The pending version of the Standards of Conduct and Functional Separation Rules for Illinois Utilities imposes different levels of compliance on electric utilities based on the location of their principal service territory. After the transfer the functioning of Ameren's retail electricity business in Illinois will be subject to a consistent set of rules governing energy supply activities within the utility. In addition, the transfer will provide a clean split between Ameren's activities in Illinois and Missouri, where the electric industry has not yet been deregulated. 8. The transfer will terminate the obligation of AmerenUE' s Illinois customers to pay decommissioning charges related to AmerenUE' s Callaway nuclear plant. VIII. STATUTORY PROVISIONS INVOLVED Section 7-102 of the Act (which is applicable to the transfer of the certificates and business) provides, inter alia, that unless the Commission finds that a transaction will convenience the public: (b) No public utility may purchase, lease, or in any other manner acquire control, direct or indirect, over the franchises, licenses, permits, plants, equipment, business or other property of any other public utility. (c) No public utility may assign, transfer, lease, mortgage, sell (by option or otherwise), or otherwise dispose of or encumber the whole or any part of its franchises, licenses, permits, plant, equipment, business, or other property, but the consent and approval of the Commission shall not be required for the sale, lease, assignment or transfer (1) by any public utility of any tangible personal property which is not necessary or 6 useful in the performance of its duties to the public, or (2) by any railroad of any real or tangible personal property. (d) No public utility may by any means, direct or indirect, merge or consolidate its franchises, licenses, permits, plants, equipment, business or other property with that of any other public utility. 220 ILCS 5/7-102 (1999). Section 7-203 of the Act (which is applicable to the transfer of the certificates) provides, inter alia that: No franchise, license, permit or right to own, operate, manage or control any public utility shall be assigned, transferred or leased nor shall any contract or agreement with reference to or affecting any such franchise, license, permit or right be valid or of any force or effect whatsoever, unless such assignment, lease, contract, or agreement shall have been approved by the Commission. 220 ILCS 5/7-203 (1999). Section 16-111(g) of the Act (which is applicable to the transfer of the distribution and transmission plant) provides, inter alia, that upon giving notice and receiving Commission approval: During the mandatory transition period, an electric utility may, without obtaining any approval of the Commission other than that provided for in this subsection and notwithstanding any other provision of this Act or any rule or regulation of the Commission that would require such approval: sell, assign, lease or otherwise transfer assets to an affiliated. . . entity, and as part of such transaction enter into service agreements, power purchase agreements, or other agreements with the transferee; provided, however, that the prices, terms and conditions of any power purchase agreement must be approved or allowed into effect by the [FERC]. . . . It provides further that the utility must submit various items and data with its notice including: (1) a complete statement of the accounting entries that it will make on its books to record the transfer of the assets and a certificate from an independent certified public accountant stating that the entries are in accordance with generally accepted accounting principles. Additionally, if the transaction is with an affiliate, the electric utility must also submit a certification from its chief accounting officer that the accounting entries are in accordance with any guidelines for cost allocations between the utility and its affiliates that have been previously approved by the Commission. (2) a description of how it will use the proceeds of the transaction to retire debt or otherwise reduce or recover the costs of services provided by such electric utility. 7 (3) a list of all other State and federal approvals the utility has obtained or will obtain in connection with the transaction. (4) an irrevocable commitment by the electric utility that the transaction will not increase transition charges it might otherwise be allowed to recover under Article XVI of the Act or impose any stranded costs that it might otherwise be allowed to charge retail customers under federal law. Finally, Section 16-111(g) provides that the Commission shall not prohibit a proposed transfer of plant unless it finds either or both that the transfer "will render the utility unable to provide its tariffed services in a safe and reliable manner, or . . that there is a strong likelihood that the consummation of the proposed transaction will result in the electric utility being entitled to request an increase in its base rates during the mandatory transition period .. . . " No one disputed Ameren' s compliance with the notice filing requirements of Section 16-111(g). IX. CONTESTED ISSUES Staff expressed several concerns about the proposed transfer. Many of Staff's concerns went to suggested revisions in tariffs sheets that will be required in the event the transfer is approved. Ameren agreed to make all the requested changes. Other concerns went to the merits of the transfer but apparently did not reach a level that would lead to a recommendation that the transfer be prohibited. IIEC opposes the proposed transfers on a number of grounds. IIEC's objections went to both the "public convenience" standard under Section 7-102 and the "service reliability" and "base rate" standards under Section 16-111(g). A SECTION 16-111(G) ISSUES 1. SERVICE RELIABILITY In terms of quality of service issues, IIEC suggested that the transfer might result in interruptible customers experiencing an increased level of interruptions for the following reasons. The AmerenCIPS interruptible tariff allows curtailments when the annual system peak is anticipated and power is needed to supply firm commitments to other utilities. IIEC witness Stephens noted first that, if the transfer is completed, AmerenCIPS will likely anticipate a new annual system peak, particularly in the early months after the transfer and second that, while AmerenUE had no sales for resale in 1999, AmerenCIPS made 38% of its sales in the sale for resale arena, including sales to other utilities, making it more likely that AmerenCIPS will need to curtail service than will AmerenUE. The Ameren Companies explained that, after the Transfer, AmerenCIPS will continue to provide safe and reliable utility service. The PSA with AEMC, initially, and later the wholesale market, will provide AmerenCIPS with a safe and reliable source of electric supply. Moreover, AEMC has adequate capacity to serve the existing AmerenCIPS load and the AmerenUE load that is to be transferred. AmerenUE provided a load-resource analysis for AEMC for the years 2001-2004. Ameren Ex. 1, App E. That analysis showed that AEMC has adequate existing resources to serve the post-transfer AmerenCIPS load. Id. 8 Ameren witness Nelson explained that there are two reasons why IIEC' s concern should be disregarded. First, there is no obligation to serve non-firm, interruptible load. Second, the record demonstrates that the Transfer will not alter the operation of the interruptible tariff. Ameren explained that interruptible customers do not have any expectation of uninterrupted service. Those customers have contracted for non-firm service, and the utility providing it has no obligation to limit the number of interruptions. If interruptible customers want firm service, they can request it, and pay for it, under the terms of the utility's tariff. As Mr. Nelson explained, utilities have no capacity planning or reserve obligation toward interruptible customers. Tr., 58-60. To the contrary, for planning reserve purposes, utilities exclude interruptible load. Id. It is not included in the peak that utilities must have capacity to serve, and utilities do not add capacity to serve interruptible load. Id. Second, Mr. Nelson explained that the Transfer will not produce any change in the operation of the interruptible tariff. Currently, AmerenUE's interruptible customers are served as part of a single, integrated control area system. They will be customers on that same system after the transfer. There will be no change in applicable planning or operating reserve requirements or margins, and the total system load, annual system peak and resources will be exactly the same after the transfer as before. AmerenUE, AmerenCIPS and Ameren Energy Marketing Company (AmerenCIPS' supplier) each maintain a minimum planning reserve margin of 15%. Ameren Ex. 2, p. 7. Staff did not question Ameren's ability to provide reliable service. Indeed, Staff witness Larson agreed that the Ameren Companies had demonstrated that they would have adequate capacity to serve the Metro East load. Staff Ex. 3, p. 3. The Commission agrees with Ameren. Accordingly, IIEC's argument that the Transfer would make non-firm service less firm is inapposite and is rejected. Interruptible customers have contracted for non-firm service, and cannot complain that such non-firm service is not firm. Because there is no likelihood that the transfer will impact the ability of the utility to provide its tariffed services in a safe and reliable manner, the transfer cannot be prohibited on this ground. 2. LIKELIHOOD OF AN INCREASE IN BASE RATES As noted previously, under Section 16-111(g), the Commission may also prohibit a Transfer if there is a "strong likelihood" that the Transfer would cause ratepayers to be subject to a rate increase request under Section 16-111(d) during the mandatory transition period. AmerenCIPS provided an analysis based upon projected returns on equity in Appendix F to the Notice (Ameren Ex. 1, App. F) from which it argues that it has demonstrated that there is very little risk that it would be entitled to request a base rate increase under Section 16-111(d). That subsection authorizes a utility to seek a base rate increase where it can demonstrate that the two-year average of its return on equity is below the average of the monthly yields of 30 year Treasury bonds for the same period. Treasury bond yields have averaged approximately 5.79% for the two year period ending June, 2000. By contrast, and based on what Mr. Nelson explained to be very conservative assumptions, the lowest annual projected return on equity, with the transaction, shown on Appendix F is significantly above that level. 9 As explained by Mr. Nelson, if AmerenUE maintains the Metro East operations, it would have to contract for additional capacity, and would be susceptible to significant changes in market prices, an increase in the cost of fuel or operations, or a significant loss of customer base that would lower returns significantly. However, the PSA guarantees that generation-related costs cannot increase before January 1, 2005, and are frozen at their current level. Hence, there is very little risk -- and certainly "no strong likelihood" -- that Metro East customers would be subject to a rate increase during the transition period as a result of the Transfer. Ameren Ex. 1, App. G, p. 12; App. F (conf.). Staff and IIEC questioned the validity of the Companies' analysis. Staff, in particular, questioned whether a rate increase might be required if AmerenCIPS were required to reduce its rates by 5% in 2002 pursuant to the provisions of the Customer Choice Law. A rate decrease would occur only if required by Section 16-111(b) of the Customer Choice Law. That Section sets forth the residential rate decrease provisions of the Law, which are divided into various categories, depending on the number of customers a utility had as of certain dates and the level of a utility's residential rates, relative to the average residential rate for a group of Midwest Utilities. Section 16-111(b) defines the Midwest Utilities as consisting of all investor-owned electric utilities with annual system peaks in excess of 1000 MW in the States of Illinois, Indiana, Iowa, Kentucky, Michigan, Missouri, Ohio and Wisconsin. Both AmerenUE and AmerenCIPS are in the category of utilities whose residential rate decrease obligations are subject to the relationship of their residential rates to the Midwest Utilities' average. Accordingly, the Section made AmerenUE and AmerenCIPS subject to two potential 5% rate decreases (in addition to an initial August 1, 1998 rate decrease, which both companies made): i) on October 1, 2000, a rate decrease equal to the lesser of 5% or the percentage by which their average residential rate exceeds the average residential rate for the Midwest Utilities based on FERC Form 1 data for calendar year 1999; and ii) on October 1, 2002, a rate decrease equal to the lesser of 5% or the percentage by which their average residential rate exceeds the average residential rate for the Midwest Utilities based on FERC Form 1 data for calendar year 2001. Neither AmerenUE nor AmerenCIPS was required to make any rate decrease on October 1, 2000, and they claim it is highly unlikely that either will be required to make any rate decrease on October 1, 2002. Ameren Ex. 5, pp. 1-2. In connection with the possibility of a residential rate decrease on October 1, 2000, Ameren performed an analysis of the relationship of the AmerenCIPS and AmerenUE residential rates to the Midwest Utilities average for 1999. Ameren Ex. 5, p. 2. Both AmerenCIPS and AmerenUE were comfortably below the average. The Commission Staff performed its own analysis and apparently agreed, because no rate decrease was required. Id. A 2002 rate decrease would be based on a 2001 test period, and the record reflects no material change in circumstances either occurring since 1999, or occurring before the end of 2001, that would produce a different result. Id. Regardless, AmerenCIPS committed that, when calculating whether AmerenCIPS is entitled to seek a rate increase during the mandatory transition period, AmerenCIPS will reverse the effect of any residential rate decrease taking effect on October 1, 2002 pursuant to Section 16-111(b) of the Customer Choice Law. Further, should AmerenCIPS still be entitled to request a rate increase during the mandatory transition period, after having reversed the effect of any such residential rate decrease on October 1, 2002, AmerenCIPS will exclude from such a rate increase request the effect of any such residential rate decrease. 10 This commitment will remain effective throughout the mandatory transition period, and the Commission hereby incorporates it as a condition of approval in this matter. IIEC contended, that unless there is a strong likelihood that AmerenUE customers would see a base rate increase before the end of the rate freeze period absent the Transfer, the insulation of these Illinois customers from market price volatility and meaningful risk of a rate increase is of little value. As Mr. Nelson explained, however, the likelihood of a base rate increase absent the transfer is greater than if the transfer takes place. AmerenUE is faced with a forecasted capacity shortfall. That shortfall must be made up with purchases at market prices or the construction of additional capacity. Either scenario would result in additional costs that could ultimately be passed on to the customers. With the transfer both scenarios become null. Ameren Ex. 2, p. 6. Accordingly, the record firmly establishes that there is no strong likelihood that after the Transfer Metro East ratepayers will be subjected to a rate increase request and the transfer cannot be prohibited on this ground. B. SECTION 7-102 ISSUES As noted previously, transactions under Section 7-102 are to be judged by a "public convenience" standard. IIEC and Staff have raised two issues that are apparently, but not expressly, based upon this standard. They include the transfers impact upon the future opportunity for rate payers in AmerenUE's current service territory to receive refunds under Section 16-111(e) of the Act and the possibility that rate payers in AmerenUE's current service territory may face rate increases after the termination of the statutory rate freeze. The issues are complicated by the fact that, in many cases, Ameren has couched its responsive arguments in terms of the Customer Choice law, which does not mention Section 7-102. 1. POTENTIAL LOSS OF SECTION 16-111(E) REFUNDS IIEC witness Stephens and Staff witness Borden both expressed concern that the Transfer may cause Metro East ratepayers to forego refunds under Section 16-111(e) of the Customer Choice Law that they might otherwise have received if the transfer did not occur. Section 16-111(e) requires electric utilities to refund "excess earnings" during the mandatory transition period to ratepayers. The term "excess earnings" is defined as the two-year average return on common equity (measured as of September 30 of each year) in excess of the average 30-year treasury rate for the same two year period plus an "Index" plus 1.5 percentage points. For 1998 and 1999, for both AmerenUE and AmerenCIPS, the Index was 4.00 percentage points. Ameren Ex. 2, p. 2. For 2000 through 2004, it will be 7.00 percentage points. AmerenUE was required to make refunds for the 1998-99 period, and Ameren expects that AmerenUE will have to make a smaller refund for 1999-2000 (because of the increase in the Index from 4.00 to 7.00 percentage points in 2000, producing an average Index of 5.5 percentage points). Id. Mr. Stephens suggested that, because AmerenUE has made refunds for 1998-99, it is possible that AmerenUE would have to make such refunds going forward. To that end IIEC made several alternative proposals. The first proposal 11 was to prohibit the transfer. The second proposal would require Ameren to track revenues for the customers in the former UE service territory and to make refunds as if such would have occurred had the transfer not been allowed. The final proposal would have Ameren make annual refunds in the same amount as the most recently computed refund (approximately $2.3 million). Ameren disputed IIECs assertions concerning the probability of future refunds, arguing that the increase in the Index effective in 2000 will eliminate AmerenUE's "excess earnings" and, regardless of whether the transfer occurs, AmerenUE will not be required to make refunds. To demonstrate this point, Ameren performed an analysis that assumed that the future yields on 30 year treasury bonds would be 6%, which produces a refund "trigger point" of 14.5%. The trigger point is calculated by adding the yield on the 30 year treasury bonds (6%) plus the Index (7%) plus 1.5%, for a total of 14.5%. Ameren then compared this figure with the forecasts of AmerenUE's return on common equity for Metro East for the years 2000-2004, using the methodology set forth in Section 16-111(e). In this regard, Ameren assumed customer load retention of 100%, to give effect to Mr. Stephens' assumption that AmerenUE's "strong financial performance" (IIEC Ex. 1.0, p.6) in 1998 and 1999 would either mirror or predict its financial performance in 2000 and beyond. Ameren Ex. 2, p. 2. The analysis showed that, using the statutory methodology, for no future two year period will AmerenUE's Metro East return on common equity exceed the applicable trigger point. Moreover, Ameren's claims its analysis is extremely conservative. It assumes, as mentioned, no load loss -- meaning a maximization of revenue. Further, Ameren did not adjust the cost of service to reflect any increased generation costs that would result if AmerenUE were to remain responsible for the Metro East load and, therefore, had to purchase additional capacity. Thus, Ameren assumed maximum revenues and minimum costs, and still the analysis showed that no refunds would be required. Staff expressed concern that the Ameren Companies would not be entitled to use the 7.00% Index, which is available only to Companies which waive their right to seek an extension of transition charges necessary beyond 2006. Ameren explained that it intends to waive such right, and committed that, if the Transfer is consummated, AmerenCIPS and AmerenUE will waive any right to seek such an extension. Ameren Ex. 3. The Commission rejects IIEC's proposals. Ameren's analysis and commitment to not seek an extension of transition charges beyond 2006, convinces us that, under any reasonable scenario, there is little likelihood that Ameren will be required to make any additional Section 16-111(e) refund, making concerns over this matter on a going forward basis, moot. We will accept Ameren' s invitation to make the commitment concerning extended transition charge recovery a condition of approval in this Order, which we are permitted to do under Section 7-102 of the Act. 2. POST- TRANSITION PERIOD RATES Mr. Stephens and Mr. Borden also indicated that they were concerned about the effect of the transfer on bundled utility rates after the mandatory transition period ends and the corresponding rate freeze expires. The Ameren Companies stated that this concern raises a policy issue that was resolved by the Legislature in adopting the Customer Choice Law. Ameren first notes that Section 16-111(g) of the Customer Choice Law forfends the Commission from prohibiting this transfer unless it finds that:, for purposes of this discussion, that the transfer would create an undue risk of a base rate increase 12 during the transition period. The General Assembly did not grant the Commission the authority to prohibit a transfer based upon whether ratepayers would face market-based generation pricing after the transition period ends and the price freeze expires. Ameren also notes that the Commission has allowed other utilities to put the overwhelming majority of the electric load in this state in the same position, and urges it not to single out Metro East for different treatment. AmerenCIPS and Illinois Power have both divested themselves of all of their generation, and Commonwealth Edison has divested itself of all of its fossil generation, pursuant to the provisions of Section 16-111(g). Ameren Ex. 2, pp. 4-5. Those companies replaced the transferred generation with power supply contracts that expire on December 31, 2004, meaning that they will have to rely on market sources beginning January 1, 2005, when the rate freeze expires. Id. Further, the Commission has approved (also under Section 16-111(g)) ComEd's proposal to transfer all of its nuclear generation to an affiliate, to be replaced by a power supply agreement, which expires at the end of 2006, and under which the final two years will have market-based pricing. Id. In other words, all customers of ComEd, Illinois Power and AmerenCIPS -- roughly 92% of the retail electric customers in the State -- may be assessed rates which reflect market-based generation costs beginning in 2005. Id. Indeed, Staff witness Larson noted that, "because the Commission has lost jurisdiction over the majority of the power supply in Illinois, the additional loss of jurisdiction over AmerenUE's Illinois load is of little consequence." Staff Ex. 3, p. 4. It would not be appropriate to treat Metro East customers differently from customers of other utilities. Finally Ameren argues that it is appropriate that customers in a deregulated market pay market-based generation charges, which is why the rate freeze expires when it does -- at the end of the transition to market-based pricing. At that point, any remaining bundled rates of electric utilities may be adjusted up or down to reflect the cost to utilities of acquiring power to serve their remaining bundled customers. While the Commission agrees with Ameren that the Customer Choice Law addresses only impacts on rates during the transition period, this does not answer the more fundamental question of whether the possibility that market based pricing may produce higher rates for customers in UE's current service territory causes the transfer to fail the public convenience standard. The question becomes one of defining the "public." IIEC, understandably, seeks to define the public as the ratepayers in AmerenUE's service territory who, if left as UE customers would not, in the near term, face market based pricing due to the fact that the State of Missouri, where the majority of AmerenUE's generating capacity is located, had not deregulated the electric industry. In other words, IIEC seeks the opportunity to use the deregulated market in Illinois as a hedge. If generation costs from utility-owned generation exceed market prices, IIEC could use the market as a safety valve. If, however, market prices exceed the cost of utility-owned generation, IIEC wants the utility to be required to provide service at regulated prices. In other words, the utility bears the risk of owning generation assets in a competitive world, but cannot assess competitive prices for the generation. This amounts to a "parochial convenience" standard, as opposed to the "public convenience" standard applicable under Section 7-102. Accepting IIEC's position would also be 13 inconsistent with the Illinois deregulation model, which expressly allows utilities to restructure their operations by transferring the costs and benefits associated with generation to another entity, and does not require utilities to either obtain or retain generation in order to provide service at below market prices. 3. CONSISTENCY WITH MARKET RESTRUCTURING IIEC was also concerned that the Transfer could be detrimental to the development of the competitive market, suggesting that transferring load responsibility for Metro East from AmerenUE to AmerenCIPS would "remove" 520 MW from the Illinois market. Ameren disagreed, arguing that the total regional load and total regional resources will be the same before and after the Transfer. No generation is being somehow lost. It is simply a question of whether Ameren buys resources from someone else (thereby "removing" someone else's 520 MW from the market) or uses its own resources. Ameren has chosen the latter so that is can both reduce its overall regulated cost of service and further the separation of wires and the generation functions in Illinois. Ameren Ex. 2, p. The Commission agrees with Ameren and finds that the transfer will not adversely impact the emergence of a competitive market place in Illinois. X. FINDINGS AND ORDERING PARAGRAPHS The Commission, having reviewed the Notice and Petition herein, and being fully apprised in the premises, is of the opinion and finds that: (1) Central Illinois Public Service Company, d/b/a AmerenCIPS, is an Illinois corporation engaged in the production, transmission, sale and delivery of electricity to the public in the State of Illinois, and is a public utility as defined in Section 3-105 of the Public Utilities Act and an electric utility as defined in Section 16-102 of the Act; Union Electric Company, d/b/a AmerenUE is an Illinois corporation engaged in the production, transmission, sale and delivery of electricity to the public in the State of Illinois, and is a public utility as defined in Section 3-105 of the Public Utilities Act and an electric utility as defined in Section 16-102 of the Act (2) the Commission has jurisdiction over the Ameren Companies and of the subject matter of this docket; (3) the statements of fact set forth in the prefatory portions of this Order are supported by the evidence of record and are hereby adopted as findings of fact; (4) AmerenUE's October 2, 2000 notice of the transfer of assets to AmerenCIPS is in compliance with the requirements of Section 16-111(g) of the Act, and that transfer is approved, subject to Findings (9) and (10) of this Order; 14 (5) the proposed transaction will not render AmerenCIPS unable to provide its tariffed services in a safe and reliable manner; (6) there is not a strong likelihood that consummation of the proposed transaction will result in the Metro East ratepayers being subject to a request for an increase in base rates during the mandatory transition period pursuant to Subsection 16-111(d) of the Act; (7) AmerenCIPS will comply with the requirements of Section 16-128(c) of the Act, as provided in the revised "Asset Transfer Agreement" submitted for the record herein; (8) the transfer of AmerenUE's certificates of convenience and necessity to AmerenCIPS is reasonable and appropriate, and the public will be convenienced thereby, subject to Findings (9) and (10) of this Order; (9) in the event that the transfer approved herein occurs, then (i) the effect of any rate decrease ordered pursuant to the terms of the Customer Choice Law to be effective October 1, 2002 shall be excluded both from the calculation under Section 16-111(d) of the Act as to whether AmerenCIPS may request a base rate increase during the mandatory transition period, and from any such request made pursuant to Section 16-111(d) during the mandatory transition period; (ii) AmerenCIPS will have waived any right it may have otherwise had to request an extension of the recovery of transition charges beyond December 31, 2006; and (iii) AmerenCIPS shall timely file tariffs that conform to the tariffs included in the record in this proceeding, including all the revisions recommended by Staff and agreed to by AmerenCIPS; (10) AmerenCIPS shall file with the Commission the final accounting entries for the transaction, showing the actual dollar values of the assets and liabilities transferred from AmerenUE to AmerenCIPS at the time of Transfer, within 45 days after the date of the Transfer, and, at the time of filing, should provide a copy of this filing to the Director of Accounting. IT IS THEREFORE ORDERED by the Illinois Commerce Commission that the transfer of Union Electric Company's distribution and transmission assets and retail electric business in Illinois, all as described in the Asset Transfer Agreement, to Central Illinois Public Service Company is hereby approved, subject to the conditions set forth herein. IT IS FURTHER ORDERED that Central Illinois Public Service Company shall comply with Findings (9) and (10) of this Order. 15 IT IS FURTHER ORDERED that subject to the provisions of Section 10-113 of the Public Utilities Act and 83 Ill. Adm. Code 200.800, this Order is final; it is not subject to the Administrative Review Law. By order of the Commission this 20th day of December, 2000. (SIGNED) RICHARD L. MATHIAS Chairman (S E A L) EX-99 10 exd_9.txt EXHIBIT D-9 - APPLICATION TO FERC EXHIBIT D-9 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Union Electric Company ) d/b/a AmerenUE ) and ) Docket No. EC04-____ Central Illinois Public Service Company ) d/b/a AmerenCIPS ) APPLICATION OF UNION ELECTRIC COMPANY D/B/A AMERENUE AND CENTRAL ILLINOIS PUBLIC SERVICE COMPANY D/B/A AMERENCIPS FOR AUTHORIZATION UNDER SECTION 203 OF THE FEDERAL POWER ACT TO TRANSFER JURISDICTIONAL FACILITIES Joseph H. Raybuck Alan J. Statman Managing Assistant Douglas O. Waikart General Counsel David S. Berman Edward C. Fitzhenry Wright & Talisman, P.C. Associate General Counsel 1200 G Street, N.W. Ameren Services Company Suite 600 1901 Chouteau Avenue Washington, DC 20005 St. Louis, Missouri 63166-6149 (202) 393-1200 (314) 554-2976 (202) 393-1240 (fax) (314) 554-3533 (202) 393-1240 (fax) (314) 554-4014 (fax) ATTORNEYS FOR UNION ELECTRIC COMPANY D/B/A AMERENUE AND CENTRAL ILLINOIS PUBLIC SERVICE COMPANY D/B/A AMERENCIPS November 12, 2003 EXHIBIT D-9 TABLE OF CONTENTS PAGE ---- I. INTRODUCTION AND BACKGROUND...............................................4 A. Description Of Applicants............................................5 1. Union Electric Company d/b/a AmerenUE...........................5 2. Central Illinois Public Service Company d/b/a AmerenCIPS........7 3. Provision of transmission service and plans for RTO participation...................................................8 4. Additional Ameren companies....................................10 B. Description Of The Transaction......................................12 II. THE PROPOSED RESTRUCTURING AND TRANSFER IS IN THE PUBLIC INTEREST AND SHOULD BE APPROVED...................................................14 A. Applicable Standard Of Review.......................................14 B. The Transaction Will Have No Adverse Effect On Competition, Rates, Or Regulation................................................16 1. The transfer will have no adverse effect on competition........16 2. The transfer will have no adverse effect on rates..............17 3. The transfer will have no adverse effect on regulations........18 4. The transaction will produce efficiencies and other benefits...20 III. INFORMATION REQUIRED BY 18 C.F.R. PART 33................................21 IV. REQUEST FOR EXPEDITED APPROVAL...........................................24 V. CONCLUSION...............................................................25 i UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Union Electric Company ) d/b/a AmerenUE ) and ) Docket No. EC04-____ Central Illinois Public Service Company ) d/b/a AmerenCIPS.. ) APPLICATION OF UNION ELECTRIC COMPANY D/B/A AMERENUE AND CENTRAL ILLINOIS PUBLIC SERVICE COMPANY D/B/A AMERENCIPS FOR AUTHORIZATION UNDER SECTION 203 OF THE FEDERAL POWER ACT TO TRANSFER JURISDICTIONAL FACILITIES Pursuant to section 203 of the Federal Power Act ("FPA"), 16 U.S.C. ss. 824b, and Part 33 of the Federal Energy Regulatory Commission's ("Commission" or "FERC") regulations issued thereunder, 18 C.F.R. part 33, Union Electric Company d/b/a AmerenUE ("AmerenUE") and Central Illinois Public Service Company d/b/a AmerenCIPS ("AmerenCIPS") (collectively, AmerenUE and AmerenCIPS are referred to as "Applicants"), request all Commission authorizations and approvals necessary for AmerenUE to sell and transfer, and for AmerenCIPS to purchase and accept, certain jurisdictional assets now owned by AmerenUE. AmerenCIPS and AmerenUE are corporate affiliates and subsidiaries of Ameren Corporation ("Ameren"), and this transaction only involves the intra-company transfer of transmission, distribution, and other assets./1/ - ---------- /1/ For purposes of the Commission's jurisdiction under FPA section 203, this transaction primarily involves the transfer of transmission and other related facilities. In addition, this transaction will also involve the transfer of certain gas distribution facilities that are not used to provide service subject to the FERC's jurisdiction under the Natural Gas Act, and FERC approval is not required for this aspect of the transfer. As Applicants show herein, this transfer will have no adverse effect on competition, rates, or regulation, is consistent with the public interest, and should therefore be promptly approved by the Commission. Specifically, once this transaction is completed, Ameren's franchised utility operations will be restructured so that AmerenUE's transmission and other electric and gas utility facilities will be located entirely in one state - Missouri, with AmerenUE's facilities now located in Illinois being transferred to AmerenCIPS, which will operate exclusively in Illinois. Missouri and Illinois are the two states in which AmerenUE and AmerenCIPS, respectively, today primarily conduct business and serve wholesale and retail load. This transaction is consistent with the regulatory regimes in Missouri and in Illinois. In particular, the transaction will allow AmerenUE to operate its electric and gas utility business only in Missouri as a vertically integrated utility subject to traditional regulation. It will also allow the current AmerenUE "Metro East" service territory to operate as part of AmerenCIPS in Illinois which is open to retail competition and, thus, will eliminate the potential for conflicting requirements of Missouri and Illinois. Also, the transaction will allow AmerenCIPS to operate its electric and gas utility business in Illinois, including the former AmerenUE Metro East service area, as essentially a "wires" and "pipes" company. Currently, AmerenUE owns generation whereas AmerenCIPS does not. This restructuring is in accord with Illinois law, which allows for the competition of electricity at retail, and which has encouraged vertically integrated utilities to transfer their generation to an affiliate or some other third party. Applicants believe that the transaction will place AmerenUE's and AmerenCIPS' utility operations on bases that are consistent with the divergent desires of the Missouri and Illinois state commissions as to whether utilities should continue to own 2 generating assets. As a result, the transaction will make AmerenUE's operations consistent with Missouri law, which does not allow for the competition of electricity at retail, and keep AmerenCIPS' operations consistent with Illinois law, which permits and encourages such competition. Because this transaction involves the restructuring of Ameren's utility operations and the intra-corporate transfer of assets between two "traditional" utilities, there will be no adverse impact on competition. Likewise, there will be no effect on rates. As described below, AmerenUE and AmerenCIPS operate a joint transmission system. Rates for transmission service over this system are determined on a system-wide basis without regard to which operating company owns the facilities and thus will not be affected by this transfer. In addition, as the Commission has found in two recent orders involving the Ameren companies, there are sufficient measures in place, including retail rate freezes in both Illinois and Missouri and the terms and conditions of the wholesale contracts now in effect, to ensure that there will be no adverse impact on rates for any customer./2/ In addition, because no new holding company will result, and because Ameren has already committed to abide by the Commission's rules on intra-company transactions, there will be no adverse impact on regulation. Accordingly, the Commission should promptly grant the approvals requested herein. The transfer of AmerenUE's electric facilities to AmerenCIPS will not affect the coordinated operation of any electric transmission or distribution plant, which will continue to be operated in the same manner, by the same personnel, and with the same degree of safety and reliability as they are today. - ---------- /2/ Ameren Energy Generating Co., 103 FERCP. 61,128, at PP 53-54 (2003) ("AEG"); Ameren Servs. Co., 101 FERC P. 61,202, at PP 61-62 (2002) ("Ameren Servs."). 3 Similarly, the transfer of AmerenUE's gas distribution facilities to AmerenCIPS will not affect the coordinated operation of the existing gas utility properties. Further, the combination of AmerenUE's utility assets in Illinois with those of AmerenCIPS will result in certain efficiencies and economies through elimination of duplicative regulatory filings and burdens, and thereby produce savings for the benefit of the public. Applicants request expedited consideration and the issuance of a Commission order within 60 days of this filing in order to allow this transaction to close on a timely basis. The Commission has indicated it will typically act on an uncontested "non-merger" application filed under section 203 within 60 days, which is consistent with this request./3/ I. INTRODUCTION AND BACKGROUND. The purpose for this transaction is to allow Ameren to restructure its utility operations and, in particular, for AmerenUE to transfer its Illinois electric and gas utility business located around the Alton and East St. Louis, Illinois areas (also known as its Metro East service area) to AmerenCIPS. A complete description of the proposed transaction and the facilities to be transferred is provided below. Ameren, through its public utility subsidiaries, engages in wholesale and retail power sales and provides electric transmission services in Missouri and Illinois. In this application, AmerenUE and AmerenCIPS seek the necessary FERC authorization to transfer from AmerenUE to AmerenCIPS - ---------- /3/ Revised Filing Requirements Under Part 33 of the Commission's Regulations, Order No. 642, 1996-2000 FERC Stats. & Regs., Regs., Preambles P. 31,111, at 31,876 (2000), reh'g denied, Order No. 642-A, 94 FERC P. 61,289 (2001) ("Order No. 642"). 4 the facilities described in Part II.B of this Application and listed in Exhibit H hereto. These facilities, for purposes of the Commission's approval, consist of AmerenUE's transmission facilities located in Illinois. AmerenUE will retain generation located in Illinois and in Iowa near the Illinois border together with interconnection-related equipment connecting these plants to the Ameren transmission system. The transaction will also allow AmerenUE to transfer certain electric distribution and gas utility facilities to AmerenCIPS. A. DESCRIPTION OF APPLICANTS. 1. UNION ELECTRIC COMPANY D/B/A AMERENUE. AmerenUE, a first-tier subsidiary of Ameren and an affiliate of AmerenCIPS, provides electric service to over one million retail and wholesale customers in Missouri and in parts of Illinois, as well as gas service to approximately 130,000 customers in those states. AmerenUE's peak load in 2002 was 8,643 MW, and its peak usage periods occurred during the summer months. AmerenUE provides wholesale electric service to the following full requirements customers, each of which is a municipal electric system located in Missouri: California, Centralia, Hannibal, Kahoka, Kirkwood, Linneus, Marceline, Perry, and St. James. AmerenUE currently owns approximately 8,500 MW of generation capacity, and utilizes these facilities and purchases power on the market in order to serve its customers. AmerenUE's retail customers in Illinois are protected by retail choice and a retail rate freeze. Specifically, pursuant to the Electric Service Customer Choice and Rate Relief Law of 1997 ("Customer Choice Law"), all retail customers have choice, and have had choice since May 1, 2002. In addition, AmerenUE's bundled retail customers in Illinois are protected by a retail rate freeze that 5 will remain in effect through the end of 2006./4/ While AmerenUE may request an increase in bundled rates prior to 2007 if the two-year average of its earned rate of return on common equity falls below the 2-year monthly average yields of 30-year U.S. Treasury bonds,/5/ it has not done so and neither expects to do so prior to the end of the rate freeze. This rate freeze will protect AmerenUE's bundled retail ratepayers in Illinois from any rate increases through the end of 2006. Unlike Illinois, Missouri has not elected to allow for competition for the provision of electricity at retail. As a result, AmerenUE has an obligation to serve, together with the exclusive right to serve, the retail customers located in its service area in Missouri./6/ Despite the lack of any restructuring legislation in Missouri, AmerenUE's Missouri customers are protected by a retail rate freeze that in this case will remain in place through June 30, 2006, under the terms of a Stipulation and Agreement ("Stipulation") between AmerenUE and a number of other parties that comprehensively resolves certain retail rate issues in Missouri./7/ The Stipulation sets rates that, except for certain specified rate decreases, will - ---------- /4/ 220 Ill. Comp. Stat. 5/16-111(a) (2003); 220 Ill. Comp. Stat. 5/16-102 (2003). As described below, these same protections apply to AmerenCIPS' retail customers. /5/ 220 Ill. Comp. Stat. 5/16-111(d) (2003). /6/ Under the Illinois Public Utilities Act, AmerenUE and other Illinois electric utilities still have an obligation to serve residential and small commercial customers, even though they no longer have an exclusive right to serve such customers. 220 Ill. Comp. Stat. 5/16-103 (2003). Similarly, AmerenUE and other Illinois electric utilities have an obligation to serve other retail customers generally where alternative suppliers are not available. 220 Ill. Comp. Stat. 5/16-113 (2003). /7/ The Missouri Public Service Commission ("MoPSC") approved the Stipulation in Staff of the Mo. Pub. Serv. Comm'n v. Union Elec. Co. d/b/a AmerenUE, Mo. PSC Case No. EC-2002-1 (July 25, 2002) ("July 25 Order"). The Stipulation was unopposed, and approved by the MoPSC as reasonable and in the public interest. 6 remain in place through June 30, 2006, and which will protect retail ratepayers from any rate increases prior to that date. Stipulation, Section 3./8/ All of AmerenUE's wholesale customers take service under contracts that have fixed rate provisions, or have other pricing provisions that will protect such customers from having to pay any costs that could arise from affiliate abuse. The customers can also purchase power from others once their existing contracts with AmerenUE expire. 2. CENTRAL ILLINOIS PUBLIC SERVICE COMPANY D/B/A AMERENCIPS. AmerenCIPS, also a first-tier subsidiary of Ameren and an affiliate of AmerenUE, provides electric service to over 325,000 retail and wholesale customers in Illinois, as well as gas service to approximately 170,000 customers in that state. AmerenCIPS' peak load in 2002 was 2,315 MW and its peak usage periods occurred during the summer months. AmerenCIPS does not serve any wholesale power sales customers. AmerenCIPS' retail customers are protected by retail choice and by the retail rate freeze as explained above with regard to AmerenUE's Illinois retail customers. AmerenCIPS currently does not own any generation. Pursuant to the Customer Choice Law, effective May 1, 2000, AmerenCIPS transferred ownership of its generation assets to Ameren Energy Generating Company ("AEG"). AEG currently sells the output from its generating facilities (including others it has acquired since the spin-off of the AmerenCIPS facilities) to Ameren Energy - ---------- /8/ The Stipulation requires AmerenUE to reduce its retail rates by $110 million over two years, with the first rate decrease of $50 million effective April 1, 2002. Id., Section 2. 7 Marketing Company ("AEM")/9/ under both cost-based and market-based rates, as well as to others pursuant to its market-based rate authority. AEM then either sells the power on the market or to AmerenCIPS for sale to AmerenCIPS' retail customers in Illinois. All sales of power from AEG to AEM, and then from AEM to AmerenCIPS, for resale to AmerenCIPS' bundled customers, take place under FERC-approved power sales agreements, whereby the prices paid to the sellers are cost-based rates based on the rates AmerenCIPS is allowed by the Illinois Commerce Commission ("ICC") to charge its retail customers./10/ These contracts will remain in place through at least December 31, 2004. 3. PROVISION OF TRANSMISSION SERVICE AND PLANS FOR RTO PARTICIPATION. AmerenUE and AmerenCIPS provide open access transmission service under a single Open Access Transmission Tariff ("Ameren OATT"). Ameren Services Company ("Ameren Services"), acting as agent for AmerenUE and AmerenCIPS, is the Transmission Provider under the Ameren OATT. The Ameren transmission system is located within the Mid-America Interconnected Network, Inc. ("MAIN") regional reliability council. Because AmerenUE and AmerenCIPS operate a joint transmission system, the rates for FERC-jurisdictional transmission services across the Ameren transmission system are determined on a single-system basis. - ---------- /9/ AEM is a power marketer and power broker that does not own any generation, transmission, or distribution facilities. It is authorized to sell power at market-based rates. Madison Gas & Elec. Co., 90 FERC P. 61,115, at 61,349-50 (2000) ("Madison Gas") (granting market-based rate authority to AEM and approving power sales agreements between AEG and AEM, and AEM and AmerenCIPS). /10/ Madison Gas, 90 FERC at 61,349-50. 8 Ameren has received conditional authorization from the Commission to join the Midwest Independent Transmission System Operator, Inc. ("Midwest ISO") through GridAmerica, a new independent transmission company ("ITC")./11/ On November 1, 2002, the GridAmerica Participants, including Ameren Services as agent for AmerenUE and AmerenCIPS, filed a proposed ITC Agreement and other documents to allow GridAmerica to function as an ITC within the Midwest ISO. By order issued on December 19, 2002, the Commission conditionally accepted the agreements submitted by the GridAmerica Participants to be effective December 31, 2002, subject to the submission of a compliance filing and a filing to support the proposed rates for GridAmerica./12/ While AmerenUE had intended to join the Midwest ISO as member of GridAmerica effective October 1, 2003, it has not yet transferred functional control of its transmission facilities to GridAmerica due to its need to obtain prior approval from the MoPSC, which it has not yet received. While AmerenUE is optimistic that it will eventually obtain such MoPSC approval, it is clear that this will occur sometime after October 1, 2003. Moreover, Ameren advised the FERC in the Docket No. ER03-262 proceedings held on September 29, 2003 that the participation of Illinois Power Company ("Illinois Power") in the PJM - ---------- /11/ Ameren Servs. Co., 100 FERCP. 61,135, at PP 1-2 (2002); Alliance Cos., 100 FERCP. 61,137, at PP 13, 35 (2002). AmerenUE has pending before the MoPSC a request to participate in the Midwest ISO through a contractual relationship with GridAmerica filed in MoPSC Case No. EO-2003-0271. /12/ Ameren Servs. Co., 101 FERCP. 61,320 (2002). 9 Interconnection, if and when Illinois Power is purchased by Exelon Corporation, would require Ameren to reevaluate its plans to join the Midwest ISO. 4. ADDITIONAL AMEREN COMPANIES. While not parties to this application, a description of the following companies, each of which is a subsidiary of Ameren, will assist the Commission in its consideration of the issues here: o Ameren Services provides administrative, accounting, legal, engineering, executive, and other support services to Ameren and its subsidiaries. As noted above, Ameren Services acts as agent for AmerenUE and AmerenCIPS under the Ameren OATT, as well as in other contexts. o AEM, a power marketer and power broker, does not own any generation, transmission, or distribution facilities, nor does it have any captive native load customers. As described above, AEM currently purchases energy and capacity from AEG for resale to AmerenCIPS in order to allow AmerenCIPS to serve its bundled retail load pursuant to contracts on file with the FERC, and for resale to others. AEM also provides wholesale electric service to six full or partial requirements customers, and to retail customers as authorized by Illinois law. o AEG, as mentioned, owns the generation facilities previously owned by AmerenCIPS. AEG has also received determinations from the FERC that it is an Exempt Wholesale Generator ("EWG") and is authorized to sell 10 power at wholesale at market-based rates./13/ As an EWG, AEG is engaged exclusively in the sale of power at wholesale. AEG is a direct subsidiary of Ameren Energy Development Company ("AED"), which primarily engages in the development and construction of new generating facilities for purchase by AEG for commercial operation./14/ On November 21, 2002, Ameren received conditional authorization under section 203 of the FPA to acquire Central Illinois Light Company now d/b/a AmerenCILCO ("AmerenCILCO")./15/ This transaction closed on January 31, 2003. AmerenCILCO serves both bundled and unbundled retail customers in Illinois, in addition to wholesale customers within that state. AmerenCILCO is a transmission-owning member of the Midwest ISO. - ---------- /13/ AEG received its initial determination of EWG status in Ameren Energy Generating Co., 92 FERC P. 62,023 (2000), and was granted market-based rate authorization in Ameren Energy Generating Co., 93 FERC P. 61,024 (2000), reh'g denied, 95 FERC P. 61,009 (2001). Consistent with 18 C.F.R. ss. 365.8, AEG has filed a number of applications for a continuing determination of EWG status to reflect the addition of new capacity or repowering of units, the most recent of which was granted in Ameren Energy Generating Co., 101 FERC P. 62,210 (2002). /14/ AED has received determinations from the Commission that it is an EWG, and has also been authorized to sell power at wholesale at market-based rates. See Ameren Energy Dev. Co., 93 FERCP. 62,211 (2000); Ameren Energy Dev. Co., 93 FERCP. 62,238 (2000). /15/ Ameren Servs. Co., 101 FERCP. 61,202 (2002). 11 B. DESCRIPTION OF THE TRANSACTION. The price, terms and conditions of the proposed transaction are set forth on the pro forma Asset Transfer Agreement, which is included as Exhibit I hereto./16/ A complete listing of the transmission facilities to be transferred is included as Exhibit H to this transaction. The facilities consist of the transmission facilities located in Illinois now owned by AmerenUE. AmerenUE proposes to transfer to AmerenCIPS the following electric related items: all of its Illinois electric utility service area assets, including assets such as the transmission facilities set forth in Exhibit H, distribution plant and customers, all offices, storerooms, and general plant (except those which are located at AmerenUE's Venice, Illinois generating plant and Keokuk, Iowa generating plant), its retail electric utility business located in the Metro East, and liabilities associated with the foregoing. AmerenUE will retain ownership of the generator lead lines and related equipment connecting the Venice and Keokuk plants to the transmission grid, as well as of the plants themselves. AmerenUE will also retain miscellaneous, minor amounts of property in Illinois to ensure the smooth operation of its electric system, including certain towers located on the Illinois side of the Mississippi River at the river's edge that carry electricity across the river; communication related equipment located in Illinois, and various permits, some of which are associated with the retained towers (e.g. river crossing permits, Federal Communications Commission permits, and railroad permits). - ---------- /16/ As noted, the Asset Transfer Agreement is being submitted in pro forma form, and has yet to be executed, and may be subject to minor changes that will be non-substantive in nature. Consistent with the Commission's merger filing requirements, counsel for Applicants states that to the best of their knowledge the final agreement will reflect the terms and conditions contained in the pro forma version submitted herewith in all material respects. Order No. 642 at 31,877. 12 In conjunction with the transfer, AmerenUE will assign to AmerenCIPS all of its Illinois certificates of convenience and necessity authorizing AmerenUE to provide electric utility service in Illinois, together with environmental permits, and all municipal and county franchises and licenses authorizing it to provide retail electric service in Illinois. AmerenUE will also transfer to AmerenCIPS all of its gas utility service assets, as well as the associated general plant assets, customers, and related liabilities in the Metro East service area. As set forth in the Asset Transfer Agreement, the transfer will occur in the following manner and will involve the following payments: A. AmerenUE will transfer approximately 50% of the combined assets net of liabilities to AmerenCIPS in exchange for a promissory note in an amount equal to approximately 50% of the total net book value, estimated to be approximately $69 million. B. AmerenUE will hold the note and receive payments including interest from AmerenCIPS. C. AmerenUE also will declare an "in kind" dividend to Ameren equal to the remaining balance (approximately 50 percent) of the net book value of the combined assets net of liabilities, estimated to be approximately $69 million. D. Ameren will then transfer the dividend assets and liabilities to AmerenCIPS as a capital contribution. 13 A copy of the form of the promissory note is attached as Attachment 1./17/ Under this note AmerenCIPS will pay AmerenUE approximately 50% of the net book value of the transferred assets. The initial term of the note is five years, with a ten year amortization schedule and a balloon payment at the end of the fifth year, unless otherwise extended, at market rate. With respect to the Venice generation plant that it will retain, AmerenUE will enter into a parallel operating agreement with Ameren Services (on behalf of AmerenUE and AmerenCIPS pursuant to the Ameren OATT). This agreement will be consistent with the Commission's pro forma large generator interconnection agreement and procedures set forth in Order No. 2003./18/ This agreement will be filed separately with the Commission prior to the transfer taking place. II. THE PROPOSED RESTRUCTURING AND TRANSFER IS IN THE PUBLIC INTEREST AND SHOULD BE APPROVED A. APPLICABLE STANDARD OF REVIEW This transaction is consistent with the public interest and therefore should be approved under section 203 of the FPA./19/ When reviewing a proposed - ---------- /17/ As is the case with the Asset Transfer Agreement, the promissory note is being submitted in pro forma form. /18/ Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, Final Rule, III FERC Stat. & Regs. PreamblesP. 31,146 (2003). /19/ Section 203(a) of the FPA, 16 U.S.C.ss.824b, states: No public utility shall sell, lease, or otherwise dispose of . . . its facilities subject to the jurisdiction of the Commission . . . or by any means whatsoever, directly or indirectly, merge or consolidate such facilities or any part thereof with those of any other person, or purchase, acquire, or take any security of any other public utility, without first having secured an order of the Commission authorizing it (continued) 14 transaction under section 203's public interest standard, the Commission looks at the proposed transaction's effect on competition, rates, and regulation./20/ This transaction satisfies the Commission's public interest requirements, as (1) there will be no adverse effect on competition; (2) there will be no adverse effect on rates; and (3) there will be no adverse effect on regulation at either the state or federal level. In fact, this transaction will enhance effective state regulation because it will allow for AmerenUE and AmerenCIPS to restructure their utility operations consistent with the regulatory environments in Missouri and Illinois, respectively. Also, this transaction will continue to allow for the coordinated operation of Ameren's Illinois utility system. AmerenUE's facilities in Illinois to be transferred will continue to be operated by the same personnel, and with the same degree of safety and reliability as they are today. Further, this transaction will allow for other benefits to the public in reducing duplicative regulatory filings and burdens on Ameren and on - ---------- (continued) to do so. . . . After notice and opportunity for hearing, if the Commission finds that the proposed disposition, consolidation, acquisition, or control will be consistent with the public interest, it shall approve the same. See also Northeast Utils. Serv. Co. v. FERC, 993 F.2d 937, 945 (1st Cir. 1993), petition for review denied, 55 F.3d 686 (1st Cir. 1995) (If Commission finds transfer of jurisdictional facilities will be consistent with the public interest, it shall approve the same). /20/ See Inquiry Concerning the Commission's Merger Policy Under the Federal Power Act: Policy Statement, Order No. 592, 1996-2000 FERC Stats. & Regs., Regs. PreamblesP. 31,044, at 30,111 (1996), reh'g denied, Order No. 592-A, 79 FERCP. 61, 321 (1997) ("Merger Policy Statement"); see also Order No. 642 at 31,872; Ariz. Pub. Serv. Co., 93 FERCP. 61,216, at 61,714 (2000), reh'g denied, 101 FERCP. 61,028 (2002); El Paso Energy Corp., 92 FERCP. 61,076, at 61,330 (2000). 15 applicable regulatory bodies. Therefore, the transaction should be approved by the Commission under FPA section 203. B. THE TRANSACTION WILL HAVE NO ADVERSE EFFECT ON COMPETITION, RATES, OR REGULATION. 1. THE TRANSFER WILL HAVE NO ADVERSE EFFECT ON COMPETITION. The transaction proposed herein is simply a reorganization of Ameren's corporate structure, intended to place all of Ameren's assets that are subject to state retail regulation in Missouri under one company (AmerenUE). In addition, the AmerenUE assets that are currently subject to state retail regulation in Illinois will be transferred to another Ameren company (AmerenCIPS) that already operates in Illinois. Other than the fact that the facilities will be owned by different Ameren companies, no change will occur in the way the associated generating facilities are operated, marketed or sold, regardless of whether the generation facilities will be used for cost-based sales or market-based sales. Moreover, this transfer does not involve a transfer between a traditional utility company and a non-traditional marketing affiliate, so there can be no concerns that this transaction is intended as a "safety net" for Ameren's merchant affiliates./21/ Further, the same source of power for AmerenCIPS will be used to serve the transferred Metro East service area, and no new power supply agreement between AmerenUE and AmerenCIPS is contemplated for the transfer. As an intra-corporate transfer, the proposed restructuring will not result in any changes in concentration in generation markets or any other applicable markets. The Commission has recognized that this type of transfer does not - ---------- /21/ Compare AEG, 103 FERC at P 37. 16 present any competitive concerns./22/ In addition, the Commission has determined that the competitive screen required by Order No. 642 is not required for intra-company transfers./23/ 2. THE TRANSFER WILL HAVE NO ADVERSE EFFECT ON RATES. The proposed transfer will have no adverse effect on rates. As noted above, Ameren operates a joint transmission system that consists of transmission facilities owned by AmerenUE and AmerenCIPS. Transmission service rates are determined on a system-wide basis without regard to whether AmerenUE or AmerenCIPS owns the facilities. Thus, the fact that the Metro East transmission facilities are being transferred from one operating company to another will not have any effect on transmission service rates. With respect to retail ratepayers, all of AmerenUE's bundled retail ratepayers are protected by rate freezes through either June or December of 2006. Specifically, all retail customers in Missouri will be protected by the retail rate freeze under the MoPSC-approved Stipulation through June 2006, and all bundled retail customers in Illinois by the statutory rate freeze through December 31, 2006. The Commission previously found that such protections are adequate to protect against an adverse effect on rates in its recent order in the AEG proceeding, and has indicated such rate freezes are sufficient to ensure that a transaction will have no adverse effect on rates in other decisions as well./24/ Similarly, AmerenCIPS' bundled retail ratepayers are protected by the - ---------- /22/ AEG, 103 FERC at P 36; see also Order No. 642 at 31,902; GenHoldings I, L.L.C., 96 FERCP. 61,140, at 61,602 (2001), PP&L Res. Inc., 90 FERCP. 61,203, at 61,649 (2000). /23/ Order No. 642 at 31,902. /24/ AEG at PP 53, 54; First Energy Corp., 94 FERCP. 61,179, at 61,620 (2001); Merger Policy Statement at 30,124. 17 Illinois rate freeze. Unbundled retail customers of AmerenUE and AmerenCIPS in Illinois are protected by the availability of retail choice. Finally, this transaction will have no effect on rates for any other customers. All of AmerenUE's wholesale power sales customers take service under contracts that have fixed rate or other pricing provisions that will not be affected by any costs associated with this transfer, and can purchase power from entities that are not affiliated with Ameren once their contracts expire. In addition, most of these agreements involve the sale of power on an unbundled basis, and thus cannot be affected by this transfer, which does not involve the transfer of generation or any new sale of power. Further, AmerenCIPS does not have any full requirements wholesale power sales customers. The Commission has also found that these safeguards are adequate to protect ratepayers from any adverse effect on rates./25/ 3. THE TRANSFER WILL HAVE NO ADVERSE EFFECT ON REGULATION. The Commission has indicated that it may set a section 203 application for hearing if (1) the merged entity would be part of a registered holding company and the applicants do not commit to abide by the Commission's policies on the pricing of non-power goods and services between affiliates, or (2) the affected state commissions do not have authority to act on the transaction./26/ Neither of these concerns is raised by this application. - ---------- /25/ Ameren Servs., 101 FERC at PP 61-62; Cinergy Servs., Inc., 98 FERCP. 61,306, at 62,307 (2002); Conectiv, 96 FERC P. 61,323 (2001). /26/ See Merger Policy Statement at 30,125. 18 With respect to the first issue, no new holding company will be formed as a result of this transaction. While Ameren is already a registered holding company under the Public Utility Holding Company Act of 1935, Ameren reiterates its prior commitment to abide by the FERC's policies with respect to intra-company and affiliate transactions. This commitment has been held sufficient to address this concern./27/ This Commission will continue to have authority over any transmission services and wholesale power sales made or provided by AmerenUE and AmerenCIPS. With respect to the authority of the states, Illinois and Missouri will continue to have jurisdiction over all retail sales of power, and all bundled transactions currently subject to their jurisdiction will remain subject to that jurisdiction. In fact, the proposed restructuring can serve to enhance the effectiveness of state regulation, by eliminating any potential for conflict between the differing regulatory approaches of Illinois and Missouri. Further, AmerenUE is seeking MoPSC approval of the proposed transaction./28/ The ICC has already approved a prior application for the transfer of AmerenUE's electric utility facilities and business in Illinois,/29/ and AmerenUE has already made filings with the ICC for the necessary approval - ---------- /27/ Merger Policy Statement at 30,125; see also 18 C.F.R.ss.2.26(e)(1). /28/ See Application filed by AmerenUE on August 25, 2003 in MoPSC Case No. EO-2004-0108. /29/ On October 2, 2000, AmerenUE filed pleadings with the ICC concerning this matter. Specifically, AmerenUE filed a "Notice of Transfer of Electric Distribution and Transmission Assets and Retail Electric Business and Entry of Various Agreements Pursuant to Section 16-111(g) of the Illinois Public Utilities Act" ("Notice"), a "Petition for Transfer of Gas System Assets and Gas Public Utility Business" ("Gas Petition"), and a Petition to transfer AmerenUE's retail electric certificates of convenience and necessity ("Certificate Petition"). On December 22, 2000, the ICC issued an Order approving AmerenUE's requests set forth in its Notice and Certificate (continued) 19 for the transfer of the gas utility business. AmerenUE and AmerenCIPS are also seeking the approval of the Securities and Exchange Commission ("SEC") under the Public Utility Holding Company Act of 1935 ("PUHCA"). 4. THE TRANSACTION WILL PRODUCE EFFICIENCIES AND OTHER BENEFITS As referenced above, the transaction will allow AmerenUE and AmerenCIPS to structure their utility businesses in Missouri and in Illinois, respectively, in a way that is more consistent with the status of retail competition in such states. The result will be utilities that are able to operate in a manner more consistent with the regulatory regimes in Missouri and Illinois. For example, since retail competition is not allowed in Missouri, AmerenUE continues to be a vertically integrated electric utility owning generation, transmission, and distribution. This creates conflicts with the regulations in effect in Illinois, which has encouraged electric utilities to transfer their generation to an affiliate or third party, including, for example, resource planning requirements. Further, the transaction will allow AmerenCIPS to eliminate a set of filings that AmerenUE is currently making with the ICC and other agencies. For example, after the transfer, Ameren will need to make only one set of filings in Illinois, instead of two, which should benefit the public and also the agencies that regulate Ameren by reducing the cost of utility service and the cost of regulation. Today, regulators, financial institutions, and others in the energy industry must address AmerenUE and AmerenCIPS as if they are separate, - ---------- (continued) Petition (ICC Docket Nos. 00-0650 and 00-0655 consol.) A copy of the ICC's order is included as Exhibit L hereto. The Petition with regard to the transfer of the retail gas business was withdrawn without prejudice, but as stated in the text above, a similar filing was recently made. 20 independent utilities in Illinois and, thus, duplicative notices, mailings, and all other administrative and regulatory functions can involve and be directed to both utilities. Future regulatory filings, such as rate cases, purchase gas adjustment dockets, rulemakings, security filings, among others, can be minimized or avoided by having one less Ameren utility in Illinois. The transfer will simplify and make more efficient the business and regulatory processes for all concerned. III. INFORMATION REQUIRED BY 18 C.F.R. PART 33. SECTION 33.2 REQUIREMENTS: 33.2(a) The exact name of the Applicants and their principal business addresses are: Central Illinois Public Service Company d/b/a AmerenCIPS 607 E. Adams Springfield, Illinois 62739 Union Electric Company d/b/a AmerenUE One Ameren Plaza 1901 Chouteau Avenue St. Louis, Missouri 63166-6149 33.2(b) Applicants respectfully request that all notices, correspondence, and other communications concerning this application be directed to the following persons: Joseph H. Raybuck Alan J. Statman Managing Assistant Douglas O. Waikart General Counsel Wright & Talisman, P.C. Edward C. Fitzhenry 1200 G Street, N.W. Associate General Counsel Suite 600 Ameren Services Company Washington, DC 20005 St. Louis, Missouri 63166-6149 (202) 393-1200 (314) 554-2976 (JHR) (202) 393-1240 (fax) (314) 554-3533 (ECF) statman@wrightlaw.com (314) 554-4014 (fax) --------------------- jraybuck@ameren.com waikart@wrightlaw.com - ------------------- --------------------- efitzhenry@ameren.com - --------------------- 21 33.2(c) A general description of the Applicants is provided in Part II.A hereof./30/ A list of the common officers and directors of the Applicants is provided as Exhibit E. A description of the Applicants' plans with respect to RTO participation is provided in Part I.A.3. To the extent not provided in this application, a complete listing of all business activities, power sales customers, etc., was provided as part of Ameren Services' July 19, 2002 filing in Ameren Services Co., Docket No. EC02-96, and is incorporated by reference herein. 33.2(d) The jurisdictional facilities to be transferred are described in Part II.B. Exhibit H also contains a listing of these facilities. 33.2(e) A description of the proposed transaction, including the names of all parties thereto, the consideration provided, and the effect of the transaction on the affected jurisdictional facilities, is provided above. A listing of all jurisdictional facilities associated with or affected by this transaction is included as Exhibit H, subject to being updated as necessary. 33.2(f) The form of the Asset Transfer Agreement related to this transaction is included as Exhibit I hereto. The form of the promissory note is included as Attachment 1 hereto. 33.2(g) The facts relied upon to show that the transaction is in the public interest are provided herein. - ---------- /30/ Neither AmerenCIPS' nor AmerenUE's organizational structure will change as a result of this transfer. 22 33.2(h) The required map is included as Exhibit K. 33.2(i) Applicants made a filing with the MoPSC on August 25, 2003, as referenced above. Applicants also have made filings with the SEC as required under the PUHCA, and also with the ICC for authority to transfer the gas utility business. Attached as Exhibit L is the order from the ICC dated December 20, 2000 in Docket Nos. 00-0650 and 00-0655 (consolidated) approving the transfer of AmerenUE's electric utility facilities to AmerenCIPS. Applicants will provide this Commission with copies of all other relevant orders as required by this section. SECTIONS 33.3 AND 33.4 REQUIREMENTS: Consistent with Order No. 642 and the Commission's regulations issued thereunder, the Applicants do not need to provide the analyses required by sections 33.3 and 33.4. These provisions establish the requirements for horizontal and vertical mergers, and are not required for transactions that only involve intra-corporate transfers. Order No. 642 at 31,902. 23 SECTION 33.5 REQUIREMENTS: Applicants' proposed accounting entries are included as Exhibit M hereto. SECTION 33.6 REQUIREMENTS (FORM OF NOTICE): A form of notice suitable for publication in the Federal Register is attached hereto. In addition, an electronic version of this notice is enclosed with this filing. LIST OF JURISDICTIONAL CONTRACTS AFFECTED - ----------------------------------------- AmerenUE is a party to a number of existing agreements for transmission and power services that will be affected by the transaction. The Commission has previously accepted these agreements for filing. To effectuate the transaction, AmerenCIPS will assume the rights and liabilities under these agreements pursuant to assignments of the contracts, consents thereto, or notifications to the affected parties as applicable. AmerenUE, AmerenCIPS, or both as needed, will obtain all necessary consents, and make all filings with the Commission which are required as a result of such assignments, consents, or notifications. Exhibit N contains a list of the affected jurisdictional contracts. COPIES OF THE APPLICATION - ------------------------- A copy of this application is being sent to all parties to affected contracts identified above in Exhibit N, and also to the ICC and the MoPSC. IV. REQUEST FOR EXPEDITED APPROVAL. Applicants request that the Commission issue an order approving this application within 60 days of its filing, or by January 12, 2004, without hearing or modification. As set forth herein, this filing is simply a corporate restructuring to place AmerenUE's regulated utility operations in one state. This transfer presents no issues with respect to the effect on competition, rates, and regulation, is in the public interest, and its prompt approval is 24 consistent with the Commission's statements that it will approve such applications within 60 days./31/ V. CONCLUSION. Wherefore, Applicants request that the Commission promptly grant all necessary approvals or authorizations necessary for the proposed corporate restructuring and transfer of facilities described herein to occur. Respectfully submitted, /s/ David S. Berman ------------------- Joseph H. Raybuck Alan J. Statman Managing Assistant Douglas O. Waikart General Counsel David S. Berman Edward C. Fitzhenry Wright & Talisman, P.C. Associate General Counsel 1200 G Street, N.W. Ameren Services Company Suite 600 1901 Chouteau Avenue Washington, DC 20005 St. Louis, Missouri 63166-6149 (202) 393-1200 (314) 554-2976 (202) 393-1240 (fax) (314) 554-3533 (314) 554-4014 (fax) ATTORNEYS FOR UNION ELECTRIC COMPANY D/B/A/ AMERENUE AND CENTRAL ILLINOIS PUBLIC SERVICE COMPANY D/B/A AMERENCIPS November 12, 2003 K:\AMEREN\1078-001-731.doc - ---------- /31/ Order No. 642 at 31,876. 25 VERIFICATION UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Union Electric Company ) d/b/a AmerenUE ) and ) Docket No. EC04-____ Central Illinois Public Service Company ) d/b/a AmerenCIPS.. ) Craig D. Nelson, being duly sworn, deposes and says that he is Vice President of Ameren Services Company and Central Illinois Public Service Company, that he has authority to sign this verification on behalf of AmerenCIPS and AmerenUE, that he has read the foregoing application, knows the contents thereof, and that the matters set forth therein are true and correct to the best of his knowledge and belief. /s/ Craig D. Nelson ------------------- Craig D. Nelson Subscribed and sworn to before me this 7th day of November, 2003. /s/ Valerie Whitehead --------------------- Notary Public FORM OF NOTICE UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Union Electric Company ) d/b/a AmerenUE ) and ) Docket No. EC04-____ Central Illinois Public Service Company ) d/b/a AmerenCIPS.. ) NOTICE OF FILING Take notice that on November 12, 2003, Union Electric Company d/b/a AmerenUE ("AmerenUE") and Central Illinois Public Service Company d/b/a AmerenCIPS ("AmerenCIPS") (collectively, AmerenUE and AmerenCIPS are referred to as "Applicants"), submitted an application pursuant to section 203 of the Federal Power Act, and Part 33 of the Federal Energy Regulatory Commission ("Commission" or "FERC") regulations, 18 C.F.R. Part 33, requesting all Commission authorizations and approvals necessary for AmerenUE to sell and transfer, and for AmerenCIPS to purchase and accept, certain jurisdictional assets now owned by AmerenUE. Copies of this filing have been served on all affected state commissions and also parties to contracts affected by the transfer. Any person desiring to intervene or to protest this filing should file with the Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a motion to intervene. All such motions or protests should be filed on or before the comment date, and, to the extent applicable, must be served on the applicant and on any other person designated on the official service list. This filing is available for review at the Commission or may be viewed on the Commission's web site at http://www.ferc.gov using the "FERRIS" link, select "General Search" and follow the instructions (call 202-208-2222 for assistance). Protests and interventions may be filed electronically via the Internet in lieu of paper; see 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's web site under the "e-Filing" link. Comment Date: ____, 2003 EXHIBIT E EXHIBIT H EXHIBIT I EXHIBIT K EXHIBIT L EXHIBIT M EXHIBIT N ATTACHMENT 1 EX-99 11 exd_10.txt EXHIBIT D-10 - ORDER OF FERC EXHIBIT D-10 UNITED STATES OF AMERICA105 FERC P. 62,186 FEDERAL ENERGY REGULATORY COMMISSION Union Electric Company d/b/a AmerenUE Docket No. EC04-21-000 Central Illinois Public Service Company d/b/a AmerenCIPS ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES (Issued December 16, 2003) On November 12, 2003, Union Electric Company d/b/a AmerenUE (AmerenUE) and Central Illinois Power Company d/b/a AmerenCIPS (AmerenCIPS) (collectively, Applicants) filed an application under section 203 of the Federal Power Act (FPA)/1/ requesting Commission authorization for a disposition of jurisdictional facilities resulting from a sale of certain of AmerenUE's electric facilities to AmerenCIPS. The jurisdictional facilities associated with the proposed transaction are transmission lines and substation facilities. Both AmerenUE and AmerenCIPS are wholly-owned subsidiaries of Ameren Corporation (Ameren), a registered holding company under the Public Utility Holding Company Act of 1935. AmerenUE is a vertically-integrated public utility, which owns generation and transmission facilities in both Illinois and Missouri and provides electric service to wholesale and retail customers in Illinois and Missouri. AmerenCIPS, which does not own generation facilities and has no wholesale power customers, owns transmission facilities in Illinois and currently serves retail customers solely in Illinois. AmerenCIPS meets its retail power needs with purchases from other Ameren affiliates. AmerenUE and AmerenCIPS provide transmission service under a single system open access transmission tariff. Ameren also recently acquired Central Illinois Light Company, now d/b/a AmerenCILCO and currently a transmission-owning member of the Midwest Independent Transmission System Operator, Inc. (Midwest ISO). Ameren has received conditional authorization from the Commission to join the Midwest ISO and to function within the Midwest ISO as part of GridAmerica, a new independent transmission company. Applicants state, however, that AmerenUE has not yet transferred functional control of its transmission facilities to GridAmerica because approval has not yet been received from the Missouri Public Service Commission (Missouri Commission). In addition, Applicants state that Ameren has advised the Commission that the participation of Illinois Power Company (Illinois Power) in the PJM Interconnection, if and when Illinois Power is - ---------- /1/ 16 U.S.C. ss. 824b (2000). Docket No. EC04-21-000 - 2 - purchased by Exelon Corporation, would require Ameren to reevaluate its plans to join the Midwest ISO. Under a proposed Asset Transfer Agreement among Union Electric Company d/b/a AmerenUE, Central Illinois Power Company d/b/a AmerenCIPS and Ameren Corporation (Asset Transfer Agreement), AmerenUE proposes to transfer all of its Illinois electric utility service area assets, with the exception of two generating plants, to AmerenCIPS./2/ The jurisdictional facilities to be transferred are transmission lines and substation facilities. As set forth in the Asset Transfer Agreement, the transfer will be accomplished in multiple parts: (1) AmerenUE will transfer approximately 50 percent of the combined assets net of liabilities to AmerenCIPS in exchange for a promissory note in an amount equal to approximately 50 percent of the total net book value; (2) AmerenUE will hold the note and receive payments, including interest from AmerenCIPS; (3) AmerenUE will declare an "in kind" dividend to Ameren equal to the remaining balance (approximately 50 percent) of the net book value of the combined assets net of liabilities; and (4) Ameren will then transfer the dividend assets and liabilities to AmerenCIPS as a capital contribution. According to Applicants, the effect of the proposed transaction will be to place all of AmerenUE's assets that are currently subject to state retail regulation in Illinois with AmerenCIPS. Applicants state that the proposed transaction is consistent with the public interest and will not adversely affect competition, rates or regulation. With regard to the effect on competition, Applicants state that the proposed intra-company transfer will not result in any change in concentration in relevant generation markets and therefore will not adversely affect competition. Applicants also state that the proposed transaction will not adversely affect the rates of wholesale power customers and retail customers. They note that all of AmerenUE's wholesale power customers are served under contracts that have fixed rate or other pricing provisions that will not be affected by any costs associated with the transfer and that AmerenCIPS has no wholesale customers. They also point out that the rates of all retail customers in Missouri are frozen through June 2006 and that a similar rate freeze exists for AmerenCIPS' bundled retail customers. Applicants further state that the proposed transaction will not adversely affect the Commission's or state regulation. Applicants state that Ameren will continue to adhere to its prior commitment to abide by the Commission's policies with respect to intra-company and affiliate transactions. They state that the Commission will continue to have authority over any transmission services and wholesale power sales made or provided by AmerenUE and AmerenCIPS. Finally, Applicants state that the state regulatory commissions in Missouri and Illinois will continue to have jurisdiction over retail transactions. The Illinois - ---------- /2/ Under the Asset Transfer Agreement, AmerenUE will also transfer certain electric and gas distribution facilities to AmerenCIPS. Docket No. EC04-21-000 - 3 - Commerce Commission has approved the proposed transaction and AmerenUE is currently seeking the Missouri Commission's approval. No state commission has intervened. This filing was noticed on November 19, 2003, with comments, protests or interventions due on or before December 3, 2003. None were filed. Notice of interventions and unopposed timely filed motions to intervene are granted pursuant to the operation of Rule 214 of the Commission's Rules of Practice and Procedure (18 C.F.R. ss. 385.214). Any opposed or untimely filed motion to intervene is governed by the provisions of Rule 214. After consideration, it is concluded that the proposed transaction is consistent with the public interest and is authorized, subject to the following conditions: (1) The proposed transaction is authorized upon the terms and conditions and for the purposes set forth in the application; (2) The foregoing authorization is without prejudice to the authority of the Commission or any other regulatory body with respect to rates, service, accounts, valuation, estimates, or determinations of cost, or any other matter whatsoever now pending or which may become before the Commission; (3) Nothing in this order shall be construed to imply acquiescence in any estimate or determination of cost or any valuation of property claimed or asserted; (4) The Commission retains authority under sections 203(b) and 309 of the FPA to issue supplemental orders as appropriate; (5) Applicants shall make appropriate filings under section 205 of the FPA, as necessary, to implement the transaction; (6) Applicants shall account for the transfer of facilities in accordance with the instructions to Account 102, Electric Plant Purchased or Sold, of the Uniform System of Accounts and file, within six months of the date of the transfer, detailed journal entries, with any narrative statements necessary to explain the proposed accounting, including related income tax consequences; and (7) Applicants shall notify the Commission within 10 days of the date that the disposition of jurisdictional facilities has occurred. Docket No. EC04-21-000 - 4 - This action is taken pursuant to the authority delegated to the Director, Division of Tariffs and Market Development - West, pursuant to 18 C.F.R. ss. 375.307. This order constitutes final agency action. Requests for rehearing by the Commission may be filed within 30 days of the date of issuance of this order, pursuant to 18 C.F.R. ss. 385.713. Jamie L. Simler Director Division of Tariffs and Market Development - West EX-99 12 exd_11.txt EXHIBIT D-11 - APPLICATION TO FERC EXHIBIT D-11 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Ameren Energy Generating Company ) and ) Union Electric Company ) Docket No. EC03-____ d/b/a AmerenUE ) APPLICATION OF AMEREN ENERGY GENERATING COMPANY AND UNION ELECTRIC COMPANY D/B/A AMERENUE FOR AUTHORIZATION UNDER SECTION 203 OF THE FEDERAL POWER ACT TO TRANSFER JURISDICTIONAL FACILITIES Joseph H. Raybuck Douglas O. Waikart Managing Assistant David S. Berman General Counsel Wright & Talisman, P.C. Ameren Services Company 1200 G Street, N.W. St. Louis, Missouri 63166-6149 Suite 600 (314) 554-2976 Washington, D.C. 20005 (314) 554-4014 (fax) (202) 393-1200 (202) 393-1240 (fax) ATTORNEYS FOR AMEREN ENERGY GENERATING COMPANY AND UNION ELECTRIC COMPANY D/B/A AMERENUE February 5, 2003 Table of Contents Page I. INTRODUCTION AND BACKGROUND...............................................2 A. Description Of Parties...............................................3 1. Ameren Energy Generating Company................................3 2. Union Electric Company d/b/a AmerenUE...........................5 3. Additional Ameren Companies.....................................6 B. Description Of The Transaction.......................................7 C. Rate Freezes In Illinois And Missouri And Protections For Wholesale Customers..................................................9 D. Plans For Participation In A Regional Transmission Organization.....11 II. THIS TRANSACTION IS IN THE PUBLIC INTEREST AND SHOULD BE APPROVED........12 A. This Transaction Offers Significant Benefits To AmerenUE And Its Ratepayers......................................................12 B. The Transaction Will Have No Adverse Effects On Competition, Rates Or Regulation.................................................16 1. The transfer will have no adverse effect on competition........16 2. The transfer will have no adverse effect on rates..............17 3. There will be no adverse effect on regulation..................18 III. INFORMATION REQUIRED BY 18 C.F.R. PART 33................................19 IV. REQUEST FOR EXPEDITED APPROVAL...........................................22 V. REQUEST FOR PRIVILEGED TREATMENT.........................................22 VI. CONCLUSION...............................................................23 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Ameren Energy Generating Company ) and ) Union Electric Company ) Docket No. EC03-____ d/b/a AmerenUE ) APPLICATION OF AMEREN ENERGY GENERATING COMPANY AND UNION ELECTRIC COMPANY D/B/A AMERENUE FOR AUTHORIZATION UNDER SECTION 203 OF THE FEDERAL POWER ACT TO TRANSFER JURISDICTIONAL FACILITIES Pursuant to Section 203 of the Federal Power Act ("FPA"), 16 U.S.C. ss. 824b, and Part 33 of the Federal Energy Regulatory Commission's ("Commission" or "FERC") regulations issued thereunder, 18 C.F.R. part 33, Ameren Energy Generating Company ("AEG") and Union Electric Company d/b/a AmerenUE ("AmerenUE") (collectively, AEG and AmerenUE are referred to as "Applicants"), files this application requesting all Commission authorizations and approvals necessary for AEG to sell and transfer, and for AmerenUE to purchase and accept, certain jurisdictional assets now owned by AEG. AEG and AmerenUE are corporate affiliates and subsidiaries of Ameren Corporation ("Ameren"), and this transaction only involves the intra-company transfer of transmission and generation assets./1/ As Applicants show herein, this transfer will have no adverse effect on competition, rates, or regulation, and is consistent with the public interest because it will provide AmerenUE with a cost-efficient and - ---------- /1/ While this transaction primarily involves the transfer of generation facilities, the Commission's approval under section 203 may be required because the transfer will involve certain transmission leads, transformers, and other transmission facilities. reliable source of energy and capacity to serve its customers, especially its bundled retail customers in Missouri and Illinois for which AmerenUE has an obligation to serve under applicable state laws. Further, this transfer is necessary and appropriate to implement provisions of a Missouri retail rate settlement requiring AmerenUE to make an infrastructure commitment to add 700 MW of generating capacity, which may include the purchase of a generation plant from an affiliate at net book value. Accordingly, the Commission should grant the approvals requested herein./2/ Applicants request expedited consideration and the issuance of a Commission order by April 2, 2003 in order to allow this transaction to close by May 1, 2003 or shortly thereafter. This will allow AmerenUE t acquire these assets in time to satisfy its regional reliability council's generation capacity reserve requirements for the upcoming 2003 peak summer months and allow AmerenUE to comply with the Missouri settlement on a timely basis. I. INTRODUCTION AND BACKGROUND A complete description of the proposed transaction and the facilities to be transferred is provided below. Ameren, through its public utility subsidiaries, engages in wholesale and retail power sales and provides electric transmission services in Missouri and Illinois. In this application, AEG and AmerenUE seek the necessary FERC authorization to transfer the transmission facilities listed in Part II.B of this Application and Exhibit H hereto. These facilities consist - ---------- /2/ In support, AmerenUE and AEG provide in Appendix A to this application the affidavit of Mr. Richard A. Voytas, Manager of Corporate Analysis at Ameren Services Company ("Ameren Services"). As set forth in Part V of this application, privileged treatment pursuant to 18 C.F.R. ss. 388.112 is requested for Attachment II to Mr. Voytas' affidavit. of the transmission leads and other transmission facilities necessary to connect the generation facilities owned by AEG, and to be transferred to AmerenUE, to the Ameren transmission system. The transaction will also allow AEG to transfer 548 MW of generation to AmerenUE. A. DESCRIPTION OF PARTIES 1. AMEREN ENERGY GENERATING COMPANY AEG is an Exempt Wholesale Generator ("EWG") that has also been authorized to sell power at market-based rates./3/ AEG is directly owned by Ameren Energy Development Company ("AED"), which is a subsidiary of Ameren Energy Resources Company ("AER")./4/ As an EWG, AEG does not serve any bundled or unbundled retail customers, and does not hold any service area franchises. AEG is engaged directly, indirectly through one or more affiliates, and exclusively in the business of owning or operating one or more eligible facilities and selling electric energy at wholesale, and will remain so after this transaction closes. On May 1, 2000, pursuant to the Illinois Electric Service Customer Choice and Rate Relief Law of 1997 ("Customer Choice Law"), Central Illinois Public - ---------- /3/ AEG received its initial determination of EWG status in Ameren Energy Generating Co., 92 FERC P. 62,023 (2000), and was granted market-based rate authorization in Ameren Energy Generating Co., 93 FERC P. 61,024 (2000), reh'g denied, 95 FERC P. 61,009 (2001) ("AEG"). Consistent with 18 C.F.R. ss. 365.8, AEG has filed a number of applications for a continuing determination of EWG status to reflect the addition of new capacity or repowering of units, the most recent of which was granted in Ameren Energy Generating Co., 101 FERC P. 62,210 (2002). /4/ AED primarily engages in the development and construction of new generating facilities to be purchased by AEG in order to expand its operations. AED has also received determinations from the Commission that it is an EWG, and been authorized to sell power at wholesale and market-based rates. See Ameren Energy Dev. Co., 91 FERCP. 62,238 (2000); Ameren Energy Dev. Co., 93 FERCP. 62,211 (2000). AER is directly owned by Ameren. Service Company d/b/a AmerenCIPS ("AmerenCIPS") transferred ownership of its generation assets to AEG./5/ Since that time, AEG has acquired and repowered additional generation units. AEG currently owns approximately 4,600 MW of generating capacity located in Illinois and Missouri, including the 548 MW it proposes to transfer to AmerenUE. AEG currently sells the output from its generating facilities to Ameren Energy Marketing Company ("AEM")/6/ under both cost-based and market-based rates, as well as to others pursuant to its market-based rate authority. AEM then either sells the power on the market or to AmerenCIPS for sale to AmerenCIPS' retail customers in Illinois./7/ All sales of power from AEG to AEM, and then from AEM to AmerenCIPS for resale to AmerenCIPS' bundled customers take place under FERC-approved power sales agreements, whereby the prices paid to sellers are cost-based rates based on the rates AmerenCIPS is - ---------- /5/ AmerenCIPS serves both bundled and unbundled retail customers located in Illinois. Its bundled retail customers are protected by a rate freeze, established by the Customer Choice Law, through January 1, 2007. Illinois, in the adoption and implementation of its Customer Choice Law, determined that competition would be enhanced where competitive generation and marketing functions are physically and functionally separated from the utility transmission and distribution system. The Commission, in an order issued on November 15, 1999, approved the transfer of AmerenCIPS' generation facilities to AEG. See Cent. Ill. Pub. Serv. Co., 89 FERCP. 62,125 (1999). /6/ AEM is a power marketer and power broker that does not own any generation, transmission, or distribution facilities. It is authorized to sell power at market-based rates. See Madison Gas & Elec. Co., 90 FERC P. 61,115, at 61,349-50 (2000) ("Madison Gas") (granting market-based rate authority to AEM and approving power sales agreements between AEG, AEM, and AmerenCIPS). /7/ AEM may also obtain power from other sources. allowed by the Illinois Commerce Commission ("ICC") to charge its retail customers./8/ These contracts will remain in place through December 31, 2004. 2. UNION ELECTRIC COMPANY D/B/A AMERENUE AmerenUE, a first-tier subsidiary of Ameren and an affiliate of AEG, provides electric service to over 1 million retail and wholesale customers in Missouri and in parts of Illinois, as well as gas service to approximately 130,000 customers in those states. AmerenUE's peak load in 2002 was 8,643 MW, and its peak usage periods occurred during the summer months. AmerenUE provides wholesale electric service to the following full requirements customers, each of which is a municipal electric system located in Missouri: California, Centralia, Hannibal, Kahoka, Kirkwood, Linneus, Marceline, Perry, and St. James. AmerenUE currently owns approximately 8,500 MW of generation capacity, and utilizes these facilities and purchases power on the market in order to serve its customers. Unlike Illinois, Missouri has not elected to allow for competition for the provision of electricity at retail. As a result, AmerenUE has an obligation to serve, together with the exclusive right to serve, the retail customers located in its service area in Missouri./9/ AmerenUE, along with AmerenCIPS, provides - ---------- /8/ Madison Gas, 90 FERC at 61,349-50; AEG, 93 FERC at 61,047 (granting market-based rate authority to AEG and approving an amendment to the contract between AEG and AEM). /9/ Under the Illinois Public Utilities Act, AmerenUE and other Illinois electric utilities still have an obligation to serve residential and small commercial customers, even though they no longer have an exclusive right to serve such customers. 220 Ill. Comp. Stat. 5/16-103 (2003). Similarly, AmerenUE and other electric utilities have an obligation to serve other retail customers generally where alternative suppliers are not available. 220 Ill. Comp. Stat. 5/16-113 (2003). open access transmission service under a single Open Access Transmission Tariff ("Ameren OATT"). Ameren Services Company ("Ameren Services"), acting as agent for AmerenUE and AmerenCIPS, is the Transmission Provider under the Ameren OATT. The Ameren transmission system is located within the Mid-America Interconnected Network, Inc. ("MAIN") regional reliability council. Ameren has received conditional authorization from the Commission to join the Midwest Independent Transmission System Operator, Inc. ("Midwest ISO") through GridAmerica, a new independent transmission company ("ITC")./10/ On November 1, 2002, the GridAmerica Participants, including Ameren Services as agent for AmerenUE and AmerenCIPS, requested expedited action to allow commencement of GridAmerica as an ITC within the Midwest ISO during April 2003. By order issued on December 19, 2002, the Commission conditionally accepted the agreements submitted by the GridAmerica Participants to be effective December 31, 2002, subject to the submission of a compliance filing and a filing to support the proposed rates for GridAmerica./11/ 3. ADDITIONAL AMEREN COMPANIES While not parties to this application, a description of the following companies, each of which is a subsidiary of Ameren, will assist the Commission in its consideration of the issues here: - ---------- /10/ Ameren Servs. Co., 100 FERCP. 61,135, at 61,511, 61,515 (2002); Alliance Cos., 100 FERCP. 61,137, at PP 13, 35 (2002). /11/ Ameren Servs. Co., 101 FERCP. 61,320 (2002) ("December 19 Order"). o Ameren Services provides administrative, accounting, legal, engineering, executive, and other support services to Ameren and its subsidiaries. As noted above, Ameren Services acts as agent for AmerenUE and AmerenCIPS under the Ameren OATT, as well as in other contexts. o AEM, a power marketer and power broker, does not own any generation, transmission, or distribution facilities, nor does it have any captive native load customers. As described above, AEM currently purchases energy and capacity from AEG for resale to AmerenCIPS in order to allow AmerenCIPS to serve its bundled retail load pursuant to contracts on file with the FERC, and for resale to others. AEM also provides wholesale electric service to six full or partial requirements customers. o AmerenCIPS serves retail customers located in Illinois, including both bundled retail customers and unbundled customers in its service area, who have not exercised choice. AmerenCIPS' bundled retail rates are protected by a rate freeze established by the Customer Choice Law, which expires January 1, 2007. In addition, Ameren has received conditional authorization under section 203 of the FPA to merge with Central Illinois Light Company ("CILCO")./12/ This transaction closed on January 31, 2003. B. DESCRIPTION OF THE TRANSACTION A complete listing of the transmission facilities to be transferred is included as Exhibit H to this transaction. In addition to these facilities, AEG will also sell and transfer to AmerenUE: (1) from AEG's Pinckneyville, Illinois generation facility, four 44 MW combustion turbine generator ("CTG") units and - ---------- /12/ Ameren Servs. Co., 101 FERCP. 61,202 (2002). four 35 MW CTG units, which represent 100% of the capacity at that facility; and (2) from AEG's Kinmundy, Illinois generation facility, two 116 MW CTG units, which also represent 100% of the total capacity of that facility. Voytas at P. 4. The terms of the subject transaction are set forth in the "Asset Transfer Agreement - Pinckneyville Generation Station Between Ameren Energy Generating Company And Union Electric Company" and "Asset Transfer Agreement - Kinmundy Generation Station Between Ameren Energy Generating Company And Union Electric Company" ("Pinckneyville Transfer Agreement" and "Kinmundy Transfer Agreement," respectively, and "Transfer Agreements," collectively)./13/ Id. The subject transmission facilities are used to interconnect the Pinckneyville and Kinmundy facilities to the Ameren transmission grid. Once this transaction closes, AmerenUE will own 548 MW of additional generation capacity. Id. Under the terms of the Transfer Agreements, AEG will sell the Pinckneyville and Kinmundy facilities to AmerenUE at the facilities' net depreciated book values, which, as of September 30, 2002, were $161.5 million and $96.4 million, respectively./14/ Id. As Applicants will show herein and as Mr. Voytas - ---------- /13/ Copies of the Transfer Agreements are included as Exhibit I to this application. These agreements are being submitted in pro forma form, have yet to be executed, and may be subject to minor changes that will be non-substantive in nature. Consistent with the Commission's merger filing requirements, counsel for Applicants states that to the best of their knowledge, the final agreements will reflect the terms and conditions contained in the agreements submitted herewith in all material respects. Revised Filing Requirements Under Part 33 of the Commission's Regulations, Order No. 642, 1996-2000 FERC Stats. & Regs., Regs. PreamblesP. 31,111, at 31,877 (2000), order on reh'g, Order No. 642-A, 94 FERCP. 61,289 (2001) ("Order No. 642"). /14/ A final determination of the assets' net book value will be made sometime prior to close, in accordance with the terms of the Pinckneyville and Kinmundy Transfer Agreements. See Section 4.3 of each of the Transfer Agreements. demonstrates in his affidavit, the selection of the Pinckneyville and Kinmundy units was the result of a thorough resource planning analysis by AmerenUE. Also, the company's analysis shows that the proposed price is reasonable as compared to other recent sales of similar types of electrical generating capacity used for peaking purposes. Moreover, this transaction will provide AmerenUE's customers with a reliable source of energy and capacity on a timely basis, as required by minimum generating reserve requirements established by AmerenUE's regional reliability council. Further, it will protect AmerenUE's customers from the potential volatility associated with purchasing needed power in the market. C. RATE FREEZES IN ILLINOIS AND MISSOURI AND PROTECTIONS FOR WHOLESALE CUSTOMERS As previously indicated, Illinois is implementing retail choice, although there is a retail rate freeze in place in that state, pursuant to the Customer Choice Law, that will protect bundled retail customers from having to pay any rate increases through January 1, 2007./15/ While AmerenUE may request an increase in bundled rates prior to 2007 if the two-year average of its earned rate of return on common equity falls below the 2-year monthly average yields of 30-year U.S. Treasury bonds,/16/ AmerenUE has made no such request and does not intend to do so prior to the end of the rate freeze. This rate freeze will protect AmerenUE's bundled retail ratepayers in Illinois from any rate increases through the end of 2006. All of the same is true for AmerenCIPS and its customers. - ---------- /15/ 220 Ill. Comp. Stat. 16-111(a) (2003); 220 Ill. Comp. Stat. 5/16-102 (2003). /16/ 220 Ill. Comp. Stat. 5/16-111(d) (2003). In addition, AmerenUE has recently entered into a Stipulation and Agreement ("Stipulation") that comprehensively resolves certain retail rate issues in Missouri./17/ The Stipulation sets rates that, except for certain specified rate decreases, will remain in place through June 30, 2006, and which will protect retail ratepayers from any rate increases prior to that date. Stipulation, Section 3./18/ AmerenUE must also undertake commercially reasonable efforts to make energy infrastructure investments totaling $2.25 billion to $2.75 billion from January 1, 2002 through June 30, 2006. This includes the obligation to acquire 700 MW of new regulated generating capacity. Id., Section 4. The Stipulation specifically states that AmerenUE can satisfy this requirement by purchasing generation from an affiliate "at net book value." Id. The Stipulation also requires AmerenUE to make enhancements to its transmission infrastructure. All of AmerenUE's and AEM's wholesale customers take service under contracts that have fixed rate provisions, or have other pricing provisions that will protect such customers from having to pay any costs that could arise from affiliate abuse. The customers can also purchase power from others once their existing contracts with the Ameren companies expire. AmerenCIPS has transferred - ---------- /17/ The Missouri Public Service Commission ("MoPSC") approved the Stipulation in Staff of the Mo. Pub. Serv. Comm'n v. Union Elec. Co. d/b/a AmerenUE, Mo. PSC Case No. EC-2002-1 (July 25, 2002) ("July 25 Order"). The Stipulation was unopposed, and approved by the MoPSC as reasonable and in the public interest. In a concurring opinion, one Commissioner indicated that one of the benefits of the Stipulation was the resulting minimization of issues associated with affiliate transactions because such transactions cannot impact rates during the moratorium period. July 25 Order at 6 (Commissioner Gaw, concurring). A copy of this Stipulation, along with the MoPSC's order, is attached as Attachment I to Mr. Voytas' Affidavit. /18/ The Stipulation requires AmerenUE to reduce its retail rates by $110 million over two years, with the first rate decrease of $50 million effective April 1, 2002. Id., Section 2. or assigned its wholesale contracts to AEM and does not have any wholesale customers. D. PLANS FOR PARTICIPATION IN A REGIONAL TRANSMISSION ORGANIZATION Pursuant to authorizations recently provided by the FERC, AmerenUE and AmerenCIPS intend to join the Midwest Independent Transmission System Operator, Inc. ("Midwest ISO") through a contractual relationship with GridAmerica, an independent transmission company within the Midwest ISO, and to transfer functional control of the Ameren transmission system to GridAmerica which, in turn, will transfer certain functions to the Midwest ISO as approved in the December 19 Order./19/ The GridAmerica Participants requested expedited action to allow this transfer of control to the Midwest ISO by April 2003. The Commission conditionally accepted the agreements filed by the GridAmerica Participants./20/ CILCO is currently a transmission-owning member of the Midwest ISO and will remain so after it is merged with Ameren. - ---------- /19/ Alliance Cos., 100 FERCP. 61,137, at PP 13, 35. The Midwest ISO has been recognized as a regional transmission organization by the FERC. Midwest Indep. Transmission Sys. Operator, Inc., 97 FERCP. 61,326 (2001). /20/ See December 19 Order, 101 FERCP. 61,320 at P 34. II. THIS TRANSACTION IS IN THE PUBLIC INTEREST AND SHOULD BE APPROVED A. THIS TRANSACTION OFFERS SIGNIFICANT BENEFITS TO AMERENUE AND ITS RATEPAYERS This transaction is consistent with the public interest and therefore should be approved under section 203 of the FPA./21/ When reviewing a proposed transaction under section 203's public interest standard, the Commission looks at the proposed transaction's effects on competition, rates, and regulation./22/ This transaction satisfies the Commission's public interest requirements as (1) there will be no adverse effect on competition; (2) there will be no adverse - ---------- /21/ Section 203(a) of the FPA, 16 U.S.C.ss.824b, states: No public utility shall sell, lease, or otherwise dispose of . . . its facilities subject to the jurisdiction of the Commission . . . or by any means whatsoever, directly or indirectly, merge or consolidate such facilities or any part thereof with those of any other person, or purchase, acquire, or take any security of any other public utility, without first having secured an order of the Commission authorizing it to do so. . . . After notice and opportunity for hearing, if the Commission finds that the proposed disposition, consolidation, acquisition, or control will be consistent with the public interest, it shall approve the same. See also Northeast Utils. Serv. Co. v. FERC, 993 F.2d 937, 945 (1st Cir. 1993), petition for review denied, 55 F.3d 686 (1st Cir. 1995) (If Commission finds transfer of jurisdictional facilities will be consistent with the public interest, it shall approve the same). /22/ See Inquiry Concerning the Commission's Merger Policy Under the Federal Power Act: Policy Statement, Order No. 592, 1996-2000 FERC Stats. & Regs., Regs. PreamblesP. 31,044, at 30,111 (1996) ("Merger Policy Statement"); see also Order No. 642 at 31,872-73; Ariz. Pub. Serv. Co., 93 FERCP. 61,216, at 61,714 (2000); El Paso Energy Corp., 92 FERCP. 61,076, at 61,330 (2000). effect on rates (in part because all of AmerenUE's customers purchase power under fixed rate contracts or are protected by retail rate freezes); and (3) there will be no adverse effect on regulation at either the state or federal level. The transfer is also an appropriate means of implementing the provisions of the Stipulation that was approved by the MoPSC. Therefore, the transaction should be approved by the Commission under FPA section 203. Prior to entering into this transaction, AmerenUE evaluated a number of options, including the proposed transfer, purchasing power on the market, purchasing existing assets from non-affiliated independent power producers ("IPP"), and building new capacity for obtaining the energy and capacity necessary to meet its reliability and customer service obligations, including meeting its peak load requirements. Voytas at P. 7. As a member of MAIN, AmerenUE must meet certain minimum short-term and long-term planning reserve requirements, which currently are 15% for 2003 and 17% for 2006. Voytas at P. 5. AmerenUE has capacity resource needs at 543 MW in 2003 to maintain a 5% reserve margin. Id. AmerenUE's resource needs in 2006 will increase up to 991 MW to meet a 17% planning reserve margin. Id. As part of AmerenUE's resource planning process, AmerenUE undertook an Asset Mix Optimization (AMO) Analysis, which was first completed in late 2001, and updated during the year 2002. The objective of an AMO Analysis is to determine the least cost mix of generating assets required to meet AmerenUE's long term needs, including its forecasted peak demand and a 17% reserve margin. Both the 2001 AMO and the updated 2002 AMO Analysis indicated that the addition of a mix of simple cycle and combined cycle combustion turbines during the entire planning horizon would satisfy AmerenUE's needs on a least cost planning basis, and that the purchase of simple cycle CTG assets from AEG is consistentwith the least cost plan that resulted from the AMO Analysis. Voytas at P. 6. MARKET PURCHASES: In the fall of 2001, AmerenUE issued a Request for Proposal ("RFP") for capacity and energy with the intent of purchasing up to 500 MW of capacity for the time period of 2002 through 2011. In the process of evaluating the bids received as part of the RFP process, a 25-year analysis of the cost to build peaking capacity was developed to assist in the evaluation. The results of this analysis, which were presented to the MoPSC Staff and Missouri Office of Public Counsel ("OPC") on January 15, 2002, showed that the Net Present Value ("NPV") of the least cost RFP options, coupled with the construction of simple cycle CTGs at the end of the 10 year contracting period (2002-2011), were comparable to the purchase of generating assets from AEG. During the process of evaluating the RFP bids, the MoPSC Staff expressed a concern with power purchases and showed a preference to AmerenUE owning hard assets. This transfer will help address this concern. Voytas at P. 8. PURCHASE OF EXISTING GENERATING ASSETS FROM NON-AMEREN ENTITIES: AmerenUE considered the option of purchasing existing generation from non-Ameren entities located both inside and outside of the Ameren control area. AmerenUE looked at two assets located within the Ameren control area. None of these assets proved to be suitable due to existing transmission constraints associated with these plants, and concerns about the creditworthiness of the owners of the assets. Voytas at P. 11 and confidential Attachment II, Item 4./23/ The purchase of generation assets located outside of the Ameren control area was also rejected, due to the lack of firm transmission service from the generator to the Ameren border. Voytas at P. 10. The inability of generators to obtain firm transmission service to the Ameren border was documented for some bidders in AmerenUE's evaluation of RFPs for capacity and energy for the summers of 2001 and 2002. Potential facility upgrades and the uncertainty associated with the timing of the completion of the upgrades made this option an unrealistic choice. Id. AmerenUE also determined that the price of obtaining the Kinmundy and Pinckneyville units from AEG was comparable to the price of buying existing units from non-affiliated entities, and the purchase of AEG units did not present the concerns described above and in Mr. Voytas' affidavit. See Voytas at P. 19. PURCHASE OF AEG ASSETS: As described in Mr. Voytas' affidavit, the Kinmundy and Pinckneyville facilities were the most viable choices of the comparable AEG generating facilities. While there are other AEG facilities that could have been transferred, those assets were less desirable because of operational characteristics, locations or tax, and other issues. Voytas at P. 12-14. Both the Pinckneyville and Kinmundy facilities are directly connected to the Ameren transmission system, and provide generation and voltage support, as well as other ancillary services. Id. at P. 17. Also, the Pinckneyville units have black start capability and can be ramped up quickly to provide service, which will - ---------- /23/ For the most part, these transmission constraints were known issues at the time the plants were constructed. While Ameren is undertaking steps to rectify these constraints, they will not be relieved in time for these plants to be used in the 2003 or 2004 peak demand period. allow AmerenUE to better respond to system emergencies. Both units have proven to be highly reliable. Voytas at P. 17. Finally, the transfer also will help AmerenUE meet its obligations under the MoPSC-approved Stipulation. Specifically, the Stipulation requires AmerenUE to acquire 700 MW of regulated generating capacity by June 30, 2006. Further, this Stipulation expressly allows AmerenUE to purchase capacity from its affiliates at net book value to fulfil this requirement, which is what AmerenUE proposes to do here. CONSTRUCTION OF NEW CAPACITY: AmerenUE also considered the construction of simple cycle combustion turbines at green field sites to meet its 2003 and 2004 resource needs. In this regard, the cost of purchasing the subject units from AEG at net book value is comparable to or less than the cost of building CTG units that offer similar flexibility and operating characteristics. Id. at P. P. 18-19. Although new combustion turbines likely could be purchased today at a slightly more favorable price than two years ago, these savings would be offset by additional cost associated with building at a less favorable site, resulting in a total installed cost not significantly different from that of the net book value of the AEG facilities. Id. B. THE TRANSACTION WILL HAVE NO ADVERSE EFFECTS ON COMPETITION, RATES OR REGULATION 1. THE TRANSFER WILL HAVE NO ADVERSE EFFECT ON COMPETITION This transaction will involve only the intra-corporate transfer of facilities and will not result in any changes in concentration in generation markets or any other applicable markets. The Commission, in other proceedings involving similar transactions,/24/ has recognized that this type of transfer does not present any competitive concerns. In addition, the Commission has determined that the competitive screen required by Order No. 642 is not required for intra-company transfers./25/ 2. THE TRANSFER WILL HAVE NO ADVERSE EFFECT ON RATES The proposed transfer will have no adverse effect on rates. All of AmerenUE's bundled retail ratepayers are protected by rate freezes through June or December of 2006. Specifically, all retail customers in Missouri will be protected by the retail rate settlement through June 2006, and all bundled retail customers in Illinois by the statutory rate freeze through January 1, 2007. The Commission has indicated such rate freezes are sufficient to ensure that a transaction will have no adverse effect on rates./26/ Moreover, all of AmerenUE's wholesale power sales customers take service under contracts that have fixed rate or other pricing provisions that will not be affected by any costs associated with this transfer, and can purchase power from entities that are not affiliated with Ameren once their contracts expire. The Commission has also found that these safeguards are adequate to protect ratepayers from any adverse effect on rates./27/ - ---------- /24/ Order No. 642 at 31,902; GenHoldings I, L.L.C., 96 FERCP. 61,140, at 61,602 (2001), PP&L Resources, Inc., 90 FERCP. 61,203, at 61,649 (2000). /25/ Order No. 642 at 31,902. /26/ FirstEnergy Corp., 94 FERCP. 61,179, at 61,620 (2001); Merger Policy Statement at 30,124. /27/ Cinergy Servs., Inc., 98 FERCP. 61,306, at 62,307 (2002); Potomac Elec. Power Co. Conectiv, 96 FERC P. 61,323 (2001). Finally, none of AmerenCIPS' customers will be affected by this transaction. The capacity being sold by AEG is not needed to support sales of power by AmerenCIPS to its bundled load. Moreover, AmerenCIPS' bundled retail rate payers are protected by the Illinois state rate freeze, and the rates AmerenCIPS pays for power acquired through AEM from AEG is established by reference to the rates set by the ICC. AmerenCIPS does not have any wholesale customers. Thus, no customers of AmerenCIPS will be adversely affected by this transaction. 3. THERE WILL BE NO ADVERSE EFFECT ON REGULATION The Commission has indicated that it may set a section 203 application for hearing if (1) the merged entity would be part of a registered holding company and the applicants do not commit to abide by the Commission's policies on the pricing of non-power goods and services between affiliates, or (2) the affected state commissions do not have authority to act on the transaction./28/ Neither of these concerns are raised by this Application. With respect to the first issue, no new holding company will be formed as a result of this transaction. While Ameren is already a registered holding company under the Public Utility Holding Company Act of 1935, Ameren reiterates its prior commitment to abide by the FERC's policies with respect to intra-company and affiliate transactions. This commitment has been held sufficient to address this concern./29/ This Commission will continue to have authority over any wholesale power sales made from the generation facilities at issue here, as well as all - ---------- /28/ See Merger Policy Statement at 30,125. /29/ Merger Policy Statement at 30,125; see also 18 C.F.R.ss.2.26(e)(1). wholesale power sales and transmission services made or provided by AmerenUE and AEG. With respect to the authority of the states, Illinois and Missouri will continue to have jurisdiction over all retail sales of power, and all bundled transactions currently subject to their jurisdiction will remain subject to that jurisdiction. Further, AmerenUE is seeking ICC approval of the proposed transaction because, by statute, the ICC must generally approve contracts between Illinois utilities and their affiliates. The MoPSC does not have any similar statutory authority. However, AmerenUE is required to comply with the MoPSC's resource planning regulations, and has done so. III. INFORMATION REQUIRED BY 18 C.F.R. PART 33 SECTION 33.2 REQUIREMENTS: 33.2(a) The exact name of the Applicants and their principal business addresses are: Ameren Energy Generating Company One Ameren Plaza 1901 Chouteau Avenue St. Louis, Missouri 63166-6149 Union Electric Company d/b/a AmerenUE One Ameren Plaza 1901 Chouteau Avenue St. Louis, Missouri 63166-6149 33.2(b) Applicants respectfully request that all notices, correspondence, and other communications concerning this Application be directed to the following persons: Joseph H. Raybuck Douglas O. Waikart Managing Assistant David S. Berman General Counsel Wright & Talisman, P.C. Ameren Services Company 1200 G Street, N.W. St. Louis, Missouri 63166-6149 Suite 600 (314) 554-2976 Washington, D.C. 20005 (314) 554-4014 (fax) (202) 393-1200 jraybuck@ameren.com (202) 393-1240 (fax) ------------------- waikart@wrightlaw.com --------------------- berman@wrightlaw.com -------------------- 33.2(c) A general description of the Applicants, and a detailed organizational chart and listing of energy subsidiaries is provided in Part II.A hereof. A list of the common officers and directors of the Applicants is provided as Exhibit E. A description of the Applicants' plans with respect to RTO participation is provided in Part II.D. AEG sells power at wholesale to customers, including AEM, primarily located in Illinois and Missouri./30/ AEG does not provide any transmission services. To the extent not provided in this application, a complete listing of all business activities, power sales customers, etc., was provided as part of Ameren Services' July 19, 2002 filing in Ameren Services Co., Docket No. EC02-96, and is incorporated by reference herein. 33.2(d) The jurisdictional facilities to be transferred are described in Part II.B. Exhibit H also contains a listing of these facilities. 33.2(e) A description of the proposed transaction, including the names of all parties thereto, the consideration provided, and the effect of the transaction on the affected jurisdictional facilities, is provided above. A listing of all jurisdictional facilities associated with or - ---------- /30/ Neither AEG's nor AmerenUE's organizational structure will change as a result of this transfer. affected by this transaction is included as Exhibit H, subject to being updated as necessary. 33.2(f) The form of the Asset Transfer Agreements related to this transaction are included as Exhibit I hereto. 33.2(g) The facts relied upon to show that the transaction is in the public interest are provided herein. 33.2(h) The required map is included as Exhibit K. 33.2(i) Applicants expect to make all necessary filings with the ICC sometime prior to closing. Applicants will provide this Commission with copies of all relevant orders as required by this section. SECTIONS 33.3 AND 33.4 REQUIREMENTS: Consistent with Order No. 642 and the Commission's regulations issued thereunder, the Applicants do not need to provide the analyses required by sections 33.3 and 33.4. These provisions establish the requirements for horizontal and vertical mergers, and are not required for transactions that only involve intra-corporate transfers. Order No. 642 at 31,902. SECTION 33.5 REQUIREMENTS: To the extent deemed necessary, Applicants request waiver of the requirement to provide the proposed accounting entries required by section 33.5. Applicants will provide this information at a later date if and as required by the Commission. SECTION 33.6 REQUIREMENTS (FORM OF NOTICE): A form of notice suitable for publication in the Federal Register is attached hereto. In addition, an electronic version of this notice on a 3.5-inch computer diskette in WordPerfect format is enclosed with this filing. IV. REQUEST FOR EXPEDITED APPROVAL Prompt approval of this transaction by the Commission will allow AmerenUE to complete its acquisition of the subject generation in time to have these and any other required resources in place prior to the peak 2003 summer months. Prompt approval will also allow AmerenUE to continue implementing the commitment to acquire additional generation that it made in the Stipulation approved by the MoPSC. Accordingly, Applicants request that the Commission grant all necessary approvals by April 1, 2003 in order to allow this transaction to close by May 1, 2003. V. REQUEST FOR PRIVILEGED TREATMENT Consistent with section 388.112 of the Commission's regulations, 18 C.F.R. ss. 388.112, Applicants request privileged treatment for Attachment II to Mr. Voytas' affidavit. This attachment contains highly confidential and sensitive information, including marketing analyses, pricing information, and information about the operating characteristics of AEG's facilities. The disclosure of this information could damage the Applicants' ability to buy and sell electricity at reasonable prices. This attachment also contains Applicants' commercially sensitive analysis of the value of certain generating units owned by unaffiliated parties. The Commission has granted privileged treatment in the past when necessary to protect similar information./31/ - ---------- /31/ See GWF Energy, L.L.C., 97 FERCP. 61,297, at 62,391 (2001), reh'g denied, 98 FERCP. 61,330 (2002) (holding in abeyance the requirement to file unredacted long-term service agreement pending the outcome of a rehearing); Ameren Energy Mktg. Co., 95 FERCP. 61,397, at 62,485, order granting clarification, 96 FERCP. 61,306 (2001) (allowing privileged treatment for supporting material); see also Jersey Cent. Power & Light Co., 87 FERCP. 61,014, at 61,040 n.15 (1999) (allowing privileged treatment of material submitted in conjunction with an asset sale). Applicants designate the following persons as the individuals to be contacted regarding the request for privileged treatment: Joseph H. Raybuck Douglas O. Waikart Managing Assistant David S. Berman General Counsel Wright & Talisman, P.C. Ameren Services Company 1200 G Street, N.W. St. Louis, Missouri 63166-6149 Suite 600 (314) 554-2976 Washington, D.C. 20005 (314) 554-4014 (fax) (202) 393-1200 jraybuck@ameren.com (202) 393-1240 (fax) ------------------- waikart@wrightlaw.com --------------------- berman@wrightlaw.com -------------------- VI. CONCLUSION For the reasons stated herein, Applicants request that the Commission, by order issued no later than April 2, 2003, grant all necessary approvals or authorizations necessary for the proposed transaction to occur. Respectfully submitted, /s/ David S. Berman ------------------- Joseph H. Raybuck Douglas O. Waikart Managing Assistant David S. Berman General Counsel Wright & Talisman, P.C. Ameren Services Company 1200 G Street, N.W. St. Louis, Missouri 63166-6149 Suite 600 (314) 554-2976 Washington, D.C. 20005 (314) 554-4014 (fax) (202) 393-1200 (202) 393-1240 (fax) ATTORNEYS FOR AMEREN ENERGY GENERATING COMPANY AND UNION ELECTRIC COMPANY D/B/A AMERENUE February 5, 2003 K:\AMEREN\1066-001-731 FORM OF NOTICE UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Ameren Energy Generating Company ) and ) Union Electric Company ) Docket No. EC03-____ d/b/a AmerenUE ) NOTICE OF FILING Take notice that on February 5, 2003, Ameren Energy Generating Company ("AEG") and Union Electric Company d/b/a AmerenUE (collectively, AEG and AmerenUE are referred to as "Applicants") submitted an application pursuant to section 203 of the Federal Power Act, and Part 33 of the Federal Energy Regulatory Commission ("Commission" or "FERC") regulations, 18 C.F.R. Part 33, for authorization for AEG to sell and transfer, and for AmerenUE to purchase and acquire, certain transmission facilities currently owned by AEG that are used to interconnect AEG's Kinmundy, Illinois and Pinckneyville, Illinois generation facilities to the Ameren transmission system. This transaction also involves the sale and transfer of the Kinmundy and Pinckneyville generation facilities now owned by AEG to AmerenUE. Copies of this filing have been served on all affected state commissions. Any person desiring to intervene or to protest this filing should file with the Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a motion to intervene. All such motions or protests should be filed on or before the comment date, and, to the extent applicable, must be served on the applicant and on any other person designated on the official service list. This filing is available for review at the Commission or may be viewed on the Commission's web site at http://www.ferc.gov using the "FERRIS" link, select "General Search" and follow the instructions (call 202-208-2222 for assistance). Protests and interventions may be filed electronically via the Internet in lieu of paper; see 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's web site under the "e-Filing" link. Comment Date: ____, 2003 EXHIBIT E EXHIBIT H EXHIBIT I EXHIBIT K EX-99 13 exd_13.txt EXHIBIT D-13 - REPORT AND ORDER OF MOPSC EXHIBIT D-13 STATE OF MISSOURI PUBLIC SERVICE COMMISSION At a Session of the Public Service Commission held at its office in Jefferson City on the 25th day of July, 2002. Staff of the Missouri Public Service ) Commission, ) ) Complainant, ) ) v. ) CASE NO. EC-2002-1 ) Union Electric Company, ) d/b/a AmerenUE, ) ) Respondent. ) REPORT AND ORDER APPROVING STIPULATION AND AGREEMENT ==================================================== Syllabus: This order approves a settlement reached by the parties that, inter alia, requires Union Electric Company d/b/a AmerenUE to reduce rates by $110 million over three years, and provide a one-time credit of $40 million to its customers. The evidentiary hearing in this case began on July 11, 2002. On July 12, the parties informed the Commission that they had reached an agreement in principle that would resolve all issues. The Commission recessed the hearing to allow the parties the opportunity to finalize the agreement and reduce it to writing. On July 16, most of the parties filed a Stipulation and Agreement that resolves all outstanding issues for the purpose of this case. Later that day, the only two parties that did not join in the agreement (Kansas City Power and Light Company and Laclede Gas Company) each filed a pleading in which each stated that it did not oppose the stipulation and waived a hearing. Pursuant to 4 CSR 240-2.115, the Commission will treat the agreement as unanimous. The agreement is somewhat complex, and its salient points will be discussed here. The agreement itself is attached to this order. The first portion of the agreement deals with rate reductions and credits. AmerenUE agrees to make a one-time credit to its Missouri retail electric customers of $40 million. This credit is in settlement of Case Nos. EM-96-149, EC-2002-1025, and EC-2002-1059, all of which relate to the now-expired Experimental Alternative Regulation Plan. AmerenUE will reduce rates as of April 1, 2002, by $50 million. A credit reflecting the reduction in rates for the period between April 1 and the effective date of this order will be made to all customers. AmerenUE will again reduce rates on April 1, 2003, by $30 million, and again on April 1, 2004, by $30 million. The parties agree that none of them/1/ shall file a case to institute a general rate increase or decrease before January 1, 2006. The agreement also provides that AmerenUE will make necessary infrastructure investments during the period of time covered by the agreement. These investments include 700 megawatts of new capacity, upratings of existing plants of 270 megawatts, and new transmission lines and upgrades to existing - ---------- /1/ The agreement specifically exempts the Office of the Attorney General from this moratorium. While the question of the authority of the Attorney General's Office to file a case to change the rates resulting from this agreement has not been briefed, the reason for the exemption appears to be the Office of the Attorney General's desire to not concede its statutory or constitutional authority. 2 transmission lines that will increase import capability by 1300 megawatts. These investments will total $2.25 to 2.75 billion. AmerenUE, as part of the agreement, also commits to make certain investments in the communities it serves. It will make an initial $5 million contribution to its Dollar More Program on September 1, 2002, and will contribute $1 million more each year for the next four years. It will create a weatherization fund for its low-income customers, and initially fund it with $2 million on September 1, 2002, and will contribute an additional $500,000 each year for the next four years. AmerenUE will also create a community development corporation and fund it with $5 million on September 1, 2002, and an additional $1 million each year for the next four years. Finally, AmerenUE will create a residential and commercial energy efficiency fund and fund it with $2 million on September 1, 2002, and an additional $500,000 each year for the next four years. All of these investments will be recorded below the line, and not treated as a regulated expense. The details for several of the programs will be worked out through the collaborative efforts of interested entities. The agreement also contains a number of miscellaneous provisions. For example, AmerenUE will modify the way it calculated its dismantling costs and/or service lines for certain assets with the result that it will decrease its depreciation expense by approximately $20 million annually. AmerenUE also commits to provide to the signatories a cost of service study by January 1, 2006, covering the twelve months ending June 30, 2005. Collaborative efforts will also be used to design and implement a residential time-of-use pilot project, and to increase the amount of demand-response options (including 3 interruptible load). On July 19, 2002, the Staff of the Commission filed a memorandum in support of the agreement, as required by paragraph 15a of the agreement. Staff explains its rationale for entering into the agreement, and explains in some detail why the agreement is in the public interest. Staff tried to anticipate the questions the Commission might have regarding the agreement, and gave its answers to those questions. On July 24, 2002, the Missouri Industrial Energy Consumers (MIEC), a group of AmerenUE's industrial customers, filed a response to the Staff memorandum. The MIEC explained that it supports the agreement for some of the same reasons as the Staff, but disagreed with others of the Staff's reasons. Also on July 24, the Staff filed an addendum to its memorandum, and a revised version of the attachment to the agreement. The addendum addresses and explains the provisions in the agreement about the decommissioning of the Callaway nuclear power plant, and raises an issue about the proper treatment of credits that would be due to AmerenUE customers that have been transferred to an electric cooperative pursuant to a Commission order. The revised attachment simply refines the calculations in the original attachment, resulting in a change of $.001 to one rate element in the second year of the moratorium period, and another change of the same amount to a rate element in the third year. Any party that objects to the revisions to the attachment must file a pleading raising its objection as soon as possible, and will be ordered to do so. The Commission re-convened the hearing on July 24, 2002, for the purpose of asking questions of the parties and of the parties' witnesses. At that hearing, all parties who had not already filed a response to the Staff's 4 memorandum waived their right to do so. The Missouri Energy Group, a group of AmerenUE's industrial customers, concurred with the response to the Staff memorandum filed by the MIEC. The parties affirmed their support for the agreement, and explained why it is in the public interest. The Commission admitted into the record all of the prefiled testimony that had not already been admitted. Pursuant to Section 536.060, RSMo 2000, the Commission may accept the agreement as a resolution of the issues in this case. The most compelling evidence supporting the conclusion that the agreement is in the public interest is the broad range of interests that entered into it. The parties include representatives of the spectrum of AmerenUE customers, from the small residential customers to the largest industrial customers. The parties also include other utilities and the Missouri Department of Natural Resources. For such a diversity of interests to be able to reach a comprehensive resolution of the 47 separate issues that were in dispute at the beginning of the hearing, the agreement must necessarily be in the public interest. The responses of the parties to Commission questions at the hearing on July 24 confirm this conclusion. Another important consideration in the Commission's conclusion that the agreement is in the public interest is that it does not restrict the Commission's powers in any way. The Commission has the right under Section 386.390, RSMo 2000, to institute a complaint about the reasonableness of AmerenUE's rates, and that right is not affected by the agreement. Although the parties (see footnote 1) have agreed to give up some of their rights, the Commission does not, by approving the agreement, give up any of its rights. Furthermore, the Commission has broad oversight over AmerenUE in addition to its right to institute a rate complaint, and the agreement does not limit the Commission's oversight. 5 The Commission has reviewed the agreement, the memorandum in support of it and the responses to that memorandum, the testimony filed and admitted into the record, and finds the agreement to be reasonable and in the public interest and will, therefore, approve it. IT IS THEREFORE ORDERED: 1. That the Stipulation and Agreement filed on July 16, 2002, is approved, and all parties shall be bound by its terms. 2. That any party that objects to the revisions, filed by the Staff of the Commission on July 24, 2002, to Attachment A to the Stipulation and Agreement must file a pleading raising its objection no later than July 30, 2002. 3. That this order shall become effective on August 4, 2002. BY THE COMMISSION DALE HARDY ROBERTS SECRETARY/CHIEF REGULATORY LAW JUDGE (S E A L) Simmons, Ch., Murray, Lumpe and Forbis, CC., concur Gaw, C., concurs, concurrence to follow Mills, Deputy Chief Regulatory Law Judge 6 -----END PRIVACY-ENHANCED MESSAGE-----