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Cybernet Data Systems Inc.

Ameren Illinois' Electric Distribution Service Rate Plan Faces Rejection

Strategic Insights

— 1 min read

Ameren Illinois, a subsidiary of Ameren Corporation, has been dealing with a multi-year electric distribution service rate plan (MYRP) and a grid plan for the years 2023 through 2027. The MYRP aimed to support grid modernization, clean energy, energy efficiency, and the state of Illinois' renewable energy goals, while providing safe and reliable electric distribution service to customers. However, on December 14, 2023, the Illinois Commerce Commission (ICC) issued an order rejecting the proposed Grid Plan and approving base rates for electric distribution services for 2024 through 2027. The ICC directed Ameren Illinois to file a revised Grid Plan within three months, with no deadline for the ICC to act on the revised plan.

Key Takeaways:

  • The ICC rejected the proposed Grid Plan that outlined how Ameren Illinois expected to operate and invest in electric distribution infrastructure, citing that it did not meet certain statutory requirements.
  • The ICC adopted an alternative methodology for establishing a rate base and revenue requirement, providing for a cumulative increase of $142 million in revenues for 2024-2027 compared to Ameren Illinois' original request.
  • The approved return on equity is 8.72% and the approved capital structure common equity percentage is 50.0%.
  • Ameren Illinois' existing riders will remain effective, and electric distribution service revenues will continue to be decoupled from sales volumes.
  • The actual revenue requirement for a particular year will incorporate Ameren Illinois' year-end rate base and actual capital structure, subject to the 105% reconciliation cap.
  • The return on equity approved by the ICC will be subject to annual incentives and penalties, if applicable, of up to 24 basis points during the four-year period.

Statistics:

  • $142 million: cumulative increase in revenues for 2024-2027 under the alternative methodology.
  • 8.72%: approved return on equity.
  • 50.0%: approved capital structure common equity percentage.
  • $3.872 billion: 2022 year-end rate base used by the ICC.
  • $675 million: 2024 Grid Plan investment (not approved).
  • $707 million: 2025 Grid Plan investment (not approved).
  • $578 million: 2026 Grid Plan investment (not approved).
  • $645 million: 2027 Grid Plan investment (not approved).

Sources:

  • Ameren Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023
  • Ameren Illinois Company's Annual Report on Form 10-K for the year ended December 31, 2022
  • Illinois Commerce Commission's Order dated December 14, 2023

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