CIPSCO Merger Approved With Conditions

Fortnightly Magazine - June 1 1997
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Recharge the Economy with Renewable Energy Tax Credits

The Missouri Public Service Commission has approved the merger of Union Electric Co. and CIPSCO Inc., if Union Electric meets certain requirements, such as helping to form an independent system operator for the region's transmission system.

The formation of the ISO must be consistent with guidelines established by the Federal Energy Regulatory Commission. The proposed merger will include the formation of a new entity, Ameren Corp., as a federally regulated public utility holding company.

Acquisition Premium. The commission approved a settlement agreement in which United Electric will not seek rate recovery of an asserted merger premium of $322 million, which is the portion of the purchase price exceeding current book value. United Electric also agreed to amortize an estimated $71.5 million in merger-related costs over 10 years and to develop an experimental retail wheeling pilot program. The program will offer 100 MW of electric power to all customer classes by March 1, 1997. Finally, the utility agreed to reduce rates beginning in September 1998 under modified earnings sharing rules offered by the utility as part of an experimental alternate regulation plan.

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