EXHIBIT D-3
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
Union Electric Company d/b/a AmerenUE )
Central Illinois Public Service )
Company, )
d/b/a Ameren CIPS )
) Docket No.
Petition for transfer of gas system )
assets and gas )
public utility business )
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PETITION FOR TRANSFER OF GAS SYSTEM
ASSETS AND GAS
PUBLIC UTILITY BUSINESS
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James J. Cook Christopher W. Flynn
Ameren Services Company Jones, Day, Reavis & Pogue
One Ameren Plaza 77 West Wacker
1901 Chouteau Avenue Suite 3500
P.O. Box 66149 Chicago, Illinois 60601-1692
St. Louis, Missouri 63166-6149 (312) 782-3939 (voice)
(314) 554-2237 (voice) (312) 782-8585 (fax)
(314) 554-4014 (fax) [email protected]
[email protected]
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STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
Union Electric Company, d/b/a AmerenUE )
Central Illinois Public Service Company, )
d/b/a AmerenCIPS )
) Docket No.
Petition for transfer of gas system )
assets and gas )
public utility business )
PETITION
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Union Electric Company, d/b/a AmerenUE ("AmerenUE") and Central Illinois
Public Service Company, d/b/a AmerenCIPS ("AmerenCIPS") (jointly, the "Ameren
Companies") request the Commission's approval, subject to Sections 7-102, 7-203
and 9-201 of the Illinois Public Utilities Act ("IPUA"), for the transfer of
AmerenUE's Illinois public utility gas business, including all physical and
intangible assets and certificates and other licenses pertinent thereto, to
AmerenCIPS. In support of their Petition, the Ameren Companies state as follows:
1. AmerenUE is a combination gas and electric utility. AmerenUE provides
natural gas and/or gas transportation service to approximately 18,000
customers in Alton, Illinois and the immediate vicinity, of which
approximately 16,775 are residential customers, 1,200 are commercial
customers and 25 are large industrial firm, interruptible, and
transportation customers. The major portion of the gas purchased by
AmerenUE for the Alton area is transported to the area by Mississippi
River Transmission Corporation ("MRTC"), an interstate pipeline, and
the remaining portion is transported to Alton by Illinois Gas
Transmission Company (formerly known as Illini Pipeline), an
intrastate pipeline, through its interconnection with Natural Gas
Pipeline Company of America ("NGPL"), an interstate pipeline. In
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addition, AmerenUE has a propane air mixing plant for supplementing
its natural gas supply on days of peak requirements. AmerenUE has no
on-system storage capability. It either contracts for such services
from the interstate pipelines with which it deals or obtains storage
services from third-party suppliers. AmerenUE's peak usage day in 1999
occurred on January 4 when a throughput of 24,929 MMBtu was
experienced on its distribution system. AmerenUE currently owns and
operate approximately 282 miles of gas distribution mains to serve its
customers in Illinois.
2. AmerenCIPS is also a combination gas and electric utility. AmerenCIPS
provides natural gas and/or gas transportation service to
approximately 170,000 customers in 267 communities in central and
southern Illinois. AmerenCIPS has approximately 153,000 residential
customers, 16,000 commercial customers and 330 large industrial firm,
interruptible, and transportation customers. The major portion of the
gas purchased by AmerenCIPS is transported to the area by the
following interstate pipelines: Panhandle Eastern Pipeline Company,
Texas Eastern Transmission Corporation, Trunkline Gas Company, NGPL,
Texas Gas Transmission Corporation and Midwestern Gas Transmission
Company. AmerenCIPS' gas system is also connected to two other
Illinois gas utility systems: Northern Illinois Gas Company and
Central Illinois Light Company. AmerenCIPS owns and operates four gas
storage reservoirs directly connected to its system and either
contracts for additional storage services from the interstate
pipelines with which it deals or obtains such services from third
party suppliers. AmerenCIPS also has a propane air mixing plant for
supplementing its supply. AmerenCIPS' peak demand in 1999 occurred on
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January 4 with a total demand of 281,640 MMBtu. AmerenCIPS currently
owns and operates approximately 4,800 miles of gas transmission and
distribution mains to serve its customers in Illinois.
3. AmerenUE and AmerenCIPS are both first tier subsidiaries of Ameren
Corporation, a registered holding company under the federal Public
Utilities Holding Company Act of 1935 ("PUHCA"). AmerenUE and
AmerenCIPS came under common control pursuant to the merger of
AmerenUE and CIPSCO, Inc., AmerenCIPS' previous parent company. The
Commission approved that merger in Docket No. 95-0551 in late 1997.
The merger became effective on December 31,1997.
4. AmerenUE and AmerenCIPS both rely extensively on support services
provided by a common service company, Ameren Services Company.
5. In connection with the merger, AmerenUE and AmerenCIPS projected that
certain benefits from joint operations of their gas facilities and
operations would accrue. Subsequent to the merger, both companies
filed retail gas rate cases that reflected, among other things, the
benefits of joint operations. The Commission approved new rates for
both companies that reflected those benefits. Those rates became
effective in February, 1999.
6. The Ameren Companies now seek to structure their gas operations along
state lines. Under their proposal, AmerenCIPS would be responsible for
all of their gas operations in Illinois; AmerenUE would be responsible
for all of their gas operations in Missouri.
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7. At the same time that the Ameren Companies seek to transfer AmerenUE's
Illinois gas operations to AmerenCIPS, they are also seeking, in a
separate filing, to effectuate the transfer of AmerenUE's retail
electric operations in Illinois to AmerenCIPS as well. As a result of
these transactions, AmerenUE's only Illinois business would be the
operation of an electric generating plant in Venice, Illinois.
AmerenUE would not offer utility service to the public in Illinois,
and, accordingly, AmerenUE would cease to be or operate as a public
utility within the meaning of the Act.
8. AmerenUE will transfer its gas assets and associated general plant
assets and related liabilities in Metro East to AmerenCIPS. These
assets and liabilities are described in the form of Asset Transfer
Agreement, which is attached hereto as Appendix A, and are set forth
in the proposed accounting entries attached hereto as Appendix D.
Ameren's propane air mixing plant for supplementing natural gas on
days of peak requirements is included in the Metro East assets and
obligations.
9. AmerenUE will also assign all related obligations to AmerenCIPS,
including without limitation, the certificates of public convenience
and necessity granted by the Commission authorizing AmerenUE to
provide gas utility service in Illinois, environmental permits, all
municipal and county franchises, labor agreements (as applicable), any
other relevant agreements that exist as of the transfer date, and all
obligations covered by AmerenUE's existing Gas Environmental
Adjustment clause rider.
10. A. AmerenUE will transfer approximately 50% of the combined
assets net of liabilities to AmerenCIPS in exchange for a
promissory note in an amount equal to approximately 50 percent of
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the total net book value, estimated to be approximately $51
million.
B. AmerenUE will hold the note and receive payments including
interest from AmerenCIPS.
C. AmerenUE also will declare an "in kind" dividend to Ameren equal
to the remaining balance (approximately 50 percent) of the net
book value of the combined assets net of liabilities, estimated
to be approximately $51 million.
D. Ameren will then transfer the dividended assets and liabilities
to AmerenCIPS as a capital contribution.
E. The note will have an initial five year term, with a ten-year
amortization schedule, with a balloon payment at the end of the
fifth year, unless the note's term is extended for an additional
five years by agreement of the parties. The note will be deeply
subordinated to all other debt of AmerenCIPS.
11. The transfer of the gas operations to AmerenCIPS would not have any
adverse impact on AmerenUE's or AmerenCIPS' customers. As noted, the
two companies already coordinate their gas operations, and many
support services are already provided by their common service company.
Hence the transfer will affect the provision of retail gas service in
name only.
12. The transfer is not likely to produce significant additional cost
savings for either company. As discussed, the benefits of coordinated
operation have already been reflected in retail rates.
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13. The restructuring proposed herein requires the Commission's approval
under Sections 7-102 and 7-203 of the IPUA. Section 7-102 provides,
inter alia, that:
(b) No public utility may purchase, lease, or in any other manner
acquire control, direct or indirect, over the franchises,
licenses, permits, plants, equipment, business or other property
of any other public utility.
(c) No public utility may assign, transfer, lease, mortgage, sell (by
option or otherwise), or otherwise dispose of or encumber the
whole or any part of its franchises, licenses, permits, plant,
equipment, business, or other property, but the consent and
approval of the Commission shall not be required for the sale,
lease, assignment or transfer (1) by any public utility of any
tangible personal property which is not necessary or useful in
the performance of its duties to the public, or (2) by any
railroad of any real or tangible personal property.
(d) No public utility may by any means, direct or indirect, merge or
consolidate its franchises, licenses, permits, plants, equipment,
business or other property with that of any other public utility.
220 ILCS 5/7-102 (1999). The Commission may grant a request under Section
7-102 if it finds that the public will be convenienced thereby.
14. Section 7-203 of the Act provides that:
No franchise, license, permit or right to own, operate, manage or
control any public utility shall be assigned, transferred or
leased nor shall any contract or agreement with reference to or
affecting any such franchise, license, permit or right be valid
or of any force or effect whatsoever, unless such assignment,
lease, contract, or agreement shall have been approved by the
Commission.
220 ILCS 5/7-203 (1999).
15. The public will be convenienced by the transfer of AmerenUE's gas
operations to AmerenCIPS. It will be more practical for the two
companies to organize themselves along state lines. This would
simplify the reporting process, for example. AmerenCIPS would be the
only Ameren entity reporting in Illinois.
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16. Moreover, the transfer would hold no detriment for any customer.
AmerenCIPS is plainly qualified to provide gas service in Illinois.
AmerenCIPS owns and operates a gas system several times larger than
the AmerenUE Illinois system. AmerenCIPS clearly has the managerial,
technical and financial qualifications to provide gas service in
AmerenUE's existing gas service territory.
17. Additionally, AmerenCIPS would adopt the service classifications and
rates in AmerenUE's tariffs for use in the Alton area. Accordingly,
customers would see no change in service classifications or rates,
until such time as the Commission determines that such change would be
appropriate.
18. So that AmerenCIPS may begin to provide gas service as of the time of
the transfer, the Ameren Companies also request pursuant to Section
9-201 of the Act that the tariffs attached as Appendix B become
effective as of the transfer.
19. In support of its Petition, the Ameren Companies are submitting
herewith the prepared direct testimony of Craig D. Nelson and Robert
J. Mill.
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WHEREFORE, for all the reasons stated herein, Union Electric Company and
Central Illinois Public Service Company respectfully request that the Commission
approve the transfer of Union Electric Company's Illinois retail gas operations,
including its certificates and plant, to Central Illinois Public Service
Company.
Dated: September 29, 2000 Respectfully submitted,
Union Electric Company
d/b/a AmerenUE
Central Illinois Public Service Company
d/b/a Ameren CIPS
By:
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One of their attorneys
James J. Cook
Ameren Services Company
One Ameren Plaza
1901 Chouteau Avenue
P.O. Box 66149
St. Louis, Missouri 63166-6149
(314) 554-2237 (voice)
(314) 554-4014 (fax)
[email protected]
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Christopher W. Flynn
Jones, Day, Reavis & Pogue
77 West Wacker
Suite 3500
Chicago, Illinois 60601-1692
(312) 782-3939 (voice)
(312) 782-8585 (fax)
[email protected]
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VERIFICATION
Warner L. Baxter, Vice President of Union Electric Company, being first
duly sworn, states that he has read the foregoing Petition, that he is familiar
with the statements therein, and that the statements therein are true and
correct to the best of his knowledge.
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Warner L. Baxter
Subscribed and sworn to
before me this day
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of September, 2000.
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Notary Public
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VERIFICATION
Craig D, Nelson, Vice President of Central Illinois Public Service Company,
being first duly sworn, states that he has read the foregoing Petition, that he
is familiar with the statements therein, and that the statements therein are
true and correct to the best of his knowledge.
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Craig D. Nelson
Subscribed and sworn to
before me this day
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of September, 2000.
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Notary Public
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LIST OF APPENDICES
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ITEM APPENDIX
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Form of Asset Transfer Agreement......................................A
Gas Tariffs...........................................................B
Form of Promissory Note...............................................C
Proposed Accounting Entries...........................................D
Direct Testimony of Craig D. Nelson...................................E
Direct Testimony of Robert J. Mill....................................F
