By Chris O’Malley
Federal regulators last week said they support a settlement under which Ameren Illinois would refund $7.1 million to resolve a dispute over its purchase of Central Illinois Light Co. in 2003 and Illinois Power in 2004.
The settlement was filed April 14 by Ameren and a customer group consisting of the Illinois Municipal Electric Agency, Prairie Power Inc., Southern Illinois Power Cooperative and Wabash Valley Power Association. Federal Energy Regulatory Commission trial staff filed initial comments in support of the settlement on May 4 (AC11-46).
At the heart of the case is how Ameren Illinois accounted for goodwill in connection with the acquisition of the two Illinois utilities when it conducted a corporate reorganization in 2010.
As part of the reorganization, $197 million of goodwill that had been on Central Illinois’ books and $214 million of Illinois Power goodwill were transferred to Ameren Illinois.
In July 2012, FERC determined that Ameren Illinois and its predecessors had inappropriately included the $411 million in their common equity. The inflated rate base resulted in excess collections from ratepayers.
FERC also said the improper inclusion of goodwill in equity caused excessive collections under Allowance for Funds Used During Construction.
In a 2012 refund report required by FERC, Ameren contended it did not owe a refund. Even after removing goodwill from its capital structure, the company said, it was owed $19.7 million, plus $3 million in interest, because it had failed to include the cost of debt redemptions in Ameren and Illinois Power’s annual transmission revenue requirements from 2005 to 2012. FERC rejected Ameren’s claim in 2013, saying its proposed adjustments went beyond the scope of its July 2012 order.
The proposed $7.1 million refund would be paid to network integration transmission service customers for the period from June 1, 2005, through Dec. 31, 2014. The amount will be reduced by $2.1 million if a refund is ordered in a separate docket over Ameren’s booking of income tax overpayments (FA13-1).
If the settlement is approved by FERC, Ameren would also have to make adjustments to its common equity for Attachment O, removing $291.8 million for 2013 and $292.2 million for 2014.