EXHIBIT D-2
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
AMEREN CORPORATION, AMEREN :
SERVICES COMPANY, UNION ELECTRIC :
COMPANY D/B/A AMERENUE, AND :
CENTRAL ILLINOIS PUBLIC SERVICE :
COMPANY D/B/A AMERENCIPS : 98-0664
:
APPLICATION FOR APPROVAL OF CERTAIN :
MONEY POOL AND TAX ALLOCATION :
AGREEMENTS :
ORDER
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By the Commission:
On September 30, 1998, Ameren Corporation, Ameren Services
Company ("Ameren Services"), Union Electric Company, d/b/a
AmerenUE ("UE"), and Central Illinois Public Service Company,
d/b/a AmerenCIPS ("CIPS") (collectively "Petitioners") filed with
the Illinois Commerce Commission ("Commission") an Application
requesting the Commission's approval of the Ameren Corporation
System Utility Money Pool Agreement ("Money Pool Agreement"),
pursuant to Sections 7-101 and 7-102 of the Public Utilities Act
("Act"), 220 ILCS 5/1-101 21 et seq. Petitioners submitted a
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copy of the Money Pool Agreement with the Application and
requested that the Commission consider the Application without a
hearing on an expedited basis. No petitions to intervene were
filed in this docket, nor were any hearings held. Commission
Staff ("Staff") filed an Answer to the Application on October 15,
1998.
Petitioners' Application states that Ameren Corporation is a
utility holding company formed with the merger of UE and CIPS
completed on December 31, 1997. UE and CIPS are Ameren
Corporation's two public utility operating companies, Ameren
Services was formed to provide administrative services for system
companies, including UE and CIPS, as part of the merger process
and to comply with federal law and the regulations of the
Securities and Exchange Commission ("SEC") under the Public
Utility Holding Company Act of 1935.
Petitioners want to enter into the Money Pool Agreement and
believe that it is reasonable and in the public interest because
it will permit lower cost borrowing for the Petitioners by
allowing internal funds to be loaned on a short term basis among
the Petitioners. Under the Money Pool Agreement, each Petitioner
will determine whether it has funds available for contribution to
the Money Pool. If so, the Petitioner may lend funds to the
Money Pool at its discretion. Each Petitioner may withdraw any
of its funds at any time upon notice to Ameren Services. The
Money Pool will be available for short term borrowing by
Petitioners as funds are available. No loans through the Money
Pool will be made to, and no borrowing through the Money Pool
will be made by, Ameren Corporation, as such is prohibited by the
SEC.
According to the Application, the source of funds for the
Money Pool will be from surplus funds in the treasuries of the
Petitioners, proceeds from bank borrowing, and sale of commercial
paper by Petitioners, consistent with regulatory orders and
applicable law. The Money Pool Agreement identifies surplus
funds from the treasuries of Petitioners as Internal Funds and
the proceeds from bank borrowings and the sale of commercial
paper by Petitioners as External Funds. Funds shall be made
available from other sources as Ameren Services, as Administrator
of the Money Pool, may determine will result in a lower cost of
borrowing to Petitioners. Record keeping will be handled by
Ameren Services under authority of the appropriate officers of
Petitioners. Ameren Services will administer the Money Pool on
an "at cost" basis.
Borrowing through the Money Pool shall be authorized by each
Petitioner's Treasurer or a designee thereof. No Petitioner
shall be required to effect a borrowing through the Money Pool if
such Petitioner determines that it can (and is authorized to)
effect such borrowing at lower cost directly from banks or
through the sale of its own commercial paper in an existing
commercial paper program.
The Application states that interest shall accrue on the
unpaid principal amount of any loan from the Money Pool. Staff's
Answer to the Application indicates that the current interest
rate (as of October 9, 1998) applicable to loans of Internal
Funds from the Money Pool is 5.25%. This interest rate is lower
than various interest rates currently applicable for short-term
borrowings from banks and higher than the current commercial
paper rate applicable to Petitioners. The current interest rate
applicable to loans of External Funds from the Money Pool is
5.2625% to UE and 5.46% to CIPS. These rates are lower than
various interest rates currently applicable for short-term
borrowings from banks with one exception and higher than the
current commercial paper rate applicable to UE and CIPS.
According to Staff's Answer, however, these interest rates are
expected to vary over time and Petitioners are not obligated to
borrow from the Money Pool if they can borrow from a cheaper
source elsewhere.
Staff's Answer indicates that Petitioners' primary source of
savings from lower cost borrowing under the Money Pool Agreement
will be realized through the reduction of about $60,000,000 in
bank lines of credit which support the short-term borrowing
capacity of Petitioners. This is achieved as a result of the
"sharing" of these facilities among the four Petitioners. The
savings will be realized in the form of lower facility and
commitment fees commensurate with the reduction of the level of
borrowing capacity. Measured in basis points, UE will save the
10 basis point commitment fee and CIPS will save the 7.5 basis
point commitment fee, each on an annual basis. Such savings will
flow through the Money Pool having the effect of reducing
borrowing rates on a pro-rata basis.
2
Analysis of the Money Pool Agreement indicates that cross-
subsidization among the Petitioners is not possible. Section
1.5(b) of the Money Pool Agreement states that a Petitioner who
borrows External Funds from the Money Pool shall pay interest on
that amount equal to the lending Petitioner's cost of such
External Funds. According to Section 1.5(c), Petitioners
borrowing a combination of Internal Funds and External Funds from
the Money Pool shall pay an interest rate that takes into account
the cost of all such External Funds as determined by Section
1.5(b). Section 1.6 specifies that commitment fees related to
External Funds contributed to the Money Pool shall be allocated
every month to the Petitioner borrowing such External Funds from
the Money Pool.
A review of Commission records reveals that other entities
regulated by the Commission have sought and received approval of
similar pooling arrangements. Examples of such entities include
GTE North, Inc. and GTE South, Inc. (approved in Docket No. 94-
0110 on December 21, 1994, subsequently replaced by agreement
approved in Docket No. 96-0344 on September 25, 1996), Illinois
Power Company and Illinova Corporation (approved in Docket No.
94-0005 on October 3, 1995), and Northern Illinois Gas Co.,
NICOR, and certain affiliated interests (approved in Docket No.
77-0009 on June 29, 1977).
Staff concluded its Answer by recommending that the
Commission grant the requested relief. Staff also noted that it
does not object to granting the requested relief without a
hearing.
The Commission, having considered the entire record and
being fully advised in the premises, is of the opinion and finds
that:
(1) the Commission has jurisdiction over Petitioners and
the subject matter herein;
(2) the recitals of fact and conclusions reached in the
prefatory portion of this order are supported by the
record and are hereby adopted as findings of fact; and
(3) Petitioners' Application for the approval of the Ameren
Corporation System Utility Money Pool Agreement, as
reflected in the attachment to the Application, should
be granted.
IT IS THEREFORE ORDERED that the Application filed by Ameren
Corporation, Ameren Services Company, Union Electric Company, and
Central Illinois Public Service Company seeking Commission
approval of the Ameren Corporation System Utility Money Pool
Agreement, as reflected in the attachment to the Application, is
hereby granted.
3
IT IS FURTHER ORDERED that subject to the provisions of
Section 10-113 of the Public Utilities Act and 83 Ill. Adm. Code
200.880, this order is final; it is not subject to the
Administrative Review Law.
By order of the Commission this 18th day of November, 1998.
(SIGNED) XXXXXXX X. XXXXXXX
Chairman
(S E A L)
4
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
CERTIFICATE
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Re: 98-0664
I, XXXXX X. XXXXX, do hereby certify that I am Chief Clerk
of the Illinois Commerce Commission of the State of Illinois and
keeper of the records and seal of said Commission with respect to
all matters except those governed by Chapters 18a and 18c of The
Illinois Vehicle Code.
I further certify that the above and foregoing is a true,
correct and complete copy of the Order made and entered of record
by said Commission on November 18, 1998.
Given under my hand and seal of said Illinois Commerce
Commission at Springfield, Illinois, on November 20, 1998.
/s/ Xxxxx X. Xxxxx
Chief Clerk
