R2009-207 AUTHORIZING EXECUTION OF INTERGOVERNMENTAL AGREEMENT INTERVENTION

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LEGAL DEPARTMENT MEMORANDUM NO. 2009-11 October 13, 2009 TO: Honorable Mayor McElroy and City Council FROM: Ryan P. McCrady, City Manager � Wendy Morthland, Corporation Counsel SUBJECT: Intergovemmental Agreement—Ameren Electricity Delivery Rate Case On March 3, 2008, Council authorized the City entering into an intergovemmental Agreement to join with Champaign, Urbana, Bloomington and Normal in an intenrention in the Ameren electricity delivery rate case that had been filed with the Illinois Commerce Commission (ICC). The Cities are beginning to realize the benefits from intervening in the last Ameren rate case. As a result of the Cities' intervention in the last case, the Commission ordered Ameren to perform a detailed cost of service study, as ,i well as a detailed street light rate design study to determine cost-based lighting fixture charges in its next rate case. The Commission also instructed Ameren in future rate cases to move towards uniform fixture rates among the three Ameren Illinois Utilities. Ameren IP's existing fixture charges are considerably higher than Ameren CILCO's and Ameren CIPS' fixture charges. On July 8, 2009, Ameren filed its third case in three years requesting rate increases in its gas and electric delivery tariffs for AmerenlP (and its other subsidiaries). The delivery tariff is the portion of the utility bill which seeks recovery for the utility's cost for delivering electricity to the customers' premises. This normally consists of approximately 30% of the total bill. In the case of street lighting, however, the delivery service tariff is a higher percentage of the bill. The rate increase requested by AmerenlP for its delivery tariff is approximately 22%. A preliminary review of the Ameren filing for the cities was completed by RWBeck in early September. The preliminary review indicated that Ameren, as urged by the cities in last year's case and in compliance with the ICC direction, proposed lowering rates and certain street lighting charges in the IP territory. As a result of the previous intervention and testimony of the cities, AmerenlP has proposed a 10% decrease in street lighting rates. This will produce an overall decrease in street lighting rates of 10%. The charges are still in excess of the cost of the service and testimony will request the ICC to continue to move these rates to cost of service. Ameren increased other charges affecting street lighting and traffic signal costs. Whether Ameren has fully justified these increases will be a focus for the cities' testimony in this case.