FERC last week conditionally approved Ameren Corp.’s $1.4 billion purchase of CILCORP Inc., parent company of Peoria, IL-based Central Illinois Light Co. (CILCO), from AES Corp. Key to the approval was the utilities’ commitment to participate in the Midwest Independent Transmission System Operator (MISO).

FERC said that participation in the MISO will broaden the regional transmission organization’s (RTO) coverage and eliminate a gap that presently exists in its territory. Also, access to a more efficient, non-discriminatory transmission system across the Midwest will be enhanced, since both Ameren’s and CILCO’s transmission will be independently controlled by MISO, the Commission said.

“I’m pleased with this on a number of fronts,” said FERC Commissioner Nora Brownell at the Commission’s agenda meeting. “Certainly, joining MISO fills in some holes in the map, but secondly, I think we’re finally seeing what we’ve been waiting for and that is real investment in transmission,” which she said is “so critical to every region of this country.”

As part of the merger conditions, Ameren has agreed to several transmission system upgrades that will increase the import and export capability of Ameren’s service area and serve to mitigate market concentration concerns. In the interim, pending completion of the first series of upgrades, Ameren has agreed to sell to non-affiliated companies 100 MW of power and energy. Pending completion of a further transmission upgrade, Ameren agrees to sell 50 MW of power and energy to non-affiliated companies. The utilities are required to file quarterly reports regarding the status of the transmission upgrades.

In June, Ameren joined three other utility organizations from the now defunct Alliance RTO in establishing terms for joining the MISO through the company’s participation in an independent transmission company, GridAmerica LLC, managed by National Grid USA.

First announced in April, the $1.4 billion deal includes $540 million in cash and $860 million worth of debt and preferred stock. The transaction will make Ameren Illinois’ second largest electric utility, with a combined customer base of 600,000 electric and 400,000 natural gas customers in the state, including 1,200 MW of mostly coal-fired generating capacity.

St. Louis-based Ameren will assume CILCORP debt at closing and pay the balance in cash to purchase the company. CILCO serves about 200,000 natural gas and 200,000 electric customers in Illinois. The sale by Arlington, VA-based AES is part of the company’s plan announced in February to clean up its balance sheet, which includes selling about $1.5 billion in assets.

In a separate action, FERC on Wednesday also acted on certain tariff revisions proposed by MISO to recover costs associated with the system development of MISO that will allow the RTO to move forward.

The Commission conditionally accepted the MISO proposal, but cautioned that costs must be reasonable and prudent and directed the grid operator to file detailed reports of estimated expenditures. FERC expressed an expectation that MISO’s board of directors will be proactive in this area.

Specifically, MISO has asked to add two rate schedules to its open access transmission tariff in order to collect costs associated with implementing financial transmission rights and day-ahead and real-time energy market services. The Commission set for hearing issues regarding appropriate cost allocation and the formula used to assign costs.

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