(As filed October 18, 2000)
File No. 70-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
APPLICATION OR DECLARATION
ON
FORM U-1
under
The Public Utility Holding Company Act of 1935
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AMEREN ENERGY FUELS AND SERVICES COMPANY
1901 Chouteau Avenue
St. Louis, Missouri 63103
(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,
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 signed copies of all
orders, notices and communications to:
Joseph H. Raybuck, Esq. William T. Baker, Jr., Esq.
Ameren Services Company Thelen Reid & Priest LLP
1901 Chouteau Avenue 40 West 57th Street
St. Louis, Missouri 63103 New York, New York 10019-4097
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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1.1. Introduction. Ameren Corporation ("Ameren"), whose principal
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business address is at 1901 Chouteau Avenue, St. Louis, Missouri 63103, is a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended (the "Act").1 Ameren owns all of the issued and outstanding common
stock of Union Electric Company ("Union Electric") and Central Illinois Public
Service Company ("CIPS"), each of which is an electric and gas utility company.
Together, Union Electric and CIPS provide retail and wholesale electric service
to approximately 1.5 million customers and retail natural gas service to
approximately 300,000 customers in a 24,500 square-mile area of Missouri and
Illinois. For the year ended December 31, 1999, Ameren reported total operating
revenues of $3,523,631,000, of which approximately 93.3% were derived from
electric operations and 6.5% from gas operations.
In addition to its two public utility subsidiaries, Ameren owns all of the
issued and outstanding common stock of five non-utility subsidiary companies, as
follows:
(1) Ameren Services Company ("Ameren Services"), a subsidiary service
company.
(2) CIPSCO Investment Company, which manages various non-utility
investments.
(3) Ameren Energy, Inc. ("Ameren Energy"), an "energy-related company"
within the meaning of Rule 58 that engages in marketing and brokering of
electricity, gas and other energy commodities and which also acts as agent for
Union Electric in connection with the brokering and marketing of electricity and
other energy commodities.2
(4) Ameren Development Company (Ameren Development"), an intermediate
non-utility holding company that was formed to acquire and hold the securities
of other exempt and authorized non-utility subsidiaries and investments.3 Ameren
Development's direct and indirect subsidiaries include Ameren Energy
Communications, Inc., an "exempt telecommunications company" within the meaning
of Section 34 of the Act, and Ameren ERC, Inc., an "energy-related company"
within the meaning of Rule 58 that engages in various activities permitted under
such rule (chiefly, steam production and sales and fuel transportation).
(5) Ameren Energy Resources Company ("Ameren Resources") is also an
intermediate non-utility holding company that holds the securities of other
exempt and authorized non-utility companies. Ameren Resources owns all of the
issued and outstanding common stock of Ameren Energy Development Company
("Ameren Energy Development"), an "exempt wholesale generator" ("EWG") within
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1 See Ameren Corporation, et al., Holding Co. Act Release No. 26809 (Dec. 30,
1997).
2 See Ameren Corporation, et al., Holding Co. Act Release No. 27053 (July 23,
1999) (the "1999 Order").
3 Id.
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the meaning of Section 32 of the Act.4 Ameren Energy Development engages in
development activities relating to EWGs and holds all of the issued and
outstanding common stock of Ameren Energy Generating Company ("Ameren GenCo"),
which is also an EWG.5 Ameren GenCo was formed to acquire all of the generating
assets of CIPS, which occurred in May 2000, and, in addition, is the vehicle
through which Ameren intends to construct approximately 3000 MW of new gas-fired
generation in the Midwest. Ameren Resources also holds all of the common stock
of Ameren Energy Fuels and Services Company ("Ameren Fuels"), which will engage
in businesses permitted by Rule 58 (as discussed below), Illinois Materials
Supply Co., a "special-purpose subsidiary" within the meaning of the 1999 Order
that manages materials acquisition for Ameren's EWG projects in Illinois, and
Ameren Energy Marketing Company, an "energy-related company" under Rule 58 that
was formed to market the electrical output of Ameren GenCo.
An organizational chart of the Ameren system is filed herewith as Exhibit
E.
1.2 Requested Approval. Ameren Fuels requests authorization to provide
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fuel procurement and natural gas supply services to (including acting as agent
for) Union Electric and CIPS. Such services, which are similar to those that
Ameren Services currently provides to Union Electric and CIPS, would be provided
"at cost" in accordance with Section 13(b) of the Act and Rules 90 and 91
thereunder. Ameren Fuels proposes to provide such services pursuant to the terms
of the Fuel and Natural Gas Services Agreement (the "Agreement") filed herewith
as Exhibit B. The Agreement includes provisions regarding liability and
indemnification, as well as provisions to protect the interests of Ameren's
state utility regulators and the retail customers of Union Electric and CIPS.
The Agreement will be filed with the Missouri and Illinois public utilities
commissions. Ameren Fuels will employ an accounting system that will enable it
to identify, track and properly allocate direct and indirect costs associated
with all of its activities.
1.3 Reason for Proposed Services Agreement. As indicated, Ameren Fuels was
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formed to engage in fuels-related businesses that are permitted by Rule 58,
specifically, (i) marketing of energy commodities, including coal and natural
gas, and (ii) ownership and operation of fuel procurement, transportation,
handling and storage facilities. A significant and growing focus of Ameren
Fuels' business will be on the unregulated operations of Ameren and on the
competitive marketplace for the services and energy commodities it sells.
Specifically, Ameren Fuels will provide fuel, natural gas, and related
procurement and management services to Ameren GenCo, as well as to other utility
companies and unaffiliated energy marketers, independent power generators, and
industrial companies. Ameren Fuels is also investigating opportunities to
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4 See Ameren Energy Development Company, 92 FERC P. 62,238 (June 29, 2000).
5 See Ameren Energy Generating Company, 92 FERC P. 62,023 (July 14, 2000).
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acquire or construct coal handling, coal washing and fuel and gas storage
facilities, primarily in the Midwest.
For the near term, Ameren Fuels will be staffed by approximately 29
individuals who currently are employees of Ameren Services. Ameren Fuels expects
to hire additional employees who will devote most of their time to new business
development and fuel infrastructure management activities that are unrelated to
Ameren's core business. The individuals who will be transferred from Ameren
Services have devoted most of their time to providing fuel procurement and gas
supply services to Union Electric and CIPS. However, with the transfer of CIPS'
generating plants to Ameren GenCo, the planned addition of nearly 3000 MW of new
gas-fired generation in Ameren GenCo, and Ameren's strategic decision to
aggressively compete in the Midwest market for fuels and fuel services through
other non-utility subsidiaries and ventures, it is anticipated that these
individuals will eventually devote less than half of their time to rendering
services to Union Electric and CIPS. Nevertheless, there will be a continuing
need for these employees to devote some part of their time to fuel procurement
and gas supply activities associated with Union Electric's and CIPS' utility
operations.
Ameren has concluded that it would be inefficient and uneconomic to
duplicate the talents and experience of the employees who will be transferred to
Ameren Fuels, as well as the systems used to manage fuel and natural gas
procurement, to serve both Union Electric and CIPS and also Ameren's exempt
subsidiaries and unaffiliated third parties. At the same time, in order to
position itself in the competitive marketplace for fuels and fuel-related
services, Ameren concluded that it would be necessary to expand the resources
and capabilities of Ameren Services' fuel procurement and gas supply departments
in areas such as gas supply for generation, new business development and asset
management. Among other considerations, gas supply for electric generation will
require a certain set of skills and experience that is somewhat different from
the skills and experience required for gas supply for the gas distribution
operations of Union Electric and CIPS, where the price pass-through under the
purchase gas adjustment clause minimizes price risk.6 The commitment to these
additional resources and capabilities would involve significant costs and
business risks that should not be borne by Union Electric and CIPS. As a result,
Ameren determined that it would be inappropriate to pursue its new business
strategy through Ameren Services, which was organized primarily to perform
services to Union Electric and CIPS.
Further, Ameren concluded that expanding its non-core business related fuel
activities through Ameren Services, rather than through a separate new company,
would expose Ameren Services to unacceptable business risks, including the risk
of loss on transactions with unaffiliated third parties, which could have an
adverse impact on Ameren Services' overall cost of providing essential services
to Union Electric and CIPS. Ameren believes that this conclusion is consistent
with Commission regulatory policies that have historically disfavored the use of
Commission-approved service companies to engage in significant business
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6 The gas-fired generating units that Ameren GenCo will add will double the
total amount of natural gas purchased and transported by the gas supply
department.
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activities with unaffiliated third parties. In addition to exposing Ameren
Services to potential business risks, any expansion of Ameren Services' current
workforce and any acquisition of additional resources primarily, or even solely,
to serve exempt associate companies (like Ameren GenCo) or unaffiliated third
parties would require a commitment of significant new capital to Ameren
Services. 7
1.4 Reports under Rule 24. Ameren will include under Item 8 of its Form
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U5S annual report information prescribed by that item with respect to the
services provided by Ameren Fuels under the authority granted by the order in
this proceeding.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
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The fees, commissions and expenses incurred or to be incurred in connection
with the transaction proposed herein are estimated at $15,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
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3.1 General. Section 13(b) and Rules 90 and 91 thereunder are applicable
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to the proposed transaction.
3.2 Rule 54 Analysis. The transactions proposed herein are also subject to
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Section 32(h)(4) of the Act and Rule 54 thereunder. Rule 54 provides that, in
determining whether to approve any transaction that does not relate to an EWG or
"foreign utility company" ("FUCO"), the Commission shall not consider the effect
of the capitalization or earnings of any subsidiary which is an EWG or FUCO upon
the registered holding company system if paragraphs (a), (b) and (c) of Rule 53
are satisfied.
Ameren has complied or will comply with the record-keeping requirements of
Rule 53(a)(2), the limitation under Rule 53(a)(3) on the use of the Ameren
system's domestic public-utility company personnel to render services to EWGs
and FUCOs, and the requirements of Rule 53(a)(4) concerning the submission of
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7 Although the Act does not bar an authorized service company from performing
services for or otherwise engaging in business dealings with unaffiliated
third parties, there have been relatively few instances in which the
Commission has authorized such activities, and in most cases the Commission
has narrowly limited the amount or types of services that a system service
company may perform for non-affiliates. In Central and South West Services,
Inc., Holding Co. Act Release Nos. 25132 (Aug. 10, 1990) and 25714 (Dec.
18, 1992), for example, the Commission authorized Central and South West
Services, Inc. ("CSW Services") to license and sell specialized computer
software programs developed in connection with providing services to its
affiliated utilities to third parties and provide support services to
licensees and purchasers of the software, subject to the qualification that
CSW Services could not add equipment or personnel for the purpose of
pursuing third-party business and a narrow limitation on the amount of
expenditures that CSW Services could make on the development and marketing
of software. More typically, registered holding companies have organized
separate subsidiaries to engage in non-affiliate business activity. See
e.g., Southern Company, Holding Co. Act Release No. 22132 (July 17, 1981);
American Electric Power Company, Inc., Holding Co. Act Release No. 22468
(Apr. 21, 1982); and Entergy Corp., Holding Co. Act Release No. 25848 (July
8, 1993).
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copies of certain filings under the Act to retail regulatory commissions.
Further, none of the circumstances described in Rule 53(b) has occurred or is
continuing. Rule 53(c) is inapplicable by its terms because the proposals
contained herein do not involve the issue and sale of securities (including any
guarantees) to finance an acquisition of an EWG or FUCO.
Rule 53(a)(1) limits a registered holding company's financing of
investments in EWGs if such holding company's "aggregate investment" in EWGs and
FUCOs exceeds 50% of its "consolidated retained earnings." Ameren's "aggregate
investment" (as defined in Rule 53(a)(1)(i)) in all EWGs and FUCOs is currently
equal to 20% of Ameren's "consolidated retained earnings" (as defined in Rule
53(a)(1)(ii)) for the four quarters ended June 30, 2000 ($1,523,446,000).
ITEM 4. REGULATORY APPROVALS.
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The Illinois Commerce Commission has jurisdiction over the terms of the
Fuel and Natural Gas Services Agreement. In addition, the Fuel and Natural Gas
Services Agreement must be filed with, but does not require prior approval by,
the Missouri Public Service Commission. No other state commission, and no
federal commission, other than the Commission, has jurisdiction over the
proposed transactions.
ITEM 5. PROCEDURE.
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The Commission is requested to publish a notice under Rule 23 with respect
to the filing of this Application or Declaration as soon as practicable. The
Applicant requests that the Commission's Order be issued as soon as the rules
allow, and in any event not later than January 31, 2001, 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 Applicant hereby waives
a recommended decision by a hearing officer or any other responsible officer of
the Commission and consents that the Division of Investment Management may
assist in the preparation of the Commission's decision and/or order, unless the
Division opposes the matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
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A. Exhibits.
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A None.
B Form of Fuel and Natural Gas Services Agreement.
C None
D-1 Application to Illinois Commerce Commission. (To be filed by
amendment).
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D-2 Order of Illinois Commerce Commission. (To be filed by
amendment).
E Organizational Chart of Ameren System. (Paper format - Form SE)
F Opinion of Counsel. (To be filed by amendment).
G Financial Data Schedule. (incorporated by reference to the
Quarterly Report on Form 10-Q of Ameren for the quarter ended
June 30, 2000) (File No. 1-14756).
H Proposed Form of Federal Register Notice.
B. Financial Statements.
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FS-1 Balance Sheet of Ameren and consolidated subsidiaries, as of June
30, 2000 (incorporated by reference to the Quarterly Report on
Form 10-Q of Ameren for the quarter ended June 30, 2000) (File
No.001-14756).
FS-2 Statements of Income of Ameren and consolidated subsidiaries for
the three and six-month periods ended June 30, 2000 (incorporated
by reference to the Quarterly Report on Form 10-Q of Ameren for
the quarter ended June 30, 2000) (File No. 001-14756).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
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None of the matters that are the subject of this Application or Declaration
involve a "major federal action" nor do they "significantly affect the quality
of the human environment" as those terms are used in section 102(2)(C) of the
National Environmental Policy Act. The transaction that is the subject of this
Application or Declaration will not result in changes in the operation of the
Applicant that will have an impact on the environment. The Applicant is not
aware of any federal agency that has prepared or is preparing an environmental
impact statement with respect to the transactions that are the subject of this
Application or Declaration.
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SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned company has duly caused this Application or
Declaration filed herein to be signed on its behalf by the undersigned thereunto
duly authorized.
AMEREN ENERGY FUELS AND
SERVICES COMPANY
By: /s/ Steven R. Sullivan
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Name: Steven R. Sullivan
Title: Vice President, General Counsel
and Secretary
Date: October 18, 2000
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