In an effort to prepare for continuing weak power markets and a soft economy, St. Louis-based Ameren Corp. announced a voluntary retirement program that potentially could reduce its work force by 14%, or about 1,000 of Ameren’s 7,400 current employees. The voluntary program could be followed by an involuntary program if the voluntary retirement program isn’t enough to produce expected cost cuts and efficiencies, Ameren said.

Ameren also announced modifications to its retiree medical benefit plans, including caps on the ultimate level of costs to the company and increased retiree co-payments. It also will freeze wage increases beginning in 2003 for all Ameren management employees.

While the company expects to realize long-term savings as a result of these measures, it expects to incur a one-time, after-tax charge of $30-50 million and in the fourth quarter based on expectations that 300-500 employees will retire.

CEO Charles W. Mueller said the actions will help the company “address the challenges of the future facing us and our industry,” which include continued weak energy markets, a soft economy, higher employee benefit costs, and escalating insurance and security costs associated with world events.

COO Gary L. Rainwater said in the company’s recent third quarter earnings statement that these “industry-wide trends, coupled with an assumed return to more normal weather patterns, the impact of our Missouri electric rate case settlement and the incremental dilution from equity issued in 2002, are expected to put pressure on 2003 earnings.”

The company’s third quarter earnings were down 10% to $240 million, or $1.64 per share. Earnings for the first nine months of 2002 were down 1.4% to $414 million, or $2.88 per share. “Net income benefited from higher demand due to warmer weather,” Mueller noted in a recent statement. “However, weak wholesale energy markets, soft economic conditions, higher employee benefit costs and lower electric rates in our Missouri service territory all had a negative impact on net income for the quarter.” Total electric revenues decreased 13%.

Rainwater said the changes announced Monday do not affect the commitments the company has made related to its Missouri electric rate case settlement or its proposed $1.4 billion (including assumption of $859 million in debt) acquisition of CILCORP Inc. from AES Corp. CILCORP is the parent company of Peoria, IL-based Central Illinois Light Co. (CILCO).

The voluntary retirement program is being offered to eligible Ameren management employees and eligible employees who are members of the International Brotherhood of Electrical Workers Local 1455.

Ameren serves 1.5 million electric customers and 300,000 natural gas customers in a 44,500-square-mile area of Missouri and Illinois. Ameren shares were up 2% by mid afternoon to $41.32.

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