Ameren Merchant Generation Company Seeks Additional Time for SO2 Emissions Compliance From Illinois Pollution Control Board
Decline in power prices drives request
COLLINSVILLE, Ill., May 3, 2012 /PRNewswire/ -- Significantly depressed power prices combined with the high-cost of environmental controls and other factors have prompted Ameren Energy Resources Company, LLC (AER), to file today a petition with the Illinois Pollution Control Board (IPCB) seeking flexibility in meeting certain emissions standards established by the Illinois Multi-Pollutant Standards (MPS).
The AER petition seeks additional time to meet the sulfur dioxide (SO2) limits applicable to its fleet, extending the compliance dates to Dec. 31, 2020. AER has spent more than $1 billion on pollution control equipment that satisfies the existing MPS SO2 limits until 2015; however, those limits are significantly reduced on Jan. 1, 2015. "Current market prices simply do not allow further investment in pollution control equipment at this time," said Steven R. Sullivan, president and CEO of AER. In February, AER announced the deceleration of its planned scrubber project at its Newton Energy Center, which would have satisfied the 2015 MPS SO2 standards. "If the requested relief is not granted, we will have to seriously consider mothballing two of our three remaining unscrubbed energy centers (Edwards, Joppa and/or Newton) on Jan. 1, 2015," said Sullivan. "Unfortunately, without relief, this may become our default MPS compliance strategy."
Approval of the request by the IPCB will allow additional time for economic recovery and related power price improvements necessary to support scrubber installations and other pollution controls at some of AER's energy centers. Under AER's proposed compliance plan, the company expects its SO2 emissions during the period covered by the variance would not increase.
"AER is fully committed to reducing emissions and will continue to meet or exceed applicable emissions standards. Our energy centers are highly efficient and low-cost and should be a part of the Illinois energy picture for the long term," said Sullivan. "We remain dedicated to Illinois and to securing a cleaner energy future. We are optimistic that the IPCB will grant the requested relief."
AER is also working closely with the PJM Regional Transmission Operator (PJM RTO) and the Midwest Independent Transmission System Operator (MISO) to remove barriers preventing downstate Illinois generators from moving power to the northern part of the state where prices are higher. "Solving this singular issue would be a first step in resolving our financial challenges," said Sullivan. "It is time for the Federal Energy Regulatory Commission to direct PJM and MISO to solve this problem."
AER is the holding company for the merchant generation business of Ameren Corporation (NYSE: AEE). AER generates power and sells it to wholesale and retail customers throughout the Midwest. This segment principally includes Ameren Energy Generating Company, Ameren Energy Resources Generating Company and Ameren Energy Marketing Company.
With assets of approximately $23 billion, Ameren serves 2.4 million electric customers and more than 900,000 natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
Statements in this release not based on historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in Ameren Corporation's Form 10-K for the year ended December 31, 2011, and elsewhere in this release and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:
- regulatory, judicial, or legislative actions, including changes in regulatory policies and ratemaking determinations;
- the effects of, or changes to, the Illinois power procurement process;
- changes in laws and other governmental actions, including monetary, fiscal, and tax policies;
- changes in laws or regulations that adversely affect the ability of electric distribution companies and other purchasers of wholesale electricity to pay their suppliers, including Ameren Energy Marketing Company;
- the effects of increased competition in the future;
- the effects on demand for our services resulting from technological advances, including advances in energy efficiency and distributed generation sources, which generate electricity at the site of consumption;
- increasing capital expenditure and operating expense requirements and our ability to recover these costs through our regulatory frameworks;
- the cost and availability of fuel such as coal and natural gas used to produce electricity; and the level and volatility of future market prices for such commodities;
- the effectiveness of our risk management strategies and the use of financial and derivative instruments;
- the level and volatility of future prices for power in the Midwest;
- the development of a capacity market within MISO;
- business and economic conditions, including their impact on interest rates, bad debt expense, and demand for our products;
- disruptions of the capital markets or other events that make our access to necessary capital, including short-term credit and liquidity, impossible, more difficult, or more costly;
- our assessment of our liquidity;
- the impact of the adoption of new accounting guidance and the application of appropriate technical accounting rules and guidance;
- actions of credit rating agencies and the effects of such actions;
- the impact of weather conditions and other natural phenomena on us and our customers;
- the impact of system outages;
- generation, transmission and distribution asset construction, installation and performance;
- impairments of long-lived assets, intangible assets, or goodwill;
- the effects of strategic initiatives, including mergers, acquisitions and divestitures and any related tax implications;
- the impact of current environmental regulations on utilities and power generating companies and new, more stringent or changing requirements, including those related to greenhouse gases, other emissions, cooling water intake structures, coal combustion residuals, and energy efficiency, that are enacted over time and that could limit or terminate the operation of certain of our generating units, increase our costs, result in an impairment of our assets, reduce our customers' demand for electricity or natural gas, or otherwise have a negative financial effect;
- labor disputes, workforce reductions, future wage and employee benefits costs, including changes in discount rates and returns on benefit plan assets;
- the inability of our counterparties and affiliates to meet their obligations with respect to contracts, credit facilities and financial instruments;
- the cost and availability of transmission capacity for the energy generated by our energy centers or required to satisfy energy sales made by us;
- legal and administrative proceedings; and
- acts of sabotage, war, terrorism, cybersecurity attacks or intentionally disruptive acts.
Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.
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