Business Context and Reporting Period
This Form 8-K was filed on November 24, 2021, by Ameren Corporation and its subsidiary Union Electric Company (doing business as Ameren Missouri). The filing addresses a regulatory event concerning Ameren Missouri's electric service rate review with the Missouri Public Service Commission (MoPSC).
Key Financial Metrics and Regulatory Agreement
The filing details a stipulation and agreement filed with the MoPSC regarding Ameren Missouri's rate case. Key financial terms of the proposed agreement include:
- Revenue Requirement Increase: A proposed $220 million increase in annual revenue requirement compared to the March 2020 rate order.
- Rate Base: Based on a $10.2 billion rate base.
- Capital Structure: A common equity ratio of 51.97%.
- Return on Equity (ROE): The filing text does not provide a clear value for the allowed ROE.
- Expense Adjustments: Reflects lower depreciation and amortization expenses of approximately $45 million compared to Ameren Missouri's original request.
- Cost Recovery: Includes recovery of $61 million in remaining non-labor operating costs and related return for the Meramec Energy Center over a five-year period.
Material Changes and Regulatory Mechanisms
The agreement maintains existing regulatory tracking mechanisms for fuel, pension, postretirement benefits, uncertain income tax positions, excess deferred income taxes, and renewable energy standard costs. These mechanisms allow base expenses to be reflected in rates while actual variances are recorded as regulatory assets or liabilities. The agreement also addresses the retirement of the Meramec Energy Center, scheduled for 2022.
Outlook, Risks, and Effective Dates
The stipulation and agreement contemplates new rates becoming effective on February 28, 2022, pending MoPSC approval. Management notes significant uncertainty regarding the final outcome:
- Approval by the MoPSC is not guaranteed.
- Even if approved, the agreement is subject to potential applications for rehearing or appeal.
- The outcome of any such legal challenges remains unpredictable.
Investor Verification Checklist
- Confirm whether the MoPSC formally approves the stipulation and agreement.
- Monitor for any filed applications for rehearing or appeals that could delay or alter the effective date of February 28, 2022.
- Verify the final allowed Return on Equity (ROE) once the commission issues its final order, as it was not specified in the stipulation.
- Track the execution of the five-year recovery plan for the $61 million in Meramec Energy Center costs.