(As filed March 10, 1999)
File No. 70-9427
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
Union Electric Company
Union Electric Development Corporation
Ameren Development Company
Ameren ERC, Inc.
Ameren Energy, Inc.
1901 Chouteau Avenue
St. Louis, Missouri 63103
Central Illinois Public Service Company
CIPSCO Investment Company
607 East Adams
Springfield, Illinois 62739
(Name of company or companies filing this statement
and address 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
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 signed copies of all
orders, notices and communications to:
William J. Niehoff, Esq. William T. Baker, Jr., Esq.
Ameren Services Company Thelen Reid & Priest LLP
1901 Chouteau Avenue 40 West 57th Street
P.O. Box 66149, MC 1310 New York, New York 10019-4097
St. Louis, Missouri
63166-6149
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The Application or Declaration heretofore filed in this
proceeding on December 8, 1998, is hereby amended and restated in
its entirety to read as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
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1.1 BACKGROUND. By order dated December 30, 1997 (the
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"Merger Order"),(fn1) Ameren Corporation ("Ameren"), a registered
holding company under the Public Utility Holding Company Act of
1935, as amended (the "Act"), was authorized to acquire all of
the issued and outstanding common stock of Union Electric Company
("Union Electric") and Central Illinois Public Service Company
("CIPS") (collectively, the "Operating Companies"), each of which
is an electric and gas utility company, and Ameren Services
Company ("Ameren Services"), a subsidiary service company, and to
carry out various other transactions related to the combination
of Union Electric and CIPS. Ameren also owns all of the issued
and outstanding common stock of CIPSCO Investment Company
("CIC"), which manages various non-utility investments; Ameren
Energy, Inc. ("Ameren Energy"), an electricity, gas and energy
commodity brokering and marketing company which is an "energy-
related company" within the meaning of Rule 58; Ameren
Development Company ("Ameren Development"), also an "energy-
related company" within the meaning of Rule 58, which was formed
to acquire and hold the securities of other "energy-related
companies;" and Ameren Energy Communications, Inc. ("Ameren
Communications"), an "exempt telecommunications company" ("ETC")
within the meaning of Section 34 of the Act.(fn2) Ameren's
indirect non-utility subsidiaries include Union Electric
Development Corporation ("UEDC"), a wholly-owned subsidiary of
Union Electric, which directly or through subsidiaries of its own
engages in various energy-related activities, and Ameren ERC,
Inc. ("Ameren ERC"), a wholly-owned subsidiary of Ameren
Development and an "energy-related company" within the meaning of
Rule 58 that engages, directly and through other subsidiaries, in
activities permitted under such rule, including, among others,
the production and sale of steam and chilled water and demand
side management programs.
By order dated March 13, 1998 (the "Financing Order"),(fn3)
the Commission authorized Ameren to issue and sell common stock
and other securities in order to fund investments in
subsidiaries, to repay, redeem or retire securities of Ameren or
its subsidiaries, to provide working capital, and for other
corporate purposes. Under the Financing Order, Ameren is also
authorized to guarantee and provide other forms of credit support
in respect of the obligations of its existing and future non-
utility subsidiaries in an aggregate principal amount not to
----------------------
(fn1) See Ameren Corporation, et al., Holding Co. Act
Rel. No. 26809.
(fn2) See Ameren Energy Communications, Inc., FCC
Release No. DA98-1615; 1998 FCC LEXIS 4104 (August 12, 1998).
(fn3) See Ameren Corporation, et al., Holding Co. Act
Rel. No. 26841. The "Authorization Period" under the Financing
Order is through February 27, 2003. Ameren has filed a Post-
Effective Amendment seeking certain modifications to the terms of
the Financing Order. See Ameren Corporation, et al., Holding Co.
Act Rel. No. 26972 (February 1, 1999) (notice of filing).
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exceed $300 million outstanding at any one time. Ameren's
existing non-utility subsidiaries (Ameren Development, Ameren
Energy, CIC and UEDC), in turn, were authorized to provide
guarantees and other forms of credit support in respect of
obligations of other non-utility subsidiaries in an aggregate
principal amount not to exceed $50 million at any one time
outstanding.
Ameren does not currently hold any direct or indirect
interest in any "exempt wholesale generator" ("EWG") or exempt
"foreign utility company" ("FUCO"), as those terms are defined in
Sections 32 and 33 of the Act, respectively. However, as
discussed in further detail below, one of Ameren's purposes in
filing this Application or Declaration is to obtain certain
necessary authorizations that will facilitate Ameren's
development, acquisition, ownership, administration and financing
of one or more future EWGs or FUCOs, as well as additional
investments in ETCs, "energy-related companies" under Rule 58 and
certain other types of non-exempt, non-utility, subsidiaries.
Appended as Exhibit I hereto is an organizational chart of
Ameren and its subsidiaries, as of December 31, 1998.
1.2 SUMMARY OF APPROVALS REQUESTED. Ameren proposes to
consolidate its direct and indirect ownership interests in
certain existing non-utility businesses and subsidiaries under
one or more first-tier non-utility holding companies that would
in most cases also be the vehicle(s) through which Ameren would
make future investments in any EWGs, FUCOs or ETCs (collectively,
"Exempt Subsidiaries"), "energy-related companies" within the
meaning of Rule 58 ("Rule 58 Subsidiaries"), and certain other
types of non-exempt, non-utility, subsidiaries, as described in
Item 1.4, below ("Non-Exempt Subsidiaries"). It is currently
contemplated that Ameren Development, a direct non-utility
subsidiary of Ameren, will serve as the holding company for such
existing and future non-utility subsidiaries of Ameren. However,
Ameren requests authority to organize and acquire the securities
of one or more additional subsidiaries to serve the same purpose
if, in Ameren's judgment, there are organizational, functional,
tax or other benefits to be derived in separating non-utility
businesses at the first-tier level. Accordingly, unless
otherwise indicated, references in this Application or
Declaration to Ameren Development shall mean Ameren Development
and such other first-tier subsidiaries as Ameren may choose to
organize to serve a similar purpose.
In furtherance of the foregoing, Ameren and its subsidiaries
request authority for each of the following transactions
described below in Item 1.3 through Item 1.14 for the period
through December 31, 2003 (the "Authorization Period").
1.3 AMEREN DEVELOPMENT. Ameren desires to consolidate under
Ameren Development its direct and indirect ownership of various
existing and future non-utility businesses and the preliminary
development activities ("Development Activities") and
administrative and management activities ("Administrative
Activities") associated with such investments. In addition,
through the other specific approvals sought herein, Ameren
Development seeks to maximize its flexibility in forming new
companies in order to facilitate future acquisitions and
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financings, to simplify the overall management and coordination
of the operations of such companies, and to insulate the
Operating Companies from risks and liabilities that may be
associated with Exempt Subsidiaries, Rule 58 Subsidiaries and
other non-utility subsidiaries of Ameren Development. In the
future, it is contemplated that Ameren Development would be the
vehicle through which Ameren would acquire and hold all or
substantially all of its investments in Exempt Subsidiaries, Rule
58 Subsidiaries, and the other Non-Exempt Subsidiaries described
below.
Development Activities will be limited to due diligence and
design review; market studies; preliminary engineering; site
inspection; preparation of bid proposals, including, in
connection therewith, posting of bid bonds; application for
required permits and/or regulatory approvals; acquisition of site
options and options on other necessary rights; negotiation and
execution of contractual commitments with owners of existing
facilities, equipment vendors, construction firms, power
purchasers, thermal "hosts," fuel suppliers and other project
contractors; negotiation of financing commitments with lenders
and other third-party investors; and such other preliminary
activities as may be required in connection with the purchase,
acquisition of construction of facilities or the securities of
other companies. Ameren Development proposes to expend up to
$250 million during the Authorization Period on all such
Development Activities. Administrative Activities will include
ongoing personnel, accounting, engineering, legal, financial, and
other support activities necessary to manage Ameren Development's
Development Activities and investments in subsidiaries.
In the future, Ameren would make additional investments in
Ameren Development pursuant to Rules 52 and 45(b) in the form of
purchases of common stock and other securities, capital
contributions, loans or open account advances, or any combination
of the foregoing. Ameren would utilize the proceeds of
financings authorized under the Financing Order or in a separate
proceeding, as well as internal sources of cash, in order to make
additional investments in Ameren Development. In addition,
Ameren may from time to time provide guarantees and other forms
of credit support on behalf of Ameren Development and its direct
and indirect subsidiaries, subject to the limitation set forth in
the Financing Order, and subject further to the limitation that
the aggregate amount of the proceeds of securities and guarantees
issued by Ameren for the purpose of funding any direct or
indirect investment in an EWG or FUCO would not, when added to
Ameren's "aggregate investment" (as defined in Rule 53(a)(1)) in
all such companies at any point in time, exceed 50% of Ameren's
"consolidated retained earnings" (also as defined in Rule
53(a)(1)). Direct or indirect investments by Ameren in Rule 58
Subsidiaries would be subject to the limitations of Rule 58.(fn4)
It is also contemplated that Ameren Development, Rule 58
Subsidiaries and Non-Exempt Subsidiaries will, in turn, issue
securities from time to time pursuant to the exemption provided
under Rule 52 to investors other than Ameren for the purpose of
-------------------------
(fn4) At September 30, 1998, Ameren's "aggregate
investment" (as defined in Rule 58(b)) in all Rule 58
Subsidiaries was approximately $11.9 million, or about .2% of
Ameren's consolidated capitalization of $5.8 billion.
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financing their respective operations, including future
acquisitions of Exempt Subsidiaries, Rule 58 Subsidiaries, and
other Non-Exempt Subsidiaries. In this regard, one of the goals
in consolidating all or substantially of Ameren's existing and
future investments in non-utility subsidiaries under Ameren
Development is that it may ultimately enhance Ameren
Development's ability to access external capital markets without
the need for credit support from Ameren.
1.4 ACQUISITION OF CERTAIN NON-EXEMPT SUBSIDIARIES. In
addition to acquiring and holding the securities of Exempt
Subsidiaries in transactions that are exempt pursuant to Section
32, 33, or 34, as applicable, or Rule 58 Subsidiaries, in
transactions that are exempt pursuant to Rule 58, Ameren and
Ameren Development request authority through the Authorization
Period to organize and acquire, directly or indirectly, the
equity securities of one or more non-exempt, non-utility
subsidiaries ("Non-Exempt Subsidiaries") falling into any one of
the following three categories:
(i) INTERMEDIATE SUBSIDIARIES, which would be organized
exclusively for the purpose of acquiring and holding the
securities of other direct or indirect non-utility subsidiaries
of Ameren Development, provided that Intermediate Subsidiaries
may also engage in Development Activities and Administrative
Activities;
(ii) FINANCING SUBSIDIARIES, which would be formed
exclusively for the purpose of issuing securities to investors
other than Ameren in order to finance, in whole or in part,
Ameren's direct or indirect acquisitions of Exempt Subsidiaries
and Rule 58 Subsidiaries; and
(iii) SPECIAL-PURPOSE SUBSIDIARIES, which may be organized
to engage in (a) any of the businesses or activities that UEDC or
CIC are currently authorized to engage in under the terms of the
Merger Order and which would not otherwise qualify as permitted
or exempt businesses under Rule 58 or Section 34, as the case may
be; (b) offering and servicing of customer financing for
purchases of home and business heating, cooling, and energy
conservation and management equipment, services and supplies; (c)
Development Activities and operations and maintenance,
construction and construction management, fuel procurement and
other types of activities for or on behalf of Ameren Development
and its direct and indirect subsidiaries; (d) marketing of bill
payment protection insurance; (e) the offering of economic
development services to expanding or relocating businesses; (f)
the offering of customer goodwill and retention programs; and (g)
the marketing of power outage insurance.
1.4.1 INTERMEDIATE SUBSIDIARIES. Ameren and
Ameren Development propose to acquire the securities of one or
more Intermediate Subsidiaries, which would be organized
exclusively for the purpose of acquiring, holding and/or
financing the acquisition of the securities of or other interest
in one or more Exempt Subsidiaries, Rule 58 Subsidiaries, or
other Non-Exempt Subsidiaries, provided that Intermediate
Subsidiaries may also engage in Development Activities and
Administrative Activities relating to such subsidiaries. To the
extent such transactions are not exempt from the Act or otherwise
authorized or permitted by rule, regulation or order of the
Commission issued thereunder, Ameren requests authority for
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Intermediate Subsidiaries to engage in the activities described
herein.
There are several legal and business reasons for the use of
special-purpose subsidiaries such as the Intermediate
Subsidiaries in connection with making investments in Exempt
Subsidiaries, Rule 58 Subsidiaries and other Non-Exempt
Subsidiaries. For example, the formation and acquisition of
special-purpose subsidiaries is often necessary or desirable to
facilitate financing the acquisition and ownership of a FUCO, an
EWG or another non-utility enterprise. Furthermore, the laws of
some foreign countries may require that the bidder in a
privatization program be organized in that country. In such
cases, it would be necessary for Ameren or Ameren Development to
form a foreign subsidiary as the entity (or participant in the
entity) that submits the bid or other proposal. In addition, the
interposition of one or more Intermediate Subsidiaries may allow
Ameren to defer the repatriation of foreign source income, or to
take full advantage of favorable tax treaties among foreign
countries, or otherwise to secure favorable U.S. income tax
treatment that would not otherwise be available. Intermediate
Subsidiaries would also serve to isolate business risks,
facilitate subsequent adjustments to, or sales of, ownership
interests by or among the members of the ownership group, or to
raise debt or equity capital in domestic or foreign markets.
An Intermediate Subsidiary may be organized, among other
things, (1) in order to facilitate the making of bids or
proposals to develop or acquire an interest in any EWG, FUCO,
ETC, or other non-utility company which, upon acquisition, would
qualify as a Rule 58 Subsidiary or other Non-Exempt Subsidiary;
(2) after the award of such a bid proposal, in order to
facilitate closing on the purchase or financing of such acquired
company; (3) at any time subsequent to the consummation of an
acquisition of an interest in any such company in order, among
other things, to effect an adjustment in the respective ownership
interests in such business held by Ameren or Ameren Development
and non-affiliated investors; (4) to facilitate the sale of
ownership interests in one or more acquired non-utility
companies; (5) to comply with applicable laws of foreign
jurisdictions limiting or otherwise relating to the ownership of
domestic companies by foreign nationals; (6) as a part of tax
planning in order to limit Ameren's exposure to U.S. and foreign
taxes; (7) to further insulate Ameren and the Operating Companies
from operational or other business risks that may be associated
with investments in non-utility companies; or (8) for other
lawful business purposes.
Investments in Intermediate Subsidiaries may take the form
of any combination of the following: (1) purchases of capital
shares, partnership interests, member interests in limited
liability companies, trust certificates or other forms of equity
interests; (2) capital contributions; (3) open account advances
without interest; (4) loans; and (5) guarantees issued, provided
or arranged in respect of the securities or other obligations of
any Intermediate Subsidiaries. Funds for any direct or indirect
investment by Ameren or Ameren Development in any Intermediate
Subsidiary will be derived from (1) borrowings, sales of common
stock and guarantees authorized under the Financing Order; (2)
any appropriate future debt or equity securities issuance
authorization obtained by Ameren from the Commission; and (3)
other available cash resources, including proceeds of securities
sales by Ameren Development pursuant to Rule 52. To the extent
that Ameren provides funds directly or indirectly to an
Intermediate Subsidiary which are used for the purpose of making
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an investment in any EWG or FUCO or a Rule 58 Subsidiary, the
amount of such funds will be included in Ameren's "aggregate
investment" in such entities, as calculated in accordance with
Rule 53 or Rule 58, as applicable.
1.4.2 FINANCING SUBSIDIARIES. Ameren and Ameren
Development request authority to acquire, directly or indirectly,
the equity securities of one or more corporations, trusts,
partnerships or other entities created specifically for the
purpose of facilitating the financing of Ameren's and its
subsidiaries' authorized and exempt activities (including exempt
and authorized acquisitions) through the issuance of long-term
debt or equity securities to third parties and the transfer of
the proceeds of such financings to Ameren or any of its
subsidiaries. Ameren may, if required, guarantee or enter into
expense agreements in respect of the obligations of any such
Financing Subsidiaries. Ameren Development or Intermediate
Subsidiaries may also provide guarantees and enter into expense
agreements, if required, on behalf of such entities pursuant to
Rules 45(b)(7) and 52, as applicable. If the direct parent
company of a Financing Subsidiary is authorized in this
proceeding or any subsequent proceeding to issue long-term debt
or similar types of equity securities, then the amount of such
securities issued by that Financing Subsidiary would count
against the limitation applicable to its parent for those
securities. In such cases, however, the guaranty by the parent
of that security issued by its Financing Subsidiary would not be
counted against the limitation on guarantees by Ameren set forth
in the Financing Order or guarantees by Ameren Development or any
of its subsidiaries, as proposed in Item 1.6 hereof, as the case
may be. In other cases, in which the parent company is not
authorized herein or in a subsequent proceeding to issue similar
types of securities, the amount of any guarantee not exempt
pursuant to Rules 45(b)(7) and 52 that is entered into by the
parent company with respect to securities issued by its Financing
Subsidiary would be counted against the limitation on Ameren
guarantees under the Financing Order or guarantees by Ameren
Development and its subsidiaries, as proposed in Item 1.6 hereof,
as the case may be. Ameren requests that the Commission reserve
jurisdiction over the transfer of any financing proceeds by a
Financing Subsidiary to Ameren pending completion of the record
in this proceeding.
1.4.3 SPECIAL-PURPOSE SUBSIDIARIES. Ameren
Development requests authority to acquire from time to time
during the Authorization Period the securities of one or more
Special-Purpose Subsidiaries. Investments in Special-Purpose
Subsidiaries by Ameren Development may take the form of purchases
of common stock or other equity securities, loans, capital
contributions, cash advances or guarantees, or any combination of
the foregoing. Ameren Development proposes to invest in such
entities an aggregate amount at any time outstanding not to
exceed $250 million. Special-Purpose Subsidiaries request
approval, to the extent required, to purchase the assets of or
securities held by UEDC and/or CIC in those businesses identified
in the Merger Order in which UEDC and/or CIC are already engaged,
directly or indirectly, and which would not qualify as permitted
or exempt activities pursuant to Rule 58 or Section 34.(fn5)
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(fn5) UEDC holds a small equity interest in one company
that may be certified as an ETC pursuant to Section 34.
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Special-Purpose Subsidiaries may also be formed to engage in any
of the following additional businesses or activities:
(i) Customer Financing. Making or guaranteeing loans to
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customers to finance the purchase of home and business
heating, ventilation and cooling equipment; energy
conservation and management equipment, products and services;
lighting equipment and supplies; and home and business security
systems. Such financing may also take the form of agreements to
purchase from vendors of such equipment and supplies installment
purchase obligations executed by their customers. Ameren
Development proposes that the aggregate principal amount of
loans, guarantees or customer installment obligations with
respect to which there is recourse to any Special-Purpose
Subsidiary shall not exceed $300 million at any one time during
the Authorization Period.(fn6)
(ii) Development Activities and Other Project Activities.
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Development Activities (as described in Item 1.3, above) and
operations and maintenance, construction and construction
management, fuel procurement and other types of services for
or on behalf of Ameren Development and its direct and
indirect subsidiaries. Ameren Development envisions that
such Special-Purpose Subsidiaries will be needed in order
to, among other things, establish and manage foreign project
development offices, and to provide operations and
maintenance, construction or asset management services,
whether to an associate company or to a non-associate
company. Creating separate subsidiaries for such purposes
would, among other things, facilitate joint ventures with
non-associates companies, isolate the risks of one activity
from others of Ameren Development and its other
subsidiaries, and facilitate the segregation of labor and
benefits programs offered to different categories of
employees.
(iii) Bill Payment Insurance. The marketing of energy
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bill payment insurance in Illinois and Missouri, which would
enable utility customers to pay their energy bills in the
event of unemployment, illness, disability or death. This
program would be underwritten and administered by an
independent insurance company or companies.(fn7)
(iv) Economic Development Services. The offering of
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economic development services for businesses wishing to expand
or relocate their facilities to anywhere within the
--------------------------
(fn6) Although such customer financing activities by a
non-utility subsidiary are beyond the scope of Rule 58 and/or
Rule 48, the Commission has granted similar requests for
authority in Columbia Gas System, et al., Holding Co. Act Rel No.
26498 (March 25, 1996); Cinergy Corp., et al., Holding Co. Act
Rel. No. 26662 (February 7, 1997); and Consolidated Natural Gas
Company, et al., Holding Co. Act Rel. No. 26757 (August 27,
1997).
(fn7) The Commission approved a similar proposal in
Columbia Gas System, et al., Holding Co. Act Rel. No. 26498
(March 25, 1996) (certain restrictions were removed in Columbia
Energy Group, et al., Holding Co. Act Rel. No. 26868 (May 6,
1998)).
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wholesale or retail service area of the Operating Companies,
including consultation with local economic development
officials, building and site screening, customized tax
comparison studies and workforce analyses, liaison services
to identify financing and leasing sources for building
construction, equipment and working capital, and other
similar services. These services will be similar in scope
to those which the Operating Companies have in the past
provided to relocating businesses, often without charge.
Ameren Development states that minimal capital will be
required to provide these types of services and that,
without further order of the Commission, it will not acquire
any securities of or other interest in any
industrial/commercial development enterprise except as may
be permitted by Rule 40(a)(5).
(v) Customer Goodwill Programs. The offering of customer
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goodwill or retention programs, such as packaged discounts
on products for the home, travel, and health services,
prepaid phone cards or "affinity" cards to promote customer
goodwill, and programs to help customers stay informed and
protect their credit rating, driving record, and social
security number.(fn8)
(vi) Outage Insurance. The marketing of "outage" insurance,
----------------
which would enable customers to protect against lost
revenues due to power interruptions, and surge protection
service.(fn9)
1.5 TRANSFERS TO NON-EXEMPT SUBSIDIARIES OF SECURITIES OR
ASSETS OF UEDC AND CIC. As indicated, UEDC and CIC currently
engage directly or through subsidiaries in certain non-utility
businesses, including automated meter reading, the sale of
appliance warranties, and demand side management programs. UEDC
and CIC request authority, to the extent needed,(fn10) to sell or
otherwise transfer such businesses or the securities of current
subsidiaries engaged in some or all of these businesses to Ameren
Development or a subsidiary of Ameren Development, and, to the
extent approval is required, Ameren Development or any such
subsidiary of Ameren Development requests authority to acquire
the assets of such businesses or securities of subsidiaries of
UEDC and CIC engaged in such businesses.(fn11) UEDC and CIC
would sell such assets or securities for an amount equal to their
cost. Alternatively, transfers of such securities or assets may
be effected by distributions by UEDC, CIC and Union Electric to
---------------------------
(fn8) The Commission approved a similar proposal in
Columbia Energy Group, et al., supra n. 7.
(fn9) In Columbia Energy Group, et al., supra n. 7, the
Commission has approved, as a part of retail services, warranty
programs relating to damage to a customer's equipment and
appliances, including surge protection.
(fn10) The sale of securities, assets or an interest in
an other business to an associate company may, in some cases, be
exempt pursuant to Rule 43(b).
(fn11) It is contemplated that UEDC will remain a wholly-
owned subsidiary of Union Electric. Ameren may contribute the
stock of CIC to Ameren Development at some point in the future.
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Ameren, followed by Ameren's contribution of such securities or
assets to Ameren Development. The transactions proposed in this
paragraph will not involve the sale or other disposition of any
utility assets of the Operating Companies.
1.6 INCREASE IN LIMITATION ON GUARANTEES BY AMEREN
DEVELOPMENT AND CERTAIN OTHER NON-UTILITY SUBSIDIARIES OF AMEREN.
Authorization is requested through the Authorization Period, to
the extent such authorization is needed,(fn12) for Ameren
Development, Ameren Energy, CIC and any existing or future
subsidiary of any of the foregoing, to provide guarantees or
other forms of credit support in respect of securities issued by
or other obligations of each other in an aggregate principal
amount at any time outstanding not to exceed $300 million,
provided that the issue and sale of any such securities or
incurrence of other obligations are either exempt from the
approval requirements under the Act, or have been specifically
authorized; and provided further that any guaranty or other form
of credit support outstanding on December 31, 2003, shall remain
in effect until it expires in accordance with its terms. Credit
support may take the form of direct guaranties of securities
issued by any such direct or indirect subsidiary, stand-by equity
funding commitments, obligations under capital maintenance
agreements or under reimbursement agreements in respect of bank
letters of credit, payment obligations under contracts, or other
similar financial instruments or contractual undertakings.
The authorization requested herein is intended to replace
and supersede the $50 million limitation on guarantees and other
forms of credit support contained in the Financing Order. The
terms and conditions of any such guarantees, including the
duration or expiration thereof, would be the same as now
authorized under the Financing Order.
1.7 SALES OF SERVICES AND GOODS AMONG AMEREN DEVELOPMENT
AND OTHER NON-UTILITY SUBSIDIARIES OF AMEREN. The applicants
propose that Ameren Development, Ameren Energy, CIC and any
direct or indirect Rule 58 Subsidiaries or Non-Exempt
Subsidiaries (including any Intermediate Subsidiary) of Ameren
Development may provide services or sell goods to each other at
fair market prices determined without regard to cost, and
therefore request an exemption pursuant to Section 13(b) from the
cost standard of Rules 90 and 91 as applicable to such
transactions, in any case in which any of the following
circumstances may apply:
(i) The client company is a FUCO or foreign EWG that
derives no part of its income, directly or indirectly, from the
generation, transmission, or distribution of electric energy for
sale within the United States;
(ii) The client company is an EWG that sells electricity at
market-based rates which have been approved by the Federal Energy
Regulatory Commission ("FERC");
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(fn12) The issuance of guarantees by such subsidiaries of
Ameren may in some cases be exempt pursuant Rules 52(b) and
45(b)(7).
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(iii) The client company is a "qualifying facility"
("QF") within the meaning of the Public Utility Regulatory
Policies Act of 1978, as amended ("PURPA") that sells electricity
exclusively (a) at rates negotiated at arms'-length to one or
more industrial or commercial customers purchasing such
electricity for their own use and not for resale, and/or (ii) to
an electric utility company at the purchaser's "avoided cost" as
determined in accordance with the regulations under PURPA; or
(iv) The client company is a domestic EWG or QF that sells
electricity at rates based upon its cost of service, as approved
by FERC or any state public utility commission having
jurisdiction, provided that the purchaser thereof is not an
Operating Company within the Ameren System; or
(v) Ameren does not own 100% of the capital stock of such
non-utility client company.
The applicants also request an exemption from Section 13(b)
of the Act in connection with the performance of Administrative
Activities or Development Activities for any client company that
is an Exempt Subsidiary, Rule 58 Subsidiary or Non-Exempt
Subsidiary if (a) such client company is a subsidiary of Ameren
the sole business of which is developing, owning, operating
and/or providing services to other affiliated companies described
in subparagraphs (i) through (v), above, or (b) such client
company is a subsidiary of Ameren, which subsidiary does not
derive, directly or indirectly, any material part of its income
from sources within the United States and is not a public-utility
company operating within the United States.(fn13)
The applicants hereby request that the Commission reserve
jurisdiction over the granting of an exemption from the cost
standards of Section 13(b) of the Act in connection with the
provision of services between Ameren Development or any non-
utility subsidiary of Ameren Development on a basis other than
one or more of the foregoing conditions pending completion of the
record in this proceeding.
1.8 SALE OF SERVICES BY UNION ELECTRIC AND CIPS TO AMEREN
DEVELOPMENT AND ITS SUBSIDIARIES. It is contemplated that Ameren
Development will purchase management, marketing, development,
accounting and administrative services from Ameren Services
pursuant to the General Services Agreement which the Commission
has previously approved as a part of the Merger Order. In
addition, utilizing a work order procedure, Ameren Development
will request the Operating Companies to provide such personnel
and other resources as are needed, from time to time, to consult
and assist in engineering and other required functions in
-----------------------
(fn13) The applicants believe that this aspect of their
request for exemption is substantially identical to that made by
another registered holding company which the Commission is
currently considering. See Application-Declaration of Entergy
Corporation, et al., in File No. 70-9123 (Holding Co. Act Rel.
No. 26825, dated February 12, 1998) (notice of filing).
12
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connection with the authorized business activities of Ameren
Development and its subsidiaries. Additional required personnel
and resources not then obtainable from within the Ameren System
will be obtained or hired from external sources. Ameren
Development proposes to enter into a service agreement ("Non-
Utility Service Agreement") with each Operating Company that will
be substantially identical to the General Services Agreement. A
draft of such agreement is included herewith as Exhibit B-1.
Selection of the Ameren System personnel to be utilized in
connection with Ameren Development's and its subsidiaries'
activities will be based upon projected personnel availability
for the duration of an activity, expertise in the type of work
involved and access to resources within the Ameren System needed
to perform the work. An Operating Company may, in its absolute
discretion, elect not to participate, either through personnel or
other resources, in any of Ameren Development's projects and
businesses.
Ameren Services will also continue to provide assistance in
connection with financial, accounting, and internal auditing
functions for Ameren Development, utilizing those accounting
systems which are economically justifiable under the
circumstances. The accounts of Ameren Development will continue
to be subject to audit by the independent accountants of Ameren.
The use of available expertise and personnel of the Ameren
System to support Ameren Development's and its subsidiaries'
authorized and exempt business activities will enable Ameren to
optimize the efficient and economic utilization of existing human
resources and other capabilities. An important result of this
efficient allocation of technical resources within the Ameren
System is that it will keep such expertise and capabilities
available to the Operating Companies, while at the same time
providing for a means by which a portion of the costs of such
personnel may be allocated to unregulated activities.
Ameren Services and the Operating Companies will be
reimbursed promptly for their costs incurred in connection with
rendering any services to Ameren Development or its subsidiaries.
The Operating Companies will utilize cost accounting procedures
designed to identify promptly all direct and indirect costs,
including overheads, which are applicable to the work being
performed by or with Operating Company personnel, material or
other assets. Ameren Services will account for, allocate and
charge its costs to Ameren Development or its subsidiaries, using
procedures permitted under Rules 90 and 91 and currently
applicable methods of allocation, as set forth in the General
Services Agreement.
All transactions between Ameren Development and Ameren
Services and the Operating Companies will be at cost in
compliance with Section 13 and Rules 90, 91 and 92.
1.9 SALE OF CERTAIN GOODS AND SERVICES BY RULE 58
SUBSIDIARIES AND SPECIAL-PURPOSE SUBSIDIARIES OUTSIDE THE UNITED
STATES. Rule 58 Subsidiaries (including, without limitation,
Ameren Energy) and Special-Purpose Subsidiaries request authority
13
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to sell goods and services to customers both within and outside
the United States. Such goods and services include:
(i) the brokering and marketing of electricity, natural gas
and other energy commodities;
(ii) energy management services ("Energy Management
Services"), including the marketing, sale, installation,
operation and maintenance of various products and services
related to energy management and demand-side management,
including energy and efficiency audits; facility design and
process control and enhancements; construction,
installation, testing, sales and maintenance of (and
training client personnel to operate) energy conservation
equipment; design, implementation, monitoring and evaluation
of energy conservation programs; development and review of
architectural, structural and engineering drawings for
energy efficiencies, design and specification of energy
consuming equipment; and general advice on programs; the
design, construction, installation, testing, sales and
maintenance of new and retrofit heating, ventilating, and
air conditioning ("HVAC"), electrical and power systems,
alarm and warning systems, motors, pumps, lighting, water,
water-purification and plumbing systems, and related
structures, in connection with energy-related needs; and the
provision of services and products designed to prevent,
control, or mitigate adverse effects of power disturbances
on a customer's electrical systems;
(iii) performance contracting services aimed at assisting
customers in realizing energy and other resource efficiency
goals in the areas of process control, fuel management, and
asset management services in respect of energy-related
systems, facilities and equipment located on or adjacent to
the premises of a customer and used by that customer in
connection with business activities. Such energy-related
systems, facilities and equipment could include: (a)
distribution systems and substations, (b) transmission,
storage and peak-shaving facilities, (c) gas supply and/or
electrical generation facilities (i.e., stand-by generators
and self-generation facilities), (d) boilers and chillers,
(e) alarm/warning systems, (f) HVAC, water and lighting
systems, and (g) environmental compliance, energy supply and
building automation systems and controls. These services
may be provided to, among others, QFs and to independent
power projects and district thermal energy systems and
municipalities and cooperatives. Rule 58 Subsidiaries or
Special-Purpose Subsidiaries may directly or indirectly act
as agent for these customers on energy management matters,
including the operation and dispatch of generation
facilities.
(iv) technical support services ("Technical Support
Services") with respect to energy-related and gas-related
matters for associate companies and nonassociate companies,
as well as for individuals. Such Technical Support Services
would include technology assessments, power factor
correction and harmonics mitigation analysis, meter reading
and repair, rate schedule design and analysis, environmental
services, engineering services, billing services (including
consolidation billing and bill disaggregation tools), risk
14
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management services, communications systems, information
systems/data processing, system planning, strategic
planning, finance, feasibility studies, and other similar
services.
(v) certain retail services, including the provision of
centralized bill payment centers for payment of all utility
and municipal bills and related services, and annual
inspection, maintenance and replacement of energy-related
equipment and appliances. These services also include
providing service line repair and extended warranties with
respect to all of the utility- or energy-related service
lines internal and external to a customer's premises, and
other similar or related services, including surge
protection. In addition, these services include marketing
services to associate and nonassociate businesses in the
form of bill insert and automated meter-reading services.
(vi) monitoring and response goods and services, which
include products used in connection with energy and gas-
related activities that enhance safety, increase
energy/process efficiency, or provide energy-related
information, as well as repair services in connection with
such problems as carbon monoxide leaks and faulty equipment
wiring. These may also include the operation of
call/dispatch centers on behalf of associate and
nonassociate companies in connection with the proposed sale
of goods and services or with activities that Ameren
Developments associate companies are otherwise authorized to
engage in under the Act.
(vii) energy-peaking services via propane-air or liquefied
natural gas ("LNG"), which involves the provision of back-up
electricity or gas supply in periods of high or "peak"
energy demand using a propane-air mixture or LNG as fuel
sources for such back-up services.
(viii) project development and ownership activities, which
involves the installation and ownership of gas-fired
turbines for on-site generation and consumption of
electricity.
In addition, Ameren Development, Rule 58 Subsidiaries and
Special-Purpose Subsidiaries request authority to provide other
energy-related goods and services. These include incidental
goods and services closely related to the consumption of energy
and the maintenance of energy consuming property by customers.
The need for these goods and services would arise as a result of,
or evolve out of, the goods and services described above and do
not differ materially from those goods and services. The
proposed incidental goods and services would not involve the
manufacture of energy consuming equipment but could be related
to, among other things, the maintenance, financing, sale or
installation of such equipment.
Ameren Development requests that the Commission (i) reserve
jurisdiction over electricity and energy commodity brokering and
marketing activities of Ameren Energy (and of any other future
Rule 58 Subsidiary or Special-Purpose Subsidiary) outside the
15
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United States pending completion of the record in this
proceeding,(fn14) (ii) authorize the proposed sale of Energy
Management Services and Technical Support Services and related
customer financing anywhere outside the United States,(fn15) and
(iii) reserve jurisdiction over sale of the remaining goods and
services described above outside the United States, pending
completion of the record.
1.10 SALE OF AGENCY SERVICES BY AMEREN ENERGY TO AMEREN
SERVICES AND/OR THE OPERATING COMPANIES. Ameren Energy, an
existing energy marketing subsidiary of Ameren, has assembled a
professional staff of approximately 50 individuals with a broad
range of experience in structuring energy transactions, executing
and confirming energy commodity trades, and managing risk. In
addition, Ameren Energy has acquired or developed at a cost of
over $1,000,000 the operating systems and data bases necessary to
conduct a successful energy marketing and trading business. In
order to utilize such existing expertise and systems, thus
permitting the Operating Companies to avoid having to incur costs
for essentially redundant capabilities, it is proposed that
Ameren Energy act as agent for Ameren Services and/or the
Operating Companies in connection with the brokering and
marketing of electricity and other energy commodities by the
Operating Companies. Ameren Energy and Ameren Services and each
of the Operating Companies propose to enter into an Agency
Agreement in the form attached hereto as Exhibit B-2. Under the
Agency Agreement, Ameren Energy would provide agency and any
other incidental services at cost, determined in accordance with
Rules 90 and 91. Ameren Energy would not be entitled to receive
any part of the profits from any such transactions and would not
receive any other fee or commission for its services.
1.11 INVESTMENTS BY AMEREN ENERGY IN INCIDENTAL FACILITIES
AND OTHER ASSETS. Ameren Energy (or any other energy marketing
and brokering subsidiary hereafter acquired or formed by Ameren
Development) requests authority to acquire or construct in one or
more transactions from time to time through the Authorization
Period, non-utility energy assets in the United States,
including, without limitation, natural gas production, gathering,
processing, storage and transportation facilities and equipment,
liquid oil reserves and storage facilities, and associated
facilities (collectively, "Energy Assets"), that would be
functionally related to and would assist Ameren Energy in
connection with energy marketing, brokering and trading. Ameren
Energy requests authorization to invest up to $400 million (the
"Investment Limitation") during the Authorization Period in such
Energy Assets or in the equity securities of existing or new
companies substantially all of whose physical properties consist
------------------------
(fn14) See SEI Holdings, Inc., Holding Co. Act Rel. No.
26581 (September 26, 1996) (reserving jurisdiction over
activities of power and gas marketing subsidiary outside the
United States). SEI Holdings, Inc. has filed a post-effective
amendment in File 70-8723 requesting release of jurisdiction
reserved in the September 26, 1996, order in order to allow power
and gas marketing activities in Canada.
(fn15) The Commission has heretofore authorized non-
utility subsidiaries of a registered holding company to sell
similarly-defined energy management services and technical
support services to customers both within and outside the United
States. See Columbia Energy Group, et al., supra n. 7; and
Cinergy Corp., supra n. 6.
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or will consist of such Energy Assets.(fn16) Such Energy Assets
(or equity securities of companies owning Energy Assets) may be
acquired for cash or in exchange for common stock or other
securities of Ameren, Ameren Development, or Ameren Energy, or
any combination of the foregoing. If common stock of Ameren is
used as consideration in connection with any such acquisition,
the market value thereof on the date of issuance will be counted
against the proposed Investment Limitation. The stated amount or
principal amount of any other securities issued as consideration
in any such transaction will also be counted against the
Investment Limitation. Under no circumstances will Ameren Energy
or any marketing subsidiary acquire, directly or indirectly, any
assets or properties the ownership or operation of which would
cause such companies to be considered an "electric utility
company" or "gas utility company" as defined under the Act.
As this Commission has recognized in American Electric Power
Company, Inc., et al., Holding Co. Act Rel. No. 26933 (November
2, 1998) and SEI Holdings, Inc., Holding Co. Act Rel. No. 26581
(September 26, 1996) and other decisions, a successful marketer
of energy commodities must be able to control some level of
physical assets that are incidental and reasonably necessary in
its day-to-day operations.(fn17) For example, gas marketers
today must be able to offer their customers a variety of value-
added, or "bundled," services, such as gas storage and
processing, that the interstate pipelines offered prior to FERC
Order 636.(fn18) In order to provide such value-added services,
many of the leading gas marketers have invested in production,
gathering, processing, and storage capacity at or near the
principal gas producing areas and hubs and market centers in the
U.S. Similarly, in order to compete with both interstate
pipelines and local distribution companies for industrial and
electric utility sales, marketers must have the flexibility to
acquire or construct such supply facilities. In fact, most of
the large marketers today with which Ameren Energy competes own
substantial physical assets of the type described herein.
The acquisition of production, gathering, processing, and
storage capacity provide energy marketers the opportunity to
hedge the price of future supplies of natural gas against changes
in demand brought about due to weather, increased usage
requirements by end use customers, or other volatilities imposed
by the market. Storage and pipeline assets allow energy
marketers to "bank" low cost supplies for use during periods of
high volatility or take advantage of differential price spreads
---------------------
(fn16) Companies whose physical properties consist of
Energy Assets may also be currently engaged in energy (gas or
electric or both) marketing activities. To the extent necessary,
applicants request authorization to continue such activities in
the event they acquire such companies.
(fn17) In American Electric Power Company, Inc., et al.,
the Commission authorized the acquisition or construction of $800
million of similarly-described non-utility "energy assets," and
in SEI Holdings, Inc., the Commission authorized an investment
limitation of $300 million in such assets.
(fn18) See FERC Order 636, FERC Stats. & Regs.
(Paragraph) 30,939, "Pipeline Service Obligations and Revisions
to Regulations Governing Self-Implementing Transportation; and
Regulation of Natural Gas Pipelines After Partial Wellhead
Decontrol," 57 Fed. Reg. 13,270 (April 16, 1992).
17
<PAGE>
between different markets. Energy marketers with strong and
balanced physical asset portfolios are able to originate tolling
or reverse tolling of gas and electric commodities, whereby the
payment is made in one or the other commodity. The integration
of production, gathering, and storage assets offer energy
marketers the opportunity to provide either gas or electric
products and services to energy users, at their discretion,
depending on user requirements and needs. Finally, the physical
assets underlying an energy marketer's balance sheet may provide
substantial credit support for the financial transactions
undertaken by the marketer.
It is the intention of Ameren Energy to add to its existing
base of non-utility, marketing-related, assets as and when market
conditions warrant, whether through acquisitions of specific
assets or groups of assets that are offered for sale, or by
acquiring existing companies (for example, other gas marketing
companies which own significant physical assets in the areas of
gas production, processing, storage, and transportation).
Ultimately, it is Ameren Energy's objective to control a
substantial portfolio of Energy Assets that would provide the
Ameren system with the flexibility and capacity to compete for
sales in all major markets in the United State and, in the
future, possibly Canada.
1.12 PAYMENT OF DIVIDENDS OUT OF CAPITAL AND UNEARNED
SURPLUS. Ameren Development also proposes, on behalf of itself
and every direct or indirect Rule 58 Subsidiary and Non-Exempt
Subsidiary, that such companies be permitted to pay dividends
with respect to the securities of such companies, from time to
time through the Authorization Period, out of capital and
unearned surplus (including revaluation reserve), to the extent
permitted under applicable corporate law.
Ameren Development anticipates that there will be situations
in which it or one or more of its Rule 58 Subsidiaries or Non-
Exempt Subsidiaries will have unrestricted cash available for
distribution in excess of any such company's current and retained
earnings. In such situations, the declaration and payment of a
dividend would have to be charged, in whole or in part, to
capital or unearned surplus. As an example, if Ameren
Development (directly or indirectly through an Intermediate
Subsidiary) purchases all of the stock of an EWG or FUCO, and
following such acquisition, the EWG or FUCO incurs non-recourse
borrowings some or all of the proceeds of which are distributed
to the Intermediate Subsidiary as a reduction in the amount
invested in the EWG or FUCO (i.e., return of capital), the
----
Intermediate Subsidiary (assuming it has no earnings) could not,
without the Commission's approval, in turn distribute such cash
to Ameren Development for possible distribution to Ameren.(fn19)
Similarly, using the same example, if an Intermediate
Subsidiary, following its acquisition of all of the stock of an
EWG or FUCO, were to sell part of that stock to a third party for
-----------------------
(fn19) The same problem would arise where an Intermediate
Subsidiary is over-capitalized in anticipation of a bid which is
ultimately unsuccessful. In such a case, Ameren Development
would normally desire a return of some or all of the funds
invested.
18
<PAGE>
cash, the Intermediate Subsidiary would again have substantial
unrestricted cash available for distribution, but (assuming no
profit on the sale of the stock) would not have current earnings
and therefore could not, without the Commission's approval,
declare and pay a dividend to Ameren Development out of such cash
proceeds.
Further, there may be periods during which unrestricted cash
available for distribution by Ameren Development or a Rule 58
Subsidiary or Non-Exempt Subsidiary exceeds current and retained
earnings due to the difference between accelerated depreciation
allowed for tax purposes, which may generate significant amounts
of distributable cash, and depreciation methods required to be
used in determining book income.
Finally, even under circumstances in which an Intermediate
Subsidiary or other downstream subsidiary has sufficient
earnings, and therefore may declare and pay a dividend to its
immediate parent, such immediate parent may have negative
retained earnings, even after receipt of the dividend, due to
losses from other operations. In this instance, cash would be
trapped at a subsidiary level where there is no current need for
it.
Ameren Development, on behalf of itself and each of its
current and future Rule 58 Subsidiaries and Non-Exempt
Subsidiaries, represents that it will not declare or pay any
dividend out of capital or unearned surplus in contravention of
any law restricting the payment of dividends. In this regard, it
should be noted that all U.S. jurisdictions limit to one extent
---
or another the authority of corporations to make dividend
distributions to shareholders. Most State corporations statutes
contain either or both an equity insolvency test or some type of
balance sheet test. Ameren Development also states that its
subsidiaries will comply with the terms of any credit agreements
and indentures that restrict the amount and timing of
distributions to shareholders.
1.13 ANTICIPATORY INTEREST RATE HEDGES BY AMEREN DEVELOPMENT
AND SUBSIDIARIES. Ameren Development, on behalf of itself and
its existing and future Rule 58 Subsidiaries and Non-Exempt
Subsidiaries, also seeks authorization, to the extent needed, 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 counterparties whose
senior debt ratings, or the senior debt ratings of the parent
companies of the counterparties, as published by Standard and
Poor's Ratings Group, are equal to or greater than BBB+, or an
equivalent rating from Moody's Investors Service, Fitch Investor
Service or Duff and Phelps.
Anticipatory Hedges would be utilized to fix 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
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U.S. Treasury securities (a "Zero Cost Collar"), or (iv) some
combination of a Forward Sale, Put Options Purchase, Zero Cost
Collar and/or other derivative transactions appropriate for the
Anticipatory Hedges. Anticipatory Hedge transactions 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 ("CBOT"), 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. Ameren Development will determine the optimal structure
of each Anticipatory Hedge transaction at the time of execution.
Ameren Development may decide to lock in interest rates and/or
limit its exposure to interest rate increases. All open
positions under an Anticipatory Hedge will be closed on or prior
to the date of the new issuance and Ameren Development will not,
at any time, take possession of the underlying U.S. Treasury
securities. Further, no Anticipatory Hedge position will be
outstanding for more than 180 days.
The overall guidelines, parameters and controls applicable
to any Anticipatory Hedge transaction by Ameren Development or
any Rule 58 Subsidiary or Non-Exempt Subsidiary will be the same
as those described in the Financing Order. All Anticipatory
Hedges will qualify as bona fide hedges and will meet the
criteria established by the Financial Accounting Standards Board
in order to qualify for hedge accounting treatment, and Ameren
Development will comply with the then existing financial
disclosure requirements of the Financial Accounting Standards
Board associated with hedging transactions.
1.14 APPROVAL FOR FUTURE REORGANIZATIONS OF AMEREN
DEVELOPMENT AND SUBSIDIARIES. In the future, following its
acquisition of the securities of new subsidiaries, Ameren
Development may determine to transfer such securities or the
assets of such subsidiaries to other direct or indirect
subsidiaries of Ameren Development or to liquidate or merge
subsidiaries. Such internal transactions would be undertaken in
order to eliminate corporate complexities, to combine related
business segments for staffing and management purposes, to
eliminate administrative costs, to achieve tax savings, or for
other ordinary and necessary business purposes. These
transactions would only involve Ameren Development and its direct
and indirect subsidiaries and would have no impact on any other
associate companies in the Ameren System. Ameren Development
requests authority to engage in such transactions, to the extent
that they are not exempt under the Act and rules thereunder,
through the Authorization Period.
1.15 OTHER MATTERS. Ameren Development proposes to file a
single consolidated quarterly report pursuant to Rule 24 of all
investments in subsidiaries, commencing with the quarterly report
for the first full calendar quarter following the date of the
Commission's order in this proceeding. Concurrently with the
filing of such report, a copy thereof will be furnished to each
state utilities commission having jurisdiction over retail rates
of Union Electric and CIPS.(fn20) It is proposed that such
------------------------
(fn20) Subsidiaries of Ameren Development that are Rule
58 Subsidiaries will also continue to file quarterly reports on
Form U-9C-3. In addition, Ameren will provide such information
as may be required by Form U5S with respect to any EWGs or FUCOs
in which it may acquire an interest. All of these reports have
been and will be furnished.
20
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combined report also be in lieu of any separate notification on
Form U-6B-2 that would otherwise be required of Ameren
Development or any subsidiary thereof with respect to exempt
securities issuances. The Rule 24 report shall include:
1. A copy of the balance sheet and income statement for
Ameren Development and its consolidated subsidiaries;
2. A narrative description of Development Activities and
of any investments during the quarter just ended, organized by
category (Exempt Subsidiaries, Rule 58 Subsidiaries, other Non-
Exempt Subsidiaries).
3. Amounts and forms of guarantees of, and similar
provisions and arrangements concerning, performing and
undertaking of other obligations by Ameren Development or any
direct or indirect Rule 58 Subsidiary or Non-Exempt Subsidiary on
behalf of other direct or indirect subsidiaries of Ameren
Development.
4. A description of services obtained by Ameren
Development, Ameren Energy, CIC, Ameren Communications or any
direct or indirect subsidiary of Ameren Development from Union
Electric and CIPS, specifying the type of service, the number of
personnel from each associate company providing services during
the quarter and the total dollar value of such services.
5. A chart, in the form of Exhibit I hereto, showing, as
of the end of such quarterly period, all associate companies of
Ameren, in addition to Ameren Development, Ameren Energy, Ameren
Communications and CIC, that are Exempt Subsidiaries (identifying
each as an EWG, FUCO or ETC, as applicable), Rule 58
Subsidiaries, and other Non-Exempt Subsidiaries (identifying each
as an Intermediate Subsidiary, Financing Subsidiary or Special-
Purpose Subsidiary, as applicable); and Ameren's percentage
equity ownership in each such entity; and
6. A description of the type and amount and, if a debt
instrument, the maturity and interest rate, of any securities
(including guarantees) issued by Ameren Development and each Non-
Exempt Subsidiary pursuant to Rule 52 or Rule 45(b), as
applicable.
7. The notional amount, identity of counterparty, and
principal terms of any Anticipatory Hedge transaction entered
into by Ameren Development, Ameren Energy, CIC or any direct or
indirect Non-Exempt Subsidiary of Ameren Development.
--------------------------
in their entirety to the Missouri and Illinois public service
commissions, subject to terms of confidentiality that those
commissions have granted.
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ITEM 2. FEES, COMMISSIONS AND EXPENSES.
------------------------------
The fees, commissions and expenses paid or incurred and to
be paid or incurred in connection with the proposals contained
herein are estimated not to exceed $25,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
-------------------------------
The applicants believe that the following proposed
transactions are or may be subject to the requirements of the
following provisions of the Act and rules thereunder:
TRANSACTION APPLICABLE SECTION OR RULE
Acquisition by Ameren Sections 9(a) and 10.
Development, directly or
indirectly, of initial
securities of Intermediate
Subsidiaries, Special-Purpose
Subsidiaries and Financing
Subsidiaries, and Development
Activities and Administrative
Activities by Ameren Development
and Intermediate Subsidiaries.
Sale or other transfer by UEDC Sections 12(c) or Section
and CIC of securities and 12(f), to the extent not
interests in businesses exempt pursuant to Rule 43, as
currently owned by UEDC and CIC applicable; Sections 9(a) and
or their respective 10, to the extent not exempt
subsidiaries, and acquisition pursuant to Rule 58 or Section
thereof by Ameren Development or 34.
any direct or indirect
subsidiary of Ameren
Development.
Sale of services by Union Section 13 (b) and Rules 87
Electric and CIPS to Ameren and 90-91.
Development or subsidiaries of
Ameren Development.
Sale of agency services by Section 13(b) and Rules 87 and
Ameren Energy to Ameren Services 90-91.
and/or Union Electric and CIPS.
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Sale of goods and services among Section 13(b) and Rules 87 and
Ameren Development and other 90-91.
Non-Utility Subsidiaries of
Ameren
Investment by Ameren Energy in Sections 9(a) and 10.
Energy Assets.
Guarantees by Ameren Development Section 6(a), 7 and 12(b) and
(or any Non-Exempt Subsidiary) Rule 45(a) thereunder, unless
of obligations of any other non- exempt pursuant to Rules 45(b)
utility subsidiary of Ameren and/or 52.
Declaration and payment of Section 12(c) and Rule 46.
dividends out of capital and
unearned surplus by Ameren
Development and/or any Non-
Exempt Subsidiary thereof.
Anticipatory Interest Rate Sections 6(a) and 7.
Hedges by
Ameren Development and
Subsidiaries
COMPLIANCE WITH RULES 53 AND 54. The transactions proposed
herein are also subject to Rules 53 and 54. 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. Rule 54 provides that the Commission shall not
consider the effect of the capitalization or earnings of
subsidiaries of a registered holding company that are EWGs or
FUCOs in determining whether to approve other transactions if
Rule 53(a), (b) and (c) are satisfied. These standards are met.
Rule 53(a)(1): Currently, Ameren does not hold, directly or
indirectly, any interest in any EWG or 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 and will cause each domestic EWG in which it acquires
and holds an interest to maintain its books and records and
prepare its financial statements in conformity with U.S.
generally accepted accounting principles ("GAAP"). The books and
records and financial statements of each FUCO in which Ameren
acquires and holds an interest (including those that are
"majority-owned subsidiaries" and those that are not) will be
maintained and prepared in conformity with GAAP. All of such
books and records and financial statements will be made available
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to the Commission, in English, upon request.
Rule 53(a)(3): No more than 2% of the employees of the
Operating Companies will, at any one time, directly or
indirectly, render services to EWGs and FUCOs.
Rule 53(a)(4): Ameren has submitted a copy of the
Application or Declaration in this proceeding and each amendment
thereto, and will submit copies of any Rule 24 certificates
required hereunder, as well as a copy of Ameren's Form U5S, to
each of the public service commissions having jurisdiction over
the retail rates of the Operating Companies.
In addition, Ameren states that the provisions of Rule 53(a)
are not made inapplicable to the authorization herein requested
by reason of the provisions of Rule 53(b).
Rule 53(b)(1): Neither Ameren nor any subsidiary of Ameren
is the subject of any pending bankruptcy or similar proceeding.
Rule 53(b)(2): Since the date upon which it became a holding
company, Ameren has not experienced any decrease in average
consolidated retained earnings.
Rule 53(b)(3): Ameren has not experienced any losses
attributable to EWGs and FUCOs.
ITEM 4. REGULATORY APPROVAL.
-------------------
The proposed transactions are not subject to the
jurisdiction of any state commission or of any federal commission
other than this Commission.
ITEM 5. PROCEDURE.
---------
The applicants request that the Commission's order be issued
as soon as the rules allow, and that there be no thirty-day
waiting period between the issuance of the Commission's order and
the date on which it is to become effective. The applicants
hereby waive a recommended decision by a hearing officer or other
responsible officer of the Commission and hereby consent that the
Division of Investment Management may assist in the preparation
of the Commission's decision and/or order in the matter unless
such Division opposes the matters covered hereby.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
---------------------------------
(a) Exhibits. (Except as noted, to be filed by amendment).
--------
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B-1 - Form of Non-Utility Service Agreement between
an Operating Company (as Service Provider)
and Ameren Development or Other Non-utility
Subsidiary (as Client Company).
B-2 - Form of Agency Agreement between Ameren
Energy and Ameren Services and each Operating
Company.
F - Preliminary Opinion of Counsel
G - Financial Data Schedule. (Incorporated by
Reference to Exhibit 27 to Ameren Form 10-Q
for the period ended September 30, 1998)
(File No. 1-14756).
H - Form of Federal Register Notice. (Previously
filed).
I - Organizational Chart of Ameren and
Subsidiaries.
(b) Financial Statements.
--------------------
FS-1 - Ameren Consolidated Balance Sheet as of
September 30, 1998, and Consolidated
Statements of Income and Consolidated
Condensed Statement of Cash Flows for the
nine months ended September 30, 1998
(Incorporated by Reference to Ameren Form 10-
Q for the period ended September 30, 1998)
(File No. 1-14756).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
(a) In light of the nature of the proposed
transactions, as described in Item 1 hereof, the Commission's
action in this matter will not constitute any major federal
action significantly affecting the quality of the human
environment.
(b) No other federal agency has prepared or is
preparing an environmental impact statement with regard to the
proposed transactions.
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SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
Ameren Corporation
By: /s/ Steven R. Sullivan
----------------------
Name: Steven R. Sullivan
Title: Vice President and
Secretary
Union Electric Company
By: /s/ Steven R. Sullivan
----------------------
Name: Steven R. Sullivan
Title: Vice President and
Secretary
Union Electric Development
Corporation
By: /s/ Donald E. Brandt
--------------------
Name: Donald E. Brandt
Title: Vice President and
Controller
Ameren Development Company
By: /s/ Donald E. Brandt
--------------------
Name: Donald E. Brandt
Title: Senior Vice President
(Signatures continued on next page)
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Ameren ERC, Inc.
By: /s/ Donald E. Brandt
--------------------
Name: Donald E. Brandt
Title: Senior Vice President
Ameren Energy, Inc.
By: /s/ Donald E. Brandt
--------------------
Name: Donald E. Brandt
Title: President
Central Illinois Public Service
Company
By: /s/ Steven R. Sullivan
----------------------
Name: Steven R. Sullivan
Title: Assistant Secretary
CIPSCO Investment Company
By: /s/ Steven R. Sullivan
----------------------
Name: Steven R. Sullivan
Title: Secretary
Dated: March 10, 1999
27
