Corporation commits to $18 million in transmission upgrades
SPRINGFIELD, Ill., July 22, 2002 — Ameren Corp. committed to spending $18 million to upgrade the Midwest regional transmission system to improve reliability and provide better access to competitive markets in recently’s filing with the Federal Energy Regulatory Commission to acquire CILCORP, Inc. from The AES Corporation.
The agreement to purchase CILCORP, the parent company of Peoria, Ill. based Central Illinois Light Co. (CILCO), was announced April 29. The $1.4 billion transaction would involve assumption of debt and a payment of cash to purchase the common stock of CILCORP, along with certain other assets.
The purchase includes CILCO’s natural gas and electric businesses, including 1,200 megawatts of largely coal-fired generating capacity. Upon completion of the acquisition, CILCO would become an Ameren subsidiary known as AmerenCILCO. In June, Ameren filed with the Illinois Commerce Commission an application to acquire CILCORP.
Recently’s federal regulatory application outlines Ameren’s commitment to upgrade transmission capacity not only into the CILCO and Ameren transmission system control areas but also in the control area of City Water, Light and Power of the city of Springfield, Ill (CWLP). The following projects are included in the application as commitments to upgrade transmission:
— A 24-month project to rebuild a 50-mile, 138,000 volt line between Tazewell and East Springfield to increase that line’s ability to import power into CILCO.
— A 6-month project to upgrade terminal equipment at the Illinois Power Baldwin substation to improve power flows into Ameren from the east.
— A new, 138,000 volt connection between CWLP’s Toronto Road substation and the AmerenCIPS substation located in Pawnee, Ill., to increase transmission import capability for the area.
— The upgrade or installation of a transformer near Springfield, Ill., to increase import capability and reliability in the region.
— A 6-month project to increase the transfer capability, principally from the east into Ameren by upgrading terminal equipment at Ameren’s East-West Frankfort (Ill.) Substation.
The application also commits that Ameren will rejoin the Midwest Independent System Operator (MISO) -the regional transmission system organization that acts as an agent to sell transmission service on behalf of its members, who own the transmission assets. CILCO is already participating in the MISO. On June 20, Ameren joined three other utility organizations in establishing terms for joining the MISO through the company’s participation in an independent transmission company.
“Ameren’s acquisition of CILCORP and the resulting transmission system upgrades will benefit general reliability and access to markets for CILCO customers and for communities throughout the Midwest,” says Gary L. Rainwater, president and chief operating officer, Ameren Corporation. “As we have said, this transaction will offer continued low electric rates, competitive gas rates, a high level of service and increased returns for investors. This acquisition is a natural fit with our core energy growth strategy and will provide benefits to customers, employees, communities and our investors.”
With this acquisition, Ameren will rank as Illinois’ second largest electric utility, based on the number of customers, total assets and operating revenues. The acquisition is subject not only to the approval of the Illinois Commerce Commission but to approval of the Securities and Exchange Commission, the Federal Energy Regulatory Commission, the Federal Communications Commission, and to the expiration of the waiting period under the Hart-Scott- Rodino Act. No approval is required from shareholders of either company.
The company expects to make all remaining regulatory filings within the next several weeks and for regulatory approvals to be completed by the end of this year or in the first quarter of 2003.
With assets of $10 billion and 2001 revenues of $4.5 billion, Ameren serves 1.5 million electric customers and 300,000 natural gas customers in a 44,500-square-mile area of Missouri and Illinois. With $1.8 billion in assets and 2001 revenues of $815 million, CILCORP’s largest subsidiary, CILCO, serves 200,000 electric and more than 200,000 natural gas customers.