(As filed on February 27, 2003)
File No. 70-10106
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1/A
Amendment No. 1
to
APPLICATION OR DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
AMEREN CORPORATION
UNION ELECTRIC COMPANY
AMEREN SERVICES COMPANY
AMEREN ENERGY, INC.
AMEREN DEVELOPMENT COMPANY
AMEREN ERC, INC.
AMEREN ENERGY COMMUNICATIONS, INC.
AMEREN ENERGY RESOURCES COMPANY
AMEREN ENERGY DEVELOPMENT COMPANY
AMEREN ENERGY GENERATING COMPANY
AMEREN ENERGY MARKETING COMPANY
AMEREN ENERGY FUELS AND SERVICES COMPANY
ILLINOIS MATERIALS SUPPLY CO.
UNION ELECTRIC DEVELOPMENT CORPORATION
AFS DEVELOPMENT COMPANY, LLC
1901 Chouteau Avenue
St. Louis, Missouri 63103
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
CIPSCO INVESTMENT COMPANY
607 East Adams Street
Springfield, Illinois 62739
CILCORP INC.
CENTRAL ILLINOIS LIGHT COMPANY
CENTRAL ILLINOIS GENERATION, INC.
CILCORP INVESTMENT MANAGEMENT INC.
CILCORP VENTURES INC.
CILCORP ENERGY SERVICES INC.
QST ENTERPRISES INC.
CILCO EXPLORATION AND DEVELOPMENT COMPANY
CILCO ENERGY CORPORATION
300 Liberty Street
Peoria, Illinois 61602
AMERENENERGY MEDINA VALLEY COGEN (NO. 4), L.L.C.
AMERENENERGY MEDINA VALLEY COGEN (NO. 2), L.L.C.
AMERENENERGY MEDINA VALLEY COGEN, L.L.C.
AMERENENERGY MEDINA VALLEY OPERATIONS, L.L.C.
P.O. Box 230
Mossville, Illinois 61552-0230
(Names of companies filing this statement and addresses
of principal executive offices)
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AMEREN CORPORATION
(Name of top registered holding company parent of each applicant or declarant)
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Steven R. Sullivan, Vice President Regulatory Policy,
General Counsel and Secretary
Ameren Services Company
1901 Chouteau Avenue
St. Louis, Missouri 63103
(Name and address of agent for service)
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The Commission is requested to mail copies of all orders,
notices and other communications to:
Ronald K. Evans, William T. Baker, Jr., Esq.
Managing Associate General Counsel Thelen Reid & Priest LLP
Ameren Services Company 875 Third Avenue
1901 Chouteau Avenue New York, New York 10022
St. Louis, Missouri 63103
2
The Application/Declaration filed in this proceeding on November 20, 2002,
is hereby amended and restated in its entirety to read as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
1.1 Introduction - Description of Applicants.
(a) Ameren and Its Utility Subsidiaries. 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"). Ameren directly owns all of
the issued and outstanding common stock of Union Electric Company d/b/a AmerenUE
("AmerenUE") and Central Illinois Public Service Company d/b/a AmerenCIPS
("AmerenCIPS"), and indirectly through CILCORP Inc. ("CILCORP"), an exempt
holding company, owns all of the issued and outstanding common stock of Central
Illinois Light Company, d/b/a AmerenCILCO ("AmerenCILCO").(1) 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 parts of Missouri and Illinois.
In addition to the foregoing, AmerenCILCO owns all of the issued and
outstanding common stock of Central Illinois Generation, Inc. ("CIGI"), which is
currently an "exempt wholesale generator" ("EWG") under Section 32 of the Act.
As explained in the CILCORP Order, CIGI was formed by AmerenCILCO in November
2001 in order to facilitate the restructuring of AmerenCILCO in accordance with
the Illinois Electric Service Customer Choice and Rate Relief Law of 1997
("Customer Choice Law"). AmerenCILCO intends to transfer substantially all of
its generating assets to CIGI, at which time CIGI will relinquish its EWG status
and therefore become an additional electric utility subsidiary of Ameren.
(b) Direct Non-Utility Subsidiaries of Ameren. Ameren has five
direct wholly-owned non-utility subsidiaries (in addition to CILCORP), as
follows:
o Ameren Services Company ("Ameren Services"), a service company subsidiary,
which provides administrative, management and technical services to Ameren
and its associate companies in the Ameren system;
o Ameren Development Company ("Ameren Development"), an intermediate
non-utility holding company, which directly and indirectly owns all of the
outstanding stock of two "energy-related companies" under Rule 58 (Ameren
ERC, Inc. ("Ameren ERC"), which provides energy management services, and
Missouri Central Railroad, a fuel transportation subsidiary) and Ameren
-------------------
(1) Ameren completed its acquisition of all of the issued and outstanding
common stock of CILCORP, the direct parent of AmerenCILCO, from The AES
Corporation ("AES") on January 31, 2003, in accordance with the
Commission's order in File No. 70-10078. See Ameren Corporation, et al.,
Holding Co. Act Release No. 27645 (Jan. 29, 2003) (the "CILCORP Order").
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Energy Communications, Inc. ("Ameren Communications"), an "exempt
telecommunications company" under Section 34 of the Act;
o Ameren Energy Resources Company ("Ameren Energy Resources"), an
intermediate non-utility holding company, which directly holds all of the
outstanding voting securities of the following subsidiaries:(2) (1) Ameren
Energy Development Company ("Ameren Energy Development"), an "exempt
wholesale generator" ("EWG") under Section 32 of the Act which, in turn,
owns all of the outstanding common stock of Ameren Energy Generating
Company ("Ameren GenCo"), also an EWG;(3) (2) Ameren Energy Marketing
Company ("Ameren Energy Marketing"), an "energy-related company" under
Rule 58; (3) Ameren Energy Fuels and Services Company ("Ameren Fuels"),
also an "energy-related company" under Rule 58, which, in turn, owns all of
the membership interests of AFS Development Company, L.L.C. ("AFS
Development"), an "energy-related company" organized to make investments in
and engage in operating activities related to oil and gas, coal bed
methane, and other energy commodities; (4) Illinois Materials Supply Co.
("Illinois Materials"), which was established to serve as an "enterprise
zone" company in connection with purchasing goods, material and equipment
for Ameren Energy Development and other non-utility associate companies;
and (5) AmerenEnergy Medina Valley Cogen (No. 4), L.L.C. ("AmerenEnergy
Medina Valley"), an intermediate non-utility holding company that
indirectly through AmerenEnergy Medina Valley Cogen (No. 2), L.L.C., holds
all of the membership interests in AmerenEnergy Medina Valley Cogen, L.L.C.
("AmerenEnergy Medina Valley Cogen"), an EWG, and directly holds all of the
membership interests in AmerenEnergy Medina Valley Operations, L.L.C.,
which operates AmerenEnergy Medina Valley Cogen's generating facility;(4)
o Ameren Energy, Inc. ("Ameren Energy"), an "energy-related company" under
Rule 58 that primarily serves as the short-term energy trading and
marketing agent for AmerenUE and Ameren GenCo and provides a range of
energy and risk management services; and
o CIPSCO Investment Company ("CIC"), which holds various nonregulated and
passive investments, including passive investments in affordable housing
projects that qualify for federal tax credits and investments in equipment
leases.
(c) Direct Non-Utility Subsidiary of AmerenUE. AmerenUE has one
direct wholly-owned non-utility subsidiary, Union Electric Development Company
--------------------
(2) Ameren Energy Resources also directly holds 20% of the outstanding common
stock of Electric Energy, Inc., an EWG.
(3) Ameren GenCo was organized in order to facilitate the restructuring of
AmerenCIPS in accordance with the Customer Choice Law. In May 2000, Ameren
GenCo acquired all of the existing generating assets of AmerenCIPS.
(4) Ameren acquired AmerenEnergy Medina Valley (formerly AES Medina Valley
Cogen (No. 4), L.L.C.) from AES shortly after completing its acquisition of
CILCORP, and subsequently contributed the membership interests in
AmerenEnergy Medina Valley to Ameren Energy Resources.
4
("UEDC"), which holds investments in steam delivery systems, affordable housing
projects that qualify for federal income tax credits, and other passive
investments.(5)
(d) Direct Non-Utility Subsidiaries of CILCORP. CILCORP directly
owns all of the common stock of three non-utility subsidiaries, as follows:
o CILCORP Investment Management Inc. ("CIM"), which, through subsidiaries,
manages CILCORP's investments in equipment leases, affordable housing
projects that qualify for federal income tax credits, non-regulated
independent power projects, and other passive investments;
o CILCORP Ventures Inc. ("CVI"), which, through a wholly-owned subsidiary,
CILCORP Energy Services, Inc. ("CESI"), provides energy-related products
and services, including gas management services for gas management
customers; and
o QST Enterprises Inc. ("QST"), which, through subsidiaries, provides energy
and related services in non-regulated retail and wholesale markets,
including utility operations and maintenance services (primarily to one of
AmerenCILCO's largest industrial customers), and holds interests in
environmentally distressed parcels of real estate acquired for resale.(6)
(e) Direct Non-Utility Subsidiaries of AmerenCILCO. In addition
to CIGI (which, as indicated above, intends to relinquish its status as an EWG),
AmerenCILCO directly owns all of the issued and outstanding common stock of two
non-utility subsidiaries: CILCO Exploration and Development Company ("CILCO
Exploration"), which engages in the exploration and development of gas, oil,
coal and other mineral resources; and CILCO Energy Corporation ("CILCO Energy"),
which was formed to research and develop new sources of energy, including the
conversion of coal and other minerals into gas. Neither company conducts any
significant business at this time.
Ameren and its direct and indirect utility and non-utility subsidiaries
named on the front cover of this Application/Declaration and described above are
herein referred to collectively as the "Applicants."
1.2 Financial Information: For the year ended December 31, 2001, Ameren
reported total operating revenues of $4,505,867,000, of which approximately
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(5) AmerenUE also directly holds 40% of the outstanding common stock of
Electric Energy, Inc., an EWG.
(6) Under the CILCORP Order, the Commission reserved jurisdiction over Ameren's
retention of certain direct and indirect non-utility subsidiaries and
investments of CIM and CVI, and Ameren has committed to divest certain
investments held by QST within three years of the date of the CILCORP
Order.
5
92.2% were derived from electric operations, 7.64% from gas operations, and .2%
from other operations.7 At September 30, 2002, Ameren had total assets of
$11,214,000,000, including net property and plant of $8,689,000,000.
As of September 30, 2002, Ameren's capitalization on a consolidated
basis and the capitalization of AmerenUE and AmerenCIPS were as follows:
------------------------- ----------- -------------- -----------------
Ameren AmerenUE AmerenCIPS
------------------------- ----------- -------------- -----------------
Common equity 50.7% 58.4% 45.5%
------------------------- ----------- -------------- -----------------
Preferred stock equity 2.4% 2.4% 6.6%
------------------------- ----------- -------------- -----------------
Long-term debt 43.6% 32.9% 44.2%
------------------------- ----------- -------------- -----------------
Short-term debt* 3.3% 6.4% 3.7%
------------------------- ----------- -------------- -----------------
* including current portion of long-term debt.
Ameren's senior unsecured debt securities are currently rated BBB+ by
Standard & Poor's Inc. ("S&P") and A3 by Moody's Investors Service ("Moody's").
The first mortgage bonds of AmerenUE and AmerenCIPS are currently rated A- and
A-, respectively, by S&P and A1 and A1, respectively, by Moody's.
For the year ended December 31, 2001, CILCORP reported consolidated
operating revenues of $814,870,000, of which $391,811,000 (48.1%) were derived
from sales of electricity, $271,434,000 (33.3%) from sales of gas and gas
transportation service, and $151,625,000 (18.6%) from CILCORP's non-utility
operations. At September 30, 2002, CILCORP had $1,877,606,000 in total assets,
including total net property, plant and equipment of $900,764,000.
As of September 30, 2002, CILCORP's capitalization on a consolidated basis
and the capitalization of AmerenCILCO were as follows:
-------------------------- -------------- ------------------
CILCORP AmerenCILCO
-------------------------- -------------- ------------------
Common equity 39.0% 48.6%
-------------------------- -------------- ------------------
Preferred stock equity 2.9% 5.5%
-------------------------- -------------- ------------------
Long-term debt 56.2% 42.3%
-------------------------- -------------- ------------------
Short-term debt* 1.9% 3.6%
-------------------------- -------------- ------------------
* including current portion of long-term debt.
-------------------
(7) Ameren adopted the provisions of Emerging Issues Task Force Issue 02-3
(EITF 02-3), "Issues Involved in Accounting for Contracts Involved in
Energy Trading and Risk Management Activities," in the third quarter of
2002. EITF 02-3 requires revenues and costs associated with certain energy
contracts to be shown on a net basis in the income statement (with no
impact on operating or net income). EITF 02-3 requires retroactive
application to all periods in which operating revenues and operating
expenses are presented. Ameren intends to apply EITF 02-3 to operating
revenues for the year ended December 31, 2001 included in its Annual Report
on Form 10-K to be filed for the year ended December 31, 2002.
6
CILCORP's senior notes are currently rated BBB+ by S&P and Baa2 by Moody's.
AmerenCILCO's secured long-term debt is currently rated A- by S&P and A2 by
Moody's.
1.3 AmerenUE's and AmerenCIPS' Current Financing Authorization.
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(a) External Short-term Debt and Interest Rate Hedging Transactions.
By order dated March 13, 1998 in File No. 70-9133 (the "1998 Financing
Order"),(8) AmerenUE and AmerenCIPS are currently authorized for the period
through February 27, 2003 to issue and sell commercial paper and to establish
credit lines and issue notes thereunder evidencing unsecured short-term
borrowings ("Short-term Debt"). AmerenUE is authorized to issue up to
$575 million of commercial paper at any one time outstanding and borrow up to
$425 million under credit lines. AmerenCIPS is authorized to issue up to
$125 million of commercial paper at any one time outstanding and borrow up to
$125 million under credit lines. Under the 1998 Financing Order, the effective
cost of money on all Short-term Debt may not exceed 300 basis points over the
six-month London Interbank Offered Rate ("LIBOR"). Issuance expenses in
connection with any non-competitive offering of Short-term Debt may not exceed
5% of the principal amount thereof.
At September 30, 2002, AmerenUE had committed bank lines totaling $85.5
million, all of which were unused and available. These lines are renewable
annually at various dates throughout the year and are available to support
AmerenUE's commercial paper program. The availability under these facilities at
any point in time is reduced by the amount of commercial paper outstanding. At
September 30, 2002, AmerenCIPS did not have outstanding any external short-term
borrowings. AmerenCIPS had committed bank lines aggregating $15 million, all of
which were unused and available.
Under the 1998 Financing Order, AmerenUE and AmerenCIPS were also
authorized to enter into interest rate hedging instruments with respect to
outstanding indebtedness of such companies.(9_
(b) Utility Money Pool. By order dated March 22, 1999 in File
No. 70-9423 (the "Money Pool Order"),(10) Ameren was authorized to establish and
fund loans to AmerenUE, AmerenCIPS and Ameren Services through the Ameren
Corporation System Utility Money Pool Agreement (the "Utility Money Pool") in
order to provide for the short-term cash and working capital needs of these
-------------------
(8) See Ameren Corporation, et al., Holding Co. Act Release No. 26841 (Mar. 13,
1998). The 1998 Financing Order, solely as it relates to financing
activities of Ameren, was amended by order dated April 26, 1999 (Holding
Co. Act Release No. 27011), and subsequently superseded and replaced by
order dated October 5, 2001 in File No. 70-9877. See Ameren Corporation,
Holding Co. Act Release No. 27449 (Oct. 5, 2001) (the "2001 Ameren
Financing Order").
(9) AmerenCILCO and CIGI are authorized under the CILCORP Order to issue
Short-term Debt and/or make short-term borrowings from Ameren, in each case
up to an aggregate amount at any time outstanding not to exceed $250
million, and to enter into interest rate hedging transactions, from time to
time through March 31, 2006 (the last day of the proposed Authorization
Period in this proceeding).
(10) See Ameren Corporation, et al., Holding Co. Act Release No. 26993 (Mar. 22,
1999).
7
companies.(11) Further, to the extent not exempt under Rule 52, AmerenUE,
AmerenCIPS, and Ameren Services are authorized to make borrowings from and
extend credit to each other pursuant to the Utility Money Pool. Ameren may not
make borrowings under the Utility Money Pool. AmerenUE is authorized to borrow
up to $500 million at any one time outstanding under the Utility Money Pool.(12)
If surplus funds made available by the participants in the Utility Money Pool
are used to fund loans to AmerenUE, AmerenCIPS or Ameren Services, the interest
rate applicable to such loans is equal to the CD yield equivalent of the 30-day
Federal Reserve "AA" Non-Financial commercial paper composite rate. If proceeds
from external borrowings by any participant in the Utility Money Pool are used
to fund loans, the interest rate is equal to the lending company's cost of
borrowing. In cases where both surplus funds and external borrowings are used to
fund loans to AmerenUE, AmerenCIPS or Ameren Services, the applicable interest
rate is a blended rate. For the year ended December 31, 2001, the average
interest rate on borrowings under the Utility Money Pool was 3.95%. Ameren
Services is the administrator of the Utility Money Pool. The authorization
period under the Money Pool Order is also through February 27, 2003.
Ameren also maintains and funds loans to certain of its non-utility
subsidiaries pursuant to the Ameren Corporation System Amended and Restated
Non-Utility Money Pool Agreement (the "Non-Utility Money Pool") in order to
provide for the short-term cash and working capital requirements of these
subsidiaries. In addition to Ameren, which is not permitted to be a borrower
under the Non-Utility Money Pool, the current participants in the Non-Utility
Money Pool are Ameren Services, which also acts as the administrator of the
Non-Utility Money Pool, Ameren Development, Ameren Energy, Ameren ERC, Ameren
Energy Communications, Ameren Energy Resources, Ameren Energy Development,
Ameren GenCo, Ameren Energy Marketing, Ameren Fuels, CIC, Illinois Materials,
and UEDC. Ameren Services participates in the Non-Utility Money Pool as a
borrower only and not as a lender.(13) Borrowings and extensions of credit by
Ameren's non-utility subsidiaries under the Non-Utility Money Pool are exempt
pursuant to Rule 52(b) and (d) and Rule 45(b)(1), as applicable.
1.4 Overview of Proposed Transactions. The Applicants are requesting
authorization herein for the period through March 31, 2006 (the "Authorization
Period") (1) to extend and restate the external short-term financing and
interest rate hedging authorization of AmerenUE and AmerenCIPS under the 1998
Financing Order, (2) to extend and continue the Utility Money Pool and
Non-Utility Money Pool (to be re-designated as the "Non-State Regulated
Subsidiary Money Pool") arrangements, and (3) to add AmerenCILCO as a
participant in the Utility Money Pool and CILCORP, CIGI, certain non-utility
subsidiaries of CILCORP (as identified below), and AmerenEnergy Medina Valley
and its direct and indirect non-utility subsidiaries as participants in the
-------------------
11 Funds advanced by Ameren to the Utility Money Pool are derived from
commercial paper sales and other short-term borrowings by Ameren authorized
under the 2001 Ameren Financing Order, as well as surplus funds in the
treasury of Ameren.
12 Borrowings by AmerenCIPS under the Utility Money Pool have been approved by
the Illinois Commerce Commission ("ICC") and are therefore exempt under
Rule 52(a). Borrowings by Ameren Services are exempt under Rule 52(b).
13 Any surplus funds that Ameren Services has on hand are invested in the
Utility Money Pool.
8
Non-State Regulated Subsidiary Money Pool, in each case subject to all of the
existing terms, conditions and limitations of the money pool agreements. Ameren
is not requesting any new financing authority in this proceeding.
1.5 Short-term Debt. AmerenUE and AmerenCIPS propose to issue and sell
from time to time during the Authorization Period Short-term Debt in an
aggregate principal amount at any time outstanding not to exceed, when added to
any borrowings by such companies under the Utility Money Pool, $1 billion in the
case of AmerenUE and $250 million in the case of AmerenCIPS. Short-term Debt may
include commercial paper notes, bank notes, and other forms of short-term
indebtedness. All Short-term Debt will have maturities of less than one year
from the date of issuance.
Commercial paper will be sold in established domestic or European
commercial paper markets. Such commercial paper would typically be sold to
dealers at the discount rate per annum prevailing at the date of issuance for
commercial paper of comparable quality and maturities sold to commercial paper
dealers generally. It is expected that the dealers acquiring such commercial
paper will reoffer it at a discount to corporate, institutional and, with
respect to European commercial paper, individual investors. It is anticipated
that such commercial paper will be reoffered to investors such as commercial
banks, insurance companies, pension funds, investment trusts, foundations,
colleges and universities, finance companies and nonfinancial corporations.
AmerenUE and AmerenCIPS also propose to establish and maintain back-up
credit facilities and other credit facilities with banks or other financial
institutions to support their commercial paper program(s) and other credit
and/or borrowing facilities generally available to borrowers with comparable
credit ratings as they may deem appropriate in light of their needs and existing
market conditions providing for revolving credit or other loans and having
commitment periods not longer than the Authorization Period. Only the amounts
drawn and outstanding under these agreements and facilities will be counted
against the proposed limits on Short-term Debt.
The effective cost of money on all Short-term Debt will not exceed at the
time of issuance the greater of (i) 300 basis points over six-month LIBOR, or
(ii) a gross spread over six-month LIBOR that is consistent with similar
securities of comparable credit quality and maturities issued by other
companies. Issuance expenses in connection with any non-competitive offering of
Short-term Debt will not exceed 5% of the principal amount thereof.
The Applicants represent that, except for securities issued for the purpose
of funding money pool operations, no Short-term Debt may be issued in reliance
upon the authorization granted by the Commission pursuant to this
Application/Declaration, unless (i) the security to be issued, if rated, is
rated investment grade; (ii) all outstanding securities of the issuer that are
rated are rated investment grade; and (iii) all outstanding securities of Ameren
that are rated are rated investment grade. For purposes of this provision, a
security will be deemed to be rated "investment grade" if it is rated investment
grade by at least one nationally recognized statistical rating organization
("NRSRO"), as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of
Rule 15c3-1 under the Securities Exchange Act of 1934, as amended. Applicants
9
request that the Commission reserve jurisdiction over the issuance of any
Short-term Debt securities that are rated below investment grade.
1.6 Hedging Transactions.
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(a) Interest Rate Hedges. AmerenUE and AmerenCIPS also request
authorization to enter into interest rate hedging transactions with respect to
outstanding indebtedness ("Interest Rate Hedges"), subject to certain
limitations and restrictions, in order to reduce or manage the effective
interest rate cost. Interest Rate Hedges would only be entered into with
counterparties ("Approved Counterparties") whose senior debt ratings, or the
senior debt ratings of any credit support providers who have guaranteed the
obligations of such counterparties, as published by S&P, are equal to or greater
than BBB, or an equivalent rating from another NRSRO.
Interest Rate Hedges will involve the use of financial instruments commonly
used in today's capital markets, such as interest rate swaps, caps, collars,
floors, and structured notes (i.e., a debt instrument in which the principal
and/or interest payments are indirectly linked to the value of an underlying
asset or index), or transactions involving the purchase or sale, including short
sales, of U.S. Treasury Securities. The transactions would be for fixed periods
and stated notional amounts. Fees, commissions and other amounts payable to the
counterparty or exchange (excluding, however, the swap or option payments) in
connection with an Interest Rate Hedge will not exceed those generally
obtainable in competitive markets for parties of comparable credit quality.
(b) Anticipatory Hedges. In addition, AmerenUE and AmerenCIPS request
authorization to enter into interest rate hedging transactions with respect to
anticipated debt offerings (the "Anticipatory Hedges"), subject to certain
limitations and restrictions. Such Anticipatory Hedges would only be entered
into with Approved Counterparties, and would be utilized to fix the interest
rate and/or limit the interest rate risk associated with any new issuance
through (i) a forward sale of exchange-traded U.S. Treasury futures contracts,
U.S. Treasury Securities and/or a forward swap (each a "Forward Sale"), (ii) the
purchase of put options on U.S. Treasury Securities (a "Put Options Purchase"),
(iii) a Put Options Purchase in combination with the sale of call options on
U.S. Treasury Securities (a "Zero Cost Collar"), (iv) transactions involving the
purchase or sale, including short sales, of U.S. Treasury Securities, or
(v) some combination of a Forward Sale, Put Options Purchase, Zero Cost Collar
and/or other derivative or cash transactions, including, but not limited to
structured notes, caps and collars, appropriate for the Anticipatory Hedges.
Anticipatory Hedges may be executed on-exchange ("On-Exchange Trades") with
brokers through the opening of futures and/or options positions traded on the
Chicago Board of Trade, Chicago Mercantile Exchange or other financial exchange,
the opening of over-the-counter positions with one or more counterparties
("Off-Exchange Trades"), or a combination of On-Exchange Trades and Off-Exchange
Trades. AmerenUE and AmerenCIPS will determine the optimal structure of each
Anticipatory Hedge transaction at the time of execution.
Each Interest Rate Hedge and Anticipatory Hedge will qualify for hedge
accounting treatment under the current Financial Accounting Standards Board
10
("FASB") guidelines in effect and as determined at the time entered into.
Further, the applicants will comply with the Statement of Financial Accounting
Standards ("SFAS") 133 ("Accounting for Derivatives Instruments and Hedging
Activities") and SFAS 138 ("Accounting for Certain Derivative Instruments and
Certain Hedging Activities") or other standards relating to accounting for
derivative transactions as are adopted and implemented by the FASB.(14)
1.7 Utility Money Pool. Ameren, AmerenUE, AmerenCIPS, and Ameren Services
seek authorization to continue their participation in the Utility Money Pool,
subject to all of the terms, conditions and limitations set forth in the Money
Pool Order. AmerenUE requests authority to borrow up to $500 million at any time
outstanding under the Utility Money Pool. Ameren will continue to participate in
the Utility Money Pool as a lender only and may not make any borrowings from or
receive any extension of credit through the Utility Money Pool. In addition,
AmerenCILCO proposes to become a participant in the Utility Money Pool, subject
to receiving approval from the ICC.(15) It is requested that the Commission
reserve jurisdiction over AmerenCILCO's participation in the Utility Money Pool
pending completion of the record.
Ameren will continue to fund loans to Utility Money Pool participants with
the proceeds of commercial paper sales and other short-term borrowings by Ameren
authorized under the 2001 Ameren Financing Order, as well as surplus funds in
the treasury of Ameren. Ameren is not requesting any new financing authority in
this proceeding.
In accordance with the terms and provisions of the Utility Money Pool,
funds will be available from the following sources for short-term loans to
AmerenUE, AmerenCIPS, AmerenCILCO and Ameren Services, from time to time: (1)
surplus funds in the treasuries of AmerenUE, AmerenCIPS, AmerenCILCO and Ameren
Services, (2) surplus funds in the treasury of Ameren, and (3) proceeds from
bank borrowings and the sale of commercial paper by Ameren, AmerenUE,
AmerenCIPS, AmerenCILCO and Ameren Services ("External Funds"). Funds will be
made available from such sources in such other order as Ameren Services, as
administrator of the Utility Money Pool, may determine would result in a lower
cost of borrowing, consistent with the individual borrowing needs and financial
standing of the companies providing funds to the Utility Money Pool. The
determination of whether a Utility Money Pool participant at any time has
surplus funds to lend to the Utility Money Pool, or shall lend such funds to the
Utility Money Pool, will be made by such participant's Treasurer, or by a
designee thereof, on the basis of cash flow projections and other relevant
factors, in such participant's sole discretion.
Utility Money Pool participants that borrow will borrow pro rata from each
company that lends, in the proportion that the total amount loaned by each such
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14 The authority sought for interest rate hedging transactions in this
Application/Declaration is identical to the authorization previously
granted to Ameren under the 2001 Ameren Financing Order.
15 Utility Money Pool borrowings by AmerenCIPS will continue to be exempt
under Rule 52(a) because such borrowings have been approved by the ICC.
Likewise, borrowings by AmerenCILCO will be exempt under Rule 52(a) upon
receipt of approval by the ICC. Borrowings by Ameren Services under the
Utility Money Pool will be exempt under Rule 52(b).
11
lending company bears to the total amount then loaned through the Utility Money
Pool. On any day when more than one fund source (e.g., surplus treasury funds of
Ameren and other Utility Money Pool participants ("Internal Funds") and External
Funds), with different rates of interest, is used to fund loans through the
Utility Money Pool, each borrower will borrow pro rata from each such fund
source in the Utility Money Pool in the same proportion that the amount of funds
provided by that fund source bears to the total amount of short-term funds
available to the Utility Money Pool.
Certain additional terms of the Utility Money Pool are described below:
Interest Rate on Loans. If only Internal Funds comprise the funds
available in the Utility Money Pool, the interest rate applicable to loans of
such Internal Funds will be the CD yield equivalent of the 30-day Federal
Reserve "AA" Non-Financial commercial paper composite rate (or if no such rate
is established for that day, then the applicable rate would be the rate for the
next preceding day for which such rate was established).
If only External Funds comprise the funds available in the Utility
Money Pool, the interest rate applicable to loans of such External Funds will be
equal to the lending company's cost for such External Funds (or, if more than
one Utility Money Pool participant had made available External Funds on such
day, the applicable interest rate will be a composite rate equal to the weighted
average of the cost incurred by the respective Utility Money Pool participants
for such External Funds).
In cases where both Internal Funds and External Funds are concurrently
borrowed through the Utility Money Pool, the rate applicable to all loans
comprised of such "blended" funds will be a composite rate equal to the weighted
average of (a) the cost of all Internal Funds contributed by Utility Money Pool
participants (as determined pursuant to the second preceding paragraph above)
and (b) the cost of all such External Funds (as determined pursuant to the
immediately preceding paragraph above). In circumstances where Internal Funds
and External Funds are available for loans through the Utility Money Pool, loans
may be made exclusively from Internal Funds or External Funds, rather than from
a "blend" of such funds, to the extent it is expected that such loans would
result in a lower cost of borrowing.
Certain Costs. The cost of compensating balances and/or fees paid to
banks to maintain credit lines by Utility Money Pool participants lending
External Funds to the Utility Money Pool will initially be paid by the
participant maintaining such line. Commitment fees will be allocated by usage of
proceeds. A portion of such costs, or all of such costs in the event a Utility
Money Pool participant establishes a line of credit solely for purposes of
lending any External Funds obtained thereby into the Utility Money Pool, will be
retroactively allocated every month to the companies borrowing such External
Funds through the Utility Money Pool in proportion to their respective daily
outstanding borrowings of such External Funds.
Investment of Surplus Funds. Funds not required by the Utility Money
Pool to make loans (with the exception of funds required to satisfy the Utility
Money Pool's liquidity requirements) will ordinarily be invested in one or more
short-term investments, including: (i) interest-bearing accounts with banks;
(ii) obligations issued or guaranteed by the U.S. government and/or its agencies
and instrumentalities, including obligations under repurchase agreements;
(iii) obligations issued or guaranteed by any state or political subdivision
12
thereof, provided that such obligations are rated not less than A by a
nationally recognized rating agency; (iv) commercial paper rated not less than
A-1 or P-1 or their equivalent by a nationally recognized rating agency; (v)
money market funds; (vi) bank certificates of deposit and bankers acceptances;
(vii) Eurodollar certificates of deposit or time deposits; (viii) investment
grade medium term notes, variable rate demand notes and variable rate preferred
stock; and (ix) such other investments as are permitted by Section 9(c) of the
Act and Rule 40 thereunder.
Allocation of Interest Income and Investment Earnings. The interest
income and investment income earned on loans and investments of surplus funds
will be allocated among the participants in the Utility Money Pool in accordance
with the proportion each participant's contribution of funds bears to the total
amount of funds in the Utility Money Pool and the cost of funds provided to the
Utility Money Pool by such participant.
Repayment. Each applicant receiving a loan through the Utility Money
Pool will be required to repay the principal amount of such loan, together with
all interest accrued thereon, on demand or on a date agreed by the parties to
the transaction, but in any event within one year of the date on which such loan
was made. All loans made through the Utility Money Pool may be prepaid by the
borrower without premium or penalty. Interest will be accrued by each borrower
monthly.
Form of Loans to Applicants. Under the authorization requested herein,
all loans through the Utility Money Pool will be made on or before March 31,
2006 and will be made pursuant to open-account advances, repayable upon demand
or on a date agreed by the parties to the transaction, but in any event not
later than one year after the date of the advance; provided, that each lending
party will at all times be entitled to receive upon demand one or more
promissory notes evidencing any and all loans by such lender. Any such note
shall: (a) be substantially in the form of Exhibit A to the form of Utility
Money Pool Agreement filed herewith, (b) be dated as of the date of the initial
borrowing, (c) mature on demand or on a date agreed by the parties to the
transaction, but in any event not later than one year after the date of the
applicable borrowing, and (d) be repayable in whole at any time or in part from
time to time, without premium or penalty.
Operation. Operation of the Utility Money Pool, including record
keeping and coordination of loans, will be handled by Ameren Services under the
authority of the appropriate officers of the participating companies. Ameren
Services will continue to administer the Utility Money Pool on an "at cost"
basis.
1.8 Non-State Regulated Subsidiary Money Pool. Ameren also proposes to
continue to maintain and fund loans to certain of its direct and indirect
non-utility subsidiaries pursuant to a new Non-State Regulated Subsidiary Money
Pool Agreement, the form of which is filed herewith as Exhibit B-2. As is the
case with the current Non-Utility Money Pool, Ameren will participate in the
Non-State Regulated Subsidiary Money Pool solely as a lender and may not make
any borrowings from or receive any extension of credit through the Non-State
Regulated Subsidiary Money Pool. CILCORP also proposes to participate in the
Non-State Regulated Subsidiary Money Pool as a lender only and will not be
permitted to make borrowings from or receive any extension of credit through the
13
Non-State Regulated Subsidiary Money Pool. Ameren Services will participate in
the Non-State Regulated Subsidiary Money Pool (as it currently does in the
Non-Utility Money Pool) solely as a borrower.
CIGI also proposes to become a participant in the Non-State Regulated
Subsidiary Money Pool. Although CIGI will be an "electric utility company" under
the Act at such time as it relinquishes EWG status, for purposes of state
regulation in Illinois, CIGI will be considered to be a "non-regulated"
affiliate of AmerenCILCO and therefore cannot participate in the Utility Money
Pool. CIGI is requesting authorization to borrow up to $250 million at any time
outstanding under the Non-State Regulated Subsidiary Money Pool. The Applicants
request that the Commission reserve jurisdiction over CIGI's participation in
the Non-State Regulated Subsidiary Money Pool pending completion of the record.
The interest rate payable on borrowings from and loans to the Non-State
Regulated Subsidiary Money Pool and the allocation of fees and investment income
to participants will be determined in the same manner described above in
connection with the Utility Money Pool.
The following direct and indirect subsidiaries of Ameren will be
participants in the Non-State Regulated Subsidiary Money Pool:
Ameren Services (solely as a borrower)
Ameren Development
Ameren ERC
Ameren Communications
Ameren Energy Resources
Ameren Energy Development
Ameren GenCo
Ameren Fuels
AFS Development
Illinois Materials
UEDC
CIC
CILCORP (solely as a lender)
CIGI
CIM
CVI
CESI
QST
CILCO Exploration
CILCO Energy
AmerenEnergy Medina Valley
AmerenEnergy Medina Valley Cogen (No. 2), L.L.C.
AmerenEnergy Medina Valley Cogen
AmerenEnergy Medina Valley Operations, L.L.C.
14
The Commission is requested to reserve jurisdiction over the participation
in the Non-State Regulated Subsidiary Money Pool of any other direct or
indirect, current or future, non-utility subsidiary of Ameren.
1.9 Relationship to Orders in Other Proceedings. Upon the effective date
of the Commission's order in this proceeding, Ameren and its pre-CILCORP
subsidiaries will relinquish their authority under the 1998 Financing Order
(File No. 70-9133) and the Money Pool Order (File No. 70-9423), except with
respect to any Short-term Debt, Utility Money Pool borrowings or loans, Interest
Rate Hedges, or Anticipatory Hedges that are outstanding on such date, which
shall expire or terminate in accordance with their terms. The order issued in
this proceeding will not affect the existing financing authorization of CILCORP,
AmerenCILCO and CIGI, as set forth in the CILCORP Order.
1.10 Certificates under Rule 24. The Applicants propose to file
certificates of notification pursuant to Rule 24 that report each of the
transactions carried out in accordance with the terms and conditions of and for
the purposes represented in this Application/Declaration. Such certificates of
notification would be filed within 60 days after the end of each of the first
three calendar quarters, and 90 days after the end of the last calendar quarter,
in which transactions occur. The Rule 24 certificates will contain the following
information for the reporting period:
(a) The amount and terms of Short-term Debt issued by AmerenUE and
AmerenCIPS (other than through the Utility Money Pool) during the quarter;
(b) The notional amount and principal terms of any Interest Rate Hedge
or Anticipatory Hedge entered into during the quarter and the identity of
the parties to such instruments;
(c) The maximum outstanding amount of all borrowings from and loans to
the Utility Money Pool and the Non-State Regulated Subsidiary Money Pool by
each money pool participant during the quarter, and the rate or range of
rates charged on borrowings by eligible Utility and Non-State Regulated
Subsidiary Money Pool participants and paid on loans to Utility and
Non-State Regulated Subsidiary Money Pool participants during the
quarter;(16)
(d) Consolidated balance sheets of Ameren, AmerenUE, AmerenCIPS,
CILCORP, AmerenCILCO and CIGI as of the end of the calendar quarter, which
may be incorporated by reference to filings by such companies under the
Securities Act of 1933 or Securities Exchange Act of 1934.
-------------------
16 For convenience and in order to simplify reporting, it is proposed that all
Utility Money Pool activity and all Non-State Regulated Subsidiary Money
Pool activity, including transactions that are exempt under Rules 52 and
45(b)(1), be reported as part of the quarterly Rule 24 certificate. 15
15
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The fees, commissions and expenses incurred or to be incurred in connection
with the preparation and filing of this Application/Declaration are estimated
not to exceed $10,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
3.1 General. Sections 6(a), 7, 9(a)(1), 9(c)(3), 10, 12(b) and 12(f) of
the Act and Rules 40, 42, 43, 45, and 54 thereunder are applicable to the
proposed transactions.
3.2 Compliance with Rule 54. The transactions proposed herein are also
subject to Rule 54. Rule 54 provides that, in determining whether to approve the
issue or sale of any securities for purposes other than the acquisition of an
EWG or "foreign utility company" ("FUCO") or other transactions unrelated to
EWGs or FUCOs, the Commission shall not consider the effect of the
capitalization or earnings of subsidiaries of a registered holding company that
are EWGs or FUCOs if Rule 53(a), (b) and (c) are satisfied. Under Rule 53(a),
the Commission shall not make certain specified findings under Sections 7 and 12
in connection with a proposal by a holding company to issue securities for the
purpose of acquiring the securities of or other interest in an EWG, or to
guarantee the securities of an EWG, if each of the conditions in
paragraphs (a)(1) through (a)(4) thereof are met, provided that none of the
conditions specified in paragraphs (b)(1) through (b)(3) of Rule 53 exists.
These standards are met.
Rule 53(a)(1): Ameren's "aggregate investment" (as defined in
Rule 53(a)(1)) in EWGs as of September 30, 2002 was $406,397,430, or
approximately 23.1% of Ameren's "consolidated retained earnings" (also as
defined in Rule 53(a)(1)) for the four quarters ended September 30, 2002
($1,757,119,306). On a pro forma basis, to take into account Ameren's investment
in AmerenEnergy Medina Valley, Ameren's "aggregate investment" would be
$432,297,155, or about 24.6% of "consolidated retained earnings" for the four
quarters ended September 30, 2002. Ameren does not currently hold an interest in
any FUCO.
Rule 53(a)(2): Ameren will maintain books and records enabling it to
identify investments in and earnings from each EWG and FUCO in which it directly
or indirectly acquires and holds an interest. Ameren will cause each domestic
EWG in which it acquires and holds an interest, and each foreign EWG and FUCO
that is a majority-owned subsidiary, to maintain its books and records and
prepare its financial statements in conformity with U.S. generally accepted
accounting principles. All of such books and records and financial statements
will be made available to the Commission, in English, upon request.
Rule 53(a)(3): No more than 2% of the employees of Ameren's domestic
utility subsidiaries will, at any one time, directly or indirectly, render
services to EWGs and FUCOs.
Rule 53(a)(4): Ameren will submit a copy of each Application/Declaration
relating to investments in EWGs and FUCOs and copies of any related Rule 24
certificates, as well as a copy of Ameren's Form U5S, to each of the public
service commissions having jurisdiction over the retail rates of Ameren's
domestic utility subsidiaries.
16
In addition, Ameren states that the provisions of Rule 53(a) are not made
inapplicable to the authorization herein requested by reason of the occurrence
or continuance of any of the circumstances specified in Rule 53(b). Rule 53(c)
is inapplicable by its terms.
ITEM 4. REGULATORY APPROVAL.
The participation of AmerenCIPS and AmerenUE in the Utility Money Pool has
been approved by the ICC. (See Exhibit D-2). The participation of AmerenCILCO in
the Utility Money Pool also requires approval of the ICC. Copies of
AmerenCILCO's application to the ICC and the ICC's order will be filed by
post-effective amendment in this proceeding as Exhibit D-3 and Exhibit D-4,
respectively. The Commission is requested to reserve jurisdiction over
AmerenCILCO's participation in the Utility Money Pool pending completion of the
record. No other state commission, and no federal commission, other than the
Commission, has jurisdiction over any of the transactions proposed in this
Application/Declaration.
ITEM 5. PROCEDURE.
The Commission has published a notice under Rule 23 with respect to the
filing of this Application/Declaration, and no hearing has been requested. The
Applicants request 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.
The Applicants hereby waive a recommended decision by a hearing officer or any
other responsible officer of the Commission and consent to the participation of
the Division of Investment Management in the preparation of the Commission's
decision and/or order, unless such Division opposes the matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
A. EXHIBITS.
--------
A None.
B-1 Utility Money Pool Agreement (incorporated by
reference to Exhibit B to Form U-1
Application/Declaration, dated November 25, 1998,
in File No. 70-9423).
B-2 Form of Non-State Regulated Subsidiary Money Pool
Agreement. (Previously filed).
C None.
D-1 Application by Ameren, AmerenCIPS, AmerenUE and
Ameren Services to Illinois Commerce Commission
(incorporated by reference to Exhibit D-1 to Form
U-1 Application/Declaration, dated November 25,
1998, in File No. 70-9423).
17
D-2 Illinois Commerce Commission Order (incorporated
by reference to Exhibit D-2 to Form U-1
Application/Declaration, dated November 25, 1998,
in File No. 70-9423).
D-3 Application by AmerenCILCO to Illinois Commerce
Commission for Authorization to Participate in
Utility Money Pool. (To be filed by post-effective
amendment).
D-4 Order of the Illinois Commerce Commission
Approving Participation of AmerenCILCO in Utility
Money Pool. (To be filed by post-effective
amendment).
E None.
F Opinion of Counsel. (Filed herewith).
G Proposed Form of Federal Register Notice.
(Previously filed).
B. FINANCIAL STATEMENTS.
--------------------
FS-1 Consolidated Balance Incorporated by reference
Sheet and Statement of to the Quarterly Report
Income of Ameren of Ameren Corporation on
Corporation as of and for Form 10-Q for the quarter
the nine months ended ended September 30, 2002
September 30, 2002 in File No. 1-14756
FS-2 Balance Sheet and Income Incorporated by reference
Statement of Union to the Quarterly Report
Electric Company as of of Union Electric Company
and for the nine months on Form 10-Q for the
ended September 30, 2002 quarter ended September 30,
2002 in File No. 1-2967
FS-3 Balance Sheet and Income Incorporated by reference
Statement of Central to the Quarterly Report
Illinois Public Service of Central Illinois
Company as of and for the Public Service Company on
nine months ended Form 10-Q for the quarter
September 30, 2002 ended September 30, 2002
in File No. 1-3672
FS-4 Consolidated Balance Incorporated by reference
Sheet and Statement of to the Quarterly Report
Income of CILCORP Inc. on Form 10-Q of CILCORP
as of and for the nine Inc. for the period ended
months ended September 30, 2002 in
September 30, 2002 File No. 1-8946
18
FS-5 Consolidated Balance Incorporated by reference
Sheet and Statement of to the Quarterly Report
Income of Central on Form 10-Q of Central
Illinois Light Company as Illinois Light Company
of and for the nine for the period ended in
months ended File No. 1-2732 September 30,
September 30, 2002 2002
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
None of the matters that are the subject of this Application/Declaration
involves a "major federal action" nor do such matters "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/Declaration will not result in changes in the operation of
the Applicants that will have an impact on the environment. The Applicants 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/Declaration.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned companies have duly caused this amended
Application/Declaration to be signed on their behalves by the undersigned
thereunto duly authorized.
AMEREN CORPORATION
UNION ELECTRIC COMPANY
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
AMEREN SERVICES COMPANY
AMEREN ENERGY, INC.
AMEREN DEVELOPMENT COMPANY
AMEREN ERC, INC.
AMEREN ENERGY COMMUNICATIONS, INC.
AMEREN ENERGY RESOURCES COMPANY
AMEREN ENERGY DEVELOPMENT COMPANY
AMEREN ENERGY GENERATING COMPANY
AMEREN ENERGY MARKETING COMPANY
AMEREN ENERGY FUELS AND SERVICES COMPANY
AFS DEVELOPMENT COMPANY LLC
ILLINOIS MATERIALS SUPPLY CO.
UNION ELECTRIC DEVELOPMENT CORPORATION
CIPSCO INVESTMENT COMPANY
By: /s/ Steven R. Sullivan
-----------------------
Name: Steven R. Sullivan
Title: Vice President Regulatory Policy,
General Counsel and Secretary
(signatures continued on next page)
19
CILCORP INC.
CENTRAL ILLINOIS LIGHT COMPANY
CENTRAL ILLINOIS GENERATION, INC.
CILCORP INVESTMENT MANAGEMENT INC.
CILCORP VENTURES INC.
QST ENTERPRISES INC.
CILCORP ENERGY SERVICES INC.
CILCO EXPLORATION AND DEVELOPMENT
COMPANY
CILCO ENERGY CORPORATION
By: /s/ Steven R. Sullivan
----------------------
Name: Steven R. Sullivan
Title: Secretary
AMERENENERGY MEDINA VALLEY COGEN (NO. 4),
L.L.C.
AMERENENERGY MEDINA VALLEY COGEN, L.L.C.
AMERENENERGY MEDINA VALLEY COGEN (NO. 2),
L.L.C.
AMERENENERGY MEDINA VALLEY OPERATIONS,
L.L.C.
By: /s/ Jerre E. Birdsong
---------------------
Name: Jerre E. Birdsong
Title: Vice President and Treasurer
Date: February 27, 2003
20