-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NDUtfayiyaXmRati8Cco5X0E8pSzkgMdpCD4U2gRkF8pBkwLGx3BsYlam12CoLYm +YpQkFSefou38bh//f4iiw== 0000950172-99-001093.txt : 19990823 0000950172-99-001093.hdr.sgml : 19990823 ACCESSION NUMBER: 0000950172-99-001093 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 19990820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AES CORPORATION CENTRAL INDEX KEY: 0000874761 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 541163725 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: SEC FILE NUMBER: 070-09465 FILM NUMBER: 99696855 BUSINESS ADDRESS: STREET 1: 1001 N 19TH ST STREET 2: STE 2000 CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7035221315 U-1/A 1 AMENDMENT NO. 2 TO FORM U-1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM U-1 ----------------------------------------- AMENDMENT NO. 2 TO APPLICATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ---------------------------------------------------- The AES Corporation 1001 North 19th Street Arlington, VA 22209 (Name of company filing this statement and address of principal executive offices) ------------------------------------------------------------------ None (Name of top registered holding company parent of each applicant or declarant) --------------------------------- William R. Luraschi General Counsel and Secretary The AES Corporation 1001 North 19th Street Arlington, VA 22209 (Name and address of agent for service) ---------------------------------- The Commission is also requested to send copies of any communications in connection with this matter to: Clifford M. Naeve, Esq. Judith A. Center, Esq. Kathleen A. Foudy, Esq. William C. Weeden Skadden, Arps, Slate, Meagher & Flom L.L.P. 1440 New York Avenue, N.W. Washington, D.C. 20005 APPLICATION FOR EXEMPTION FROM THE PROVISIONS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 PURSUANT TO SECTION 3(a)(5) The Application previously filed in this proceeding is hereby amended and restated in its entirety to read as follows: Introduction and Request For Commission Action The AES Corporation ("AES") hereby applies for an order from the United States Securities and Exchange Commission (the "Commission") to the effect that upon consummation of the merger transaction described in Item 1 below, the resulting public utility holding company, and every subsidiary company thereof as such, will be exempt from the provisions of the Public Utility Holding Company Act of 1935, as amended ("PUHCA" or "the Act"), other than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act.1 ITEM 1. DESCRIPTION OF THE TRANSACTION A. Summary of the Transaction Pursuant to a Merger Agreement dated November 22, 1998, between AES and CILCORP Inc. ("CILCORP"), Midwest Energy, Inc., an Illinois corporation and wholly-owned subsidiary of AES, will be merged with and into CILCORP, with CILCORP as the surviving corporation (the "Transaction"). As a result of the Transaction, each outstanding share of common stock of CILCORP ("CILCORP Shares") and each associated purchase right under the Rights Agreement, dated as of October 29, 1996, between Continental Stock Transfer and Trust Company and CILCORP will be converted into the right to receive $65.00 (subject to adjustment as described in the Merger Agreement) in cash, without interest. The Merger Agreement is attached to this Application as Exhibit B-1. - --------------- 1 Some AES subsidiaries also will continue to be exempt from the Act as exempt wholesale generators ("EWGs"), pursuant to Section 32 of the Act, as foreign utility companies ("FUCOs"), pursuant to Section 33 of the Act, or as qualifying facilities ("QFs"), pursuant to Section 210(e) of the Public Utility Regulatory Policies Act of 1978, and the implementing rules of the Federal Energy Regulatory Commission. Following the Transaction, CILCORP will be a first-tier, direct subsidiary of AES, and CILCORP's subsidiaries will maintain their current structure as direct or indirect subsidiaries, as the case may be, of CILCORP. In addition, CILCORP will continue to be an Illinois corporation with its principal executive offices in Peoria, Illinois and AES will continue to be a Delaware corporation with its principal executive offices in Arlington, Virginia. The merger will provide important benefits to CILCORP's utility customers and shareholders. AES's international and diversified experience in competitive power markets will provide CILCORP's public utility subsidiary, Central Illinois Light Company ("CILCO"), the resources necessary to provide quality customer services in a deregulated environment. Pursuant to the Electric Service Customer Choice and Rate Relief Law of 1997, which was enacted in Illinois in December 1997 and becomes effective in October 1999, industrial and commercial customers will be able to choose their own retail electric power providers. Residential customers will have the same choice sometime thereafter, ultimately leading to open choice for all Illinois electricity customers by mid-year 2002. This deregulation will result in direct competition for customers and will create demand for a broader range of services at competitive prices. AES's worldwide experience and management resources, coupled with CILCORP's utility expertise in Illinois, will facilitate enhanced customer services at competitive prices. The Merger Agreement is subject to the approval of CILCORP's shareholders and was approved at a special meeting of CILCORP shareholders held on May 20, 1999. The Merger also is subject to approval by the Federal Energy Regulatory Commission ("FERC"). An application for such approval was filed with the FERC on February 19, 1999. See Exhibit D-2. The FERC granted the application and approved the Merger on June 16, 1999. Central Illinois Light Company and The AES Corporation, 87 FERC P. 61, 293 (1999). (See Exhibit D-3). The Merger also is subject to the notification and reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). On February 22, 1999, the Federal Trade Commission granted early termination of the HSR Act waiting period. In addition, CILCO provided notice to the Illinois Commerce Commission ("ICC") pursuant to Section 16-111(g) of the Illinois Public Utilities Act regarding the Transaction, and filed a petition with the ICC for an order finding that the ICC has no pre-approval jurisdiction over the Transaction, or, in the alternative, for an order approving the Transaction with respect to CILCO's gas operations.2 See Exhibit D-1. After the filing of its petition, - --------------- 2 Pursuant to the Illinois Public Utilities Act, the ICC does not have pre-approval jurisdiction over the Transaction with respect to CILCO's electric operations. Illinois restructuring legislation removed ICC authority over the reorganization of electric utilities until January 1, 2005. Although the Illinois restructuring legislation removed much of the ICC's authority over the sale or other transfer of electric assets to affiliated or other unaffiliated entities until January 1, 2005, the ICC does retain authority during this period to prohibit, under certain circumstances, sales or other transfers of generating plant or transmission or distribution facilities. If the ICC finds that a proposed transfer will render the electric utility unable to provide its tariffed services in a safe and reliable manner, or that there is a strong likelihood that consumma tion of the proposed transaction will result in the electric utility being entitled to request an increase in its base rates prior to January 1, 2005, the ICC may prohibit the transaction. See 220 ILCS section 5/16-111(g). CILCO withdrew its request that the ICC make a ruling on the jurisdictional issue. The ICC held an evidentiary hearing on February 5, 1999, and issued an order approving the Transaction with respect to CILCO's gas operations on March 10, 1999. See Exhibit K-17. CILCO also requested that the ICC issue a state commission certification in accordance with the requirements of Section 33(a)(2) of the Act. The ICC issued such certification by letter to the Commission dated March 10, 1999. See Exhibit K-18.3 Upon consummation of the Transaction, AES will own CILCORP, an intrastate exempt holding company under Section 3(a)(1) of the Act, and its direct and indirect subsidiaries, including CILCO, a utility subsidiary principally engaged in the generation, transmission, distribution and sale of electric energy, and the purchase, distribution, transportation and sale of natural gas in central and east-central Illinois. After giving effect to the Transaction, CILCORP will remain predominantly an intrastate holding company that will not derive any material part of its income from an out-of-state utility subsidiary. Accordingly, CILCORP will continue to claim an exemption from registration under PUHCA pursuant to Section 3(a)(1) and Rule 2. For the reasons set forth herein, AES will qualify for an exemption from registration under Section 3(a)(5) of the Act. B. Description of Parties to the Transaction 1. AES Corporation AES, incorporated in Delaware, is a United States-based multinational electric power generation and energy distribution company, with operations in 16 countries worldwide. AES is engaged principally in the development, ownership, and operation of electric generating plants and electric and gas distribution companies, all of which either are (or are owned by) EWGs, FUCOs or QFs. Revenues from electric generation and distribution activities accounted for over 95 percent of revenues in 1997 and again in 1998. Other activities include the sale of steam and other commodities related to AES's cogeneration operations, as - --------------- 3 The Transaction is not subject to pre-approval by this Commission under Section 9(a)(2) of the Act, since AES will acquire and own only one PUHCA-jurisdictional public utility company upon consummation of the Transaction. See Coral Petroleum, Inc., Rel. No. 35-21, 632 (1980). well as operational, construction and project development services, and gas and power marketing.4 AES currently is not a holding company subject to the provisions of the Act because none of its subsidiaries is a public utility company as defined by the Act. Exhibit K-2 lists all AES subsidiaries and their respective jurisdictions of organization. AES has grown since its founding in 1981 to become one of the largest, if not the largest, global electricity suppliers. AES currently owns and/or operates (entirely or in part) a diverse international portfolio of electric power plants with a total capacity of 26,466 megawatts ("MW"), including plants that are part of distribution companies in which AES has an interest. Of that total, 6,449 MW (fifteen plants) are located in the United States, 1,818 MW (five plants) are in the United Kingdom, 885 MW (six plants) are in Argentina, 817 MW (eight plants) are in China, 1,281 MW (three plants) are in Hungary, 6,456 MW (41 plants) are in Brazil, 5,384 MW (seven plants) are in Kazakhstan, 210 MW (one plant) are in the Dominican Republic, 110 MW (one plant) are in Canada, 695 MW (two plants) are in Pakistan, 1,254 MW (three plants) are in Australia, 405 MW (one plant) are in the Netherlands, 420 MW (one plant) are in India and 282 MW (two plants) are in Panama. 20,017 MW of this generating capacity is located outside the United States.5 As noted above, AES also owns partial interests (both majority and minority) in companies that distribute and sell electricity directly to commercial, industrial, governmental, and residential customers. AES has majority ownership in three distribution companies in Argentina, one in Brazil, one in the country of Georgia, one in Kazakhstan, one in El Salvador, and one in the Dominican Republic, and less than majority ownership in three additional distribution companies in Brazil. AES recently increased its ownership interest in two of the Brazilian distribution companies. These eleven companies serve a total of approximately 13.6 million foreign customers with sales of nearly 107,000 gigawatt-hours. On a net equity basis, AES's ownership in these companies represents approximately 3.7 million foreign customers and approximately 29,000 gigawatt-hours. On June 23, 1999, AES announced that it had assumed management control of two distribution companies in Kazakhstan, which together serve approximately 1.8 million customers and own a transmission network covering an area approximately the size of France. - --------------- 4 AES Power, a wholly owned subsidiary of AES active in power marketing, generated less than 1 percent of AES's1998 net income. CEMIG, in which AES has a minority investment, has operated a small gas distribution com pany, Gasmig, since 1995. In addition, AES recently acquired New Energy Ventures (now renamed NewEnergy Inc.), an energy services provider. 5 On a net equity basis, i.e., actual ownership interest, AES has 17,618 MW of capacity, of which 11,194 MW is foreign-based. In addition to power generation and distribution, AES owns and operates the Lyukobanya Coal Mine in Hungary. The mine has an output of approximately one million tons per year of brown coal and is the sole supplier of AES Borsod. AES has grown rapidly throughout this decade. In 1990, the year before it went public, AES had total assets of $1.1 billion, revenues of $190.2 million and net income of $15.5 million.6 By the end of 1997, total assets grew by approximately 700 percent to $8.9 billion, revenues grew by approximately 640 percent to $1.4 billion, and net income grew by nearly 1,100 percent to $185 million. From the end of 1997 to the end of 1998, AES's total assets expanded 21 percent to $10.8 billion, revenues rose 71 percent to $2.4 billion and net income grew 68 percent to $311 million. In the eight year period between year-end 1990 and 1998, AES's growth in total assets, revenues and net income were 882 percent, 1,162 percent and 1,906 percent, respectively. AES has continued its growth in 1999. Thus far in 1999, AES has acquired or achieved commercial operations for two power plants totaling 282 megawatts ("MW") in Panama, a 420 MW plant in India and three power plants totaling 1,254 MW in Australia. The company also recently completed financing for the purchase of six power plants totaling 1,424 MW in New York.7 In 1999, AES also expects to achieve financial closing on its acquisition of the four electric generating plants of CILCO (1,152 MW). Also in 1999, AES is expected to complete construction of and begin operating a 180 MW coal-fired plant in the United States. Combining the 101 power plants currently in operation, planned for acquisition in 1999 or projected to begin operations in 1999, AES is expected to have a minimum of 27,798 MW of generating capacity by the end of the - --------------- 6 Determined in accordance with Generally Accepted Accounting Principles ("GAAP"). 7 These generating assets of New York State Electric and Gas Corporation ("NYSEG") will be owned by a wholly-owned subsidiary of AES that has EWG status. 8 Of this 27,798 MW, 20,017 MW will be foreign. On a net equity basis, AES is expected to have a generating capacity of 18,950 MW at year-end 1999; 11,194 MW of which will be foreign. current calendar year.8 As a result, the power generation capacity of companies in which AES has an interest will have grown by 3,027 percent in 8 years.9 10 The growth of AES's distribution business also has been fast-paced. In 1996, AES purchased its first interests in a distribution company. By the end of 1998, companies in which AES had an interest served approximately 13 million customers and sold over 102,000 gigawatt-hours of power.11 Thus far in 1999, AES has acquired 75 percent of a distribution company serving 370,000 customers in the country of Georgia, 50 percent of an electric distribution company serving approximately 270,000 customers in the Dominican Republic, and increased its ownership stakes in two Brazilian distribution companies, Light and Metropolitana, by 27 percent and 30 percent, respectively. In addition, AES acquired management control of two distribution companies in Kazakhstan which together serve 1.8 million customers. AES's market capitalization has mirrored its growth over the decade. AES's public offering in 1991 valued the company at $750 million. At present, AES's market capitalization has risen to approximately $10.77 billion, an increase of 1,336 percent in approximately 8 years. Exhibit K-3 lists the AES subsidiary companies which own generation facilities currently in operation, and also includes company operating locations, power generation capacities, AES net equity interests, and the regulatory status of the companies and/or generating facilities (i.e., whether QF, EWG, or FUCO). Exhibit K-3 also lists the distribution companies in which AES owns an interest, including location, regulatory status and the nature of AES's interest. Exhibit K-4 depicts the locations of AES's current generation and distribution businesses worldwide. 2. CILCORP CILCORP was incorporated as a utility holding company in the State of Illinois in 1985. CILCORP is the parent of four first-tier subsidiaries: CILCO, QST Enterprises Inc. ("QST"), CILCORP Investment Management Inc. ("CIM"), and CILCORP Ventures Inc. ("CVI"). The consolidated assets, revenues and net income of CILCORP for the year ending December 31, 1997 were $1.335 billion, $558 million and $16.4 million, respectively. For 1998, CILCORP's consolidated assets, revenues and net income were $1.313 billion, $559 million and $16.3 million, respectively. CILCORP is exempt from the provisions of PUHCA (except for Section 9(a)(2)) under Section 3(a)(1) pursuant to Rule 2. - --------------- 9 This projection conservatively assumes AES growth only from AES projects under development which are expected to be operational in this period and from existing projects which AES already has committed to acquire during this period. 10 2,093 percent on a net equity basis. 11 Approximately 3.1 million customers and 25,000 gigawatt-hours on a net equity basis. CILCO, the primary business subsidiary of CILCORP, is an electric and gas utility engaged in the generation, transmission, distribution, and sale of electric energy in an area of approximately 3,700 square miles in central and east-central Illinois, and the purchase, distribution, transportation and retail sale of natural gas in an area of approximately 4,500 square miles in central and east-central Illinois. As of December 31, 1998, CILCO served approximately 253,000 customers; approximately 189,000 retail electric customers and approximately 197,000 gas customers, including 837 industrial, commercial and residential gas transportation customers that purchase gas directly from suppliers for transportation through CILCO's system. At the end of 1997, the electric utility assets of CILCO were $723.8 million and the gas utility assets were $290.5 million. At the end of 1998, the electric utility assets of CILCO were $729.1 million and the gas utility assets were $286.2 million. In 1997, CILCO earned $338.1 million in electric utility revenues (62 percent of total operating revenue) and $208.8 million in gas utility revenues (38 percent of total operating revenue). In 1998, CILCO earned $360.0 million in electric utility revenues (68 percent of total operating revenue) and $172.3 million in gas utility revenues (32 percent of total operating revenue). CILCO owns and operates two steam-electric generating plants, one cogeneration plant and two combustion turbine-generators. These facilities had an available summer capability of 1,152 megawatts in 1998. At the end of 1998, CILCO's transmission system included approximately 285 circuit miles operating at 138,000 volts, 48 circuit miles operating at 345,000 volts and 16 principal substations with an installed capacity of 2,150,000 kilovolt-amperes. In 1998, the system peak demand was 1,195 megawatts for electric activities and the peak day natural gas send-out was 327,328 million cubic feet. CILCO had total assets, operating revenues and net income of $1.023 billion, $546.9 million and $50.3 million, respectively, for the year ending December 31, 1997. At the end of 1998, CILCO had total assets, operating revenues and net income of $1.024 billion, $532.3 million and $41 million, respectively. CILCO has two wholly-owned subsidiaries, CILCO Exploration and Development Company ("CEDCO") and CILCO Energy Corporation ("CECO"). CEDCO was formed to engage in the exploration and development of gas, oil, coal, and other mineral resources. QST was formed in December 1995 to facilitate CILCORP's expansion into non-regulated energy and related services businesses. QST has three wholly-owned first-tier subsidiaries: CILCORP Infraservices, Inc. ("CII"), ESE Land Corporation ("ESE Land") and QST Energy, Inc. ("QST Energy"). QST Energy has one wholly-owned subsidiary: QST Energy Trading Inc. ("QST Trading"). CII provides utility operation and maintenance services. CII currently serves one customer in Central Illinois. Until recently, ESE Land was a direct subsidiary of QST Environmental, Inc. ("QST Environmental"), formerly a first-tier subsidiary of QST, as described below. ESE Land acquired environmentally-impaired property for remediation and resale. During the fourth quarter of 1998, QST Environmental sold substantially all of the assets of ESE Land. QST Energy, which began operations in 1996, provides non-regulated energy and energy-related services to retail and wholesale customers. QST Energy competed against marketers, brokers and utility affiliates to market and provide energy and related services to customers of utilities and other energy providers who have the ability to choose a supplier. QST Trading was a wholesale natural gas and electric power marketer which purchased, sold, and brokered energy and capacity at market-based rates to other marketers, including QST Energy, utilities and other customers. In June of 1998, CILCORP announced that it was reevaluating its strategy for QST Energy, and indicated that the company would focus on opportunities for profitable growth in Illinois, de-emphasizing energy trading activities at QST. After further consideration, CILCORP decided to wind down the operations of QST Energy and QST Trading, except to the extent required to fulfill commitments to existing customers and counterparties. Once these commitments are fulfilled, the operations of QST Energy and QST Trading will be completely wound down. In late 1998, CILCORP decided to sell QST Environmental, an environmental consulting and engineering firm serving governmental, industrial and commercial customers. On June 24, 1999, CILCORP completed the sale of QST Environmental. As a result of the winding down and sale of various QST operations, CILCORP is reporting the results of QST and certain of its subsidiaries as discontinued operations. For the year ending December 31, 1998, QST had total assets and a net loss of $121.6 million and $21.9 million, respectively. CIM invests in a diversified portfolio of long-term financial investments which currently include leveraged leases, energy-related projects and affordable residential housing. CIM has four wholly-owned subsidiaries: CILCORP Lease Management, Inc., CIM Leasing, Inc., CIM Air Leasing, Inc., and CIM Energy Investments, Inc. For the year ending December 31, 1998, CIM had total assets, revenues and net income of $162.5 million, $11.1 million and $4.3 million, respectively. CVI primarily invests in ventures in energy-related products and services. CVI has an 80 percent interest in the Agricultural Research and Development Corporation and has one wholly-owned subsidiary, CILCORP Energy Services Inc., ("CESI"). CESI's primary business is the sale of non-regulated energy services, including non-regulated sales of natural gas. For the year ending December 31, 1998, CVI had total assets, revenues and a net loss of $7.8 million, $13.5 million and $1.4 million, respectively. ITEM 2. FEES, COMMISSIONS AND EXPENSES The fees, commissions and expenses to be paid or incurred, directly or indirectly, by all parties in connection with the Transaction are estimated to total approximately $28 million. ITEM 3. APPLICABLE STATUTORY PROVISION Section 3(a)(5) Under Section 3(a)(5), a holding company and its subsidiaries will be exempt from the provisions of the Act (except for Section 9(a)(2)) if the holding company is not and does not derive any material part of its income from a subsidiary whose principal business within the U.S. is that of a public utility company. As the Commission has noted, the Section 3(a)(5) exemption is meant to be available to a holding company system with foreign operations whose U.S. utility operations "account for no material part of the holding company's income" and are "small in size". Gaz Metropolitain, Inc., Rel. No. 26170 (1994) (quoting and citing Electric Bond and Share Company, Rel. No. 11004, 1952 WL 1058 (1952) ("Electric Bond and Share")). For the reasons set forth below, it is clear that AES will qualify for a Section 3(a)(5) exemption upon completion of the Transaction. A. Materiality of CILCO Income In the relatively few cases decided under Section 3(a)(5) where the Commission has addressed the materiality of the U.S. utility subsidiary, the Commission has considered the relative size of the U.S. utility subsidiary's operations, expressed as a percentage of the applicant holding company's total operations, based upon a variety of financial yardsticks. See, e.g., Gaz Metropolitain (citing to U.S. utility contributions to holding company total consolidated revenues, net income, and net utility plant); TransCanada Pipelines Limited, Rel. No. 35-25647 (1992)(citing to percentages of holding company total revenues and net assets); Consumers' Gas Company, Rel. No. 35-14956 (1963) comparing U.S. utility and holding company revenues, net income, and net assets). In considering these various financial measurements, the Commission has not indicated that any given one is entitled to particular deference. The Commission similarly has not applied a strict percentage test of materiality under Section 3(a)(5). The Commission has granted Section 3(a)(5) exemptions where the U.S. utility subsidiary represented less than approximately 5 percent of total holding company operations. See, e.g., Gaz Metropolitain; TransCanada Pipelines. The Commission also has indicated that a holding company that derived approximately 46 percent of its total business revenues from a utility subsidiary (in the form of fees for underwriting services) received a material amount of income from such subsidiary. H.M. Byllesby & Company, Rel. No. 1882 (1940). See also Cities Service Company, 8 SEC 318 (1940)(noting in dicta that U.S. utility subsidiary contributions to holding company of approximately 30 percent of gross revenues and 45 percent of net fixed assets would be considered material). See also NIPSCO Industries, Inc., Rel. No. 35-26975 (Feb. 10, 1999) ("NIPSCO") (in the Section 3(a)(1) context, the Commission has emphasized that there is no strict percentage test for assessing materiality under Section 3(a)(1)). It should be noted that the Commission Staff has recommended that the Commission adopt a more flexible standard for exemptions under Section 3(a), urging the agency to take into account the ability of affected state commissions to "adequately protect utility consumers against any detriment that might be associated with certain activities of exempt holding companies." The Regulation of Public-Utility Holding Companies (June 1995), pp. 119-120. As explained below, the ICC has such ability here. A review of CILCO's contributions to AES's total operations (including CILCORP), from the perspective of a variety of financial indicators, reveals that CILCO's utility activities and assets constitute only a very minor percentage of AES's overall business, a percentage that will become increasingly minor over time, as the size of AES's business continues to grow.12 Set forth below in Table 1 are the percentages, on a pro forma basis for 1996-1998, of gross revenues, net operating revenues13, operating income, net income, and net assets of CILCO, to the total combined gross revenues, net operating revenues, operating income, net income, and net assets of AES as a whole. - --------------- 12 In fact, AES expects that CILCO's activities and assets as a percentage of AES's overall business will trend down to below 10 percent within five years. 13 Net operating revenues are gross revenues less cost of purchased gas for retail gas distribution and the cost of fuel for electric generation, for both AES and CILCO.
CILCO Contributions To AES/CILCORP Consolidated Holding Company (Proportional Consolidation Basis) ($MM) 1996 1997 1998 Gross Revenues* 31.26% 21.24% 12.81% AES 1,149 2,045 3,640 CILCO 524 553 538 CILCORP (excluding CILCO) 3 5 21 AES/CILCORP 1,676 2,603 4,199 Net Operating Revenues 26.66% 17.75% 10.35% AES 891 1,557 3,011 CILCO 325 337 350 CILCORP (excluding CILCO) 3 5 21 AES/CILCORP 1,219 1,899 3,382 Operating Income 21.05% 14.59% 8.54% AES 365 608 997 CILCO 96 103 93 CILCORP (excluding CILCO) (5) (5) (1) AES/CILCORP 456 706 1,089 Net Income 27.45% 24.88% 12.54% AES 125 185 311 CILCO 42 50 41 CILCORP (excluding CILCO) (14) (34) (25) AES/CILCORP 153 201 327 Net Assets 20.07% 9.12% 7.78% AES 3,876 9,883 11,851 CILCO 1,036 1,023 1,024 CILCORP (excluding CILCO) 250 312 289 AES/CILCORP 5,162 11,218 13,164
* In calculating the gross revenues percentage, the numerator is equal to the total gross business revenues of CILCO, which include revenues from minor non-utility activities (nearly all of which are from service transactions with CILCORP affiliates). The denominator is comprised of all CILCORP business revenues (including revenues from all CILCO activities and CILCORP non-utility activities) plus all of AES's business revenues. The AES data contained in Table 1 is compiled on a proportional consolidation basis rather than in accordance with GAAP. On a proportional consolidation basis, revenues, income and assets are allocated to AES on a pro rata basis in proportion to the ownership percentages held by AES in each of the projects/companies in which it has an equity interest. AES holds a less-than-50 percent equity interest in a number of projects that generate substantial revenues.14 On a proportional consolidation basis, revenues from sales made by these minority-interest investments are included as revenues in statements of operations. On financial statements prepared in accordance with GAAP, on the other hand, returns from minority-interest projects are not reported as revenues, but instead are reported as equity in earnings of affiliates (net of - --------------- 14 AES holds majority equity interests in a number of projects/companies. Under GAAP, revenues and income from such projects are included in AES's consolidated financial statements in the same manner as wholly-owned projects. However, the revenue impact of these holdings is far outweighed by the exclusion of minority-owned projects from the calculation of AES's GAAP-based gross revenues. income taxes). Thus, although GAAP-based data is the appropriate data for use in other contexts, using GAAP-based data here would understate the revenues AES earns from its electric business. The proportional consolidation data provides a more accurate representation of the size of AES's generation and distribution business relative to that of CILCO's business for purposes of the Commission's materiality analysis. Commission case law provides support for making appropriate adjustments to financial data reported on the basis of prescribed, conventional accounting treatments, where such adjustments would yield a more accurate picture, from a PUHCA perspective, of a company's operations, revenues, or other pertinent criteria. For example, on several occasions, the Commission has considered proportional consolidation data. See, e.g., Northern New England Company, et al., Rel. No. 11711 (February 13, 1953) (1953 SEC LEXIS 875) (applying proportional consolidation approach to re-state and allocate income and balance sheet amounts to reflect ownership percentages) and Sioux City Gas and Electric Company, Rel. No. 9303 (September 8, 1949) (1949 SEC LEXIS 613) (applying proportional consolidation approach to evaluation of dividend coverage ratios). See also Consolidated Cities Light, Power & Traction Company, et al., Rel. No. 4130 (February 23, 1943) (1943 SEC LEXIS 556) (consideration of company's "indirect" sources of income, such as payments by another company of its interest and sinking fund requirements on outstanding debt). In addition, proportional consolidation is consistent with the status of the minority-interest businesses as subsidiary companies of AES. AES owns at least 10 percent of the voting securities of such companies, and as noted above, participates in their management and operation. Therefore, it is appropriate to allocate the revenues and assets of these companies to AES on a pro-rata basis. To do otherwise significantly would underestimate the extent of AES's foreign operations.15 Although Table 1 includes data for 1996, 1997 and 1998, given AES's phenomenal growth, the 1998 data is by far the most relevant for purposes of comparing the relative size of CILCO and AES. As the description in Item 1, Section B above notes, AES's revenues increased approximately 640 percent between 1990 and 1997, and increased by 71 percent from 1997 to 1998. Unlike a traditional utility company, whose financial results are relatively static over time or who have year-to-year variations (perhaps attributable to weather conditions, or one-time extraordinary changes) that can best be viewed over a several-year period, AES has experienced and will continue to experience rapid growth through project development and acquisitions. In fact, in light of its - --------------- 15 AES also has calculated the percentages set forth in Table 1 in accordance with GAAP. Such calculations are set forth in Exhibit K-5. As explained above, however, use of this GAAP-based data understates the size of AES's worldwide business relative to CILCO, whereas data compiled on a propor tional consolidation basis provides a more accurate comparison of the size of CILCO to the size of the AES/CILCORP merged company. rapid growth, AES was quite a different company at the end of 1998 than it was in 1996 or even 1997. As reflected in Table 1, between the end of 1996 and 1998, AES gross revenues grew 217 percent, from $1.15 billion to $3.64 billion; net operating revenues grew 238 percent, from $891 million to $3.01 billion; operating income grew 173 percent, from $365 million to $997 million; net income grew 149 percent, from $125 million to $311 million; and net assets grew 205 percent, from $3.88 billion to $11.85 billion.16 Therefore, in light of AES's significant growth from the years 1996 through 1998, the financial data for 1996 and 1997 do not provide an accurate picture of the relative size of AES and its current foreign operations. Thus, to avoid a misleading comparison, greatest weight should be given to AES's most recent financial results (1998) in evaluating the relative contribution of CILCO to the holding company. Table 1 demonstrates the relative size of AES and the merged AES/CILCORP holding company based on five financial yardsticks. In this instance, because of the differing nature of AES's and CILCO's operations, certain of the financial yardsticks, particularly gross revenues and net income, tend to overstate CILCO's contributions to the merged AES/CILCORP holding company. Thus, as explained below, the Table 1 data comparing net operating revenues, operating income and net assets present the most accurate representation of the relative size of CILCO to the merged AES/CILCORP holding company. There are several reasons why a comparison of gross revenues presents a misleading picture of the relative size of AES and CILCO. First, between 30 and 40 percent of CILCO's gross revenues over the past four years were earned from its natural gas business, whereas virtually all of AES's current revenues have been derived from electric generation and distribution. The Commission has recognized the difficulty of making size comparisons between an electric company and a natural gas distribution company based upon gross revenues. Houston Industries, Inc., Rel. No. 35-26744 (1997); NIPSCO, supra. In NIPSCO, the Commission observed that the "[c]omponents of gross revenues are different for electric and gas utilities" and that "pass-through costs" (e.g., purchased gas and fuel for electric generation) constitute a larger part of gross revenues for a gas utility than for an electric utility. The Commission thus concluded that where a predominantly electric system (NIPSCO) acquired an exclusively gas system (Bay State), a reliance on gross revenues comparisons would distort the relative sizes of the merging companies. - --------------- 16 Similarly, use of an average of financial information for the years 1996 through 1998 also significantly understates the extent of AES's operations and therefore also proves inadequate. AES's 1998 gross revenues are 52 percent greater than the average of AES's gross revenues for the years 1996 through 1998. AES's 1998 net operating revenues are 54 percent greater than the average of AES's net operating revenues for the years 1996 through 1998; 1998 operating income is 46 percent greater than the three-year average; 1998 net income is 43 percent greater than the three-year average; and 1998 net assets are 51 percent greater than the three-year average. The same considerations apply in this instance. Here AES, almost exclusively an electric company, is acquiring CILCO, a company earning a substantial portion of its gross revenues from gas distribution. Although AES does not, for the most part, have automatic "pass-throughs" of its electric fuel costs in the manner of a domestic regulated electric utility, subtracting AES's electric fuel and purchased gas costs (as well as CILCO's electric fuel and purchased gas costs) from gross revenues reveals the impact of different operating margins of the two companies. In 1998 CILCO had operating revenues of $532.3 million and net income of $41 million -- a margin of 7.6 percent. AES reported revenues of $2.4 billion and net income of $311 million --a margin of approximately 13 percent. Part of this differential also can be explained by the fact that CILCO provides service which is subject to rate regulation (including, inter alia, tariff provisions for electric fuel cost recovery and pass-through of purchased gas costs which provide automatic recoupment from ratepayers), while AES conducts the vast bulk of its business in unregulated, competitive markets. A comparison of AES and CILCO net income also may obscure the true scope of CILCO's business vis-a-vis that of AES. Net income is sensitive to differences in capital structure, and AES and CILCO have disparate capital structures driven by differences in their respective business operations. AES uses project financing for much of its investment, and thus has proportionally larger interest expenses than does CILCO.17 Since interest is deducted before calculating net income, comparisons based on net income may result merely from differences in capital structure rather than differences in size or scope of business operations. Such is the case with AES and CILCO, because AES maintains a more highly leveraged capital structure than does CILCO. A more accurate comparison of the scope of CILCO's business vis-a-vis the merged AES holding company is achieved by comparing net operating revenues, operating income and net assets. Table 1 shows that in 1998, CILCO's contributions to AES's total net operating revenues, operating income, and net assets were 10.35, 8.54 and 7.78 percent, respectively. In fact, as noted above, AES expects CILCO's contributions to AES's gross revenues, net operating revenues, operating income, net income and net assets to trend down to below 10 percent within five years. The results of the analysis demonstrate that CILCO will not make a contribution to AES's total operations that is sufficiently appreciable so as to be deemed - --------------- 17 For example, comparing the unleveraged net income of CILCO to the unleveraged net income of the AES holding company provides a better understanding of the relative size of the CILCO and AES holding company business operations. (Unleveraged net income is calculated by determining net income on a before-interest expense, after-tax basis.) For example, CILCO would represent 8.26 percent of 1998 total holding company unleveraged net income, compared to 12.54 percent of total holding company net income on a GAAP basis. "material" within the Commission's understanding of materiality under Section 3(a). In NIPSCO, for example, the Commission recently determined that a utility's contributions to net operating revenues of 10.8 percent to 11.2 percent and to operating income of 7.1 percent to 8.7 percent would not be considered material in the context of Section 3(a)(1). In making such determination, the Commission noted that Section 3(a)(1) "has no specific numerical tests to guide a finding that a public-utility subsidiary is material" and that the Commission has not "embraced any numerical bright-line test of materiality under section 3(a)(1)." See NIPSCO, slip op. at 34-35. Instead, the Commission noted that "factors other than mere percentages must be taken into consideration in determining the application of the materiality standard of section 3(a)(1)" and noted the Division of Investment Management's recommendation (set forth in its 1995 study, supra) that the Commission "adopt a more flexible standard for exemptions under section 3(a) that would consider the facts and circumstances of each situation and take into account the ability of the affected state regulators to adequately protect the interests of utility consumers." Id. See also Atlanta Gas Light Company, Rel. No. 35-26482 (1996)(granting Section 3(a)(1) exemption to holding company with an out-of-state subsidiary representing over 6 percent of the holding company's consolidated operating revenues and total net assets).18 B. Size of CILCO Operations In Gaz Metropolitain, the Commission stated that the standard under which a foreign holding company system could be exempted under Section 3(a)(5) included, in addition to an inquiry into materiality, an assessment of whether U.S. utility operations were "small in size."19 This concern about size under Section 3(a)(5) was articulated in Cities Service Company, where the Commission stated, based on the legislative history of the Act, that the size standard was established in order to prevent abuse of the Section 3(a)(5) exemption by holding companies that had very large, non-utility domestic businesses. The Commission emphasized that the fact that a holding company's domestic utility income is not material to its total income is irrelevant if the holding company is so large that domestic utility activity is still large in an absolute sense. 8 SEC 318, 334-335 (1940). The merged AES/CILCORP holding company will satisfy both the "small in size" standard and the policy concern underlying the standard. CILCO's U.S. utility operations clearly are "small in size," both in terms of prior Commission precedent and as compared to other state, regional and - --------------- 18 Although Section 3(a)(1) sets forth a different standard for exemption than Section 3(a)(5), both Section 3(a)(5) and Section 3(a)(1) incorporate the concept of "materiality." The Act does not suggest that the term would have different meanings in the two sections. Thus, the Commission's analysis of materiality in the Section 3(a)(1) context does provide insight into the concept of materiality in the Section 3(a)(5) context. 19 58 SEC Docket 189 at 193 (1994) (quoting Electric Bond and Share). U.S. utilities today. Moreover, AES has significant foreign operations, and its existing domestic activity consists of owning and operating EWG and QF facilities, and engaging in energy marketing. The context of this transaction is sharply different from that which confronted the Commission in Electric Bond and Share and Cities Service. In those cases, the applicants seeking exemption under Section 3(a)(5) were companies with little or no foreign business of any sort, and with very large domestic non-utility businesses. As the Commission pointed out, granting a Section 3(a)(5) exemption under such circumstances would necessarily mean that the exemption "[w]ould not be contingent on the existence in the system of foreign operations and an exemption would be afforded even where the holding company system has no foreign interest, a result obviously not intended by Congress." Electric Bond and Share, 1952 WL 1058 at 19. In denying exemptions to Electric Bond and Share and Cities Service, the Commission also expressed its concern that Section 3(a)(5) not be used as an exemption for large U.S. non-utility enterprises that could not qualify for exemption under Section 3(a)(3). Unlike either Electric Bond and Share or Cities Service, AES has very significant foreign electric generation and distribution operations and is without question a global provider of electric services. AES has electric generation and/or distribution operations in 16 countries. AES owns and/or operates (entirely or in part) 20,017 MW of generating capacity located outside of the United States.20 As demonstrated on Exhibit K-23, this foreign generation capacity constitutes a significant portion of AES's total generating capacity. In addition, AES owns partial interests (both majority and minority) in eleven companies located outside of the United States that sell electricity directly to commercial, industrial, governmental, and residential customers. These eleven companies serve a total of approximately 13.6 million foreign customers with sales of approximately 107,000 gigawatt-hours. On a net equity basis, AES's ownership in these companies represents approximately 3.7 million foreign customers and foreign sales of approximately 29,000 gigawatt-hours.21 As demonstrated on Exhibit K-23, in 1998, 100 percent of the distribution company customers served by AES were located outside of the United States and 100 percent of the gigawatt-hours provided by such companies were provided outside of the United States.22 Companies in which AES has an ownership interest supply approximately half of the electricity in Northern Ireland, 40 percent of the electricity in Panama, 30 percent of the electricity in the Dominican Republic, 19 percent of the electricity in Hungary, 18 percent of the electricity in - --------------- 20 11,194 MW on a net equity basis. 21 In addition, AES recently assumed management control of two distribution companies in Kazakhstan. 22 The addition of CILCO in 1999 will provide AES its first and only domestic distribution customers and sales: approximately 252,800 customers and sales of approximately 6,152 gigawatt-hours. Kazakhstan, and 10 percent of the electricity in Pakistan. Moreover, as illustrated on Exhibit K-1, 96 percent of AES employees are located outside of the United States, and only 6 percent of AES employees speak English as a first language. Furthermore, as demonstrated in Exhibits K-19 through K-22, AES's foreign operations contribute significantly to AES's gross revenues, net operating revenues, operating income, and assets. For example, in 1998, on a proportional consolidation basis, AES's foreign operations contributed 83 percent of AES's gross revenues, 84 percent of AES's net operating revenues, 70 percent of AES's operating income, and 73 percent of AES's assets. On a total project basis, those percentages increase to 93 percent of gross revenues, 94 percent of net operating revenues, 87 percent of operating income, and 91 percent of assets. As also demonstrated in the chart below and in Exhibits K-19 through K-22, the percentage contribution of AES's foreign operations has increased considerably since 1996. Growth of AES Foreign Operations Year-End 1996 - Year-End 1998 (Proportional Consolidation Basis)23 Gross Revenues 406% Net Operating Revenues 426% Operating Income 498% Net Assets 329% Generating Capacity (MW) - Total 110% Generation Capacity (MW) - AES Equity 78% Plants in Operation 280% Distribution Customers - Total 381% Distribution Customers - AES Equity 746% Distribution Output (GWh) - Total 411% Distribution Output (GWh) - AES Equity 808% Based on conservative projections of AES growth in 1999 (see footnote 9), AES anticipates that in 1999, AES's foreign operations will contribute, on a proportional consolidation basis, 78 percent of AES's gross revenues, 82 percent - --------------- 23 On a GAAP-basis, during the same period, AES's gross revenues increased 561 percent; AES's net operating revenues increased 609 percent; AES's operating income increased 1,628 percent; and AES's net assets increased 324 percent. of AES's net operating revenues and 64 percent of AES's operating income. On a total project basis, those percentages increase to 92 percent of AES's gross revenues, 94 percent of AES's net operating revenues and 88 percent of AES's operating income. As AES continues its growth as a global energy company, the percentage of AES's gross revenues, net operating revenues, operating income, and assets resulting from AES's foreign operations in the year 2000 will be greater than the percentages in 1999.24 While AES does have operations within the United States, its domestic businesses are all either QFs or EWGs, which are deemed not to be public utility companies under the Act and which the Commission does not need to regulate to protect the interests of U.S. ratepayers and investors. The Commission Staff has recognized that ownership of QF and EWG interests by foreign utility companies ("FUCOs") should not defeat FUCO status. The Southern Company, 1996 SEC No-Act. LEXIS 496 (No-Action Letter Issued May 10, 1996). Just as QF and EWG investments do not transform a FUCO into a holding company subject to the potential full brunt of jurisdiction under the Act, AES's domestic QF and EWG investments should not prevent AES from qualifying for a Section 3(a)(5) exemption, where its only other current investments are FUCOs and foreign EWGs and its proposed single U.S. regulated utility investment is small in size from any relevant perspective. As the facts set forth in this Application demonstrate, AES is a global energy company whose present business, both domestic and foreign, is the "exempt utility" business -- i.e., the business of EWGs, QFs and power marketers in the United States and EWGs and FUCOs outside the United States. As a company engaged in the "exempt utility" business, AES is the type of company for which - --------------- 24 AES notes that the statements of risk factors contained in its disclosure statements are not inconsistent with AES's well-grounded expectations that its foreign exempt utility business will continue to grow. Such disclosure statements are designed to apprise potential investors of the risks inherent in foreign investment. As evidence of this, AES notes that in a 1996 Form S-3, AES described its foreign investment risks in nearly the same language AES used in a 1998 Form S-3. As the above table clearly demonstrates, the growth of AES's foreign business from year-end 1996 to year-end 1998 was substantial. Moreover, as a global energy company, AES always is evaluat ing potential investments worldwide. If AES determines that its growth in any particular foreign country will be curtailed, AES may shift its efforts to other foreign countries. Or, if AES's foreign growth were to be curtailed substantially for any reason, AES would shift its focus to additional domestic exempt utility projects. Regardless, AES will continue to develop its exempt utility business. Thus, for purposes of the materiality of CILCO relative to AES, which is not at all dependent on whether AES's growth is foreign or domestic, AES's exempt utility business will continue to grow vis-a-vis CILCO, such that AES expects CILCO's activities and assets as a percentage of AES's overall business to trend down below 10 percent within five years. the 3(a)(5) exemption was designed -- a company whose business and experience is in the utility industry. See The AES Corporation, Rel. No. 35-25539 (May 21, 1992) (granting AES a Section 3(a)(5) application upon AES's acquisition of indirect ownership interests of an electric utility company in Northern Ireland, where AES's existing business was the development, ownership, operation, and maintenance of qualifying facilities in the United States).25 AES's acquisition of CILCORP is a natural outgrowth and consequence of AES's corporate focus, i.e., a natural outgrowth of AES's business of being a global energy provider. For example, AES has extensive business expertise in competitive domestic and foreign energy markets which will enable CILCO to compete more effectively in restructured energy markets. This benefit was recognized by the ICC when it adopted as a finding of fact CILCO's statement that AES's acquisition of CILCORP will provide CILCO with "access to the extensive experience of AES in energy markets around the world" and that "CILCO expects to draw on the experience of AES to improve CILCO's operating efficiency and customer service." See ICC March 10, 1999 order at 5, 9. As such, AES easily can be distinguished from Electric Bond and Share and Cities Service, each non-utility (and non-exempt utility) companies seeking to own large domestic utility companies even though as a non-utility each had, at best, limited experience with the utility industry, domestic or foreign. Granting a Section 3(a)(5) exemption to AES, a global energy provider engaged in the exempt utility business, helps to ensure that the Section 3(a)(5) exemption is granted to those companies for which it was intended, and not to those companies who seek exemption under Section 3(a)(5) as a means of evading the restriction on exemption under Section 3(a)(3). See Electric Bond and Share; Cities Service. CILCO's U.S. utility operations are small in size, both in terms of prior Commission precedent and when compared to other regional and U.S. utilities. In denying the Cities Service exemption application, the Commission held that Cities Service and its utility subsidiaries: (i) comprised "one of the most important public utility holding company systems in the United States," (ii) "controlled a far-flung utility empire with assets valued at more than $400,000,000," and (iii) had operations that extended to "20 states and Canada - --------------- 25 For example, in 1998, AES earned 98.01 percent of its gross revenues and 97.6 percent of its net operating revenues, both on a proportional consolida tion basis, from exempt utility operations. (On a GAAP basis, AES earned 99.82 percent of its net revenues and 99.76 percent of its net operating revenues from its exempt utility business.) In 1998, a combined AES/CILCORP would have earned 97.64 percent of its gross revenues and 97.07 percent of its net operating revenues (both on a proportional consolida tion basis) from utility and exempt utility operations. (On a GAAP basis, a combined AES/CILCORP would have earned 98.95 percent of its gross revenues and 98.58 percent of its net operating revenues from utility and exempt utility operations.) with an estimated population in the areas served of approximately 4,500,000." Id. at 336. In Electric Bond and Share, Electric Bond and Share Company ("Electric Bond") sought to be relieved of its commitment to dispose of the common stock it held in United Gas Corporation ("United"), its gas utility subsidiary, through exemptions under, inter alia, Section 3(a)(5) of PUHCA. 33 SEC 21 (1952). Applying the "small in size" standard developed in Cities Service, the Commission held that the gas utility operations of United, a recently acquired subsidiary of Electric Bond, were "very substantial" in magnitude and, therefore, rejected the application. Id. at 43. The Commission focused on the fact that United operated the second largest gas distribution operations in its region, and accounted "for a large and significant part of the natural gas distribution business in the United States." Id. at 43-44. The Commission cited to the following facts in its analysis of the magnitude of United's gas utility operations: o United's non-industrial gas distribution operations were "approximately twice as large as those carried on in the entire State of Mississippi, slightly greater than those in the State of Louisiana, and about 25 percent of those in the State of Texas. With one exception, there [was] no company whose residential and commercial gas distribution operations in the three (3) state area [were] as large as those of United." o Within the three-state region in which it operated, United served "approximately 21.1 percent of all residential and commercial customers, with approximately 18.2 percent of all the residential and commercial gas consumed and accounted for approximately 19.2 percent of the total gross residential and commercial gas revenues." o United's gas distribution operations were large in relation to other gas distributors in the United States. The absolute size of CILCO's utility business clearly is smaller when compared to modern utility companies than the utility businesses of Electric Bond and Cities Service in their day. Electric Bond's gas operations were in three states - Texas, Louisiana and Mississippi - in which Electric Bond served 21.2 percent of all customers, provided 18.2 percent of all gas consumed and accounted for 19.2 percent of total gas reserves. CILCO, on the other hand, operates only in one state, in which it only serves 5.4 percent of all gas utility customers, accounts for only 5.9 percent of all gas utility assets and accounts for only 5.8 percent of total gas revenues (see Exhibit K-15). In Gaz Metropolitain, on the other hand, the Commission granted a Section 3(a)(5) exemption to Gaz Metropolitain, whose domestic utility subsidiary, Vermont Gas Systems, Inc., had a state-wide franchise to sell natural gas at retail and appeared at that time to deliver nearly all of the natural gas sold at retail in Vermont. In addition, there are four gas companies larger than CILCO in the state of Illinois (see Exhibit K-15), while only one gas company was larger than Electric Bond in its three-state service area. Cities Service, in sharp contrast to CILCO, had operations in 19 states, compared to CILCO's single-state operations. It also should be noted that an analysis of the size of CILCO's utility activities should reflect the realities of today's public utility markets. Since the time of Cities Service and Electric Bond, utility operations have become larger enterprises commensurate with growth in population and number of utility customers, as well as increased electricity and gas consumption per utility customer. Recently, the size of public utility companies has grown and will continue to grow in the wake of consolidations undertaken in response to increased competition and restructuring initiatives. It is clear from the case law, in particular Electric Bond and Share, that the Commission is concerned with the size of the holding company's U.S. utility operations as compared to state, regional and national competitors. CILCO's utility operations are small in size relative to other utilities, whether on a state, regional26, or national basis. The data establishes that the activities of CILCO, in terms of electric and gas utility activities considered separately and in terms of combined utility activity, are small in scale. Exhibit K-14 compares CILCO's electric utility activities to other Illinois electric utilities in terms of assets, revenues and customers.27 According to all three measures, CILCO's electric utility business accounts for: o 2.8 percent of Illinois' electric utility revenues; o 2.7 percent of Illinois' electric utility assets, and o 3.4 percent of Illinois' electric utility customers. Out of six investor-owned electric utility companies in Illinois, CILCO is ranked number four. The three largest electric utility companies in Illinois earn 95.2 percent of electric utility revenues, have 96.5 percent of the electric utility assets and serve 96.5 percent of all electric utility customers.28 Only 2.0 percent of Illinois' electric utility revenues are earned by electric utility companies with fewer revenues than CILCO; only 0.8 percent - --------------- 26 The Region is defined as the State of Illinois and the five states bordering Illinois - Indiana, Kentucky, Missouri, Iowa, and Wisconsin. 27 The data contained in Exhibits K-6 through K-16 were analyzed, organized and graphed by LECG, Inc. ("LECG"), an economic consulting service located in Washington, D.C. The source of LECG's data was Resource Data International, Inc., which utilizes Federal Energy Regulatory Commission Form 1 filings and Securities and Exchange Commission Forms 10-K and 10-Q filings as sources. 28 The third largest electric utility company in Illinois earns 11.8 percent of the electric utility revenues, has 14.4 percent of the electric utility assets and serves 9.9 percent of the electric utility customers. of Illinois' electric utility assets are owned by electric utility companies with fewer assets than CILCO; and only 0.1 percent of Illinois' electric utility customers are served by electric utilities with fewer customers than CILCO. Exhibit K-15 compares CILCO's gas utility activities to other Illinois state gas utilities in terms of assets, revenues and customers. According to all three measures, CILCO's gas utility business accounts for: o 5.8 percent of Illinois' gas utility revenues; o 5.9 percent of Illinois' gas utility assets, and o 5.4 percent of Illinois' gas utility customers. Out of seven investor-owned gas utility companies in Illinois, CILCO is ranked number five. The four largest gas utility companies in Illinois earn 93.9 percent of gas utility revenues, have 93.9 percent of gas utility assets and serve 94.2 percent of all gas utility customers.29 Only 0.3 percent of Illinois' gas utility revenues are earned by gas utility companies with fewer revenues than CILCO; only 0.2 percent of Illinois' gas utility assets are owned by gas utility companies with fewer assets than CILCO; and only 0.4 percent of Illinois' gas utility customers are served by gas utilities with fewer customers than CILCO. Exhibit K-16 compares CILCO's total utility activities to all other Illinois utilities (electric, gas and combination electric and gas), again in terms of assets, revenues and customers. According to all three measures, CILCO's combined electric and gas utility business accounts for: o 3.5 percent of Illinois' utility revenues; o 3.1 percent of Illinois' utility assets, and o 4.2 percent of Illinois' utility customers. Out of nine investor-owned utilities in Illinois, CILCO is ranked number six. The five largest utilities in Illinois earn 94.9 percent of the utility revenues, have 96.2 percent of the utility assets and serve 95.6 percent of the utility customers.30 Only 1.6 percent of Illinois' total utility revenues are earned by utility companies with fewer revenues than CILCO; only 0.7 percent of Illinois' total utility assets are owned by utility companies with fewer assets than CILCO; and only 0.2 percent of Illinois' total utility customers are served by utilities with fewer customers than CILCO. - --------------- 29 The fourth largest gas utility company in Illinois earns 6.6 percent of the gas utility revenues, has 6.9 percent of the gas utility assets and serves 7.9 percent of the gas utility customers. 30 The fifth largest utility company in Illinois earns 7.8 percent of the utility revenues, has 4.1 percent of the utility assets and serves 10.2 percent of the utility customers. Exhibit K-6 compares CILCO's electric utility activities to other regional electric utilities in terms of assets, revenues and customers. According to all three measures, CILCO's electric utility business accounts for: o 0.9 percent of the Region's electric utility revenues, o 1.0 percent of the Region's electric utility assets, and o 1.1 percent of the Regions's electric utility customers. Out of thirty investor-owned electric utility companies in the Region, CILCO is ranked number 19 based on revenues. The electric utility companies in the Region larger than CILCO earn 96.2 percent of electric utility revenues, have 95.7 percent of electric utility assets and serve 95.4 percent of electric utility customers.31 Only 2.8 percent of the Region's electric utility revenues are earned by electric utility companies with fewer revenues than CILCO; only 3.3 percent of the Region's electric utility assets are owned by electric utility companies with fewer assets than CILCO; and only 3.5 percent of the Region's electric utility customers are served by electric utilities with fewer customers than CILCO. Exhibit K-7 compares CILCO's gas utility activities to other regional gas utilities, also in terms of assets, revenues and customers. According to all three measures, CILCO's gas utility business accounts for: o 1.8 percent of the Region's gas utility revenue, o 2.1 percent of the Region's gas utility assets, and o 1.6 percent of the Region's gas utility customers. Out of thirty-three investor-owned gas utility companies in the Region, CILCO is ranked number 17. The gas utility companies in the Region larger than CILCO earn 93.7 percent of the gas utility revenues, have 92.0 percent of the gas utility assets and serve 95.5 percent of the gas utility customers.32 Only 4.5 percent of the Region's gas utility revenues are earned by gas utility companies with fewer revenues than CILCO; only 5.9 percent of the Region's gas utility assets are owned by gas utility companies with fewer assets than CILCO; and only 2.9 - --------------- 31 The 18th largest electric utility in the Region based on revenues earns 1.2 percent of the Region's electric utility revenues. The 17th largest electric utility based on assets has 1.1 percent of the Region's electric utility assets. The 16th largest electric utility in the Region in terms of customers serves 2 percent of the Region's electric utility customers. 32 The 16th largest gas utility in the Region based on revenues earns 1.9 percent of the Region's gas utility revenues. The 15th largest gas utility in the Region based on gas utility assets has 2.4 percent of the Region's gas utility assets. The 17th largest gas utility in the Region based on customers serves 1.8 percent of the Region's gas customers. percent of the Region's gas utility customers are served by gas utilities with fewer customers than CILCO. Exhibit K-8 compares CILCO's combined electric and gas utility activities to other regional combination electric and gas utilities, again in terms of revenues, assets and customers. According to all three measures, CILCO's combined electric and gas utility business accounts for: o 2.5 percent of the Region's combination electric and gas utility revenue, o 2.5 percent of the Region's combination electric and gas utility assets, and o 2.9 percent of the Region's combination electric and gas utility customers. Out of 16 combination electric and gas companies in the Region, CILCO ranks 11th. The 10 combination companies larger than CILCO earn 91.8 percent of the combination utility revenue, have 91.9 percent of the assets and serve 92.1 percent of the customers. The 10th largest combination utility in the Region earns 3.1 percent of the revenues, has 2.7 percent of the assets and serves 4.3 percent of the customers.33 Only 5.6 percent of the Region's combination electric and gas utility revenues are earned by combination electric and gas utility companies with fewer revenues than CILCO; only 5.5 percent of the Region's combination electric and gas utility assets are owned by combination electric and gas utility companies with fewer assets than CILCO; and only 5 percent of the Region's combination electric and gas utility customers are served by combination electric and gas utilities with fewer customers than CILCO. Exhibit K-9 compares CILCO's total utility activities to all other regional utilities (electric, gas and combination electric and gas), again in terms of revenues, assets and customers. According to all three measures, CILCO's combined electric and gas utility business accounts for: o 1.1 percent of the Region's utility revenues, o 1.2 percent of the Region's utility assets, and o 1.3 percent of the Region's utility customers. Out of forty-eight investor-owned utilities in the Region, CILCO ranks 21st. The twenty utilities larger than CILCO earn 90.9 of the utility revenues, have 91.8 percent of the utility assets and serve 95.4 percent of the utility customers.34 - --------------- 33 The 10th largest combination utility in the Region earns 3.1 percent of the revenues, has 2.7 percent of the assets and serves 4.3 percent of the custom ers. Only 8.0 percent of the Region's total utility revenues are earned by utility companies with fewer revenues than CILCO; only 7.1 percent of the Region's utility assets are owned by utility companies with fewer assets than CILCO; and only 3.3 percent of the Region's utility customers are served by utilities with fewer customers than CILCO. The Exhibits described above clearly indicate that CILCO's utility operations are small in size, particularly when compared to other utilities in the state and the Region. Comparing the size of CILCO's utility operations to all United States utilities, again in terms of revenues, assets and customers, makes it even clearer that CILCO's utility operations are small in size. Exhibit K-10 compares CILCO's electric utility activities to all other United States electric utilities in terms of assets, revenues and customers. According to all three measures, CILCO's electric utility business accounts for: o 0.2 percent of U.S. electric utility revenues, o 0.2 percent of U.S. electric utility assets, and o 0.2 percent of U.S. electric utility customers. In terms of revenue, CILCO is ranked 79th of electric utilities. The 78 electric utility companies larger than CILCO earn 98.2 percent of electric utility company revenues. In terms of assets, CILCO ranks 74th. The 73 electric utility companies larger than CILCO own 97.6 percent of electric utility assets. In terms of customers, CILCO is ranked 76th. The 75 companies larger than CILCO in terms of customers serve 97.8 percent of electric utility customers.35 Only 1.6 percent of U.S. electric utility revenues are earned by electric utility companies with fewer revenues than CILCO; only 2.2 percent of United States electric utility assets are owned by electric utility companies with fewer assets than CILCO; and only 1.9 percent of United States electric utility customers are served by electric utilities with fewer customers than CILCO. Exhibit K-11 compares CILCO's gas utility activities to all United States gas utilities, also in terms of assets, revenues and customers. According to all three measures, CILCO's gas utility business accounts for: - --------------- 34 The 20th largest utility in the Region in terms of revenues earns 1.4 percent of the Region's utility revenues. The 19th largest utility in the Region in terms of assets has 1.2 percent of the Region's utility assets. The 23rd largest utility in terms of customers serves 1.4 percent of the Region's utility customers. 35 The 78th largest electric utility in terms of revenues earns 0.2 percent of electric utility revenues. The 73rd largest electric utility in terms of assets has 0.2 percent of the assets. The 75th largest electric utility in terms of customers serves 0.2 percent of electric utility customers. o 0.5 percent of U.S. gas utility revenue, o 0.5 percent of U.S. gas utility assets, and o 0.4 percent of U.S. gas utility customers. In terms of revenue, CILCO is ranked 58th of gas utilities. The 57 utilities larger than CILCO in terms of revenues earn 92.0 percent of gas utility revenues. In terms of assets, CILCO is ranked 55th. The 54 companies larger than CILCO have 90.8 percent of gas utility assets. In terms of customers, CILCO is ranked 57th. The 56 gas utility companies larger than CILCO serve 93.5 percent of gas utility customers.36 Only 7.5 percent of U.S. gas utility revenues are earned by gas utility companies with fewer revenues than CILCO; only 8.7 percent of U.S. gas utility assets are owned by gas utility companies with fewer assets than CILCO; and only 6.1 percent of U.S. gas utility customers are served by gas utilities with fewer customers than CILCO. Exhibit K-12 compares CILCO's combined electric and gas utility activities to all U.S. combination electric and gas utilities, again in terms of revenues, assets and customers. According to all three measures, CILCO's combined electric and gas utility business accounts for: o 0.7 percent of U.S. combination electric and gas utility revenue, o 0.7 percent of U.S. combination electric and gas utility assets, and o 0.7 percent of U.S. combination electric and gas utility customers. In terms of revenues, CILCO ranks 29th of combined gas and electric companies in the U.S. The 28 companies larger than CILCO in terms of revenue earn 96.4 percent of combined gas and electric company revenues. In terms of assets, CILCO also is ranked 28th. The 27 companies larger than CILCO in terms of assets have 96.0 percent of the assets. In terms of customers, CILCORP is ranked 27th. The 26 companies larger than CILCO in terms of customers serve 95.3 percent of the customers.37 Only 3.0 percent of U.S. combination electric and gas utility revenues are earned by combination electric and gas utility companies with fewer revenues than CILCO; only 3.3 percent of U.S. combination electric and gas utility assets are owned by combination electric and gas utility companies with - --------------- 36 The 57th largest gas utility in terms of revenues earns 0.5 percent of gas utility revenues. The 54th largest gas utility in terms of assets has 0.5 percent of the assets. The 56th largest gas utility in terms of customers serves 0.4 percent of gas utility customers. 37 The 28th largest combined gas and electric company in terms of revenues earns 0.8 percent of the revenues. The 28th largest combined gas and electric company in terms of assets has 0.8 percent of the assets. The 26th largest combined gas and electric company in terms of customers serves 1.0 percent of the customers. fewer assets than CILCO; and only 4.0 percent of U.S. combination electric and gas utility customers are served by combination electric and gas utilities with fewer customers than CILCO. Exhibit K-13 compares CILCO's total utility activities to all other U.S. utilities (electric, gas and combination electric and gas), again in terms of revenues, assets and customers. According to all three measures, CILCO's combined electric and gas utility business accounts for: o 0.2 percent of U.S. utility revenues, o 0.2 percent of U.S. utility assets, and o 0.3 percent of U.S. utility customers. In terms of revenue, CILCO is ranked 87th of investor-owned utilities. The 86 companies larger than CILCO in terms of revenue earn 93.6 percent of utility revenues. In terms of assets, CILCO ranks 78th. The 77 companies larger than CILCO in terms of assets have 93.5 percent of utility assets. In terms of customers, CILCO is ranked 83rd. The 82 companies larger than CILCO serve 92.0 percent of utility customers.38 Only 6.2 percent of U.S. utility revenues are earned by utility companies with fewer revenues than CILCO; only 6.2 percent of U.S. utility assets are owned by utility companies with fewer assets than CILCO; and only 7.7 percent of U.S. utility customers are served by utilities with fewer customers than CILCO. It is clear from the data described above that the utility activities of CILCO, in terms of combined utility activity and in terms of electric and gas utility activities considered separately, whether on a state, regional or national basis, are small in scale. C. Public Interest Under the "unless and except" clause of Section 3(a), the Commission has the authority to deny a request for exemption if it were to determine that granting the exemption would be "detrimental to the public interest or the interest of investors or consumers." No such concerns, however, are presented with respect to this Transaction and request for exemption. The Transaction will result in a holding company which will be well-equipped to respond effectively to the changing nature of the electric and gas industries, thus promoting the interests of both investors and ratepayers. - --------------- 38 The 86th largest utility in terms of revenues earns 0.2 percent of utility revenues. The 77th largest utility in terms of assets has 0.3 percent of utility assets. The 82nd largest utility in terms of customers serves 0.3 percent of utility customers. The Transaction is subject to approval by the FERC and the ICC. The FERC approved the Merger on June 16, 1999. See Exhibit D-3. Specifically, the FERC found that the Transaction (1) will not adversely affect competition; (2) will not adversely affect the rates paid by CILCO ratepayers; and (3) will not have an adverse effect on federal or state regulation. As explained earlier, the ICC approved the Transaction with respect to CILCO's gas operations.39 After noting that AES "is a global energy company that operates electric generation facilities in the United States and in foreign countries ... [and] also owns foreign electric distribution businesses, mostly in South America, and a small amount of gas distribution in foreign countries ...[and] does not own or operate any regulated utilities in the United States," the ICC found that AES's acquisition of CILCORP would not adversely affect CILCO's ability to perform its duties under the Illinois Public Utilities Act with respect to its gas operations. Specifically, the ICC found that: o AES's acquisition of CILCORP will not diminish CILCO's ability to provide adequate, reliable, efficient, safe and least-cost gas public utility service; o AES's acquisition of CILCORP will not result in the unjustified subsidization of non-utility activities by CILCO or its customers with respect to CILCO's gas operations; o costs and facilities are fairly and reasonably allocated between utility and non-utility activities in such a manner that the Commission may identify those costs and facilities which are properly included by CILCO for ratemaking purposes for its gas utility operations; o AES's acquisition of CILCORP will not significantly impair CILCO's ability to raise necessary capital on reasonable terms or to maintain a reasonable capital structure with respect to its gas utility operations; o CILCO will remain subject to all applicable laws, regulations, rules, decisions and policies governing the regulation of Illinois public utilities with respect to CILCO's gas utility operations: o AES's acquisition of CILCORP is not likely to have a significant adverse effect on competition in the Illinois gas utility markets over which the Commission has jurisdiction; and - --------------- 39 AES notes that the ICC had before them the Merger Agreement (Exhibit B-1 hereto) which discusses AES's intent to seek from this Commission an exemption from registration. o AES's acquisition of CILCORP is not likely to result in any adverse rate impacts on retail gas customers of CILCO. See March 10, 1999 ICC Order at 9-10 (see Exhibit K-17). Although the ICC's jurisdictional focus was limited to the transfer of CILCO's gas operations, most of its findings (for example, the Transaction's impact on capital structure and affiliate transactions) are applicable to CILCO as a whole, including its electric operations. In addition, in a letter issued to the Commission pursuant to Section 33(a)(2), the ICC acknowledged that AES "currently holds, and intends to continue to hold and acquire, ownership interest in electric and natural gas facilities in one or more foreign countries." The ICC then certified to the Commission that it has "the authority and resources to protect Illinois consumers in accordance with the Illinois statutes ... and intends to exercise such authority." After AES's acquisition of CILCORP, CILCO's operations will continue to be subject to regulation by the FERC and the ICC, both of whom regulate utility transactions with affiliates. With respect to the ICC, the Illinois Public Utilities Act specifically grants the ICC jurisdiction over affiliate transactions with electric and gas public utilities, "to the extent of access to all accounts and records of such affiliated interest relating to such transactions, including access to accounts and records of joint and general expenses with the electric or gas public utility any portion of which is related to such transactions; and to the extent of authority to require such reports with respect to such transactions to be submitted by such affiliated interests, as the [ICC] may prescribe". Illinois Public Utilities Act, Section 7-101(2)(ii). Thus, the ICC has broad authority to access the books and records of any member of the AES corporate family, wherever located, if such AES entity engages in transactions with CILCO or if any costs associated with such entity are allocated to CILCO. In addition, the ICC recently adopted rules and regulations governing the relationship between electric utilities and their affiliates. See 83 Illinois Administrative Code Part 450. Pursuant to such rules, transactions between electric utilities and their affiliates are prohibited from subsidizing the affiliate. To that end, transfers of goods and services between electric utilities and their affiliates must be approved by the ICC (unless approval has been waived by statute or ICC rule). In addition, the ICC has access to the electric utility's books and records regarding affiliate transactions and electric utilities must conduct biennial internal audits regarding affiliate transactions, which provide assurance that non-utility activities are not subsidized by the electric utility or its customers. Furthermore, AES will file certificates with the Commission pursuant to Rule 24, within 60 days after the end of each calendar quarter beginning September 30, 1999, for a period of three years, and then every six months thereafter, that provide to the Commission the following information: o a statement of income and balance sheet, for the 12-month period then ending, of (i) AES, (ii) CILCORP and (iii) CILCO; o an updated Table 1 (see page 11, supra); o for both AES and CILCORP: (i) the total number of megawatts of generating capacity; (ii) the revenues earned from such generating capacity; (iii) the change in such capacity and revenues since the filing of the previous certificate and (iv) the location of any additional capacity; o for both AES and CILCORP: (i) the amount of electric transmission and electric and gas distribution assets owned; (ii) the revenues from such assets and (iii) the change in such assets since the filing of the previous certificate; o information regarding any sale or transfer of any CILCO electric and/or gas utility assets to any affiliate company in the AES system; and o copies of any applications to and orders from the ICC that relate to AES's ownership of or oversight over the operation of CILCORP and/or CILCO. ITEM 4. REGULATORY APPROVAL The Merger Agreement is subject to the approval of CILCORP's shareholders and was approved by CILCORP's shareholders at a special meeting held May 20, 1999. The Merger also is subject to approval by the FERC, and was approved by the FERC on June 16, 1999. See Exhibit D-3. The Merger also is subject to the notification and reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). On February 22, 1999, the Federal Trade Commission granted early termination of the HSR Act waiting period. In addition, as noted above, all necessary State approvals for the transaction have been received. The ICC has approved the Transaction with respect to the transfer of CILCO's gas operations. See Exhibit K-17. The ICC also has issued a certification in accordance with the requirements of Section 33(a)(2) of the Act. See Exhibit K-18. ITEM 5. PROCEDURE AES respectfully requests that the Commission issue its order granting and permitting the requested exemption as soon as practicable, but in any event not later than August 20, 1999. It is submitted that a recommended decision by a hearing or other responsible officer of the Commission is not needed for approval of the proposed Transaction. The Division of Investment Management may assist in the preparation of the Commission's decision. There should be no waiting period between issuance of the Commission's order and the date on which it is to become effective. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS A. Exhibits Exhibits attached to this Amendment No. 2 supplement and, where applicable, replace the exhibits previously filed in this proceeding. A-1 Articles of Incorporation of AES A-2 By-Laws of AES A-3 Articles of Incorporation of CILCORP A-4 By-Laws of CILCORP A-5 Articles of Incorporation of Midwest Energy, Inc. A-6 By-Laws of Midwest Energy, Inc. B-1 Agreement and Plan of Merger (Exhibit A to Exhibit D-2 hereto) C-1 Definitive Proxy Statement relating to the special meeting of shareholders of CILCORP, Inc. to approve the merger with Midwest Energy, Inc. (File No. 1-8946, filed on March 24, 1999, and incorporated herein by reference) D-1 Petition to the Illinois Commerce Commission, filed on December 11, 1998, together with testimony and exhibits (Exhibit F to Exhibit D-2 hereto) D-2 Application to FERC, filed on February 19, 1999, together with testimony and exhibits D-3 FERC Order approving the Merger, dated June 16, 1999 E-1 AES organization chart E-2 CILCORP organization chart E-3 Combined company organization chart after the Transaction F-1 Opinions of AES and CILCO Counsel F-2 Past Tense Opinion of Counsel (to be filed by amendment with Rule 24 certificate) G-1 AES's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 1-12291, filed March 30, 1998, and incorporated herein by reference) G-2 AES' Quarterly Report on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998 (File No. 1-12291 and incorporated herein by reference) G-3 CILCORP's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 1-8946, filed March 18, 1998, and incorporated herein by reference) G-4 CILCORP's Quarterly Report on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998 (File No. 1-8946 and incorporated herein by reference) G-5 AES's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 1-12291, filed March 30, 1999, and incorporated herein by reference) G-6 CILCORP's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 1-8946, filed March 26, 1999, and incorporated herein by reference) H-1 Proposed Form of Notice K-1 AES Employees K-2 AES Subsidiaries K-3 Generating Plants in Operation K-4 Global Map of Generating Plants and Distribution Companies K-5 CILCO Contributions To AES Consolidated Holding Company (GAAP Basis) K-6 Market Shares for Electric Companies in Illinois and Bordering States K-7 Market Shares for Gas Companies in Illinois and Bordering States K-8 Market Shares for Combined Gas and Electric Companies in Illinois and Bordering States K-9 Market Shares for Utilities in Illinois and Bordering States K-10 Market Shares for Electric Companies in the U.S. K-11 Market Shares for Gas Companies in the U.S. K-12 Market Shares for Combined Gas and Electric Companies in the U.S. K-13 Market Shares for Utility Companies in the U.S. K-14 Market Shares for Electric Companies in Illinois K-15 Market Shares for Gas Companies in Illinois K-16 Market Shares for Utilities in Illinois K-17 Order Issued by the Illinois Commerce Commission pursuant to petition filed by CILCO (March 10, 1999) K-18 Letter from Richard L. Mathias, Chairman of the Illinois Commerce Commission to the Securities and Exchange Commission (March 10, 1999) K-19 AES Foreign Breakout: Gross Revenues K-20 AES Foreign Breakout: Net Operating Revenues K-21 AES Foreign Breakout: Operating Income K-22 AES Foreign Breakout: Assets K-23 AES Foreign Breakout for Generation, Power Plants and Distribution B. Financial Statements FS-1 AES Consolidated Balance Sheet as of December 31, 1997 (previously filed with the Commission in AES's Annual Report on Form 10K for the year ended December 31, 1997 (Exhibit G-1 hereto), filed March 30, 1998, File No. 1-12291, and incorporated herein by reference) FS-2 AES Consolidated Balance Sheet as of September 30, 1998 (previously filed with the Commission in AES's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (Exhibit G-2 hereto), filed November 16, 1998, File No. 1-12291, and incorporated herein by reference) FS-3 AES Consolidated Statement of Income for the 12 months ended December 31, 1997 (previously filed with the Commission in AES's Annual Report on Form 10K for the year ended December 31, 1997 (Exhibit G-1 hereto), filed March 30, 1998, File No. 1-12291, and incorporated herein by reference) FS-4 AES Consolidated Statement of Income for the 9 months ended September 30, 1998 (previously filed with the Commission in AES's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (Exhibit G-2 hereto), filed November 16, 1998, File No. 1-12291, and incorporated herein by reference) FS-5 CILCORP Consolidated Balance Sheet as of December 31, 1997 (previously filed with the Commission in CILCORP's Annual Report on Form 10K for the year ended December 31, 1997 (Exhibit G-3 hereto), filed March 18, 1998, File No. 1-8946, and incorporated herein by reference) FS-6 CILCORP Consolidated Balance Sheet as of September 30, 1998 (previously filed with the Commission in CILCORP's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (Exhibit G-4 hereto), filed November 10, 1998, File No. 1-8946, and incorporated herein by reference) FS-7 CILCORP Consolidated Statement of Income for the 12 months ended December 31, 1997 (previously filed with the Commission in CILCORP's Annual Report on Form 10K for the year ended December 31, 1997 (Exhibit G-3 hereto), filed March 18, 1998, File No. 1-8946, and incorporated herein by reference) FS-8 CILCORP Consolidated Statement of Income for the 9 months ended September 30, 1998 (previously filed with the Commission in CILCORP's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (Exhibit G-4 hereto), filed November 10, 1998, File No. 1-8946, and incorporated herein by reference) FS-9 AES Consolidated Balance Sheet as of December 31, 1998 (previously filed with the Commission in AES's Annual Report on Form 10K for the year ended December 31, 1998 (Exhibit G-5 hereto), filed March 30, 1999, File No. 1-12291, and incorporated herein by reference) FS-10 AES Consolidated Statement of Income for the 12 months ended December 31, 1998 (previously filed with the Commission in AES's Annual Report on Form 10K for the year ended December 31, 1998 (Exhibit G-5 hereto), filed March 30, 1999, File No. 1-12291, and incorporated herein by reference) FS-11 CILCORP Consolidated Balance Sheet as of December 31, 1998 (previously filed with the Commission in CILCORP's Annual Report on Form 10K for the year ended December 31, 1998 (Exhibit G-6 hereto), filed March 26, 1999, File No. 1-8946, and incorporated herein by reference) FS-12 CILCORP Consolidated Statement of Income for the 12 months ended December 31, 1998 (previously filed with the Commission in CILCORP's Annual Report on Form 10K for the year ended December 31, 1998 (Exhibit G-6 hereto), filed March 26, 1999, File No. 1-8946, and incorporated herein by reference) SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Application to be signed on its behalf by the undersigned thereunto duly authorized. The AES Corporation By: /s/ William R. Luraschi -------------------------------- Name: William R. Luraschi Title: General Counsel and Secretary Date: August 18, 1999 EX-99.1 2 EXHIBIT D-3 FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: James J. Hoecker, Chairman; Vicky A. Bailey, William L. Massey, Linda Breathitt, and Curt Hebert, Jr. Central Illinois Light Company and The AES Corporation Docket No. EC99-40-000 ORDER APPROVING MERGER (Issued June 16, 1999) I. Introduction On February 19, 1999, Central Illinois Light Company (CILCO) and The AES Corporation (collectively, Applicants), filed a joint application under section 203 of the Federal Power Act (FPA)1 requesting Commission approval of the merger of CILCO's parent, CILCORP Inc. (CILCORP), into and with Midwest Energy, Inc. (Midwest), a wholly-owned subsidiary of AES, with CILCORP being the surviving entity, and thereafter, at the option of AES, the merger of CILCORP into AES. We will approve the proposed merger as consistent with the public interest. II. Background A. The Parties to the Merger 1. CILCO and CILCORP CILCO, a wholly-owned subsidiary of CILCORP,2 provides electric services to approximately 193,000 customers in central and east central - --------------- 1 16 U.S.C. 824b (1994). 2 CILCORP is an exempt public utility holding company under section 3(a)(1) of the Public Utility Holding Company Act (PUHCA), 15 U.S.C. 79c (1994). Applicants state that CILCORP has a subsidiary (QST), in addition to CILCO, that is involved in wholesale and/or retail energy transactions. QST, through its subsidiary QST Environmental Inc., provides environmental services to governmental and industrial clients across the United States. QST also provides energy and energy-related services to a broad spectrum of retail and wholesale customers through another subsidiary, QST Energy Inc. QST Energy Inc. has one wholly-owned subsidiary, QST Energy Trading Inc., which purchases and sells energy in the wholesale market. CILCO and QST Energy Trading Inc. have each received approval from the Commission to charge market-based rates. See Central Illinois Light Company, 83 FERC 61,252 (1998); QST Energy Trading, Inc., 74 61,282 (1996). Illinois, where it also provides retail gas service to approximately 202,000 customers. CILCO distributes electricity in Peoria, Pekin and Lincoln, Illinois and numerous other communities in central and east central Illinois and provides natural gas distribution service in Peoria, Pekin and Springfield, Illinois and numerous other communities in central and east central Illinois. Applicants state that CILCO's natural gas service is exempt from Commission jurisdiction under the Hinshaw Amendment to the Natural Gas Act. Applicants state that the 1998 net generating capability owned by CILCO is approximately 1152 MW. CILCO owns two coal-fired generating stations in central Illinois. Those facilities have a combined capability of 1106 MW. In addition, CILCO owns a 30 MW gas-fired peaking station. CILCO also owns the 16 MW Midwest Grain Cogeneration plant. CILCO has two contracts under which it currently makes wholesale purchases of 150 MW of capacity and energy, plus reserves. 2. AES AES is a United States-based multinational electric power generation and distribution company with operations in 16 countries worldwide. Applicants state that AES is engaged principally in the development, ownership and operation of electric generating plants and electric distribution companies. Revenues from electric generation and distribution activities accounted for over 95 percent of revenues in 1997. Other activities include the sale of steam from cogeneration operations as well as operational, construction and project development services and gas and power marketing. The Commission has authorized the following AES subsidiaries to make wholesale sales of power at market-based rates: (1) AES Power, Inc.; (2) Northern/AES Energy L.L.C.; (3) Commonwealth Chesapeake Company, L.L.C. ; and (4) AES NY, L.L.C. In addition, the Commission has granted three AES subsidiaries (AES Huntington Beach, L.L.C., AES Alamitos, L.L.C. and AES Redondo Beach, L.L.C.) authority to sell wholesale power and certain ancillary services at market-based rates. Applicants state that AES has grown since its founding in 1981 to become one of the largest, if not the largest, global electricity suppliers. They state that AES currently owns and/or operates (entirely or in part) a diverse international portfolio of electric power plants with a total capacity of 23,656 MW, including plants that are part of distribution companies in which AES has an interest. Of that total, 5,025 MW (nine plants) are either qualifying facilities (QFs) or Exempt Wholesale Generators (EWGs) that are located in the United States; 1818 MW (five plants) are located in the United Kingdom; 885 MW (six plants) are located in Argentina; 817 MW (eight plants) are in China; 1,291 MW (three plants) are in Hungary; 6,456 MW (41 plants) are in Brazil; 5,384 MW (seven plants) are in Kazakhstan; 210 MW (one plant) are in the Dominican Republic; 110 MW (one plant) are in Canada; 695 MW (two plants) are in Pakistan; 288 MW (one plant) are in Australia; 405 MW (one plant) are in the Netherlands; and 282 MW (two plants) are in Panama. On a MW-basis, nearly 80 percent of the AES generating capacity is outside of the United States. In addition, AES owns Midwest, an Illinois corporation that was incorporated for the sole purpose of the merger transaction. Applicants state that AES is not currently a public utility holding company within the meaning of PUHCA. They state that each of the generating facilities in which AES has an interest is or has been (1) owned and operated by a "foreign utility company" within the meaning of section 33 of PUHCA; (2) certified as a QF; (3) determined to be owned and operated by an EWG; or (4) some combination of the foregoing statutory exemptions from regulation under PUHCA. B. Description of the Proposed Merger Under the terms of the Merger Agreement, the merger would take place in two steps, the second being within AES's discretion. First, Midwest would be merged into CILCORP, with CILCORP as the surviving corporation. As part of the first merger, the common stock of CILCORP would be canceled in exchange for the right to receive $65.00 per share in cash, and the common stock of Midwest would be the common stock of the surviving corporation, CILCORP. AES would own all of CILCORP's common stock and, thus, AES indirectly would own and control all of the common stock of CILCORP's subsidiaries, including CILCO. Thereafter, at the discretion of AES, CILCORP may be merged into AES, with AES as the surviving corporation. Following the merger, AES would own and control (directly if the second merger takes place, and indirectly, if it does not) CILCO and its jurisdictional assets. Thus, either or both merger transactions would result in a transfer of control over CILCO and its jurisdictional assets. The Merger Agreement provides that following the merger, each CILCORP subsidiary, including CILCO, will continue to provide the same products and services it provided before the merger. Applicants state that CILCORP, the corporation that currently owns CILCO, is an exempt holding company under section 3(a)(1) of PUHCA (the intrastate exemption). Applicants state that they have applied to the Securities and Exchange Commission (SEC) for an exemption for the merged company from registration as a holding company under section 3(a)(5) of PUHCA.3 They state that the SEC's issuance to AES of a section 3(a)(5) exemption to PUHCA is a condition to the closing of the merger. They state that with a section 3(a)(5) PUHCA exemption, the merger will have no effect on the QF status of AES's cogeneration and small power facilities. - --------------- 3 Section 3(a)(5) of PUHCA provides that the SEC may exempt from PUHCA any holding company, if: such holding company is not, and derives no material part of its income, directly or indirectly, from any one or more subsidiary companies which are, a company or companies the principal business of which within the United States is that of a public-utility company. III. Notice of Filing and Interventions Notice of the Applicants' filing was published in the Federal Register,4 with motions to intervene and protests due on or before April 22, 1999. Timely motions to intervene and protests were filed by Allegheny Energy, Inc. on behalf of itself and its subsidiaries, West Penn Power Company and The Potomac Edison Company (collectively, Allegheny), and by Central Illinois Public Service Company and Union Electric Company, wholly-owned subsidiaries of Ameren Corporation (collectively, the Ameren Companies). Allegheny and the Ameren Companies allege that the proposed merger, and Applicants' application to the SEC for a section 3(a)(5) exemption to PUHCA, will enable the AES QF facilities to avoid the ownership requirements of PURPA. Allegheny further alleges that the post-merger retention of QF status would be inconsistent with the spirit of the Commission's PURPA regulations and would foster economic inefficiencies. Allegheny and the Ameren Companies conclude that the merger would not be in the public interest if it allows the post-merger company to retain more than a fifty percent interest in facilities that at the same time retain QF status. Applicants moved to dismiss the protests of Allegheny and the Ameren Companies. Applicants claim that the merger proceeding is not the proper proceeding in which to challenge the effect of the merger on the QF status of AES facilities. Allegheny and the Ameren Companies filed a response to Applicants' motion to dismiss protests. IV. Discussion A. Procedural Matters Pursuant to Rule 214 of the Commission's Rules of Practice and Procedure, 18 C.F.R. 385.214 (1999), the timely, unopposed motions to intervene of Allegheny and the Ameren Companies serve to make them parties to this proceeding. As noted above, Allegheny and the Ameren Companies included "protests" in their motions to intervene. Applicants filed a motion to dismiss the "protests" on the ground that the issues raised (concerning the post-merger QF status of several AES facilities and whether AES should be ordered to divest itself of some of its interests in QFs as a condition of the merger) are irrelevant to the issues in the merger proceeding. We do not agree with Applicants that all of the concerns raised by the intervenors are irrelevant to a merger proceeding, and we address the concerns raised by the intervenors to the extent relevant to this proceeding. Accordingly, we will deny Applicants' motion that we dismiss the protests. - --------------- 4 64 Fed. Reg. 10,288 (1999). B. Standard of Review Section 203(a) of the FPA provides, in relevant part, as follows: No public utility shall sell, lease, or otherwise dispose of the whole of its facilities subject to the jurisdiction of the Commission, or any part thereof of a value in excess of $50,000, or by any means whatsoever, directly or indirectly, merge or consolidate such facilities or any part thereof with those of any other person, or purchase, acquire, or take any security of any other public utility, without first having secured an order of the Commission authorizing it to do so. 16 U.S.C. 824b(a) (1994). Under section 203(a), the Commission must approve a proposed merger if it finds that the merger "will be consistent with the public interest." Id. In 1996, the Commission issued its Merger Policy Statement updating and clarifying its procedures, criteria and policies applicable to public utility mergers.5 The Merger Policy Statement provides that the Commission will generally take account of three factors in analyzing proposed mergers: (a) the effect on competition; (b) the effect on rates; and (c) the effect on regulation. For the reasons discussed below, we find that Applicants' proposed merger, as conditioned below, is consistent with the public interest. Accordingly, we will approve the merger without further investigation. C. Effect on Competition In the Merger Policy Statement, the Commission adopted the Department of Justice and Federal Trade Commission (DOJ/FTC) Horizontal Merger Guidelines (Guidelines) as the analytical framework for evaluating the effect of a proposed merger on competition.6 The Merger Policy Statement adopted a five-part analytic screen and established conditions under which the Commission would set the issue of competition for hearing.7 The Commission also stated in the Merger Policy Statement that: it will not be necessary for the merger applicants to perform the screen analysis or file the data needed for the screen analysis in cases where the merging firms do not have facilities or sell relevant - --------------- 5 See Inquiry Concerning the Commission's Merger Policy Under the Federal Power Act: Policy Statement, Order No. 592, 61 Fed. Reg. 68,595 (1996), FERC Stats. & Regs. 31,044 at 30,117-18 (1996), order on reconsideration, Order No. 592-A, 62 Fed. Reg. 33,341 (1997), 79 FERC 61,321 (1997) (Merger Policy Statement). 6 FERC Stats. & Regs. at 30,117-18. 7 Id. at 30,119. Appendix A of the Policy Statement provides a detailed description of the analytic screen. products in common geographic markets. In these cases, the proposed merger will not have an adverse competitive impact (i.e., there can be no increase in the applicants' market power unless they are selling relevant products in the same geographic markets) so there is no need for a detailed analysis.8 In the Merger Policy Statement, the Commission observed, however, that the analytic screen . . . is not infallible. In some cases, the screen may not detect certain market power problems.9 As a result, the Commission allowed for showings of competitive harm that would not be indicated by the screen. 1. Applicants' Analysis Applicants state that they have evaluated the competitive effects of the proposed merger in accordance with the requirements of the Merger Policy Statement and have also considered the Commission's Notice of Proposed Rulemaking for revising merger filing requirements.10 They assert that the proposed merger will have no adverse effect on competition, resulting either from the horizontal or vertical aspects of the consolidation. In regard to horizontal effects, Applicants note that under the Policy Statement, a detailed screen analysis is unnecessary because AES and CILCO do not sell the same products in the same geographic markets.11 With regard to vertical effects, Applicants state that neither party has more than de minimis control over generation inputs and that such inputs are not in locations that could give rise to vertical market power issues. Applicants provide an abbreviated market analysis to support their claim that the proposed merger will not adversely affect competition. To support their assertion that a screen analysis is unnecessary, Applicants analyze: (1) installed capacity in a market centered on CILCO and (2) historical transactions data. With regard to the first, Applicants analyze installed capacity for themselves and all utilities directly interconnected with - --------------- 8 Id. at 30,136. 9 Id. at 30,119. 10 See Revised Filing Requirements Under Part 33 of the Commission's Regulations, 63 FR 20,340 (1998), FERC Stats. & Regs. 32,528. 11 Applicants note that AES's power marketing subsidiaries, AES Power Inc. and Northern/ AES Energy, LLC (in which it has a 45 percent ownership interest), do not own or control power supplies under long-term contracts (i.e., of one or more year's duration) that are not committed to other purchasers. CILCO.12 Their analysis shows that for the years 1999 through 2001, the combination of AES's and CILCO's generation assets produces no increase in market share. Applicants provide supporting information showing that AES's generators that are located nearest to the CILCO and Ameren markets (in which CILCO sells) are two to four wheels away.13 They then analyze historical trade data to demonstrate that AES and CILCO have sold no energy to common customers in 1996 and 1997. Because CILCO and AES do not compete in the same geographic markets, Applicants conclude that the merger raises no vertical competitive concerns either with regard to CILCO's sales of gas or transmission services or with regard to both CILCO's and AES's control of potential generation sites or emission allowances.14 2. Intervenors Concerns Allegheny argues that the merger will create competitive distortions because of AES' ownership of certain QFs. Allegheny notes that upon consummation of the merger, AES will own an electric utility (CILCO) and up to 100 percent of seven QFs.15 Allegheny argues that this result is inconsistent with the rationale relied upon by the Commission when it established the 50 percent ownership limitation. That rationale, according to Allegheny, is substantially based upon concerns about potential self-dealing (i.e., preferring their own QFs to those owned by others) and cross-subsidization (e.g., subsidizing their QFs at the expense of their captive retail customers) by vertically-integrated electric utilities. Allegheny argues that QF-owning utilities are potentially able to maximize their competitive positions by subsidizing with QF profits their rates in competitive markets while at the same time forcing competitors to purchase - --------------- 12 CILCO's direct interconnections are with Commonwealth Edison Company, Ameren, Illinois Power Co., Springfield, City Water Light & Power, Corn Belt Electric Cooperative (Corn Belt), and the Village of Riverton, Illinois (Riverton). Total installed capacity in the market consisting of Applicants and CILCO's direct interconnects is in excess of 40,000 MW. Affidavit of Cliff W. Hamal, February 19, 1999 at Table CWH-6. 13 In support of this argument, Applicants further maintain that the output of these units is fully committed to customers under long-term contracts. They note that while AES has projects under development and other acquisitions are expected to increase the generating capacity under AES's control, those activities are all far from markets in which CILCO operates and the output of the projects generally is sold under long-term contracts. Affidavit of Cliff W. Hamal at 4. 14 Affidavit of Cliff W. Hamel at 16-17. 15 Motion at 12. high cost QF power. This, Allegheny claims, would cause distortions in competitive power markets.16 Allegheny requests that the Commission, as a condition of the merger, direct AES to divest portions of its interests in QFs so that it will not own more than 50 percent of any QF. Alternatively, Allegheny requests that the Commission determine that current AES QFs will lose QF status upon consummation of the merger. In response, Applicants argue that Allegheny ignores the demonstrated fact that AES owns no QFs located in the vicinity of CILCO's service territory. Therefore, it is highly unlikely that sales from AES's QFs would ever be made to CILCO's customers.17 In response, Allegheny argues that with the current and potential membership in the Midwest Independent Transmission System Operator (MISO), two of AES's generation facilities would not be three wheels away -- as claimed by Applicants -- but only one wheel away from CILCO.18 As a result, Allegheny claims, it would be very possible for the merged company to use its QFs for self-dealing and cross-subsidization, thereby creating economic inefficiencies. 3. Discussion As the Commission stated in the Merger Policy Statement, a screen analysis is unnecessary if the merging firms do not have facilities or sell relevant products in common geographic markets. Applicants argue that this is the case here. To support this claim, applicants have provided information on installed capacity in the CILCO market and historical transactions data showing that AES and CILCO sell products in different geographic markets. We note that no intervenor has raised any specific comments or criticisms regarding Applicants' analysis of the competitive effects of the proposed merger, except the QF-related concerns addressed below. Given the foregoing circumstances, the Commission believes that Applicants' approach to evaluating -- and conclusions regarding the competitive effects of the proposed merger are reasonable. - --------------- 16 Allegheny claims that it, specifically, will be competitively disadvantaged as a result of the merger because its subsidiaries are forced to purchase power from two AES owned QFs at costs that are substantially above market levels, and upon consummation of the merger, its payments would go to subsidize a utility holding company whose subsidiaries are competing or potentially competing with Allegheny. According to Allegheny, such a result distorts the marketplace and creates a tilted playing field. Id. at 23 and Affidavit of Peter S. Fox-Penner, April 21, 1999 at 5-6. 17 Motion to Dismiss Protests at 7-8. 18 AES's Beaver Valley and Warrior Run QFs, located in Pennsylvania and Maryland, respectively. As the Commission observed in the Merger Policy Statement, a basic concern in evaluating the competitive effects of mergers involving entities that own or control electric generation is whether the merger increases the ability of the merged company to affect prices and/or output in electricity markets. This ability can result, for example, from a merger-induced increase in market power, a prerequisite of which is that the merging entities sell relevant products in the same geographic markets. We note that Allegheny's concern that the merged company could engage in self-dealing and cross-subsidization (e.g., AES using QF revenues to subsidize generation sales in competitive markets) is based on a largely unsupported and unsubstantiated claim that such behavior could distort competition and result in economic inefficiency. Allegheny makes no persuasive argument that the merged company would have the ability to affect electricity prices or output or that conditions necessaryto do so (i.e., that CILCO and AES sell products in the same geographic market) are present. Allegheny argues that because of the MISO, two of AES's generators would be one wheel away from the markets in which CILCO participates, so that it would be very possible for the merged company to engage in competition-distorting self-dealing and cross-subsidization. We do not find this argument compelling. The likely effect of an RTO should be to make markets broader and less concentrated. Moreover, we note that even if AES and CILCO could be considered to sell products in the same geographic market, information on the size and disposition of the output of AES's generators indicates that: (1) the change in market concentration due to the combining AES's and CILCO's generation will be insignificant, and (2) the output of AES's facilities is committed under long-term contracts, making it more difficult for the merging company to withhold such capacity. As a result, we reject Allegheny's argument that it is essential, in order to prevent distortions in competitive power markets, to limit AES's QF ownership to 50 percent if the SEC grants AES the exempt status it seeks. For the reasons discussed above, we find that the proposed merger will not adversely affect competition. D. Effect on Rates The Merger Policy Statement explains our concern that there be adequate ratepayer protection from adverse rate effects as a result of a merger. It describes various commitments that may be acceptable means of protecting ratepayers, such as hold harmless provisions, open seasons for wholesale customers, rate freezes, and rate reductions.19 According to the application, the proposed merger will not have an adverse effect on rates. In support, Applicants state that AES has no captive customers and that CILCO serves at wholesale only two transmission dependent - --------------- 19 Merger Policy Statement, FERC Stats. and Regs. at 30,123-24. utilities (TDUs); Riverton and Corn Belt. With respect to generation rates, Applicants maintain that because CILCO's contract with Riverton is a fixed-rate requirements contract, no merger-related costs can be passed through to Riverton.20 With respect to transmission rates, Applicants state that Corn Belt is served under a five-year transmission contract which precludes CILCO from increasing its transmission rate.21 Applicants assert that once these contracts expire, Riverton will be free to obtain sales service on the competitive market and transmission service will be available to both Riverton and Corn Belt under CILCO's open-access tariff.22 According to the application, CILCO is a participant in the MISO, which has filed a single ISO-wide open-access tariff (MISO tariff).23 Applicants state that the proposed transaction will have no adverse effect on transmission rates because the MISO tariff rates are currently under review by the Commission. Applicants commit that CILCO will not seek any increase in its jurisdictional transmission rates or its MISO tariff rates for a period of four years after the merger is consummated.24 Applicants also maintain that the proposed merger will not have an adverse effect on its market-based rates because those rates are based on the market, not costs.25 With respect to the rates charged by AES affiliates that own QF and EWG generating plants, Applicants state that the proposed merger will not have any effect on these rates, since AES cannot change them unilaterally.26 For the above reasons, Applicants assert that the Commission's ratepayer protection goals are met. Intervenors raise no rate or ratepayer protection issues. Upon consideration of the above, we conclude that the proposed merger will not adversely affect rates. - --------------- 20 The CILCO/Riverton contract terminates February 28, 2001. Application at 20. 21 Id. at 3. 22 Id. 23 On September 16, 1998, the MISO tariff was accepted for filing with certain rate and non-rate terms set for hearing. Midwest Independent System Operator, 84 FERC 61,231 (1998), order on reh'g, 85 FERC 61,372 (1998). However, the MISO has not yet begun operating. 24 Id. at 3 and 22. 25 Id. at 20-21. Applicants further state that CILCORP's power marketing subsidiary, QST Energy, Inc., plans to terminate its marketing activities and will file a request to terminate its market-based rate tariff. 26 Id. at 21. E. Effect on Regulation As explained in the Merger Policy Statement, the Commission's primary concern with the effect on regulation of a proposed merger involves possible changes in the Commission's jurisdiction when a registered holding company is formed, thus invoking the jurisdiction of the Securities and Exchange Commission (SEC). We are also concerned with the effect on state regulation where a state does not have authority to act on a merger and the state raises concerns about the effect of the merger on regulation.27 With respect to Federal regulation, Applicants state that the proposed merger will not result in the formation of a registered public utility holding company under PUHCA, and thus, the Commission's jurisdiction over CILCO will not be affected. In support, Applicants note that CILCORP (CILCO's parent company) is currently an exempt public utility holding company under PUHCA, and that post-merger, AES is expected to enjoy the same status. Applicants also note that, as a condition of closing, the SEC must issue AES an exemption from registration as a holding company under PUHCA section 3(a)(5).28 With respect to state regulation, Applicants maintain that the proposed merger will have no effect on the Illinois Commerce Commission's (Illinois Commission) jurisdiction over CILCO's retail rates.29 As noted, Allegheny and Ameren Companies maintain that the proposed merger may allow AES to escape the Commission's qualifying facility (QF) regulations, which restrict utility ownership of QFs to a maximum of fifty percent.30 Allegheny requests that, regardless of whether the SEC grants AES exempt status pursuant to section 3(a)(5) of PUHCA, the Commission should condition the merger on either elimination of QF status of the AES plants, or require divestiture to ensure that the merged company owns no more than fifty percent of any QFs. Ameren Companies request that the Commission delay taking action until the SEC acts on AES's pending request for a section 3(a)(5) exemption. If the exemption is granted, Ameren Companies request that a hearing be held to determine if AES should be subject to the Commission's regulations regarding QF ownership. We disagree with Allegheny's and Ameren Companies' contentions that the proposed merger will allow AES to evade our QF regulations. If the SEC - --------------- 27 Merger Policy Statement, FERC Stats. and Regs. at 30,124-25. 28 Application at 23. As previously noted, section 3(a)(5) provides an exemption if "such holding company is not, and derives no material part of its income, directly or indirectly, from any one or more subsidiary companies which are, a company or companies the principle business of which within the United States is that of a public utility company." 29 On March 10, 1999, the Illinois Commission issued an order approving the proposed merger with respect to its effects on CILCO's gas utility operations. determines that AES qualifies for exempt status, the Commission's QF ownership requirements do not apply.31 However, if the SEC denies AES's request for exempt status, and AES opts to proceed with the merger,32 AES would have to either divest or reduce its QF ownership as necessary to comply with the Commission's regulations or lose QF status for those facilities where its equity ownership exceeds fifty percent.33 Allegheny also argues that AES should not be considered to be a foreign utility company, which would allow it to obtain a section 3(a)(5) exemption under PUHCA and thus not be subject to this Commission's QF - --------------- 30 According to Allegheny, AES has equity ownership interests in seven QFs; six of the AES ownership interests are in the 80 to 100 percent range. Motion at 8. 31 The Commission's ownership requirements are found in 18 C.F.R. 292.206 (1999). That regulation provides: (a) General Rule. A cogeneration facility or small power production facility may not be owned by a person primarily engaged in the generation or sale of electric power (other than electric power solely from cogeneration facilities or small power production facilities). (B) Ownership test. For purposes of this section, a cogeneration or small power production facility shall be considered to be owned by a person primarily engaged in the generation or sale of electric power, if more than 50 percent of the equity interest in the facility is held by an electric utility or utilities, or by an electric utility holding company, or companies, or any combination thereof. If a wholly or partially owned subsidiary of an electric utility or electric utility holding company has an ownership interest of a facility, the subsidiary's ownership interest shall be considered as ownership by an electric utility or electric utility holding company. (c) Exceptions. For purposes of this section a company shall not be considered to be an "electric utility" company if it: (1) Is a subsidiary of an electric utility holding company which is exempt by rule or order adopted or issued pursuant to section 3(a)(3) or 3(a)(5) of the Public Utility Holding Company Act of 1935, 15 U.S.C. 79c(a)(3), 79c(a)(5). 32 While Applicants maintain that receiving PUHCA exempt status is a condition of closing, AES can, under the merger agreement, waive this condition and proceed with the merger as a registered public utility holding company. Application at Exhibit A, Merger Agreement at 61-62. We address this possibility below. 33 See e.g., Coso Energy Developers, et al., 85 FERC 61,355 (1998). regulations. Similarly, Ameren Companies argue that CILCO's operations are too large to be considered immaterial under section 3(a)(5) of PUHCA. Both Allegheny and Ameren Companies argue that, notwithstanding the SEC's action regarding AES's exemption request, it would be unduly discriminatory to allow AES a less restrictive ownership of a QF than other investor-owned utilities or domestic public utility holding companies. Allegheny's and Ameren Companies' arguments regarding AES's status under PUHCA are misplaced. Allegheny and Ameren Companies should raise their concerns with the SEC. We note that the proposed merger does not change the applicability of our QF regulations. In light of the above, we will not condition the merger as requested by Allegheny, nor will we delay our finding or require a hearing as requested by Ameren Companies. As noted above, Applicants indicate that AES is expected to be an exempt public utility holding company after closing, and, therefore, that the Commission will not lose jurisdiction over intra-corporate transactions. However, if the SEC were to determine that AES does not qualify for exempt holding company status, and AES becomes a registered holding company, Ohio Power34 would deprive this Commission of authority over certain intra-corporate transactions. Thus, because AES's status as a holding company under PUHCA is unclear, and because the Commission may not be able to adequately protect ratepayers from affiliate abuse should AES become a registered holding company, we will condition approval of the proposed merger on Applicants' agreeing to abide by our policies with respect to intra-corporate transactions. Applicants shall inform the Commission within 15 days of the date of this order whether this condition is acceptable. Accordingly, we find that the proposed merger, as conditioned, will not have an adverse effect on regulation. F. Accounting Issues According to the application, the merger will take place at the holding company level, with no effect on the account balances or financial statements of the jurisdictional utility, CILCO. For this reason, Applicants request a waiver of the requirement to file their accounting for the merger. Based on Applicants' assertion that CILCO's account balances and financial - --------------- 34 Ohio Power Co. v. FERC, 954 F.2d 779, 782-86 (D.C. Cir.), cert. denied, 498 U.S. 73 (1992). Federal Energy Regulatory Commission statements will not be affected by the merger and the understanding that CILCO will continue to maintain its accounts in accordance with the Commission's Uniform System of Accounts, we will grant the waiver of the requirement to file accounting related to the merger. The Commission orders: (A) Applicants' motion to dismiss the protests is hereby denied. (B) Applicants' proposed merger is hereby approved subject to the commitments and conditions discussed in the body of this order. (C) The request for waiver of the requirement to file accounting related to the merger is hereby granted. (D) The foregoing authorization is without prejudice to the authority of the Commission or any other regulatory body with respect to rates, services, accounts, valuation, estimates or determinations of cost, or any other matter whatsoever now pending or which may come before the Commission. (E) Nothing in this order shall be construed to imply acquiescence in any estimate or determination of cost or any valuation of property claimed or asserted. (F) The Commission retains authority under section 203(b) of the FPA to issue supplemental orders as appropriate. (G) Applicants shall notify the Commission that the merger has occurred within 10 days of the date the merger is consummated. By the Commission. (SEAL) /s/ David P. Boergers ---------------------------------------- David P. Boergers Secretary UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: James J. Hoecker, Chairman; Vicky A. Bailey, William L. Massey, Linda Breathitt, and Curt Hebert, Jr. Central Illinois Light Company and Docket No. EC99-40-001 The AES Corporation ORDER DENYING REHEARING (Issued August 16, 1999) On July 16, 1999, Allegheny Energy, Inc., West Penn Power Co. and The Potomac Edison Co. (collectively "Allegheny") filed a timely request for rehearing of the Commission's June 16, 1999 order in this proceeding. Central Illinois Light Company and The AES Corp, 87 FERC 61,293 (1999) (June 16 order). As explained below, we will deny rehearing. Background In the June 16 order, the Commission approved the application filed by Central Illinois Light Company (CILCO) and The AES Corporation (AES) (collectively, Applicants) filed pursuant to section 203 of the Federal Power Act (FPA)1 requesting approval of the merger of CILCO's parent, CILCORP Inc. (CILCORP), into and with Midwest Energy, Inc. (Midwest), a wholly-owned subsidiary of AES, with CILCORP being the surviving entity, and thereafter, at the option of AES, the merger of CILCORP into AES. Applicants stated that they have applied to the Securities and Exchange Commission (SEC) for an exemption for the merged company from registration as a - --------------- 1 16 U.S.C. 824b (1994). holding company under section 3(a)(5) of PUHCA.2 They stated that the SEC's issuance to AES of a section 3(a)(5) exemption to PUHCA is a condition to the closing of the merger. They stated that with a section 3(a)(5) PUHCA exemption, the merger will have no effect on the QF status of AES's cogeneration and small power production facilities under the Commission's regulations. A. Allegheny's Intervention Allegheny intervened in the merger proceeding. Allegheny argued that the proposed merger will create competitive distortions because of AES's ownership of certain QFs. Allegheny also argued that AES's post-merger QF ownership of more than fifty percent of a QF would be inconsistent with the ownership restrictions contained in the Public Utility Regulatory Policies Act of 1978 (PURPA) and the Commission's regulations implementing PURPA. Allegheny argued that AES should not be considered to be a foreign utility company, which would allow it to obtain a section 3(a)(5) exemption under PUHCA and thus not be subject to this Commission's QF regulations. Finally, Allegheny argued that, notwithstanding the SEC's action regarding AES's exemption request, it would be unduly discriminatory to allow AES to own more than fifty percent of a QF while precluding other investor-owned utilities or domestic public utility holding companies from doing so. B. The Commission's June 16 order In its June 16 order, the Commission approved the proposed merger as consistent with the public interest. With respect to the QF ownership issue, the Commission stated that if the SEC grants AES its requested exemption, the - --------------- 2 Section 3(a)(5) of PUHCA provides that the SEC may exempt from PUHCA any holding company, if: such holding company is not, and derives no material part of its income, directly or indirectly, from any one or more subsidiary companies which are, a company or companies the principal business of which within the United States is that of a public-utility company. Commission's QF ownership requirements do not apply; but if the SEC denies the requested exemption, and AES opts to proceed with the merger, AES would have to either divest or reduce its QF ownership as necessary to comply with the Commission's regulations, or lose QF status for those facilities where its ownership exceeds fifty percent. The Commission further stated that the SEC was the proper forum in which to address whether a section 3(a)(5) PUHCA exemption should be granted to the merged company. Finally, the Commission noted that "the proposed merger does not change the applicability of our QF regulations." 87 FERC at 62,162. The Commission accordingly denied Allegheny's request that the merger be conditioned on either loss of the QF status of facilities owned by AES or divestiture of a sufficient equity interest in AES's QF facilities to reduce its equity interests below fifty percent. Id. C. Allegheny's Request for Rehearing With one exception, Allegheny has raised many of the same arguments that the Commission has already addressed in its prior order, and nothing raised causes us to revise our earlier finding. However, on rehearing Allegheny now argues that Applicants are attempting to create a regulatory gap by having argued to this Commission that this Commission should defer to the SEC regarding exemption from PUHCA, and now arguing to the SEC that this Commission has already addressed the QF ownership issue so that the SEC should not consider the QF issue in determining whether to grant AES the requested exemption from PUHCA. Allegheny states that if the Commission and the SEC accept AES's arguments, the result will be that the post-merger entity will be permitted to retain more than fifty percent ownership of QFs without any finding that the continued QF ownership complies with PURPA or is in the public interest. Allegheny urges that the Commission, in order "[t]o prevent this regulatory gap,"3 determine: (1) whether the merger is in the public interest, if the SEC grants the requested section 3(a)(5) exemption, given the fact that the merged company will own more than 50 percent of its QFs; and (2) whether it is discriminatory to allow the AES/CILCORP merged company to own more than 50 percent of its QFs while denying such ownership to the merged CalEnergy/MidAmerican company.4 Finally, Allegheny requests that the merged company be prohibited from owning more than fifty percent of any QF. - --------------- 3 Request for Rehearing at 8. 4 See MidAmerican Energy Company and MidAmerican Energy Holdings Company, 85 FERC 61,354 (1998). Discussion We will deny rehearing. As an initial matter, we note that Allegheny's allegation of a regulatory gap is premised on its notion that this Commission and the SEC can somehow be misled by CILCO/AES into failing to take all relevant facts and law into account in three types of related, but separate determinations, i.e., (1) the determination by the SEC whether the merged company satisfies the requirements for an exemption under section 3(a)(5) of PUHCA; (2) our determination of whether the merger is in the public interest; and (3) any determination by this Commission concerning the QF status of the AES facilities following merger.5 - --------------- 5 Allegheny's concerns about the QF status of the facilities relate to whether the AES facilities will satisfy the ownership requirements for QF status following the merger. The Commission's ownership requirements are found in 18 C.F.R. 292.206 (1999). That regulation provides: (a) General Rule. A cogeneration facility or small power production facility may not be owned by a person primarily engaged in the generation or sale of electric power (other than electric power solely from cogeneration facilities or small power production facilities). (B) Ownership test. For purposes of this section, a cogeneration or small power production facility shall be considered to be owned by a person primarily engaged in the generation or sale of electric power, if more than 50 percent of the equity interest in the facility is held by an electric utility or utilities, or by an electric utility holding company, or companies, or any combination thereof. If a wholly or partially owned subsidiary of an electric utility or electric utility holding company has an ownership interest of a facility, the subsidiary's ownership interest shall be considered as ownership by an electric utility or electric utility holding company. (c) Exceptions. For purposes of this section a company shall not be considered to be an "electric utility" company if it: (1) Is a subsidiary of an electric utility holding company which is exempt by rule or order adopted or issued pursuant to section 3(a)(3) or 3(a)(5) of the Public Utility Holding Company Act of 1935, 15 U.S.C. 79c(a)(3), 79c(a)(5). We disagree, and reiterate our finding that the proposed merger will not allow Applicants to evade our regulations, nor will it create a regulatory gap in the event Applicants receive the requested PUHCA exemption. We continue to believe that the public interest concerns regarding the merger, and whether AES's current QFs will continue to satisfy the ownership requirements for QF status following the merger, are best addressed in separate proceedings.6 This conclusion is consistent with the approach we took in the CalEnergy/MidAmerican merger proceeding (cited by Allegheny in its Request for Rehearing at 3), where we stated: The effect of the merger on the projects' QF status and SoCal Edison's related concerns are addressed in the relevant QF proceedings, and are independent of whether the merger is consistent with the public interest.7 Moreover, Allegheny remains free to challenge the QF status of any facilities the merged company claims have QF status. Allegheny's challenges, however, must be made in QF status proceedings, not in the merger proceeding. In addition, we reiterate that the SEC remains the proper forum in which Allegheny should address its concerns regarding that agency's granting of a section 3(a)(5) exemption to the merged company. Turning to Allegheny's request that this Commission consider whether it is discriminatory to allow the AES/CILCORP merged company to own more than 50 percent of its QFs, while denying such ownership to the merged CalEnergy/MidAmerican company, we note that Allegheny's allegations of discrimination are at this point entirely speculative in that the SEC has not yet granted AES its requested exemption. If the requested exemption is not granted, AES will have to take divestiture action similar to that taken by CalEnergy following its merger in order to retain QF status for its facilities, and thus there could be no claim of discriminatory action. - --------------- 6 In this regard, the Commission made the finding that themerger is consistent with the public interest, 87 FERC at 62,156, 62,158; that the merged company's ownership of QFs will not adversely affect competition, 87 FERC at 62,161, and the merged company's ownership of QFs will not adversely affect regulation 87 FERC at 62,162. Nothing in the record supports Allegheny's allegation that this Commission has been misled in making these determinations. 7 MidAmerican, 85 FERC at 62,367. Federal Energy Regulatory Commission 88 FERC P 61,181, 1999 WL 619557 (F.E.R.C.) On the other hand, it is clear that AES/CILCORP and CalEnergy/MidAmerican will not be similarly situated if the SEC grants the requested exemption. If the requested exemption is granted, AES/CILCORP and CalEnergy/MidAmerican will have different legal statuses. When entities are not similarly situated, differing treatments do not result in undue discrimination. The Commission orders: Allegheny's request for rehearing is hereby denied. By the Commission. (SEAL) /s/ Linwood A. Watson, Jr. ---------------------------------------- Linwood A. Watson, Jr. Acting Secretary EX-99.2 3 EXHIBIT E-1 Exhibit E-1 AES Corporation | |--| |-------- Six US Power Plants Owned | by Second Tier US Companies | |-------- Seven US Power Plants Owned | by Fourth Tier US Companies | |-------- Two US Power Plants Owned | by Fifth Tier US Companies | |-------- Four Foreign Power Plants Owned | by Second Tier Foreign Companies | |-------- Six Foreign Power Plants Owned | by Third Tier Foreign Companies | |-------- Eight Foreign Power Plants Owned | by Fourth Tier Foreign Companies | |-------- Fifty-Six Foreign Power Plants Owned | by Fifth Tier Foreign Companies | |-------- Six Foreign Power Plant Owned | by Sixth Tier Foreign Companies | |-------- One Foreign Power Plant Owned | by Seventh Tier Foreign Companies | |-------- Seven Foreign Distribution | Companies Owned by Fourth | Tier Foreign Companies* | |-------- Three Foreign Distribution | Company Owned by Fifth | Tier Foreign Companies | |-------- One Foreign Distribution | Company Owned by Sixth | Tier Foreign Companies | |-------- Midwest Energy, Inc. (100% Owned First Tier US Subsidiary) - - AES has approximately 147 additional US companies used as holding companies, development companies, and for other purposes. - - AES has approximately 156 additional foreign companies used as holding companies, development companies, and for other purposes. EX-99.3 4 EXHIBIT E-2 Exhibit E-2 CILCORP | |--| |-------- Central Illinois Light Company | | | |--- CILCO Exploration and | | Development Company | | | |--- CILCO Energy Corporation | | |-------- CILCORP Ventures, Inc. | | | |--- CILCORP Energy Services Inc | | | |--- Agricultural Research and | Development Corp.* | | |-------- CILCORP Investment Management Inc. | | | |--- CIM Energy Investments Inc. | | | |--- CIM Leasing Inc. | | | |--- CIM Air Leasing Inc. | | | |--- CILCORP Lease | Management Inc. | | | |--- CLM Inc. - IV | | | |--- CLM Inc. - VI | | | |--- CLM Inc. - VII | | | |--- CLM Inc. - VIII | | |-------- QST Enterprises Inc. | |--- CILCORP Infraservices Inc. | |--- QST Energy Inc. | | | |--- QST Energy | Trading Inc. | |--- ESE Land Corporation | |--- Savannah | Resources Corp. | | | | | |- McCadden | Development, | LLC * | |--- ESE Placentia | Development Corp. | |--- ELC Makena I, | L.L.C. * | |--- Wilmington | Land Co. | |--- California/Nevada | Development, | LLC * | |--- Future Developments LLC * * Not a wholly-owned subsidiary EX-99.4 5 EXHIBIT E-3 Exhibit E-3 AES Corporation | |--| |-------- Six US Power Plants Owned | by Second Tier US Companies | |-------- Seven US Power Plants Owned | by Fourth Tier US Companies | |-------- Two US Power Plants Owned | by Fifth Tier US Companies | |-------- Four Foreign Power Plants Owned | by Second Tier Foreign Companies | |-------- Six Foreign Power Plants Owned | by Third Tier Foreign Companies | |-------- Eight Foreign Power Plants Owned | by Fourth Tier Foreign Companies | |-------- Fifty-Six Foreign Power Plants Owned | by Fifth Tier Foreign Companies | |-------- Six Foreign Power Plant Owned | by Sixth Tier Foreign Companies | |-------- One Foreign Power Plant Owned | by Seventh Tier Foreign Companies | |-------- Seven Foreign Distribution | Companies Owned by Fourth | Tier Foreign Companies* | |-------- Three Foreign Distribution | Company Owned by Fifth | Tier Foreign Companies | |-------- One Foreign Distribution | Company Owned by Sixth | Tier Foreign Companies | |----- CILCORP | |-------- Central Illinois Light Company | | | |--- CILCO Exploration and | | Development Company | | | |--- CILCO Energy Corporation | | |-------- CILCORP Ventures, Inc. | | | |--- CILCORP Energy Services Inc | | | |--- Agricultural Research and | Development Corp.** | | |-------- CILCORP Investment | Management Inc. | | | |--- CIM Energy Investments Inc. | | | |--- CIM Leasing Inc. | | | |--- CIM Air Leasing Inc. | | | |--- CILCORP Lease | Management Inc. | | | |--- CLM Inc. - IV | | | |--- CLM Inc. - VI | | | |--- CLM Inc. - VII | | | |--- CLM Inc. - VIII | | |-------- QST Enterprises Inc. | |--- CILCORP Infraservices Inc. | |--- QST Energy Inc. | | | |--- QST Energy | Trading Inc. | |--- ESE Land Corporation | |--- Savannah | Resources Corp. | | | | | |- McCadden | Development, | LLC ** | |--- ESE Placentia | Development Corp. | |--- ELC Makena I, | L.L.C. ** | |--- Wilmington | Land Co. | |--- California/Nevada | Development, | LLC ** | |--- Future Developments LLC ** - - AES has approximately 147 additional US companies used as holding companies, development companies, and for other purposes. - - AES has approximately 156 additional foreign companies used as holding companies, development companies, and for other purposes. ** Not a wholly-owned subsidiary. EX-99.5 6 EXHIBIT F-1 [AES LETTERHEAD] August 18, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Re: The AES Corporation - Application Under the Public Utility Holding Company Act of 1935 Ladies and Gentlemen: The AES Corporation ("AES") proposes to acquire CILCORP, Inc. ("CILCORP"), an Illinois corporation, and its wholly-owned public utility subsidiary, Central Illinois Light Company ("CILCO") (the "Transaction"). AES seeks an order from this Commission that upon AES's consummation of the Transaction, AES, and its subsidiary companies as such, will be exempt from the provisions of the Public Utility Holding Company Act of 1935, as amended ("PUHCA" or the "Act"), other than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act. I am General Counsel for The AES Corporation and am familiar with the Transaction. In this connection and in accordance with the requirements of Exhibit F to Form U-1, I have examined the Articles of Incorporation of AES, the By-Laws of AES, and such other documents, certificates and corporate records, and such matters of law, as I have deemed necessary for the purpose of rendering this opinion. The opinions expressed below with respect to the Transaction are subject to and rely upon the following assumptions and conditions: a. The Transaction shall have been duly authorized and approved, to the extent required by the governing corporate documents and applicable state laws, by the shareholders of CILCORP. b. All required approvals, authorizations, consents, certificates, rulings, and orders of, and all filings and registrations with, all applicable federal and state commissions and regulatory authorities with respect to the Transaction shall have been obtained or made, as the case may be, and shall have become final and unconditional in all respects and shall remain in effect and the Transaction shall have been accomplished in accordance with all such approvals, authorizations, consents, certificates, orders, filings, and registrations. c. The Commission shall have duly entered an appropriate order with respect to the Transaction granting AES an exemption pursuant to Section 3(a)(5) of the Act. d. All corporate formalities required by the laws of the state of Illinois for the consummation of the Transaction shall have been taken, and the Transaction shall have become effective in accordance with the laws of the state of Illinois. e. AES and CILCORP shall have obtained all consents, waivers and releases, if any, required for the Transaction under all applicable governing corporate documents, contracts, agreements, debt instruments, indentures, franchises, licenses, and permits. f. The representations and warranties of CILCORP concerning the corporate organization and existence of CILCORP set forth in the Agreement and Plan of Merger Among The AES Corporation, CILCORP, Inc. and Midwest Energy, Inc. dated as of November 22, 1998 (the "Merger Agreement") are true and correct as of the date hereof and CILCORP has complied with all applicable covenants and conditions set forth in the Merger Agreement. Based upon the foregoing, and subject to the assumptions and conditions set forth herein, I am of the opinion that: 1. AES is a corporation validly organized and existing under the laws of the State of Delaware. 2. AES may lawfully purchase the stock of CILCORP. I am a member of the New York bar and do not hold myself out as an expert on the laws of any other state. I hereby consent to the filing of this opinion as an exhibit to the Application. Very truly yours, /s/ William R. Luraschi ---------------------------------------- William R. Luraschi Vice President, Secretary and General Counsel [CILCORP LETTERHEAD] August 17, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Re: The AES Corporation - Application Under the Public Utility Holding Company Act of 1935 Ladies and Gentlemen: The AES Corporation ("AES") proposes to acquire CILCORP Inc. ("CILCORP"), an Illinois corporation, and its wholly-owned public utility subsidiary, Central Illinois Light Company ("CILCO") (the "Transaction"). AES seeks an order from this Commission that upon AES's consummation of the Transaction, AES, and its subsidiary companies as such, will be exempt from the provisions of the Public Utility Holding Company Act of 1935, as amended ("PUHCA" or the "Act"), other than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act. I am Vice President, Secretary and Treasurer for CILCORP and am familiar with the Transaction. In this connection and in accordance with the requirements of Exhibit F to Form U-1, I have examined the Articles of Incorporation of CILCORP, the By-Laws of CILCORP, and such other documents, certificates and corporate records, and such matters of law, as I have deemed necessary for the purpose of rendering this opinion. The opinions expressed below with respect to the Transaction are subject to and rely upon the following assumptions and conditions: a. The Transaction shall have been duly authorized and approved, to the extent required by the governing corporate documents and applicable state laws, by the shareholders of CILCORP. b. All required approvals, authorizations, consents, certificates, rulings, and orders of, and all filings and registrations with, all applicable federal and state commissions and regulatory authorities with respect to the Transaction shall have been obtained or made, as the case may be, and shall have become final and unconditional in all respects and shall remain in effect and the Transaction shall have been accomplished in accordance with all such approvals, authorizations, consents, certificates, orders, filings, and registrations. c. The Commission shall have duly entered an appropriate order with respect to the Transaction granting AES an exemption pursuant to Section 3(a)(5) of the Act. d. All corporate formalities required by the laws of the state of Illinois for the consummation of the Transaction shall have been taken, and the Transaction shall have become effective in accordance with the laws of the state of Illinois. e. AES and CILCORP shall have obtained all consents, waivers and releases, if any, required for the Transaction under all applicable governing corporate documents, contracts, agreements, debt instruments, indentures, franchises, licenses, and permits. f. The representations and warranties of CILCORP concerning the corporate organization and existence of CILCORP set forth in the Agreement and Plan of Merger among The AES Corporation, CILCORP Inc. and Midwest Energy, Inc. dated as of November 22, 1998 (the "Merger Agreement") are true and correct as of the date hereof and CILCORP has complied with all applicable covenants and conditions set forth in the Merger Agreement. Based upon the foregoing, and subject to the assumptions and conditions set forth herein, I am of the opinion that: 1. CILCORP is a corporation validly organized and existing under the laws of the State of Illinois. 2. All state laws applicable to the Transaction will have been complied with. 3. The shares of CILCORP common stock to be acquired in conjunction with the Transaction will be validly issued, fully paid and nonassessable and the holders thereof will be entitled to the rights and privileges appertaining thereto set forth in the Articles of Incorporation of CILCORP. I am a member of the Illinois bar and do not hold myself out as an expert on the laws of any other state. I hereby consent to the filing of this opinion as an exhibit to the Application. Very truly yours, /s/ John G. Sahn ---------------------------------------- John G. Sahn Vice President, Secretary and Treasurer EX-99.6 7 EXHIBIT H-1 EXHIBIT H-1 UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 Release No. / , 1999 - ------------------------------------ ) In the Matter of ) ) The AES Corporation ) 1001 North 19th Street ) Arlington, VA 22209 ) ) (70- ) ) - ------------------------------------) The AES Corporation ("AES"), a Delaware Corporation, has filed an Application on Form U-1 for an exemption from the provisions of the Public Utility Holding Company Act of 1935 (the "Act"). AES seeks an order from the Commission to the effect that, upon consummation of the merger transaction described therein, the resulting public utility holding company, and every subsidiary company thereof as such, will be exempt from the provisions of the Act, other than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act. AES intends to merge its wholly-owned subsidiary, Midwest Energy, Inc. ("Midwest Energy"), an Illinois corporation, with and into CILCORP Inc. ("CILCORP"), a utility holding company in the State of Illinois, with CILCORP as the surviving corporation (the "Transaction"). Following the Transaction, CILCORP will be a first-tier, direct subsidiary of AES, and CILCORP's subsidiaries will maintain their current structure as direct or indirect subsidiaries, as the case may be, of CILCORP. CILCORP will continue to be an Illinois corporation with its principal executive office in Peoria, Illinois and AES will continue to be a Delaware corporation with its principal executive offices in Arlington, Virginia. AES is a United States-based multinational electric power generation and energy distribution company, with operations in 17 countries worldwide. AES is not currently a holding company subject to the provisions of the Act because none of its subsidiaries is a public utility company as defined by the Act. AES is engaged principally in the development, ownership, and operation of electric generating plants and electric and gas distribution companies. AES currently owns and/or operates (entirely or in part) a diverse international portfolio of electric power plants with a total capacity of 24,076 megawatts ("MW"), including plants that are part of distribution companies in which AES has an interest. CILCORP is an intrastate holding company exempt from the Act, except for Section 9(a)(2), under Section 3(a)(1) and Rule 2. CILCORP is the parent of four first-tier subsidiaries: Central Illinois Light Company ("CILCO"), QST Enterprises Inc., CILCORP Investment Management Inc., and CILCORP Ventures Inc. CILCO is the primary business subsidiary of CILCORP and is a utility subsidiary principally engaged in the generation, transmission, distribution and sale of electric energy in an area of approximately 3,700 square miles in central and east-central Illinois, and the purchase, distribution, transportation and retail sale of natural gas in an area of approximately 4,500 square miles in central and east-central Illinois. The merger of CILCORP with and into Midwest Energy will be governed by the terms of an Agreement and Plan of Merger dated as of November 22, 1998 (the "Merger Agreement"), by and among AES, CILCORP and Midwest Energy. As a result of the Transaction, each outstanding share of common stock of CILCORP and each associated purchase right under the Rights Agreement, dated as of October 29, 1996, between Continental Stock Transfer and Trust Company and CILCORP will be converted into the right to receive $65.00 (subject to adjustment as described in the Merger Agreement). Following the Transaction, CILCORP will remain predominantly an intrastate holding company that will not derive any material part of its income from an out-of-state utility subsidiary. Accordingly, CILCORP will continue to claim an exemption from registration under PUHCA pursuant to Section 3(a)(1) and Rule 2. AES seeks an order from the Commission that AES will be exempt from registration pursuant to Section 3(a)(5) of the Act. AES states that following the Transaction it will meet the statutory requirements of the Section 3(a)(5) exemption because it will not be and will not derive a material part of its income, directly or indirectly, from any one or more subsidiary companies which are, a company or companies the principal business of which within the U.S. is that of a public utility company. AES also states that following the Transaction, AES will be a holding company system with significant foreign operations whose U.S. utility operations do not account for a material part of the holding company's income and are small in size. Accordingly, exemption under Section 3(a)(5) is appropriate and in the public interest. The Application and any amendments thereto are available for public inspection through the Commission's Office of Public Reference. Interested persons wishing to comment or request a hearing should submit their views in writing by _______, 1999, to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on AES at the address specified above. Proof of service (by affidavit or, in case of an attorney at law, by certificate) should be filed with the request. Any request for hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the manner. After said date, the Application, as filed or as amended, may be granted and/or permitted to become effective. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Jonathan G. Katz Secretary EX-99.7 8 EXHIBIT K-1 Exhibit K-1 AES Employees [Two Pie Charts Placed Side-by-Side] The first pie chart is entitled "By First Language" and is placed to the left of the second pie chart. This pie chart reflects the fact that the first language of six percent of AES employees is English (as shown by a red slice). The first language of ninety-four percent of AES employees is a language other than English(as shown by a blue slice). The second pie chart is entitled "By Work Location" and is placed to the right of the first pie chart. This pie chart reflects the fact that four percent of AES employees are located in the United States (as shown by a red slice). Ninety-six percent of AES employees are located outside of the United States (as shown by a blue slice). EX-99.8 9 EXHIBIT K-2 EXHIBIT K-2 AES SUBSIDIARIES
Subsidiary Jurisdiction ---------- ------------ AEE2, L.L.C. Delaware AES (India) Private Limited India AES - MS Pty Ltd. Australia AES Alamitos Development, Inc. Delaware AES Alamitos, L.L.C. Delaware AES Allegheny, Inc. Delaware AES Altoona, Inc. Delaware AES Americas International Holdings, Limited Bermuda AES Americas Investments, Inc. Delaware AES Americas, Inc. Delaware AES Andean Partners, L.P. Delaware AES Andes II, Inc. Delaware AES Andes III, Inc. Delaware AES Andes, Inc. Delaware AES Andino, L.L.C Delaware AES Angel Falls, L.L.C. Delaware AES Anhui Power Co. Ltd. British Virgin Islands AES Anhui Power Company (L) Ltd. Labuan AES Aramtermelo Holdings B.V. Netherlands AES Argentina Operations, Ltd. Cayman Islands AES Argentina, Inc. Delaware AES Aurora, Inc. Delaware AES Australia Holding B.V. Netherlands AES Balboa, Inc. Delaware AES Bandeirante Empreendimentos Ltda. Brazil AES Bandeirante, Ltd. Cayman Islands AES Barry Operations Ltd. United Kingdom AES Barry, Ltd. United Kingdom AES Beauvior B.V. Netherlands AES Beaver Valley, Inc. Delaware AES Big Sky, L.L.C. Delaware AES Borsodi Avamtermelo Kft Hungary AES Brasil Ltda. Brazil AES Brazil Holdings, Inc. Delaware AES Brazil International Holdings, Limited Bermuda AES Brazil, Inc. Delaware AES Bucks County, Inc. Delaware AES California Management Co., Inc. Delaware AES Canada, Inc. Delaware AES Canal Power Services, Inc. Delaware AES Canal, Ltd. Cayman Islands AES Caracoles I Cayman Islands AES Caracoles II Cayman Islands AES Caracoles III L.P. Cayman Islands AES Caracoles SRL Argentina AES Caribbean Holdings, Inc. Delaware AES Caribbean Services, Inc. Delaware AES Cayman Empreendimentos Ltda. Brazil AES Cayman Guaiba, Ltd. Cayman Islands AES Cayman I Cayman Islands AES Cayman II Cayman Islands AES Cayman Islands Holdings, Ltd. Cayman Islands AES Cayman Pampas, Ltd. Cayman Islands AES Cayuga, L.L.C. Delaware AES Cemig Empreendimentos, Inc. Cayman Islands AES Cemig Holdings, Inc. Delaware AES Central America Power Ventures, Ltd. Cayman Islands AES Central American Management Services, Inc. Delaware AES Cerros Negros Holdings, Ltd. Cayman Islands AES Chengdu Power Co. (L) Ltd. Malaysia AES Chesapeake, Inc. Delaware AES Chigen Co. Ltd. British Virgin Islands AES Chigen Company (L) Limited Malaysia AES China Company Cayman Islands AES China Generating Co. Ltd. China AES China Holding Co. (L) Ltd. Malaysia AES Cilcorp Funding, L.L.C. Delaware AES Colstrip, L.L.C. Delaware AES Connecticut Management, Inc. Delaware AES Constructors, Inc. Delaware AES Coral Reef, LLC Cayman Islands AES Costa Rica Hydroelectrica, Ltd. Cayman Islands AES Creative Resources, L.P. Delaware AES Dahe Power Co. Ltd. British Virgin Islands AES Deepwater Owner Trust Delaware AES Deepwater, Inc. Delaware AES Del Sol, Inc. Cayman Islands AES Development of Argentina S.A. Argentina AES Distribucion Dominicana, Ltd. Cayman Islands AES Distribuidores Salvadorenos Limitada San Salvador AES Distribuidores Salvadorenos Y Campania San Salvador AES Dominican Holdings, Inc. DE/USA AES Eagle, Inc. Delaware AES Eastern Energy, L.P. Delaware AES Edelap Funding Corporation, L.L.C. Delaware AES El Salvador, Ltd. El Salvador AES Electric Investments, Ltd. Bermuda AES Electric, Ltd. United Kingdom AES Elsta B.V. Netherlands AES Emerald III, Inc. Delaware AES Emerald, Ltd. Cayman Islands AES Energen, Ltd. Cayman Islands AES Energia Cartagena S.R.L. Spain AES Energia de Mexico, S.A. de C.V. Mexico AES Energia SRL Italy AES Energy (Asia) Pte Ltd. Singapore AES Energy Canada, Inc. Canada AES Energy Mexico, Inc. Delaware AES Energy, Ltd. Bermuda AES Engineering, Ltd. Cayman Islands AES Enterprise, Inc. Delaware AES Europe S.A. France AES Forca Empreendimentos Ltda. Brazil AES Forca, Ltd. Cayman Islands AES FSC Corporation Barbados AES Gas Empreendimentos Ltda. Brazil AES Gas Power, Inc. Delaware AES Generacion Dominicana, Ltd. Cayman Islands AES Gerasul Empreendimentos Ltda. Brazil AES Gerasul, Ltd. Cayman Islands AES Global Power Holdings, B.V. Netherlands AES Goldfields Power B.V. Netherlands AES GPH, L.L.C. Delaware AES Granbury, L.P. Delaware AES Great Falls, B.V. Netherlands AES Greenfield, L.L.C. Delaware AES Greenidge, L.L.C Delaware AES Guaiba Empreendimentos Ltda. Brazil AES Guaiba II Empreendimentos Ltda. Brazil AES Haripur (Pvt.) Limited Bangladesh AES Harriman Cove, Inc. Delaware AES Hawaii Management Company, Inc. Delaware AES Hawaii, Inc. Delaware AES Hazleton, Inc. Delaware AES HGP, Inc. Delaware AES Hickling, L.L.C. Delaware AES HLP, Inc. Delaware AES Holdings Limited Cayman Islands AES Hungary Investment Ltd. Hungary AES Hungary Limited United Kingdom AES Huntington Beach Development, Inc. Delaware AES Huntington Beach, L.L.C. Delaware AES IB Valley Holding Mauritius AES Inchon Generating Ltd. Korea AES India, L.L.C. Delaware AES Indian Queens Power Ltd. United Kingdom AES Intercon II, Ltd. Cayman Islands AES Intercon, Ltd. Cayman Islands AES Interenergy, Ltd. Cayman Islands AES International Holdings II, Ltd. British Virgin Islands AES International Holdings, Ltd. British Virgin Islands AES International Power Marketing, Inc. Delaware AES Investments II, Ltd. Cayman Islands AES Ironwood Funding, L.L.C. Delaware AES Ironwood, Inc. Delaware AES Ironwood, L.L.C. Delaware AES Isthmus Energy, S.A. Panama AES Jennison, L.L.C. Delaware AES Joshua Tree, Inc. Delaware AES Juniata, Inc. Delaware AES Kelanitissa (Private) Limited Sri Lanka AES King Harbor, Inc. Delaware AES Kingston, Inc. Canada AES Korea, Inc. Delaware AES Korean Investments, L.L.C. Delaware AES La Gloria II, Inc. Delaware AES la Playa Holdings, B.V. Netherlands AES Lal Pir Limited Pakistan AES Lal Pir, L.L.C. Delaware AES Las Mareas, Inc. Delaware AES las Palmas, L.L.C. Delaware AES Latrobe Valley, BV Netherlands AES Light II, Inc. Delaware AES Londonderry, L.L.C. Delaware AES Los Mina Finance Company Cayman Islands AES Los Mina Holdings, Inc. Delaware AES Madison Holdings BV Netherlands AES Mayan Holdings, S. de R.L. de C.V. Mexico AES Medway Electric Limited United Kingdom AES Medway Operations Limited United Kingdom AES Meghnaghat Limited Bangladesh AES Merida B.V. Netherlands AES Merida III, S. de R.L. de C.V. Mexico AES Merida Management Services, S. de R.L. de C.V. Mexico AES Merida Operaciones SRL de CV Mexico AES Mexico Development, S. de R.L. de C.V. Mexico AES Mexico Farms, Inc. Delaware AES Monroe Holdings B.V. Netherlands AES Monterey, Inc. Delaware AES Monticello B.V. Netherlands AES Mount Vernon B.V. Netherlands AES Mt. Stuart B.V. Netherlands AES Mt. Stuart General Partnership Australia AES New York Funding, L.L.C. Delaware AES New York Holdings, L.L.C. Delaware AES Nograd Holdings B.V. Netherlands AES NY, L.L.C. Delaware AES NY2, L.L.C. Delaware AES NY3, L.L.C. Delaware AES Oasis Private Ltd. Singapore AES Ocean Springs, Ltd. Cayman Islands AES Oklahoma Management Co., Inc. Delaware AES Operations Colombia Ltda. Colombia AES OPGC Holding Mauritius AES Orient, Inc. Delaware AES Orissa Operations Private Limited India AES Pacific, Inc. Delaware AES Pak Gen (Pvt) Company Pakistan AES Pak Gen Holdings, Inc. Pakistan AES Pakistan (Holdings) Limited United Kingdom AES Pakistan (Pvt) Ltd. Pakistan AES Pakistan Holdings Mauritius AES Pakistan Operations, Ltd. Delaware AES Panama Energy, S.A. Panama AES Panama Holding, Ltd. Cayman Islands AES Parana Gas S.A. China AES Parana Holdings, Ltd. Cayman Islands AES Parana I Limited Partnership Cayman Islands AES Parana IHC, Ltd. Cayman Islands AES Parana II Limited Partnership Cayman Islands AES Parana SCA Partnership Argentina AES Parana Sociedad Anonima Argentina AES Partington Ltd. United Kingdom AES Pasadena, Inc. Delaware AES Peru S.R.L. Peru AES Phoenix Ltd. Hungary AES PJM, Inc. Delaware AES Placerita, Incorporated Delaware AES Power North, Inc. Delaware AES Power, Inc. Delaware AES Prachinburi Holdings B.V. Netherlands AES Prescott, L.L.C. Delaware AES Puerto Rico, Inc. Delaware AES Puerto Rico, L.P. Delaware AES Pumped Storage Arkansas, L.L.C. Delaware AES Red Oak, Inc. Delaware AES Red Oak, L.L.C. Delaware AES Redondo Beach, L.L.C. Delaware AES Rio Diamante, Inc. Delaware AES Rio Ozama Holdings, Ltd. Cayman Islands AES River Bend, L.L.C. Delaware AES Riverside, Inc. Delaware AES Rock Springs, B.V. Netherlands AES San Nicolas, Inc. Delaware AES Santa Ana, Ltd. Cayman Islands AES Services, Ltd. Cayman Islands AES Shady Point, Inc. Delaware AES Silk Road Holdings B.V. Netherlands AES Silk Road Ltd. United Kingdom AES Silk Road, Inc. Delaware AES Somerset, L.L.C. Delaware AES South City, L.L.C. Delaware AES Southington Holdings, Inc. Delaware AES Southington, L.L.C. Delaware AES Southland Funding, L.L.C. Delaware AES Southland Holdings, L.L.C. Delaware AES Southland, L.L.C. Delaware AES Sul Distribuidora Gaucha de Energia S.A. Brazil AES Sul Funding, L.L.C. Delaware AES Summit Generation Ltd. United Kingdom AES Sunbelt, L.L.C. Delaware AES Suntree Power Ltd. Kazakstan AES Taiwan, Inc. Delaware AES Tau Power B.V. Netherlands AES Termosul Empreendimentos Ltda. Brazil AES Terneuzen Cogen B.V. Netherlands AES Terneuzen Engineering B.V. Netherlands AES Terneuzen Management Services B.V Netherlands AES Thames, Inc. Delaware AES Tisza Holdings B.V. Netherlands AES Trading Limited Cayman Islands AES Transgas Empreendimentos Ltda. Brazil AES Transpower - Taiwan Taiwan AES Transpower Australia Pty Ltd. Australia AES Transpower Private Ltd. Singapore AES Transpower, Inc. Mauritius AES Transpower, Inc. (DE) Delaware AES Treasure Cove, Ltd. Cayman Islands AES Trust I Delaware AES Trust II Delaware AES Trust III Delaware AES Trust IV Delaware AES Trust V Delaware AES Turbine Equipment, Inc. Delaware AES Turkish Holdings B.V. Netherlands AES Tyneside Ltd. United Kingdom AES U&K Holdings B.V. Netherlands AES UK Holdings, Ltd. United Kingdom AES Uruguaiana Empreedimentos Ltda. Brazil AES Uruguaiana, Inc. Cayman Islands AES Venezuela Holdings, B.V. Netherlands AES Venezuela, C.A. Venezuela AES Victoria Holdings B.V. Netherlands AES Victoria Partners B.V. Netherlands AES Warrior Run Funding, L.L.C. Delaware AES Warrior Run, Inc. Delaware AES Western Australia Holdings B.V. Netherlands AES Western Maryland Management Co., Inc. Delaware AES Westover, L.L.C. Delaware AES White Cliffs B.V. Netherlands AES WR Limited Partnership Delaware AES Yucatan, S. de R.L. de C.V. Mexico AES ZEG Holdings B.V. Netherlands AES Zemplen Ltd. Hungary AES-CLESA Services Limitada San Salvador AES-ST Ekibastuz, LLP Kazakstan AES-TB Power Company Limited Cayman Islands AES/Sonat Adelanto, Inc. Delaware AES/Sonat Power, L.L.C. Virginia AESE SRL Italy AESEBA S.A. Argentina Altoona Cogeneration Partners, L.P. Pennsylvania Anhui Liyuan - AES Power Co., Ltd. China Belfast West Power Limited Northern Ireland Blank Inc Venezuela Blue Mountain Power LP Pennsylvania Blue Mountain Power, Inc. Delaware Borsod Energetikia, Kft. Hungary BV Partners Delaware Camille, Ltd. Cayman Islands Cavanal Minerals, Inc. Delaware Cayman Energy Traders Cayman Islands Central Dique, S.A. Argentina Central Termica San Nicolas S.A. Argentina Chengdu AES Kaihua Gas Turbine Power Co. Ltd. China Chiahui Power Corporation Taiwan Chongqing Nanchuan Aixi Power Company Limited China Cloghan Limited Northern Ireland Cloghan Point Holdings Limited Northern Ireland CMS Generation San Nicolas Company Michigan Coal Creek Minerals, Inc. Delaware Compagnia Energetica de Minas Gerais Brazil Companhia Centro-Oeste de Distribuicao de Energia Eletrica Brazil Compania de Inversiones en Electricidad, S.A. Argentina DEMEX, Inc. Delaware DEMSA, Inc. Delaware DOC Dominicana, S.A. Dominican Republic DOC Guatemala S.A. Guatemala Dominican Power Metering, Ltd. Cayman Islands Dominican Power Partners LDC Cayman Islands Eden Village Produce Limited Northern Ireland Elsta BV Netherlands Elsta BV & Co. CV Netherlands Emerald Power Holdings C.V. Netherlands Empresa Distribuidora de Energia Norte S.A. Argentina Empresa Distribuidora de Energia Sur S.A. Argentina Empresa Distribuidora La Plata, S.A. Argentina Global Power Holdings CV Netherlands Hefei Zhongli Energy Co. Ltd. China Hidroelectrica Rio Juramento S.A. Argentina Hidrotermica San Juan S.A. Argentina Hispaniola Power Ventures, Ltd. Cayman Islands Hunan Xiangci - AES Hydro Power Company Ltd. China Inversora AES Americas S.A. Argentina Inversora de San Nicolas S.A. Argentina Ir. G. Passchier Management B.V. Netherlands Jiaozuo AES Wan Fang Power Company Limited China JSC Telasi Republic of Georgia Kilroot Electric Limited Cayman Islands Kilroot Power Limited Northern Ireland Kingston CoGen Limited Partnership Canada La Plata Holdings Delaware La Plata Holdings, Inc. Delaware La Plata I Empreendimentos Ltda. Brazil La Plata I, Inc. Delaware La Plata II Empreendimentos Ltda. Brazil La Plata II, Inc. Delaware La Plata III, Inc. Delaware La Plata IV, L.L.C. Delaware Light Servicos de Eletricidade S.A. Brazil LIGHT.COM, Inc. Delaware LIGHT.COM, L.L.C. Delaware Loy Yang Energy Pty Ltd. Australia Loy Yang Finance Corporation Pty Ltd Australia Loy Yang Management Pty Limited Australia Luz del Plata S.A. Argentina Medway Power Limited United Kingdom Merco Intercon, Ltda. Brazil Midwest Energy, Inc. Illinois Mountain Minerals, Inc. Delaware myLIGHT.COM, Inc. Delaware myLIGHT.COM, L.L.C. Delaware NIGEN Limited Northern Ireland Nogradszen Kft Hungary Northern/AES Energy, LLC Minnesota Placerita Oil Co., Inc. Delaware San Francisco Energy Company, L.P. Delaware Shazia S.R.L. Argentina Southern Electric Brazil Participacoes, Ltda. Brazil Terneuzen Cogen B.V. Netherlands The AES Corporation Delaware Tisza Eromu Rt. Hungary Twin Rivers Power, Inc. Delaware UK Asset Management Services, Ltd. United Kingdom UK Energy Holdings Limited United Kingdom Wildwood Funding, Ltd. Cayman Islands Wildwood II, Ltd. Cayman Islands Wuhu Shaoda Electric Power Development Co. Ltd. China Wuxi AES CAREC Gas Turbine Power Company Limited China Wuxi AES Zhong Hang Power Company Limited China Yangcheng International Power Generating Co. Ltd. China Yangchun Fuyang Diesel Engine Power Co. Ltd. China Zarnowicka Elektrownia Gazowa Sp.zo.o. Poland
EX-99.9 10 EXHIBIT K-3
Exhibit K-3 GENERATING PLANTS IN OPERATION AES Capacity AES Equity Regulatory Company Country (MW) Interest (%) (MW) Status - ------- ------- ---- ----------- ------ ------ AES Deepwater USA 143 100.00 143.00 QF AES Beaver Valley USA 125 80.00 100.00 QF AES Placerita USA 120 100.00 120.00 QF AES Thames USA 181 100.00 181.00 QF AES Shady Point USA 320 100.00 320.00 QF AES Hawaii USA 180 100.00 180.00 QF NGE Generation (6 plants) USA 1,424 100.00 1,424.00 EWG AES Alamitos USA 2,083 100.00 2,083.00 EWG AES Redondo Beach USA 1,310 100.00 1,310.00 EWG AES Huntington Beach USA 563 100.00 563.00 EWG AES Kingston Canada 110 50.00 55.00 EWG AES San Nicolas Argentina 650 69.00 448.50 EWG AES Cabra Corral Argentina 102 98.00 99.96 FUCO AES El Tunal Argentina 10 98.00 9.80 FUCO AES Sarmiento Argentina 33 98.00 32.34 FUCO AES Ullum Argentina 45 98.00 44.10 FUCO AES Quebrada Argentina 45 100.00 45.00 FUCO Fontes Nova - Light Brazil 144 13.75 19.80 FUCO Ilha dos Pombos - Light Brazil 164 13.75 22.55 FUCO Nilo Pecanha - Light Brazil 380 13.75 52.25 FUCO Pereira Passos - Light Brazil 100 13.75 13.75 FUCO CEMIG (37 plants) Brazil 5,668 20.96* 1,188.14 FUCO EGE Bayano Panama 192 49.00 94.08 FUCO EGE Chiriqui Panama 90 49.00 44.10 FUCO AES Los Mina Dom. Rep. 210 100.00 210.00 EWG ECOGEN (2 plants) Australia 966 100.00 966.00 FUCO AES Mt. Stuart Australia 288 100.00 288.00 FUCO AES Xiangci - Cili China 26 51.00 13.26 FUCO AES Wuxi China 63 55.00 34.65 FUCO Wuhu China 250 25.00 62.50 FUCO Yangchun China 15 25.00 3.75 FUCO Chengdu Lotus City China 48 35.00 16.80 FUCO AES Jiaozou China 250 70.00 175.00 FUCO AES Hefei China 115 70.00 80.50 FUCO AES Fuling Aixi China 50 70.00 35.00 FUCO AES Ekibastuz Kazakhstan 4,000 70.00 2,800.00 FUCO AES Ust-Kamenogorsk GES Kazakhstan 332 85.00 282.20 FUCO AES Shulbinsk GES Kazakhstan 702 85.00 596.70 FUCO AES Ust-Kamenogorsk TETS Kazakhstan 240 85.00 204.00 FUCO AES Leninogorsk TETS Kazakhstan 50 85.00 42.50 FUCO AES Sogrinsk TETS Kazakhstan 50 85.00 42.50 FUCO AES Capacity AES Equity Regulatory Company Country (MW) Interest (%) (MW) Status - ------- ------- ---- ----------- ------ ------ AES Semipalatinsk TETS Kazakhstan 10 85.00 8.50 FUCO OPGC India 420 49.00 205.80 FUCO AES Lal Pir Pakistan 351 90.00 315.90 FUCO AES Pak Gen Pakistan 344 90.00 309.60 FUCO AES Borsod Hungary 171 96.00 164.16 FUCO AES Tisza II Hungary 860 96.00 825.60 FUCO AES Tiszapalkonya Hungary 250 96.00 240.00 FUCO AES Elsta Netherlands 405 50.00 202.50 FUCO Medway U.K. 688 25.00 172.00 FUCO AES Indian Queens U.K. 140 100.00 140.00 EWG Kilroot U.K. 520 47.00 244.40 FUCO Belfast West U.K. 240 47.00 112.80 FUCO AES Barry U.K. 230 100.00 230.00 FUCO --- ------ TOTALS 26,466 17,617.99 Percentage of Foreign Generation 75.63% 63.54%
ELECTRIC DISTRIBUTION COMPANIES Company Location AES Interest Regulatory Status - ------- -------- ------------ ----------------- AES EDEN Argentina Majority FUCO AES EDES Argentina Majority FUCO AES EDELAP Argentina Majority FUCO AES Sul Brazil Majority FUCO Light Servicios de Electricidade, S.A. Brazil Minority FUCO o Electropaulo Metropolitana, S.A. Brazil Minority FUCO Cemig, S.A. Brazil Minority FUCO AES CLESA El Salvador Majority FUCO AES Telasi Georgia Majority FUCO ALTAI Kazakhstan Majority FUCO EDE Este ** Dominican 50% FUCO Republic
* CEMIG owns 21.648% of 36 plants accounting for 5,458 MW and 3.14% of 1 plant accounting for 210 MW. ** Closing expected in June of 1999. EX-99.10 11 EXHIBIT K-4 Exhibit K-4 [Map] Map of the world, including national borders. The map identifies the location of AES's generating plants (designated by purple triangles), distribution companies (designated by red squares), projects under construction or advanced development (designated by orange circles with orange borders) and pending acquisitions (designated by black squares). In cases where numerous generating plants are located in the same country or region within a country, the multiple plants may be designated by a large purple triangle and footnoted in order to identify the number of generating plants represented by such box. AES has ninety-six generating plants located in the following countries: the United States - fifteen, Canada - one, Panama - two, the Dominican Republic - one, Argentina - six, Brazil - forty-one, the United Kingdom - five, the Netherlands - one, Hungary - three, Pakistan - two, India - one, Kazakhstan - seven, China - eight, Australia - three. AES has eleven distribution companies located in the following countries: Brazil - four, Argentina - three, El Salvador - one, Georgia - one, Kazakhstan - one, Dominican Republic - one. AES also assumed management control of two distribution companies in Kazakhstan. AES has eighteen projects under construction or advanced development located in the following countries: the United States - three, Mexico - one, Puerto Rico - one, Brazil - one, Argentina - two, the United Kingdom - two, Hungary - one, Poland - one, Egypt - one, India - one, Sri Lanka - one, Bangladesh - two, China - one. AES has one pending acquisition in the United States (CILCORP). EX-99.11 12 EXHIBIT K-5 EXHIBIT K-5 CILCO Contributions To AES/CILCORP Consolidated Holding Company (GAAP Basis) ($MM)
1996 1997 1998 GROSS REVENUES* 38.47% 28.09% 18.19% AES 835 1,411 2,398 CILCO 524 553 538 CILCORP (excluding CILCO) 3 5 21 AES/CILCORP 1,362 1,969 2,957 NET OPERATING REVENUES 34.50% 25.63% 16.06% AES 614 973 1,809 CILCO 325 337 350 CILCORP (excluding CILCO) 3 5 21 AES/CILCORP 942 1,315 2,180 OPERATING INCOME 26.02% 22.10% 11.27% AES 278 368 733 CILCO 96 103 93 CILCORP (excluding CILCO) (5) (5) (1) AES/CILCORP 369 466 825 NET INCOME 27.45% 24.88% 12.54% AES 125 185 311 CILCO 42 50 41 CILCORP (excluding CILCO) (14) (34) (25) AES/CILCORP 153 201 327 NET ASSETS 21.11% 9.99% 8.47% AES 3,622 8,909 10,781 CILCO 1,036 1,023 1,024 CILCORP (excluding CILCO) 250 312 289 AES/CILCORP 4,908 10,244 12,094
* In calculating the gross revenues percentage, the numerator is equal to the total gross business revenues of CILCO, which include revenues from minor non-utility activities (nearly all of which are from service transactions with CILCORP affiliates). The denominator is comprised of all CILCORP business revenues (including revenues from all CILCO activities and CILCORP non-utility activities) plus all of AES's business revenues. EX-99.12 13 EXHIBIT K-6 Exhibit K-6 Market Share for Electric Companies in Illinois and Bordering States (Companies Listed in Order of Customers Served) - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): Unicom Corp. American Electric Power Co., Inc. Ameren Corp. Northern States Power Co. Cinergy Corp. Wisconsin Energy Corp. Alliant Energy Corp. MidAmerican Energy Holdings Co. Illinova Corp. KU Energy Corp. Kansas City Power & Light Co. IPALCO Enterprises, Inc. NIPSCO Industries, Inc. WPS Resources Corp. UtiliCorp United, Inc. LG&E Energy Corp. Cilcorp, Inc. Empire District Electric Co. Everyone else Y-axis (left side of chart): Market Share Percentages (listed in increments of 5 percent between and including 0 and 25 percent) [Bar Chart lists market shares for electric companies in Illinois and Bordering States in terms of assets, revenues and number of customers. The companies are listed in the order of customers served as provided below. Assets, revenues and customers are represented by green, violet and red bars, respectively.]
Market Share for Electric Companies in Illinois and Bordering States Companies Sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - ------------------------------------------------------------------------------------------- Unicom Corp. 7,176 1 19.7% 19.7% American Electric Power Co., Inc. 6,979 2 19.2% 38.9% Cinergy Corp. 4,059 3 11.2% 50.0% Ameren Corp. 2,889 4 7.9% 58.0% Northern States Power Co. 2,483 5 6.8% 64.8% Alliant Energy Corp. 1,524 6 4.2% 69.0% Illinova Corp. 1,420 7 3.9% 72.9% Wisconsin Energy Corp. 1,412 8 3.9% 76.8% MidAmerican Energy Holdings Co. 1,126 9 3.1% 79.9% NIPSCO Industries, Inc. 1,017 10 2.8% 82.7% Kansas City Power & Light Co. 896 11 2.5% 85.1% IPALCO Enterprises, Inc. 738 12 2.0% 87.1% KU Energy Corp. 716 13 2.0% 89.1% LG&E Energy Corp. 615 14 1.7% 90.8% UtiliCorp United, Inc. 557 15 1.5% 92.3% Minnesota Power, Inc. 491 16 1.3% 93.7% WPS Resources Corp. 479 17 1.3% 95.0% Ohio Valley Electric Corp. 450 18 1.2% 96.2% Cilcorp, Inc. 338 19 0.9% 97.2% SIGCORP, Inc. 273 20 0.7% 97.9% Electric Energy, Inc. 232 21 0.6% 98.5% Empire District Electric Co. 214 22 0.6% 99.1% Madison Gas & Electric Co. 163 23 0.4% 99.6% St. Joseph Light & Power Co. 87 24 0.2% 99.8% Consolidated Water Power Co. 37 25 0.1% 99.9% Northwestern Wisconsin Electric Co. 10 26 0.0% 100.0% Mount Carmel Public Utility Co. 9 27 0.0% 100.0% Wisconsin River Power Co. 5 28 0.0% 100.0% North Central Power Co., Inc. 2 29 0.0% 100.0% Pioneer Power & Light Co. 2 30 0.0% 100.0% Total 36,401
Market Share for Electric Companies in Illinois and Bordering States Companies Sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ------------------------------------------------------------------------------------------- Unicom Corp. 26,322 1 23.0% 23.0% American Electric Power Co., Inc. 17,993 2 15.7% 38.7% Ameren Corp. 10,446 3 9.1% 47.8% Cinergy Corp. 8,951 4 7.8% 55.7% Northern States Power Co. 6,866 5 6.0% 61.7% Illinova Corp. 6,465 6 5.6% 67.3% Wisconsin Energy Corp. 4,969 7 4.3% 71.6% Alliant Energy Corp. 4,682 8 4.1% 75.7% NIPSCO Industries, Inc. 3,911 9 3.4% 79.1% MidAmerican Energy Holdings Co. 3,876 10 3.4% 82.5% Kansas City Power & Light Co. 3,497 11 3.1% 85.6% IPALCO Enterprises, Inc. 2,695 12 2.4% 87.9% KU Energy Corp. 2,553 13 2.2% 90.2% LG&E Energy Corp. 2,242 14 2.0% 92.1% WPS Resources Corp. 1,409 15 1.2% 93.4% UtiliCorp United, Inc. 1,403 16 1.2% 94.6% Minnesota Power, Inc. 1,231 17 1.1% 95.7% Cilcorp, Inc. 1,187 18 1.0% 96.7% SIGCORP, Inc. 1,050 19 0.9% 97.6% Empire District Electric Co. 791 20 0.7% 98.3% Ohio Valley Electric Corp. 686 21 0.6% 98.9% Madison Gas & Electric Co. 487 22 0.4% 99.3% Electric Energy, Inc. 348 23 0.3% 99.6% St. Joseph Light & Power Co. 305 24 0.3% 99.9% Consolidated Water Power Co. 37 25 0.0% 99.9% Northwestern Wisconsin Electric Co. 28 26 0.0% 100.0% Wisconsin River Power Co. 26 27 0.0% 100.0% Mount Carmel Public Utility Co. 18 28 0.0% 100.0% North Central Power Co., Inc. 7 29 0.0% 100.0% Pioneer Power & Light Co. 3 30 0.0% 100.0% Total 114,483
Market Share for Electric Companies in Illinois and Bordering States Companies Sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - ----------------------------------------------------------------------------------------- Unicom Corp. 3,420 1 19.6% 19.6% American Electric Power Co., Inc. 2,958 2 17.0% 36.6% Ameren Corp. 1,495 3 8.6% 45.1% Northern States Power Co. 1,474 4 8.4% 53.6% Cinergy Corp. 1,401 5 8.0% 61.6% Wisconsin Energy Corp. 973 6 5.6% 67.2% Alliant Energy Corp. 892 7 5.1% 72.3% MidAmerican Energy Holdings Co. 644 8 3.7% 76.0% Illinova Corp. 559 9 3.2% 79.2% KU Energy Corp. 464 10 2.7% 81.9% Kansas City Power & Light Co. 443 11 2.5% 84.4% IPALCO Enterprises, Inc. 417 12 2.4% 86.8% NIPSCO Industries, Inc. 414 13 2.4% 89.2% WPS Resources Corp. 371 14 2.1% 91.3% UtiliCorp United, Inc. 366 15 2.1% 93.4% LG&E Energy Corp. 355 16 2.0% 95.4% Cilcorp, Inc. 194 17 1.1% 96.5% Empire District Electric Co. 141 18 0.8% 97.3% Minnesota Power, Inc. 137 19 0.8% 98.1% SIGCORP, Inc. 122 20 0.7% 98.8% Madison Gas & Electric Co. 122 21 0.7% 99.5% St. Joseph Light & Power Co. 61 22 0.4% 99.9% Northwestern Wisconsin Electric Co. 11 23 0.1% 99.9% Mount Carmel Public Utility Co. 6 24 0.0% 100.0% North Central Power Co., Inc. 4 25 0.0% 100.0% Pioneer Power & Light Co. 2 26 0.0% 100.0% Consolidated Water Power Co. 1 27 0.0% 100.0% Ohio Valley Electric Corp. 0 28 0.0% 100.0% Electric Energy, Inc. 0 29 0.0% 100.0% Wisconsin River Power Co. 0 30 0.0% 100.0% Total 17,446
EX-99.13 14 EXHIBIT K-7 Exhibit K-7 Market Share for Gas Companies in Illinois and Bordering States (Companies Listed in Order of Customers Served) - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): Columbia Energy Group, Inc. Nicor, Inc. Southern Union Co. Peoples Energy Corp. UtiliCorp United, Inc. NIPSCO Industries, Inc. MidAmerican Energy Holdings Co. Wicor, Inc. Atmos Energy Corp. Indiana Energy, Inc. Cinergy Corp. Northern States Power Co. Illinova Corp. Alliant Energy Corp. Ameren Corp. LG&E Energy Corp. WPS Resources Corp. Cilcorp, Inc. Madison Gas & Electric Co. Everyone else Y-axis (left side of chart): Market Share Percentages (listed in increments of 2 percent between and including 0 and 20 percent) [Bar Chart lists market shares for gas companies in Illinois and Bordering States in terms of assets, revenues and number of customers. The companies are listed in the order of customers served as provided below. Assets, revenues and customers are represented by green, violet and red bars, respectively.]
Market Shares for Gas Companies in Illinois and Bordering States Companies Sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - ----------------------------------------------------------------------------------------------- Columbia Energy Group, Inc. 2,282 1 18.6% 18.6% Nicor, Inc. 1,731 2 14.1% 32.6% Peoples Energy Corp. 1,238 3 10.1% 42.7% Southern Union Co. 882 4 7.2% 49.9% NIPSCO Industries, Inc. 772 5 6.3% 56.1% Wicor, Inc. 537 6 4.4% 60.5% MidAmerican Energy Holdings Co. 536 7 4.4% 64.9% Indiana Energy, Inc. 528 8 4.3% 69.2% Northern States Power Co. 505 9 4.1% 73.3% Atmos Energy Corp. 502 10 4.1% 77.3% Cinergy Corp. 496 11 4.0% 81.4% Alliant Energy Corp. 408 12 3.3% 84.7% Illinova Corp. 354 13 2.9% 87.6% UtiliCorp United, Inc. 276 14 2.2% 89.8% Ameren Corp. 250 15 2.0% 91.8% LG&E Energy Corp. 231 16 1.9% 93.7% Cilcorp, Inc. 219 17 1.8% 95.5% WPS Resources Corp. 211 18 1.7% 97.2% Madison Gas & Electric Co. 108 19 0.9% 98.1% SIGCORP, Inc. 86 20 0.7% 98.8% Wisconsin Fuel & Light Co. 51 21 0.4% 99.2% Delta Natural Gas Co., Inc. 39 22 0.3% 99.5% Minnesota Power, Inc. 14 23 0.1% 99.6% Midwest Bottle Gas Co. 9 24 0.1% 99.7% Illinois Gas Co. 9 25 0.1% 99.8% St. Joseph Light & Power Co. 6 26 0.0% 99.8% Consumers Gas Co. 5 27 0.0% 99.9% Master Gas Service Co. 4 28 0.0% 99.9% St. Croix Valley Natural Gas Co., Inc. 4 29 0.0% 99.9% Indiana Utilities Corp. 3 30 0.0% 100.0% Mount Carmel Public Utility Co. 3 31 0.0% 100.0% Natural Gas, Inc. 2 32 0.0% 100.0% Fidelity Natural Gas, Inc. 1 33 0.0% 100.0% Total 12,299
Market Shares for Gas Companies in Illinois and Bordering States Companies Sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ----------------------------------------------------------------------------------------------- Nicor, Inc. 2,956 1 15.8% 15.8% Columbia Energy Group, Inc. 2,424 2 13.0% 28.8% Peoples Energy Corp. 2,083 3 11.2% 40.0% Southern Union Co. 1,518 4 8.1% 48.1% NIPSCO Industries, Inc. 1,230 5 6.6% 54.7% UtiliCorp United, Inc. 954 6 5.1% 59.8% Indiana Energy, Inc. 847 7 4.5% 64.4% Wicor, Inc. 787 8 4.2% 68.6% MidAmerican Energy Holdings Co. 769 9 4.1% 72.7% Cinergy Corp. 739 10 4.0% 76.6% Atmos Energy Corp. 684 11 3.7% 80.3% Illinova Corp. 634 12 3.4% 83.7% Northern States Power Co. 608 13 3.3% 87.0% Alliant Energy Corp. 495 14 2.7% 89.6% Ameren Corp. 447 15 2.4% 92.0% Cilcorp, Inc. 383 16 2.1% 94.1% LG&E Energy Corp. 335 17 1.8% 95.9% WPS Resources Corp. 231 18 1.2% 97.1% Madison Gas & Electric Co. 167 19 0.9% 98.0% SIGCORP, Inc. 134 20 0.7% 98.7% Delta Natural Gas Co., Inc. 106 21 0.6% 99.3% Wisconsin Fuel & Light Co. 57 22 0.3% 99.6% Midwest Bottle Gas Co. 15 23 0.1% 99.7% Minnesota Power, Inc. 14 24 0.1% 99.7% Illinois Gas Co. 12 25 0.1% 99.8% St. Joseph Light & Power Co. 7 26 0.0% 99.8% Consumers Gas Co. 6 27 0.0% 99.9% Fidelity Natural Gas, Inc. 5 28 0.0% 99.9% Master Gas Service Co. 5 29 0.0% 99.9% Indiana Utilities Corp. 4 30 0.0% 99.9% Mount Carmel Public Utility Co. 4 31 0.0% 100.0% St. Croix Valley Natural Gas Co., Inc. 4 32 0.0% 100.0% Natural Gas, Inc. 2 33 0.0% 100.0% Total 18,665
Market Shares for Gas Companies in Illinois and Bordering States Companies Sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - --------------------------------------------------------------------------------------------- Columbia Energy Group, Inc. 1,940 1 15.7% 15.7% Nicor, Inc. 1,848 2 15.0% 30.7% Southern Union Co. 988 3 8.0% 38.7% Peoples Energy Corp. 963 4 7.8% 46.5% UtiliCorp United, Inc. 786 5 6.4% 52.9% NIPSCO Industries, Inc. 688 6 5.6% 58.5% MidAmerican Energy Holdings Co. 612 7 5.0% 63.4% Wicor, Inc. 513 8 4.2% 67.6% Atmos Energy Corp. 501 9 4.1% 71.7% Indiana Energy, Inc. 477 10 3.9% 75.5% Cinergy Corp. 453 11 3.7% 79.2% Northern States Power Co. 443 12 3.6% 82.8% Illinova Corp. 394 13 3.2% 86.0% Alliant Energy Corp. 380 14 3.1% 89.1% Ameren Corp. 294 15 2.4% 91.4% LG&E Energy Corp. 281 16 2.3% 93.7% WPS Resources Corp. 218 17 1.8% 95.5% Cilcorp, Inc. 200 18 1.6% 97.1% Madison Gas & Electric Co. 106 19 0.9% 98.0% SIGCORP, Inc. 106 20 0.9% 98.8% Wisconsin Fuel & Light Co. 48 21 0.4% 99.2% Delta Natural Gas Co., Inc. 37 22 0.3% 99.5% Minnesota Power, Inc. 11 23 0.1% 99.6% Illinois Gas Co. 10 24 0.1% 99.7% Midwest Bottle Gas Co. 10 25 0.1% 99.8% St. Joseph Light & Power Co. 6 26 0.1% 99.8% Consumers Gas Co. 6 27 0.0% 99.9% St. Croix Valley Natural Gas Co., Inc. 5 28 0.0% 99.9% Master Gas Service Co. 4 29 0.0% 99.9% Mount Carmel Public Utility Co. 4 30 0.0% 100.0% Indiana Utilities Corp. 2 31 0.0% 100.0% Natural Gas, Inc. 2 32 0.0% 100.0% Total 12,335
EX-99.14 15 EXHIBIT K-8 Exhibit K-8 Market Share for Combined Gas and Electric Companies in Illinois and Bordering States (Companies Listed in Order of Customers Served) - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): Northern States Power Co. Cinergy Co. Ameren Corp. Alliant Energy Corp. MidAmerican Energy Holdings Co. UtiliCorp United, Inc. NIPSCO Industries, Inc. Illinova Corp. LG&E Energy Corp. WPS Resources Corp. Cilcorp, Inc. Madison Gas & Electric Co. SIGCORP, Inc. Minnesota Power, Inc. St. Joseph Light & Power Co. Mount Carmel Public Utility Co. Y-axis (left side of chart): Market Share Percentages (listed in increments of 5 percent between and including 0 and 25 percent) [Bar Chart lists market shares for combined gas and electric companies in Illinois and Bordering States in terms of assets, revenues and number of customers. The companies are listed in the order of customers served as provided below. Assets, revenues and customers are represented by green, violet and red bars, respectively.]
Market Share for Combined Gas and Electric Companies in Illinois and Bordering States Companies Sorted by Revenue Holding Company Revenue Rank Share of Total Cumulative Share (millions of $) - --------------------------------------------------------------------------------------------------------- Cinergy Corp. 4,555 1 20.7% 20.7% Ameren Corp. 3,139 2 14.3% 35.0% Northern States Power Co. 2,988 3 13.6% 48.5% Alliant Energy Corp. 1,932 4 8.8% 57.3% NIPSCO Industries, Inc. 1,789 5 8.1% 65.5% Illinova Corp. 1,774 6 8.1% 73.5% MidAmerican Energy Holdings Co. 1,663 7 7.6% 81.1% LG&E Energy Corp. 846 8 3.8% 84.9% UtiliCorp United, Inc. 833 9 3.8% 88.7% WPS Resources Corp. 690 10 3.1% 91.8% Cilcorp, Inc. 557 11 2.5% 94.4% Minnesota Power, Inc. 505 12 2.3% 96.7% SIGCORP, Inc. 358 13 1.6% 98.3% Madison Gas & Electric Co. 271 14 1.2% 99.5% St. Joseph Light & Power Co. 93 15 0.4% 99.9% Mount Carmel Public Utility Co. 12 16 0.1% 100.0% Total 22,004
Market Share for Combined Gas and Electric Companies in Illinois and Bordering States Companies Sorted by Assets Holding Company Assets Rank Share of Total Cumulative Share (millions of $) - --------------------------------------------------------------------------------------------------------- Ameren Corp. 10,893 1 17.7% 17.7% Cinergy Corp. 9,690 2 15.7% 33.4% Northern States Power Co. 7,474 3 12.1% 45.5% Illinova Corp. 7,099 4 11.5% 57.0% Alliant Energy Corp. 5,177 5 8.4% 65.4% NIPSCO Industries, Inc. 5,141 6 8.3% 73.7% MidAmerican Energy Holdings Co. 4,645 7 7.5% 81.3% LG&E Energy Corp. 2,578 8 4.2% 85.4% UtiliCorp United, Inc. 2,357 9 3.8% 89.3% WPS Resources Corp. 1,640 10 2.7% 91.9% Cilcorp, Inc. 1,570 11 2.5% 94.5% Minnesota Power, Inc. 1,245 12 2.0% 96.5% SIGCORP, Inc. 1,184 13 1.9% 98.4% Madison Gas & Electric Co. 654 14 1.1% 99.5% St. Joseph Light & Power Co. 311 15 0.5% 100.0% Mount Carmel Public Utility Co. 22 16 0.0% 100.0% Total 61,680
Market Share for Combined Gas and Electric Companies in Illinois and Bordering States Companies Sorted by Number of Customers Holding Company Customers Rank Share of Total Cumulative Share (thousands) - ------------------------------------------------------------------------------------------------------- Northern States Power Co. 1,917 1 14.1% 14.1% Cinergy Corp. 1,853 2 13.6% 27.7% Ameren Corp. 1,789 3 13.2% 40.9% Alliant Energy Corp. 1,271 4 9.4% 50.2% MidAmerican Energy Holdings Co. 1,256 5 9.2% 59.5% UtiliCorp United, Inc. 1,152 6 8.5% 68.0% NIPSCO Industries, Inc. 1,102 7 8.1% 76.1% Illinova Corp. 953 8 7.0% 83.1% LG&E Energy Corp. 636 9 4.7% 87.8% WPS Resources Corp. 589 10 4.3% 92.1% Cilcorp, Inc. 395 11 2.9% 95.0% Madison Gas & Electric Co. 228 12 1.7% 96.7% SIGCORP, Inc. 228 13 1.7% 98.3% Minnesota Power, Inc. 148 14 1.1% 99.4% St. Joseph Light & Power Co. 68 15 0.5% 99.9% Mount Carmel Public Utility Co. 9 16 0.1% 100.0% Total 13,594
EX-99.15 16 EXHIBIT K-9 Exhibit K-9 Market Share for Utilities in Illinois and Bordering States (Companies Listed in Order of Customers Served) - ------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): Unicom Corp. American Electric Power Co., Inc. Columbia Energy Group, Inc. Northern States Power Co. Cinergy Corp. Nicor, Inc. Ameren Corp. Alliant Energy Corp. MidAmerican Energy Holdings Co. UtiliCorp United, Inc. NIPSCO Industries, Inc. Southern Union Co. Wisconsin Energy Corp. Peoples Energy Corp. Illinova Corp. LG&E Energy Corp. WPS Resources Corp. Wicor, Inc. Atmos Energy Corp. Indiana Energy, Inc. KU Energy Corp. Kansas City Power & Light Co. IPALCO Enterprises, Inc. Cilcorp, Inc. Madison Gas & Electric Co. Everyone else Y-axis (left side of chart): Market Share Percentages (listed in increments of 5 percent between and including 0 and 25 percent) [Bar Chart lists market shares for utilities in Illinois and Bordering States in terms of assets, revenues and number of customers. The companies are listed in the order of customers served as provided below. Assets, revenues and customers are represented by green, violet and red bars, respectively.]
Market Share for Utilities in Illinois and Bordering States Companies sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - ---------------------------------------------------------------------------------------------------- Unicom Corp. 7,176 1 14.7% 14.7% American Electric Power Co., Inc. 6,979 2 14.3% 29.1% Cinergy Corp. 4,555 3 9.4% 38.4% Ameren Corp. 3,139 4 6.4% 44.9% Northern States Power Co. 2,988 5 6.1% 51.0% Columbia Energy Group, Inc. 2,282 6 4.7% 55.7% Alliant Energy Corp. 1,932 7 4.0% 59.6% NIPSCO Industries, Inc. 1,789 8 3.7% 63.3% Illinova Corp. 1,774 9 3.6% 66.9% Nicor, Inc. 1,731 10 3.6% 70.5% MidAmerican Energy Holdings Co. 1,663 11 3.4% 73.9% Wisconsin Energy Corp. 1,412 12 2.9% 76.8% Peoples Energy Corp. 1,238 13 2.5% 79.4% Kansas City Power & Light Co. 896 14 1.8% 81.2% Southern Union Co. 882 15 1.8% 83.0% LG&E Energy Corp. 846 16 1.7% 84.7% UtiliCorp United, Inc. 833 17 1.7% 86.4% IPALCO Enterprises, Inc. 738 18 1.5% 88.0% KU Energy Corp. 716 19 1.5% 89.4% WPS Resources Corp. 690 20 1.4% 90.9% Cilcorp, Inc. 557 21 1.1% 92.0% Wicor, Inc. 537 22 1.1% 93.1% Indiana Energy, Inc. 528 23 1.1% 94.2% Minnesota Power, Inc. 505 24 1.0% 95.2% Atmos Energy Corp. 502 25 1.0% 96.2% Ohio Valley Electric Corp. 450 26 0.9% 97.2% SIGCORP, Inc. 358 27 0.7% 97.9% Madison Gas & Electric Co. 271 28 0.6% 98.5% Electric Energy, Inc. 232 29 0.5% 98.9% Empire District Electric Co. 214 30 0.4% 99.4% St. Joseph Light & Power Co. 93 31 0.2% 99.6% Wisconsin Fuel & Light Co. 51 32 0.1% 99.7% Delta Natural Gas Co., Inc. 39 33 0.1% 99.8% Consolidated Water Power Co. 37 34 0.1% 99.8% Mount Carmel Public Utility Co. 15 35 0.0% 99.9% Midwest Energy, Inc. 12 36 0.0% 99.9% Northwestern Wisconsin Electric Co. 10 37 0.0% 99.9% Midwest Bottle Gas Co. 9 38 0.0% 99.9% Illinois Gas Co. 9 39 0.0% 99.9% Wisconsin River Power Co. 5 40 0.0% 100.0% Consumers Gas Co. 5 41 0.0% 100.0% Master Gas Service Co. 4 42 0.0% 100.0% St. Croix Valley Natural Gas Co., Inc. 4 43 0.0% 100.0% Indiana Utilities Corp. 3 44 0.0% 100.0% Natural Gas, Inc. 2 45 0.0% 100.0% North Central Power Co., Inc. 2 46 0.0% 100.0% Pioneer Power & Light Co. 2 47 0.0% 100.0% Fidelity Natural Gas, Inc. 1 48 0.0% 100.0% Total 48,714
Market Share for Utilities in Illinois and Bordering States Companies sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ----------------------------------------------------------------------------------------------------- Unicom Corp. 26,322 1 19.8% 19.8% American Electric Power Co., Inc. 17,993 2 13.5% 33.3% Ameren Corp. 10,893 3 8.2% 41.5% Cinergy Corp. 9,690 4 7.3% 48.7% Northern States Power Co. 7,474 5 5.6% 54.3% Illinova Corp. 7,099 6 5.3% 59.7% Alliant Energy Corp. 5,177 7 3.9% 63.6% NIPSCO Industries, Inc. 5,141 8 3.9% 67.4% Wisconsin Energy Corp. 4,969 9 3.7% 71.2% MidAmerican Energy Holdings Co. 4,645 10 3.5% 74.6% Kansas City Power & Light Co. 3,497 11 2.6% 77.3% Nicor, Inc. 2,956 12 2.2% 79.5% IPALCO Enterprises, Inc. 2,695 13 2.0% 81.5% LG&E Energy Corp. 2,578 14 1.9% 83.5% KU Energy Corp. 2,553 15 1.9% 85.4% Columbia Energy Group, Inc. 2,424 16 1.8% 87.2% UtiliCorp United, Inc. 2,357 17 1.8% 89.0% Peoples Energy Corp. 2,083 18 1.6% 90.5% WPS Resources Corp. 1,640 19 1.2% 91.8% Cilcorp, Inc. 1,570 20 1.2% 92.9% Southern Union Co. 1,518 21 1.1% 94.1% Minnesota Power, Inc. 1,245 22 0.9% 95.0% SIGCORP, Inc. 1,184 23 0.9% 95.9% Indiana Energy, Inc. 847 24 0.6% 96.5% Empire District Electric Co. 791 25 0.6% 97.1% Wicor, Inc. 787 26 0.6% 97.7% Ohio Valley Electric Corp. 686 27 0.5% 98.2% Atmos Energy Corp. 684 28 0.5% 98.7% Madison Gas & Electric Co. 654 29 0.5% 99.2% Electric Energy, Inc. 348 30 0.3% 99.5% St. Joseph Light & Power Co. 311 31 0.2% 99.7% Delta Natural Gas Co., Inc. 106 32 0.1% 99.8% Wisconsin Fuel & Light Co. 57 33 0.0% 99.9% Consolidated Water Power Co. 37 34 0.0% 99.9% Northwestern Wisconsin Electric Co. 28 35 0.0% 99.9% Mount Carmel Public Utility Co. 26 36 0.0% 99.9% Wisconsin River Power Co. 26 37 0.0% 99.9% Midwest Bottle Gas Co. 15 38 0.0% 100.0% Illinois Gas Co. 12 39 0.0% 100.0% Midwest Energy, Inc. 10 40 0.0% 100.0% North Central Power Co., Inc. 7 41 0.0% 100.0% Consumers Gas Co. 6 42 0.0% 100.0% Fidelity Natural Gas, Inc. 5 43 0.0% 100.0% Master Gas Service Co. 5 44 0.0% 100.0% Indiana Utilities Corp. 4 45 0.0% 100.0% St. Croix Valley Natural Gas Co., Inc. 4 46 0.0% 100.0% Pioneer Power & Light Co. 3 47 0.0% 100.0% Natural Gas, Inc. 2 48 0.0% 100.0% Total 133,162
Market Share for Utilities in Illinois and Bordering States Companies sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - ----------------------------------------------------------------------------------------------- Unicom Corp. 3,420 1 11.5% 11.5% American Electric Power Co., Inc. 2,958 2 9.9% 21.4% Columbia Energy Group, Inc. 1,940 3 6.5% 27.9% Northern States Power Co. 1,917 4 6.4% 34.4% Cinergy Corp. 1,853 5 6.2% 40.6% Nicor, Inc. 1,848 6 6.2% 46.8% Ameren Corp. 1,789 7 6.0% 52.8% Alliant Energy Corp. 1,271 8 4.3% 57.0% MidAmerican Energy Holdings Co. 1,256 9 4.2% 61.3% UtiliCorp United, Inc. 1,152 10 3.9% 65.1% NIPSCO Industries, Inc. 1,102 11 3.7% 68.8% Southern Union Co. 988 12 3.3% 72.1% Wisconsin Energy Corp. 973 13 3.3% 75.4% Peoples Energy Corp. 963 14 3.2% 78.6% Illinova Corp. 953 15 3.2% 81.8% LG&E Energy Corp. 636 16 2.1% 84.0% WPS Resources Corp. 589 17 2.0% 85.9% Wicor, Inc. 513 18 1.7% 87.7% Atmos Energy Corp. 501 19 1.7% 89.3% Indiana Energy, Inc. 477 20 1.6% 90.9% KU Energy Corp. 464 21 1.6% 92.5% Kansas City Power & Light Co. 443 22 1.5% 94.0% IPALCO Enterprises, Inc. 417 23 1.4% 95.4% Cilcorp, Inc. 395 24 1.3% 96.7% Madison Gas & Electric Co. 228 25 0.8% 97.5% SIGCORP, Inc. 228 26 0.8% 98.2% Minnesota Power, Inc. 148 27 0.5% 98.7% Empire District Electric Co. 141 28 0.5% 99.2% St. Joseph Light & Power Co. 68 29 0.2% 99.4% Wisconsin Fuel & Light Co. 48 30 0.2% 99.6% Delta Natural Gas Co., Inc. 37 31 0.1% 99.7% Mount Carmel Public Utility Co. 13 32 0.0% 99.8% Midwest Energy, Inc. 12 33 0.0% 99.8% Northwestern Wisconsin Electric Co. 11 34 0.0% 99.8% Illinois Gas Co. 10 35 0.0% 99.9% Midwest Bottle Gas Co. 10 36 0.0% 99.9% Consumers Gas Co. 6 37 0.0% 99.9% St. Croix Valley Natural Gas Co., Inc. 5 38 0.0% 100.0% Master Gas Service Co. 4 39 0.0% 100.0% North Central Power Co., Inc. 4 40 0.0% 100.0% Indiana Utilities Corp. 2 41 0.0% 100.0% Natural Gas, Inc. 2 42 0.0% 100.0% Pioneer Power & Light Co. 2 43 0.0% 100.0% Consolidated Water Power Co. 1 44 0.0% 100.0% Ohio Valley Electric Corp. 0 45 0.0% 100.0% Electric Energy, Inc. 0 46 0.0% 100.0% Wisconsin River Power Co. 0 47 0.0% 100.0% Total 29,797
EX-99.16 17 EXHIBIT K-10
Market Shares for Electric Companies in the U.S. Number of Portion of Market Served Cilcorp's Cilcorp's Larger by Cilcorp and Larger Parameter Units Statistics Share Companies Companies - --------------------------------------------------------------------------------------------------- Customers thousands 194 0.2% 75 98.1% Assets $millions 1,187 0.2% 73 97.8% Revenues $millions 338 0.2% 78 98.4%
Comparison of Cilcorp, Inc. to Large Electric Utilities Number of Utilities Average Size Necessary for 50% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 17 2,690 14 Assets $millions 16 18,148 15 Revenues $millions 17 5,863 17 Number of Utilities Average Size Necessary for 80% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 38 1,906 10 Assets $millions 37 18,148 15 Revenues $millions 38 4,120 12
Market Shares for Electric Companies in the United States Companies Sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - --------------------------------------------------------------------------------------------- Southern Company 9,076 1 4.7% 4.7% Edison International 7,933 2 4.1% 8.8% PG&E Corp. 7,700 3 4.0% 12.7% Entergy Corp. 7,649 4 3.9% 16.7% Unicom Corp. 7,176 5 3.7% 20.4% American Electric Power Co., Inc. 6,979 6 3.6% 24.0% Texas Utilities Co. 6,210 7 3.2% 27.2% FPL Group, Inc. 6,132 8 3.2% 30.4% Consolidated Edison, Inc. 5,647 9 2.9% 33.3% FirstEnergy Corp. 5,172 10 2.7% 35.9% Dominion Resources, Inc. 4,628 11 2.4% 38.3% Duke Energy Corp. 4,361 12 2.2% 40.6% Northeast Utilities 4,297 13 2.2% 42.8% Reliant Energy, Inc. 4,251 14 2.2% 45.0% PECO Energy Co. 4,191 15 2.2% 47.2% Public Service Enterprise Group, Inc. 4,167 16 2.1% 49.3% GPU, Inc. 4,096 17 2.1% 51.4% Cinergy Corp. 4,059 18 2.1% 53.5% New England Electric System 3,989 19 2.1% 55.6% PacifiCorp 3,684 20 1.9% 57.5% DTE Energy Co. 3,619 21 1.9% 59.3% Central & South West Corp. 3,427 22 1.8% 61.1% Niagara Mohawk Power Corp. 3,308 23 1.7% 62.8% PP&L Resources, Inc. 3,048 24 1.6% 64.4% Carolina Power & Light Co. 3,024 25 1.6% 65.9% Ameren Corp. 2,889 26 1.5% 67.4% Allegheny Energy, Inc. 2,655 27 1.4% 68.8% CMS Energy Corp. 2,513 28 1.3% 70.1% Northern States Power Co. 2,483 29 1.3% 71.4% New Century Energies, Inc. 2,452 30 1.3% 72.6% Florida Progress Corp. 2,448 31 1.3% 73.9% Baltimore Gas & Electric Co. 2,222 32 1.1% 75.1% Conectiv 2,083 33 1.1% 76.1% Potomac Electric Power Co. 1,864 34 1.0% 77.1% Energy East Corp. 1,792 35 0.9% 78.0% Pinnacle West Capital Corp. 1,790 36 0.9% 78.9% Sempra Energy 1,776 37 0.9% 79.9% BEC Energy 1,769 38 0.9% 80.8% Alliant Energy Corp. 1,524 39 0.8% 81.6% Illinova Corp. 1,420 40 0.7% 82.3% Enron Corp. 1,419 41 0.7% 83.0% Wisconsin Energy Corp. 1,412 42 0.7% 83.7% Puget Sound Energy, Inc. 1,231 43 0.6% 84.4% Western Resources, Inc. 1,228 44 0.6% 85.0% - --------------------------------------------------------------------------------------------- SCANA Corp. 1,203 45 0.6% 85.6% TECO Energy, Inc. 1,202 46 0.6% 86.3% OGE Energy Corp. 1,192 47 0.6% 86.9% DQE, Inc. 1,147 48 0.6% 87.5% MidAmerican Energy Holdings Co. 1,126 49 0.6% 88.0% NIPSCO Industries, Inc. 1,017 50 0.5% 88.6% DPL, Inc. 1,015 51 0.5% 89.1% CMP Group, Inc. 977 52 0.5% 89.6% Hawaiian Electric Industries, Inc. 938 53 0.5% 90.1% Kansas City Power & Light Co. 896 54 0.5% 90.5% Eastern Utilities Associates 829 55 0.4% 91.0% Commonwealth Energy System 812 56 0.4% 91.4% Nevada Power Co. 799 57 0.4% 91.8% Idaho Power Co. 749 58 0.4% 92.2% IPALCO Enterprises, Inc. 738 59 0.4% 92.6% UniSource Energy Corp. 730 60 0.4% 92.9% Washington Water Power Co. 726 61 0.4% 93.3% PSC of New Mexico 722 62 0.4% 93.7% KU Energy Corp. 716 63 0.4% 94.1% United Illuminating Co. 710 64 0.4% 94.4% Rochester Gas & Electric Corp. 700 65 0.4% 94.8% LG&E Energy Corp. 615 66 0.3% 95.1% El Paso Electric Co. 594 67 0.3% 95.4% TNP Enterprises, Inc. 581 68 0.3% 95.7% UtiliCorp United, Inc. 557 69 0.3% 96.0% Orange & Rockland Utilities, Inc. 554 70 0.3% 96.3% Sierra Pacific Resources 541 71 0.3% 96.6% Montana Power Co. 508 72 0.3% 96.8% Minnesota Power, Inc. 491 73 0.3% 97.1% WPS Resources Corp. 479 74 0.2% 97.3% Cleco Corp. 456 75 0.2% 97.6% Ohio Valley Electric Corp. 450 76 0.2% 97.8% Central Hudson Gas & Electric Corp. 416 77 0.2% 98.0% Central Vermont Public Service Corp. 372 78 0.2% 98.2% Cilcorp, Inc. 338 79 0.2% 98.4% Everyone else combined 3,141 1.6% 100.0% Total 193,832
Market Shares for Electric Companies in the United States Companies Sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ----------------------------------------------------------------------------------------------- Southern Company 30,208 1 5.3% 5.3% Unicom Corp. 26,322 2 4.6% 9.9% PG&E Corp. 23,988 3 4.2% 14.1% Entergy Corp. 22,637 4 4.0% 18.1% Texas Utilities Co. 22,328 5 3.9% 22.0% Edison International 20,723 6 3.6% 25.6% American Electric Power Co., Inc. 17,993 7 3.1% 28.7% FPL Group, Inc. 16,643 8 2.9% 31.7% Duke Energy Corp. 14,760 9 2.6% 34.2% Dominion Resources, Inc. 14,545 10 2.5% 36.8% FirstEnergy Corp. 14,289 11 2.5% 39.3% DTE Energy Co. 14,123 12 2.5% 41.8% PECO Energy Co. 13,805 13 2.4% 44.2% Public Service Enterprise Group, Inc. 13,648 14 2.4% 46.6% Reliant Energy, Inc. 12,614 15 2.2% 48.8% Consolidated Edison, Inc. 11,739 16 2.1% 50.8% PacifiCorp 11,417 17 2.0% 52.8% Central & South West Corp. 11,314 18 2.0% 54.8% Ameren Corp. 10,446 19 1.8% 56.6% Carolina Power & Light Co. 10,090 20 1.8% 58.4% PP&L Resources, Inc. 9,957 21 1.7% 60.1% GPU, Inc. 9,896 22 1.7% 61.9% Northeast Utilities 9,751 23 1.7% 63.6% Cinergy Corp. 8,951 24 1.6% 65.1% Niagara Mohawk Power Corp. 8,734 25 1.5% 66.7% Allegheny Energy, Inc. 7,977 26 1.4% 68.1% Pinnacle West Capital Corp. 6,923 27 1.2% 69.3% Baltimore Gas & Electric Co. 6,908 28 1.2% 70.5% Northern States Power Co. 6,866 29 1.2% 71.7% New Century Energies, Inc. 6,639 30 1.2% 72.9% Illinova Corp. 6,465 31 1.1% 74.0% New England Electric System 6,246 32 1.1% 75.1% Potomac Electric Power Co. 6,211 33 1.1% 76.2% Florida Progress Corp. 6,158 34 1.1% 77.2% CMS Energy Corp. 5,788 35 1.0% 78.3% Conectiv 5,593 36 1.0% 79.2% Energy East Corp. 5,160 37 0.9% 80.1% Wisconsin Energy Corp. 4,969 38 0.9% 81.0% Western Resources, Inc. 4,722 39 0.8% 81.8% Alliant Energy Corp. 4,682 40 0.8% 82.7% Sempra Energy 4,502 41 0.8% 83.4% DQE, Inc. 4,334 42 0.8% 84.2% BEC Energy 4,295 43 0.8% 84.9% SCANA Corp. 4,280 44 0.7% 85.7% - -------------------------------------------------------------------------------------------- NIPSCO Industries, Inc. 3,911 45 0.7% 86.4% MidAmerican Energy Holdings Co. 3,876 46 0.7% 87.1% TECO Energy, Inc. 3,626 47 0.6% 87.7% OGE Energy Corp. 3,609 48 0.6% 88.3% Puget Sound Energy, Inc. 3,498 49 0.6% 88.9% Kansas City Power & Light Co. 3,497 50 0.6% 89.6% DPL, Inc. 3,261 51 0.6% 90.1% Enron Corp. 3,014 52 0.5% 90.7% IPALCO Enterprises, Inc. 2,695 53 0.5% 91.1% Idaho Power Co. 2,606 54 0.5% 91.6% KU Energy Corp. 2,553 55 0.4% 92.0% Rochester Gas & Electric Corp. 2,436 56 0.4% 92.5% Nevada Power Co. 2,378 57 0.4% 92.9% El Paso Electric Co. 2,259 58 0.4% 93.3% LG&E Energy Corp. 2,242 59 0.4% 93.7% UniSource Energy Corp. 2,189 60 0.4% 94.0% Hawaiian Electric Industries, Inc. 2,084 61 0.4% 94.4% PSC of New Mexico 1,949 62 0.3% 94.7% United Illuminating Co. 1,819 63 0.3% 95.1% Montana Power Co. 1,798 64 0.3% 95.4% CMP Group, Inc. 1,689 65 0.3% 95.7% Washington Water Power Co. 1,576 66 0.3% 95.9% Sierra Pacific Resources 1,543 67 0.3% 96.2% Cleco Corp. 1,446 68 0.3% 96.5% WPS Resources Corp. 1,409 69 0.2% 96.7% UtiliCorp United, Inc. 1,403 70 0.2% 97.0% Minnesota Power, Inc. 1,231 71 0.2% 97.2% TNP Enterprises, Inc. 1,225 72 0.2% 97.4% Central Hudson Gas & Electric Corp. 1,194 73 0.2% 97.6% Cilcorp, Inc. 1,187 74 0.2% 97.8% Everyone else combined 12,509 2.2% 100.0% Total 571,350
Market Shares for Electric Companies in the United States Companies Sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - --------------------------------------------------------------------------------------------- PG&E Corp. 4,486 1 5.0% 5.0% Edison International 4,235 2 4.7% 9.6% Southern Company 3,683 3 4.1% 13.7% FPL Group, Inc. 3,615 4 4.0% 17.7% Unicom Corp. 3,420 5 3.8% 21.5% Consolidated Edison, Inc. 3,010 6 3.3% 24.8% American Electric Power Co., Inc. 2,958 7 3.3% 28.1% Texas Utilities Co. 2,459 8 2.7% 30.8% Entergy Corp. 2,447 9 2.7% 33.5% FirstEnergy Corp. 2,151 10 2.4% 35.9% DTE Energy Co. 2,039 11 2.3% 38.1% GPU, Inc. 2,008 12 2.2% 40.4% Dominion Resources, Inc. 1,977 13 2.2% 42.5% Duke Energy Corp. 1,919 14 2.1% 44.7% Public Service Enterprise Group, Inc. 1,897 15 2.1% 46.8% Central & South West Corp. 1,712 16 1.9% 48.6% Northeast Utilities 1,706 17 1.9% 50.5% CMS Energy Corp. 1,603 18 1.8% 52.3% Reliant Energy, Inc. 1,558 19 1.7% 54.0% New Century Energies, Inc. 1,557 20 1.7% 55.7% Niagara Mohawk Power Corp. 1,554 21 1.7% 57.5% Ameren Corp. 1,495 22 1.7% 59.1% PECO Energy Co. 1,482 23 1.6% 60.8% Northern States Power Co. 1,474 24 1.6% 62.4% PacifiCorp 1,421 25 1.6% 64.0% Cinergy Corp. 1,401 26 1.5% 65.5% Allegheny Energy, Inc. 1,395 27 1.5% 67.0% New England Electric System 1,337 28 1.5% 68.5% Florida Progress Corp. 1,314 29 1.5% 70.0% PP&L Resources, Inc. 1,240 30 1.4% 71.3% Sempra Energy 1,168 31 1.3% 72.6% Carolina Power & Light Co. 1,138 32 1.3% 73.9% Baltimore Gas & Electric Co. 1,109 33 1.2% 75.1% Wisconsin Energy Corp. 973 34 1.1% 76.2% Conectiv 926 35 1.0% 77.2% Alliant Energy Corp. 892 36 1.0% 78.2% Puget Sound Energy, Inc. 864 37 1.0% 79.2% Energy East Corp. 811 38 0.9% 80.1% Pinnacle West Capital Corp. 748 39 0.8% 80.9% OGE Energy Corp. 687 40 0.8% 81.6% Potomac Electric Power Co. 685 41 0.8% 82.4% Enron Corp. 679 42 0.8% 83.1% BEC Energy 669 43 0.7% 83.9% MidAmerican Energy Holdings Co. 644 44 0.7% 84.6% - ------------------------------------------------------------------------------------------ Western Resources, Inc. 614 45 0.7% 85.3% DQE, Inc. 581 46 0.6% 85.9% Illinova Corp. 559 47 0.6% 86.5% CMP Group, Inc. 525 48 0.6% 87.1% TECO Energy, Inc. 518 49 0.6% 87.7% Nevada Power Co. 504 50 0.6% 88.2% SCANA Corp. 499 51 0.6% 88.8% DPL, Inc. 482 52 0.5% 89.3% KU Energy Corp. 464 53 0.5% 89.8% Kansas City Power & Light Co. 443 54 0.5% 90.3% IPALCO Enterprises, Inc. 417 55 0.5% 90.8% NIPSCO Industries, Inc. 414 56 0.5% 91.3% Hawaiian Electric Industries, Inc. 385 57 0.4% 91.7% WPS Resources Corp. 371 58 0.4% 92.1% Commonwealth Energy System 367 59 0.4% 92.5% UtiliCorp United, Inc. 366 60 0.4% 92.9% Idaho Power Co. 357 61 0.4% 93.3% LG&E Energy Corp. 355 62 0.4% 93.7% PSC of New Mexico 346 63 0.4% 94.1% Rochester Gas & Electric Corp. 343 64 0.4% 94.4% Eastern Utilities Associates 316 65 0.3% 94.8% UniSource Energy Corp. 314 66 0.3% 95.1% United Illuminating Co. 312 67 0.3% 95.5% Washington Water Power Co. 297 68 0.3% 95.8% Sierra Pacific Resources 283 69 0.3% 96.1% El Paso Electric Co. 282 70 0.3% 96.4% Montana Power Co. 279 71 0.3% 96.7% Orange & Rockland Utilities, Inc. 268 72 0.3% 97.0% Central Hudson Gas & Electric Corp. 266 73 0.3% 97.3% Cleco Corp. 234 74 0.3% 97.6% TNP Enterprises, Inc. 221 75 0.2% 97.8% Cilcorp, Inc. 194 76 0.2% 98.1% Everyone else combined 1,758 1.9% 100.0% Total 90,483
EX-99.17 18 EXHIBIT K-11
Market Shares for Gas Companies in the U.S. Number of Portion of Market Served Cilcorp's Cilcorp's Larger by Cilcorp and Larger Parameter Units Statistics Share Companies Companies - --------------------------------------------------------------------------------------------------- Customers thousands 200 0.4% 56 93.9% Assets $millions 383 0.5% 54 91.3% Revenues $millions 219 0.5% 57 92.5%
Comparison of Cilcorp, Inc. to Large Gas Utilities Number of Utilities Average Size Necessary for 50% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 12 2,075 10 Assets $millions 14 2,787 7 Revenues $millions 15 1,601 7 Number of Utilities Average Size Necessary for 80% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 34 1,157 6 Assets $millions 38 1,642 4 Revenues $millions 39 966 4
Market Shares for Gas Companies in the United States Companies Sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - --------------------------------------------------------------------------------------------------- Sempra Energy 3,196 1 6.9% 6.9% Columbia Energy Group, Inc. 2,282 2 4.9% 11.7% Consolidated Natural Gas Co. 2,027 3 4.3% 16.1% Public Service Enterprise Group, Inc. 1,937 4 4.2% 20.2% PG&E Corp. 1,892 5 4.1% 24.3% Nicor, Inc. 1,731 6 3.7% 28.0% Houston Industries, Inc. 1,695 7 3.6% 31.6% MarketSpan Corp. 1,310 8 2.8% 34.4% Peoples Energy Corp. 1,238 9 2.7% 37.1% MCN Energy Group, Inc. 1,227 10 2.6% 39.7% CMS Energy Corp. 1,195 11 2.6% 42.3% AGL Resources, Inc. 1,120 12 2.4% 44.7% Consolidated Edison, Inc. 1,096 13 2.3% 47.0% Washington Gas Light Co. 1,079 14 2.3% 49.4% National Fuel Gas Co. 986 15 2.1% 51.5% Texas Utilities Co. 969 16 2.1% 53.5% Southern Union Co. 882 17 1.9% 55.4% Piedmont Natural Gas Co., Inc. 784 18 1.7% 57.1% NIPSCO Industries, Inc. 772 19 1.7% 58.8% Eastern Enterprises 756 20 1.6% 60.4% Niagara Mohawk Power Corp. 659 21 1.4% 61.8% New Century Energies, Inc. 637 22 1.4% 63.2% ONEOK, Inc. 600 23 1.3% 64.5% New Jersey Resources Corp. 574 24 1.2% 65.7% Wicor, Inc. 537 25 1.2% 66.8% MidAmerican Energy Holdings Co. 536 26 1.1% 68.0% Indiana Energy, Inc. 528 27 1.1% 69.1% Baltimore Gas & Electric Co. 522 28 1.1% 70.2% Northern States Power Co. 505 29 1.1% 71.3% Atmos Energy Corp. 502 30 1.1% 72.4% Cinergy Corp. 496 31 1.1% 73.5% NUI Corp. 455 32 1.0% 74.4% PECO Energy Co. 451 33 1.0% 75.4% Questar Corp. 448 34 1.0% 76.4% Bay State Gas Co. 442 35 0.9% 77.3% Equitable Resources, Inc. 410 36 0.9% 78.2% Puget Sound Energy, Inc. 409 37 0.9% 79.1% Alliant Energy Corp. 408 38 0.9% 79.9% UGI Corp. 368 39 0.8% 80.7% Illinova Corp. 354 40 0.8% 81.5% NW Natural (Northwest Natural Gas Co.) 352 41 0.8% 82.2% PSC of North Carolina, Inc. 348 42 0.7% 83.0% Energy East Corp. 338 43 0.7% 83.7% Rochester Gas & Electric Corp. 336 44 0.7% 84.4% - -------------------------------------------------------------------------------------------------- Commonwealth Energy System 331 45 0.7% 85.1% South Jersey Industries, Inc. 325 46 0.7% 85.8% Yankee Energy System, Inc. 319 47 0.7% 86.5% PSC of New Mexico 295 48 0.6% 87.2% CTG Resources, Inc. 285 49 0.6% 87.8% UtiliCorp United, Inc. 276 50 0.6% 88.4% Southwest Gas Corp. 258 51 0.6% 88.9% Connecticut Energy Corp. 252 52 0.5% 89.4% Ameren Corp. 250 53 0.5% 90.0% TECO Energy, Inc. 250 54 0.5% 90.5% SCANA Corp. 234 55 0.5% 91.0% SEMCO Energy, Inc. 233 56 0.5% 91.5% LG&E Energy Corp. 231 57 0.5% 92.0% Cilcorp, Inc. 219 58 0.5% 92.5% Everyone else combined 3,509 7.5% 100.0% Total 46,653
Market Shares for Gas Companies in the United States Companies Sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ---------------------------------------------------------------------------------------------------- Sempra Energy 6,652 1 8.6% 8.6% PG&E Corp. 5,985 2 7.7% 16.2% Nicor, Inc. 2,956 3 3.8% 20.0% Consolidated Natural Gas Co. 2,705 4 3.5% 23.5% Public Service Enterprise Group, Inc. 2,697 5 3.5% 27.0% MCN Energy Group, Inc. 2,541 6 3.3% 30.3% Columbia Energy Group, Inc. 2,424 7 3.1% 33.4% Peoples Energy Corp. 2,083 8 2.7% 36.1% CMS Energy Corp. 1,926 9 2.5% 38.5% AGL Resources, Inc. 1,885 10 2.4% 41.0% Washington Gas Light Co. 1,832 11 2.4% 43.3% MarketSpan Corp. 1,827 12 2.3% 45.7% Houston Industries, Inc. 1,764 13 2.3% 47.9% Consolidated Edison, Inc. 1,740 14 2.2% 50.2% Texas Utilities Co. 1,677 15 2.2% 52.3% Southern Union Co. 1,518 16 2.0% 54.3% NIPSCO Industries, Inc. 1,230 17 1.6% 55.9% Piedmont Natural Gas Co., Inc. 1,227 18 1.6% 57.4% National Fuel Gas Co. 1,187 19 1.5% 59.0% Puget Sound Energy, Inc. 1,169 20 1.5% 60.5% Niagara Mohawk Power Corp. 1,132 21 1.5% 61.9% NW Natural (Northwest Natural Gas Co.) 1,129 22 1.5% 63.4% New Century Energies, Inc. 1,124 23 1.4% 64.8% Eastern Enterprises 955 24 1.2% 66.0% UtiliCorp United, Inc. 954 25 1.2% 67.3% PECO Energy Co. 878 26 1.1% 68.4% Baltimore Gas & Electric Co. 847 27 1.1% 69.5% Indiana Energy, Inc. 847 28 1.1% 70.6% Questar Corp. 836 29 1.1% 71.6% ONEOK, Inc. 826 30 1.1% 72.7% New Jersey Resources Corp. 810 31 1.0% 73.7% Wicor, Inc. 787 32 1.0% 74.8% MidAmerican Energy Holdings Co. 769 33 1.0% 75.7% Southwest Gas Corp. 747 34 1.0% 76.7% Cinergy Corp. 739 35 0.9% 77.7% Atmos Energy Corp. 684 36 0.9% 78.5% PSC of North Carolina, Inc. 671 37 0.9% 79.4% UGI Corp. 638 38 0.8% 80.2% Illinova Corp. 634 39 0.8% 81.0% Bay State Gas Co. 622 40 0.8% 81.8% South Jersey Industries, Inc. 616 41 0.8% 82.6% Northern States Power Co. 608 42 0.8% 83.4% NUI Corp. 607 43 0.8% 84.2% Equitable Resources, Inc. 567 44 0.7% 84.9% - -------------------------------------------------------------------------------------------------- Energy East Corp. 563 45 0.7% 85.6% Yankee Energy System, Inc. 524 46 0.7% 86.3% Alliant Energy Corp. 495 47 0.6% 86.9% TECO Energy, Inc. 460 48 0.6% 87.5% Ameren Corp. 447 49 0.6% 88.1% PSC of New Mexico 441 50 0.6% 88.7% Cascade Natural Gas Corp. 423 51 0.5% 89.2% Rochester Gas & Electric Corp. 417 52 0.5% 89.8% CTG Resources, Inc. 406 53 0.5% 90.3% Connecticut Energy Corp. 396 54 0.5% 90.8% Cilcorp, Inc. 383 55 0.5% 91.3% Everyone else combined 6,780 8.7% 100.0% Total 77,787
Market Shares for Gas Companies in the United States Companies Sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - -------------------------------------------------------------------------------------------------- Sempra Energy 5,508 1 11.2% 11.2% PG&E Corp. 3,680 2 7.5% 18.7% Houston Industries, Inc. 2,075 3 4.2% 22.9% Columbia Energy Group, Inc. 1,940 4 3.9% 26.9% Nicor, Inc. 1,848 5 3.8% 30.6% Consolidated Natural Gas Co. 1,786 6 3.6% 34.3% Public Service Enterprise Group, Inc. 1,531 7 3.1% 37.4% CMS Energy Corp. 1,511 8 3.1% 40.5% AGL Resources, Inc. 1,361 9 2.8% 43.2% Texas Utilities Co. 1,355 10 2.8% 46.0% MCN Energy Group, Inc. 1,178 11 2.4% 48.4% MarketSpan Corp. 1,132 12 2.3% 50.7% Consolidated Edison, Inc. 1,033 13 2.1% 52.8% New Century Energies, Inc. 1,006 14 2.0% 54.8% Southern Union Co. 988 15 2.0% 56.8% Peoples Energy Corp. 963 16 2.0% 58.8% Washington Gas Light Co. 790 17 1.6% 60.4% UtiliCorp United, Inc. 786 18 1.6% 62.0% ONEOK, Inc. 744 19 1.5% 63.5% National Fuel Gas Co. 712 20 1.4% 65.0% NIPSCO Industries, Inc. 688 21 1.4% 66.4% Questar Corp. 626 22 1.3% 67.6% MidAmerican Energy Holdings Co. 612 23 1.2% 68.9% Eastern Enterprises 570 24 1.2% 70.1% Baltimore Gas & Electric Co. 565 25 1.2% 71.2% Niagara Mohawk Power Corp. 526 26 1.1% 72.3% Wicor, Inc. 513 27 1.0% 73.3% Puget Sound Energy, Inc. 510 28 1.0% 74.4% Atmos Energy Corp. 501 29 1.0% 75.4% Indiana Energy, Inc. 477 30 1.0% 76.3% Southwest Gas Corp. 468 31 1.0% 77.3% Cinergy Corp. 453 32 0.9% 78.2% NW Natural (Northwest Natural Gas Co.) 443 33 0.9% 79.1% Northern States Power Co. 443 34 0.9% 80.0% Piedmont Natural Gas Co., Inc. 440 35 0.9% 80.9% PECO Energy Co. 405 36 0.8% 81.7% PSC of New Mexico 401 37 0.8% 82.6% Illinova Corp. 394 38 0.8% 83.4% Alliant Energy Corp. 380 39 0.8% 84.1% New Jersey Resources Corp. 367 40 0.7% 84.9% NUI Corp. 339 41 0.7% 85.6% PSC of North Carolina, Inc. 310 42 0.6% 86.2% Ameren Corp. 294 43 0.6% 86.8% LG&E Energy Corp. 281 44 0.6% 87.4% - ------------------------------------------------------------------------------------------------- Rochester Gas & Electric Corp. 281 45 0.6% 87.9% Citizens Utilities Co. 277 46 0.6% 88.5% Bay State Gas Co. 270 47 0.5% 89.1% South Jersey Industries, Inc. 260 48 0.5% 89.6% Equitable Resources, Inc. 260 49 0.5% 90.1% UGI Corp. 254 50 0.5% 90.6% SCANA Corp. 249 51 0.5% 91.1% Washington Water Power Co. 241 52 0.5% 91.6% Energy East Corp. 240 53 0.5% 92.1% Commonwealth Energy System 235 54 0.5% 92.6% TECO Energy, Inc. 234 55 0.5% 93.1% WPS Resources Corp. 218 56 0.4% 93.5% Cilcorp, Inc. 200 57 0.4% 93.9% Everyone else combined 2,987 6.1% 100.0% Total 49,142
EX-99.18 19 EXHIBIT K-12
Market Shares for Combined Gas & Electric Companies in the U.S. Number of Portion of Market Served Cilcorp's Cilcorp's Larger by Cilcorp and Larger Parameter Units Statistics Share Companies Companies - --------------------------------------------------------------------------------------------------- Customers thousands 395 0.7% 26 96.0% Assets $millions 1,570 0.7% 27 96.7% Revenues $millions 557 0.7% 28 97.0%
Comparison of Cilcorp, Inc. to Large Utilities Number of Utilities Average Size Necessary for 50% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 6 4,665 12 Assets $millions 8 14,510 9 Revenues $millions 7 5,796 10 Number of Utilities Average Size Necessary for 80% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 16 2,765 7 Assets $millions 17 10,339 7 Revenues $millions 16 4,021 7
Market Shares for Combined Gas and Electric Companies in the United States Companies Sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - --------------------------------------------------------------------------------------------------- PG&E Corp. 9,592 1 11.9% 11.9% Consolidated Edison, Inc. 6,743 2 8.4% 20.3% Public Service Enterprise Group, Inc. 6,103 3 7.6% 27.9% Sempra Energy 4,973 4 6.2% 34.1% PECO Energy Co. 4,642 5 5.8% 39.9% Cinergy Corp. 4,555 6 5.7% 45.5% Niagara Mohawk Power Corp. 3,967 7 4.9% 50.5% CMS Energy Corp. 3,708 8 4.6% 55.1% Ameren Corp. 3,139 9 3.9% 59.0% New Century Energies, Inc. 3,090 10 3.8% 62.8% Northern States Power Co. 2,988 11 3.7% 66.5% Baltimore Gas & Electric Co. 2,743 12 3.4% 69.9% Conectiv 2,236 13 2.8% 72.7% Energy East Corp. 2,130 14 2.6% 75.4% Alliant Energy Corp. 1,932 15 2.4% 77.8% NIPSCO Industries, Inc. 1,789 16 2.2% 80.0% Illinova Corp. 1,774 17 2.2% 82.2% MidAmerican Energy Holdings Co. 1,663 18 2.1% 84.3% Puget Sound Energy, Inc. 1,641 19 2.0% 86.3% SCANA Corp. 1,436 20 1.8% 88.1% Rochester Gas & Electric Corp. 1,037 21 1.3% 89.4% PSC of New Mexico 1,017 22 1.3% 90.6% Washington Water Power Co. 892 23 1.1% 91.8% LG&E Energy Corp. 846 24 1.1% 92.8% UtiliCorp United, Inc. 833 25 1.0% 93.8% Orange & Rockland Utilities, Inc. 722 26 0.9% 94.7% WPS Resources Corp. 690 27 0.9% 95.6% Sierra Pacific Resources 611 28 0.8% 96.4% Cilcorp, Inc. 557 29 0.7% 97.0% Everyone else combined 2,373 3.0% 100.0% Total 80,422
Market Shares for Combined Gas and Electric Companies in the United States Companies Sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ---------------------------------------------------------------------------------------------------- PG&E Corp. 29,973 1 13.6% 13.6% Public Service Enterprise Group, Inc. 16,345 2 7.4% 21.0% PECO Energy Co. 14,682 3 6.7% 27.6% Consolidated Edison, Inc. 13,479 4 6.1% 33.7% Sempra Energy 11,154 5 5.1% 38.8% Ameren Corp. 10,893 6 4.9% 43.7% Niagara Mohawk Power Corp. 9,865 7 4.5% 48.2% Cinergy Corp. 9,690 8 4.4% 52.6% New Century Energies, Inc. 7,763 9 3.5% 56.1% Baltimore Gas & Electric Co. 7,755 10 3.5% 59.6% CMS Energy Corp. 7,714 11 3.5% 63.1% Northern States Power Co. 7,474 12 3.4% 66.5% Illinova Corp. 7,099 13 3.2% 69.7% Conectiv 5,835 14 2.6% 72.4% Energy East Corp. 5,723 15 2.6% 75.0% Alliant Energy Corp. 5,177 16 2.3% 77.3% NIPSCO Industries, Inc. 5,141 17 2.3% 79.6% Puget Sound Energy, Inc. 4,667 18 2.1% 81.8% MidAmerican Energy Holdings Co. 4,645 19 2.1% 83.9% SCANA Corp. 4,632 20 2.1% 86.0% Rochester Gas & Electric Corp. 2,853 21 1.3% 87.3% LG&E Energy Corp. 2,578 22 1.2% 88.4% PSC of New Mexico 2,390 23 1.1% 89.5% UtiliCorp United, Inc. 2,357 24 1.1% 90.6% Washington Water Power Co. 1,941 25 0.9% 91.4% Sierra Pacific Resources 1,690 26 0.8% 92.2% WPS Resources Corp. 1,640 27 0.7% 93.0% Cilcorp, Inc. 1,570 28 0.7% 93.7% Everyone else combined 6,986 3.2% 100.0% Total 220,699
Market Shares for Combined Gas and Electric Companies in the United States Companies Sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - --------------------------------------------------------------------------------------------------------- PG&E Corp. 8,167 1 14.9% 14.9% Sempra Energy 6,676 2 12.2% 27.1% Consolidated Edison, Inc. 4,043 3 7.4% 34.4% Public Service Enterprise Group, Inc. 3,428 4 6.2% 40.7% CMS Energy Corp. 3,115 5 5.7% 46.4% New Century Energies, Inc. 2,563 6 4.7% 51.0% Niagara Mohawk Power Corp. 2,080 7 3.8% 54.8% Northern States Power Co. 1,917 8 3.5% 58.3% PECO Energy Co. 1,887 9 3.4% 61.8% Cinergy Corp. 1,853 10 3.4% 65.1% Ameren Corp. 1,789 11 3.3% 68.4% Baltimore Gas & Electric Co. 1,674 12 3.1% 71.5% Puget Sound Energy, Inc. 1,374 13 2.5% 74.0% Alliant Energy Corp. 1,271 14 2.3% 76.3% MidAmerican Energy Holdings Co. 1,256 15 2.3% 78.6% UtiliCorp United, Inc. 1,152 16 2.1% 80.7% NIPSCO Industries, Inc. 1,102 17 2.0% 82.7% Energy East Corp. 1,051 18 1.9% 84.6% Conectiv 1,028 19 1.9% 86.5% Illinova Corp. 953 20 1.7% 88.2% SCANA Corp. 748 21 1.4% 89.6% PSC of New Mexico 747 22 1.4% 90.9% LG&E Energy Corp. 636 23 1.2% 92.1% Rochester Gas & Electric Corp. 623 24 1.1% 93.2% WPS Resources Corp. 589 25 1.1% 94.3% Washington Water Power Co. 538 26 1.0% 95.3% Cilcorp, Inc. 395 27 0.7% 96.0% Everyone else combined 2,190 4.0% 100.0% Total 54,846
EX-99.19 20 EXHIBIT K-13
Market Shares for Utility Companies in the U.S. Number of Portion of Market Served Cilcorp's Cilcorp's Larger by Cilcorp and Larger Parameter Units Statistics Share Companies Companies - --------------------------------------------------------------------------------------------------- Customers thousands 395 0.3% 82 92.3% Assets $millions 1,570 0.2% 77 93.8% Revenues $millions 557 0.2% 86 93.8%
Comparison of Cilcorp, Inc. to Large Utilities Number of Utilities Average Size Necessary for 50% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 21 3,329 8 Assets $millions 18 18,213 12 Revenues $millions 20 6,061 11 Number of Utilities Average Size Necessary for 80% of of These Ratio of Average Large Parameter Units U.S. Utilities Utility to Cilcorp - -------------------------------------------------------------------------------------------- Customers thousands 53 2,113 5 Assets $millions 44 11,851 8 Revenues $millions 50 3,863 7
Market Share for Utilities in the U.S. Companies sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - --------------------------------------------------------------------------------------------- PG&E Corp. 9,592 1 4.0% 4.0% Southern Company 9,076 2 3.8% 7.8% Edison International 7,933 3 3.3% 11.0% Entergy Corp. 7,649 4 3.2% 14.2% Texas Utilities Co. 7,179 5 3.0% 17.2% Unicom Corp. 7,176 6 3.0% 20.2% American Electric Power Co., Inc. 6,979 7 2.9% 23.1% Consolidated Edison, Inc. 6,743 8 2.8% 25.9% FPL Group, Inc. 6,132 9 2.5% 28.4% Public Service Enterprise Group, Inc. 6,103 10 2.5% 31.0% Houston Industries, Inc. 5,946 11 2.5% 33.4% FirstEnergy Corp. 5,172 12 2.1% 35.6% Sempra Energy 4,973 13 2.1% 37.6% PECO Energy Co. 4,642 14 1.9% 39.6% Dominion Resources, Inc. 4,628 15 1.9% 41.5% Cinergy Corp. 4,555 16 1.9% 43.4% Duke Energy Corp. 4,361 17 1.8% 45.2% Northeast Utilities 4,297 18 1.8% 47.0% GPU, Inc. 4,096 19 1.7% 48.7% New England Electric System 3,989 20 1.7% 50.3% Niagara Mohawk Power Corp. 3,967 21 1.6% 52.0% CMS Energy Corp. 3,708 22 1.5% 53.5% PacifiCorp 3,684 23 1.5% 55.0% DTE Energy Co. 3,619 24 1.5% 56.5% Central & South West Corp. 3,427 25 1.4% 58.0% Ameren Corp. 3,139 26 1.3% 59.3% PP&L Resources, Inc. 3,107 27 1.3% 60.6% New Century Energies, Inc. 3,090 28 1.3% 61.8% Carolina Power & Light Co. 3,024 29 1.3% 63.1% Northern States Power Co. 2,988 30 1.2% 64.3% Baltimore Gas & Electric Co. 2,743 31 1.1% 65.5% Allegheny Energy, Inc. 2,655 32 1.1% 66.6% Florida Progress Corp. 2,448 33 1.0% 67.6% Columbia Energy Group, Inc. 2,282 34 0.9% 68.5% Conectiv 2,236 35 0.9% 69.5% Energy East Corp. 2,130 36 0.9% 70.4% Consolidated Natural Gas Co. 2,027 37 0.8% 71.2% Alliant Energy Corp. 1,932 38 0.8% 72.0% Potomac Electric Power Co. 1,864 39 0.8% 72.8% Pinnacle West Capital Corp. 1,790 40 0.7% 73.5% NIPSCO Industries, Inc. 1,789 41 0.7% 74.3% Illinova Corp. 1,774 42 0.7% 75.0% BEC Energy 1,769 43 0.7% 75.7% Nicor, Inc. 1,731 44 0.7% 76.5% MidAmerican Energy Holdings Co. 1,663 45 0.7% 77.1% Puget Sound Energy, Inc. 1,641 46 0.7% 77.8% TECO Energy, Inc. 1,451 47 0.6% 78.4% SCANA Corp. 1,436 48 0.6% 79.0% - --------------------------------------------------------------------------------------------- Enron Corp. 1,419 49 0.6% 79.6% Wisconsin Energy Corp. 1,412 50 0.6% 80.2% MarketSpan Corp. 1,310 51 0.5% 80.7% Peoples Energy Corp. 1,238 52 0.5% 81.3% Western Resources, Inc. 1,228 53 0.5% 81.8% MCN Energy Group, Inc. 1,227 54 0.5% 82.3% OGE Energy Corp. 1,192 55 0.5% 82.8% DQE, Inc. 1,147 56 0.5% 83.2% Commonwealth Energy System 1,144 57 0.5% 83.7% AGL Resources, Inc. 1,120 58 0.5% 84.2% Washington Gas Light Co. 1,079 59 0.4% 84.6% Rochester Gas & Electric Corp. 1,037 60 0.4% 85.1% PSC of New Mexico 1,017 61 0.4% 85.5% DPL, Inc. 1,015 62 0.4% 85.9% National Fuel Gas Co. 986 63 0.4% 86.3% CMP Group, Inc. 977 64 0.4% 86.7% Hawaiian Electric Industries, Inc. 938 65 0.4% 87.1% Kansas City Power & Light Co. 896 66 0.4% 87.5% Washington Water Power Co. 892 67 0.4% 87.9% Southern Union Co. 882 68 0.4% 88.2% LG&E Energy Corp. 846 69 0.4% 88.6% UtiliCorp United, Inc. 833 70 0.3% 88.9% Eastern Utilities Associates 829 71 0.3% 89.3% Nevada Power Co. 799 72 0.3% 89.6% Piedmont Natural Gas Co., Inc. 784 73 0.3% 89.9% Eastern Enterprises 756 74 0.3% 90.2% Idaho Power Co. 749 75 0.3% 90.5% IPALCO Enterprises, Inc. 738 76 0.3% 90.8% UniSource Energy Corp. 730 77 0.3% 91.2% Orange & Rockland Utilities, Inc. 722 78 0.3% 91.5% KU Energy Corp. 716 79 0.3% 91.7% United Illuminating Co. 710 80 0.3% 92.0% WPS Resources Corp. 690 81 0.3% 92.3% Sierra Pacific Resources 611 82 0.3% 92.6% ONEOK, Inc. 600 83 0.2% 92.8% El Paso Electric Co. 594 84 0.2% 93.1% TNP Enterprises, Inc. 581 85 0.2% 93.3% New Jersey Resources Corp. 574 86 0.2% 93.6% Cilcorp, Inc. 557 87 0.2% 93.8% Everyone else combined 14,956 6.2% 100% Total 240,866
Market Share for Utilities in the U.S. Companies sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ------------------------------------------------------------------------------------------------------- Southern Company 30,208 1 4.6% 4.6% PG&E Corp. 29,973 2 4.6% 9.3% Unicom Corp. 26,322 3 4.0% 13.3% Texas Utilities Co. 24,004 4 3.7% 17.0% Entergy Corp. 22,637 5 3.5% 20.5% Edison International 20,723 6 3.2% 23.7% American Electric Power Co., Inc. 17,993 7 2.8% 26.4% FPL Group, Inc. 16,643 8 2.6% 29.0% Public Service Enterprise Group, Inc. 16,345 9 2.5% 31.5% Duke Energy Corp. 14,760 10 2.3% 33.8% PECO Energy Co. 14,682 11 2.3% 36.0% Dominion Resources, Inc. 14,545 12 2.2% 38.3% Houston Industries, Inc. 14,378 13 2.2% 40.5% FirstEnergy Corp. 14,289 14 2.2% 42.7% DTE Energy Co. 14,123 15 2.2% 44.9% Consolidated Edison, Inc. 13,479 16 2.1% 46.9% PacifiCorp 11,417 17 1.8% 48.7% Central & South West Corp. 11,314 18 1.7% 50.4% Sempra Energy 11,154 19 1.7% 52.1% Ameren Corp. 10,893 20 1.7% 53.8% Carolina Power & Light Co. 10,090 21 1.6% 55.4% PP&L Resources, Inc. 10,049 22 1.5% 56.9% GPU, Inc. 9,896 23 1.5% 58.4% Niagara Mohawk Power Corp. 9,865 24 1.5% 60.0% Northeast Utilities 9,751 25 1.5% 61.5% Cinergy Corp. 9,690 26 1.5% 63.0% Allegheny Energy, Inc. 7,977 27 1.2% 64.2% New Century Energies, Inc. 7,763 28 1.2% 65.4% Baltimore Gas & Electric Co. 7,755 29 1.2% 66.6% CMS Energy Corp. 7,714 30 1.2% 67.8% Northern States Power Co. 7,474 31 1.1% 68.9% Illinova Corp. 7,099 32 1.1% 70.0% Pinnacle West Capital Corp. 6,923 33 1.1% 71.1% New England Electric System 6,246 34 1.0% 72.0% Potomac Electric Power Co. 6,211 35 1.0% 73.0% Florida Progress Corp. 6,158 36 0.9% 73.9% Conectiv 5,835 37 0.9% 74.8% Energy East Corp. 5,723 38 0.9% 75.7% Alliant Energy Corp. 5,177 39 0.8% 76.5% NIPSCO Industries, Inc. 5,141 40 0.8% 77.3% Wisconsin Energy Corp. 4,969 41 0.8% 78.1% Western Resources, Inc. 4,722 42 0.7% 78.8% Puget Sound Energy, Inc. 4,667 43 0.7% 79.5% MidAmerican Energy Holdings Co. 4,645 44 0.7% 80.2% - ------------------------------------------------------------------------------------------------------- SCANA Corp. 4,632 45 0.7% 80.9% DQE, Inc. 4,334 46 0.7% 81.6% BEC Energy 4,295 47 0.7% 82.3% TECO Energy, Inc. 4,086 48 0.6% 82.9% OGE Energy Corp. 3,609 49 0.6% 83.4% Kansas City Power & Light Co. 3,497 50 0.5% 84.0% DPL, Inc. 3,261 51 0.5% 84.5% Enron Corp. 3,014 52 0.5% 84.9% Nicor, Inc. 2,956 53 0.5% 85.4% Rochester Gas & Electric Corp. 2,853 54 0.4% 85.8% Consolidated Natural Gas Co. 2,705 55 0.4% 86.2% IPALCO Enterprises, Inc. 2,695 56 0.4% 86.7% Idaho Power Co. 2,606 57 0.4% 87.1% LG&E Energy Corp. 2,578 58 0.4% 87.5% KU Energy Corp. 2,553 59 0.4% 87.9% MCN Energy Group, Inc. 2,541 60 0.4% 88.2% Columbia Energy Group, Inc. 2,424 61 0.4% 88.6% PSC of New Mexico 2,390 62 0.4% 89.0% Nevada Power Co. 2,378 63 0.4% 89.4% UtiliCorp United, Inc. 2,357 64 0.4% 89.7% El Paso Electric Co. 2,259 65 0.3% 90.1% UniSource Energy Corp. 2,189 66 0.3% 90.4% Hawaiian Electric Industries, Inc. 2,084 67 0.3% 90.7% Peoples Energy Corp. 2,083 68 0.3% 91.0% Washington Water Power Co. 1,941 69 0.3% 91.3% AGL Resources, Inc. 1,885 70 0.3% 91.6% Washington Gas Light Co. 1,832 71 0.3% 91.9% MarketSpan Corp. 1,827 72 0.3% 92.2% United Illuminating Co. 1,819 73 0.3% 92.5% Montana Power Co. 1,798 74 0.3% 92.7% Sierra Pacific Resources 1,690 75 0.3% 93.0% CMP Group, Inc. 1,689 76 0.3% 93.3% WPS Resources Corp. 1,640 77 0.3% 93.5% Cilcorp, Inc. 1,570 78 0.2% 93.8% Everyone else combined 40,561 6.2% 100% Total 650,055
Market Share for Utilities in the U.S. Companies sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - ------------------------------------------------------------------------------------------------------ PG&E Corp. 8,167 1 5.8% 5.8% Sempra Energy 6,676 2 4.8% 10.6% Edison International 4,235 3 3.0% 13.6% Consolidated Edison, Inc. 4,043 4 2.9% 16.5% Texas Utilities Co. 3,814 5 2.7% 19.3% Southern Company 3,683 6 2.6% 21.9% Houston Industries, Inc. 3,633 7 2.6% 24.5% FPL Group, Inc. 3,615 8 2.6% 27.1% Public Service Enterprise Group, Inc. 3,428 9 2.4% 29.5% Unicom Corp. 3,420 10 2.4% 32.0% CMS Energy Corp. 3,115 11 2.2% 34.2% American Electric Power Co., Inc. 2,958 12 2.1% 36.3% New Century Energies, Inc. 2,563 13 1.8% 38.1% Entergy Corp. 2,447 14 1.7% 39.9% FirstEnergy Corp. 2,151 15 1.5% 41.4% Niagara Mohawk Power Corp. 2,080 16 1.5% 42.9% DTE Energy Co. 2,039 17 1.5% 44.4% GPU, Inc. 2,008 18 1.4% 45.8% Dominion Resources, Inc. 1,977 19 1.4% 47.2% Columbia Energy Group, Inc. 1,940 20 1.4% 48.6% Duke Energy Corp. 1,919 21 1.4% 50.0% Northern States Power Co. 1,917 22 1.4% 51.3% PECO Energy Co. 1,887 23 1.3% 52.7% Cinergy Corp. 1,853 24 1.3% 54.0% Nicor, Inc. 1,848 25 1.3% 55.3% Ameren Corp. 1,789 26 1.3% 56.6% Consolidated Natural Gas Co. 1,786 27 1.3% 57.9% Central & South West Corp. 1,712 28 1.2% 59.1% Northeast Utilities 1,706 29 1.2% 60.3% Baltimore Gas & Electric Co. 1,674 30 1.2% 61.5% PacifiCorp 1,421 31 1.0% 62.5% Allegheny Energy, Inc. 1,395 32 1.0% 63.5% Puget Sound Energy, Inc. 1,374 33 1.0% 64.5% AGL Resources, Inc. 1,361 34 1.0% 65.5% New England Electric System 1,337 35 1.0% 66.4% Florida Progress Corp. 1,314 36 0.9% 67.4% Alliant Energy Corp. 1,271 37 0.9% 68.3% MidAmerican Energy Holdings Co. 1,256 38 0.9% 69.2% PP&L Resources, Inc. 1,240 39 0.9% 70.1% MCN Energy Group, Inc. 1,178 40 0.8% 70.9% UtiliCorp United, Inc. 1,152 41 0.8% 71.7% Carolina Power & Light Co. 1,138 42 0.8% 72.6% MarketSpan Corp. 1,132 43 0.8% 73.4% NIPSCO Industries, Inc. 1,102 44 0.8% 74.2% Energy East Corp. 1,051 45 0.8% 74.9% Conectiv 1,028 46 0.7% 75.6% - ------------------------------------------------------------------------------------------------------ Southern Union Co. 988 47 0.7% 76.3% Wisconsin Energy Corp. 973 48 0.7% 77.0% Peoples Energy Corp. 963 49 0.7% 77.7% Illinova Corp. 953 50 0.7% 78.4% Washington Gas Light Co. 790 51 0.6% 79.0% TECO Energy, Inc. 753 52 0.5% 79.5% Pinnacle West Capital Corp. 748 53 0.5% 80.1% SCANA Corp. 748 54 0.5% 80.6% PSC of New Mexico 747 55 0.5% 81.1% ONEOK, Inc. 744 56 0.5% 81.7% National Fuel Gas Co. 712 57 0.5% 82.2% OGE Energy Corp. 687 58 0.5% 82.7% Potomac Electric Power Co. 685 59 0.5% 83.1% Enron Corp. 679 60 0.5% 83.6% BEC Energy 669 61 0.5% 84.1% LG&E Energy Corp. 636 62 0.5% 84.6% Questar Corp. 626 63 0.4% 85.0% Rochester Gas & Electric Corp. 623 64 0.4% 85.5% Western Resources, Inc. 614 65 0.4% 85.9% Commonwealth Energy System 602 66 0.4% 86.3% WPS Resources Corp. 589 67 0.4% 86.7% DQE, Inc. 581 68 0.4% 87.2% Eastern Enterprises 570 69 0.4% 87.6% Washington Water Power Co. 538 70 0.4% 87.9% CMP Group, Inc. 525 71 0.4% 88.3% Wicor, Inc. 513 72 0.4% 88.7% Nevada Power Co. 504 73 0.4% 89.1% Atmos Energy Corp. 501 74 0.4% 89.4% DPL, Inc. 482 75 0.3% 89.8% Indiana Energy, Inc. 477 76 0.3% 90.1% Southwest Gas Corp. 468 77 0.3% 90.4% KU Energy Corp. 464 78 0.3% 90.8% NW Natural (Northwest Natural Gas Co.) 443 79 0.3% 91.1% Kansas City Power & Light Co. 443 80 0.3% 91.4% Piedmont Natural Gas Co., Inc. 440 81 0.3% 91.7% IPALCO Enterprises, Inc. 417 82 0.3% 92.0% Cilcorp, Inc. 395 83 0.3% 92.3% Everyone else combined 10,790 7.7% 100% Total 139,916
EX-99.20 21 EXHIBIT K-14 Exhibit K-14 Market Share for Electric Companies in Illinois (Companies Listed in Order of Customers Served) - ------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): Unicom Corp. Ameren Corp. Illinova Corp. Cilcorp, Inc. Mount Carmel Public Utility Co. Electric Energy, Inc. Y-axis (left side of chart): Market Share Percentages (listed in increments of 10 percent between and including 0 and 70 percent) [Bar Chart lists market shares for electric companies in Illinois in terms of assets, revenues and number of customers. The companies are listed in the order of customers served as provided below. Assets, revenues and customers are represented by green, violet and red bars, respectively.]
Market Share for Electric Companies in Illinois Companies Sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - ------------------------------------------------------------------------------------------ Unicom Corp. 7,176 1 59.5% 59.5% Ameren Corp. 2,889 2 23.9% 83.4% Illinova Corp. 1,420 3 11.8% 95.2% Cilcorp, Inc. 338 4 2.8% 98.0% Electric Energy, Inc. 232 5 1.9% 99.9% Mount Carmel Public Utility Co. 9 6 0.1% 100.0% Total 12,064
Market Share for Electric Companies in Illinois Companies Sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - -------------------------------------------------------------------------------------- Unicom Corp. 26,322 1 58.8% 58.8% Ameren Corp. 10,446 2 23.3% 82.1% Illinova Corp. 6,465 3 14.4% 96.5% Cilcorp, Inc. 1,187 4 2.7% 99.2% Electric Energy, Inc. 348 5 0.8% 100.0% Mount Carmel Public Utility Co. 18 6 0.0% 100.0% Total 44,786
Market Share for Electric Companies in Illinois Companies Sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - ----------------------------------------------------------------------------------------- Unicom Corp. 3,420 1 60.3% 60.3% Ameren Corp. 1,495 2 26.3% 86.6% Illinova Corp. 559 3 9.9% 96.5% Cilcorp, Inc. 194 4 3.4% 99.9% Mount Carmel Public Utility Co. 6 5 0.1% 100.0% Electric Energy, Inc. 0 6 0.0% 100.0% Total 5,674
EX-99.21 22 EXHIBIT K-15 Market Share for Gas Companies in Illinois (Companies Listed in Order of Customers Served) - ------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): Nicor, Inc. Peoples Energy Corp. Illinova Corp. Ameren Corp. Cilcorp, Inc. Illinois Gas Co, Mount Carmel Public Utility Co. Y-axis (left side of chart): Market Share Percentages (listed in increments of 10 percent between and including 0 and 60 percent) [Bar Chart lists market shares for gas companies in Illinois in terms of assets, revenues and number of customers. The companies are listed in the order of customers served as provided below. Assets, revenues and customers are represented by green, violet and red bars, respectively.]
Market Shares for Gas Companies in Illinois Companies Sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - ---------------------------------------------------------------------------------- Nicor, Inc. 1,731 1 45.5% 45.5% Peoples Energy Corp. 1,238 2 32.5% 78.1% Illinova Corp. 354 3 9.3% 87.4% Ameren Corp. 250 4 6.6% 93.9% Cilcorp, Inc. 219 5 5.8% 99.7% Illinois Gas Co. 9 6 0.2% 99.9% Mount Carmel Public Utility Co. 3 7 0.1% 100.0% Total 3,803
Market Shares for Gas Companies in Illinois Companies Sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ---------------------------------------------------------------------------------- Nicor, Inc. 2,956 1 45.3% 45.3% Peoples Energy Corp. 2,083 2 32.0% 77.3% Illinova Corp. 634 3 9.7% 87.0% Ameren Corp. 447 4 6.9% 93.9% Cilcorp, Inc. 383 5 5.9% 99.8% Illinois Gas Co. 12 6 0.2% 99.9% Mount Carmel Public Utility Co. 4 7 0.1% 100.0% Total 6,519
Market Shares for Gas Companies in Illinois Companies Sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - --------------------------------------------------------------------------------- Nicor, Inc. 1,848 1 49.8% 49.8% Peoples Energy Corp. 963 2 25.9% 75.7% Illinova Corp. 394 3 10.6% 86.3% Ameren Corp. 294 4 7.9% 94.2% Cilcorp, Inc. 200 5 5.4% 99.6% Illinois Gas Co. 10 6 0.3% 99.9% Mount Carmel Public Utility Co. 4 7 0.1% 100.0% Total 3,714
EX-99.22 23 EXHIBIT K-16 Exhibit K-16 Market Share for Utilities in Illinois (Companies Listed in Order of Customers Served) - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): Unicom Corp. Nicor, Inc. Ameren Corp. Peoples Energy Corp. Illinova Corp. Cilcorp, Inc. Illinois Gas Mount Carmel Public Utility Co. Electric Energy, Inc. Y-axis (left side of chart): Market Share Percentages (listed in increments of 10 percent between and including 0 and 60 percent) [Bar Chart lists market shares for utilities in Illinois in terms of assets, revenues and number of customers. The companies are listed in the order of customers served as provided below. Assets, revenues and customers are represented by green, violet and red bars, respectively.]
Market Share for Utilities in Illinois Companies sorted by Revenue Holding Company Revenue Rank Share of Cumulative Share (millions of $) Total - ------------------------------------------------------------------------------------------------ Unicom Corp. 7,176 1 45.2% 45.2% Ameren Corp. 3,139 2 19.8% 65.0% Illinova Corp. 1,774 3 11.2% 76.2% Nicor, Inc. 1,731 4 10.9% 87.1% Peoples Energy Corp. 1,238 5 7.8% 94.9% Cilcorp, Inc. 557 6 3.5% 98.4% Electric Energy, Inc. 232 7 1.5% 99.9% Mount Carmel Public Utility Co. 12 8 0.1% 99.9% Illinois Gas Co. 9 9 0.1% 100.0% Total 15,867
Market Share for Utilities in Illinois Companies sorted by Assets Holding Company Assets Rank Share of Cumulative Share (millions of $) Total - ------------------------------------------------------------------------------------------------ Unicom Corp. 26,322 1 51.3% 51.3% Ameren Corp. 10,893 2 21.2% 72.5% Illinova Corp. 7,099 3 13.8% 86.4% Nicor, Inc. 2,956 4 5.8% 92.1% Peoples Energy Corp. 2,083 5 4.1% 96.2% Cilcorp, Inc. 1,570 6 3.1% 99.3% Electric Energy, Inc. 348 7 0.7% 99.9% Mount Carmel Public Utility Co. 22 8 0.0% 100.0% Illinois Gas Co. 12 9 0.0% 100.0% Total 51,305
Market Share for Utilities in Illinois Companies sorted by Number of Customers Holding Company Customers Rank Share of Cumulative Share (thousands) Total - ----------------------------------------------------------------------------------------------- Unicom Corp. 3,420 1 36.4% 36.4% Nicor, Inc. 1,848 2 19.7% 56.1% Ameren Corp. 1,789 3 19.1% 75.2% Peoples Energy Corp. 963 4 10.3% 85.4% Illinova Corp. 953 5 10.2% 95.6% Cilcorp, Inc. 395 6 4.2% 99.8% Illinois Gas Co. 10 7 0.1% 99.9% Mount Carmel Public Utility Co. 9 8 0.1% 100.0% Electric Energy, Inc. 0 9 0.0% 100.0% Total 9,388
EX-99.23 24 EXHIBIT K-17 Exhibit K-17 STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION CENTRAL ILLINOIS LIGHT COMPANY : : PETITION PURSUANT TO SECTION : 16-111(G) OF THE PUBLIC UTILITIES ACT : 98-0882 REQUESTING THE ILLINOIS COMMERCE : COMMISSION TO ENTER AN ORDER : FINDING IT HAS NO PRE-APPROVAL : JURISDICTION OVER CERTAIN : REORGANIZATIONS, OR, IN THE : ALTERNATIVE, APPROVING THE : REORGANIZATIONS WITH RESPECT TO THE : GAS OPERATIONS OF CENTRAL ILLINOIS : LIGHT COMPANY PURSUANT TO THE : PROVISIONS OF SECTION 7-204 OF THE : PUBLIC UTILITIES ACT. : ORDER By the Commission: I. PROCEDURAL HISTORY On December 14, 1998, Central Illinois Light Company ("CILCO") filed a petition with the Illinois Commerce Commission ("Commission") pursuant to Section 16-111(g) of the Public Utilities Act ("Act") (220 ILCS 5/16-111(g)), seeking a determination that the Commission does not have pre-approval jurisdiction of two proposed reorganizations involving CILCO's parent corporation, CILCORP Inc. ("CILCORP"). In the alternative, CILCO requested entry of an order pursuant to Section 7-204 of the Act (220 ILCS 5/7-204) seeking an expedited order of the Commission approving the two reorganizations with respect to CILCO's gas operations. The first reorganization involves a transaction by which The AES Corporation ("AES") will acquire ownership and control of CILCORP, which owns all of the common stock of CILCO. As a result of the second reorganization, which will occur only at the discretion of AES, AES will acquire direct ownership of all of CILCO's common stock. Local Union No. 51, International Brotherhood of Electrical Workers, AFL-CIO ("Local No. 51, IBEW") filed a petition to intervene. That petition was allowed by the Hearing Examiner. Pursuant to proper legal notice, a prehearing conference was held in this matter on January 13,1999, and an evidentiary hearing was held on February 5,1999, at the Commission's offices in Springfield, Illinois. Appearances were entered by counsel on behalf of CILCO, the Commission Staff, and Local No. 51, IBEW. At the hearing on February 5,1999, CILCO submitted the testimony of William M. Shay, a Senior Vice President of CILCO, Nicholas T. Shay, CILCO's Director of Rates and Regulatory Affairs, and Robert J. Sprowls, Vice President and Chief Financial Officer of CILCO. Mr. Robert Plaza, Case Manager for Staff, testified that Staff had no objection to the proposed reorganizations and did not oppose the granting of the application. At the conclusion of the hearing on February 5, 1999, the record was marked "Heard and Taken." CILCO, Staff and Local No. 51, IBEW, waived the filing of initial and reply briefs and the service of the Hearing Examiner's proposed order. II. DESCRIPTION OF THE PROPOSED REORGANIZATIONS CILCORP is an Illinois corporation and the owner of a majority of the voting capital stock of CILCO. Under date of November 22, 1998, CILCORP entered into an Agreement and Plan of Merger ("Agreement") with AES, a Delaware corporation, and Midwest Energy, Inc. ("Midwest"), an Illinois corporation and a wholly-owned subsidiary of AES. Pursuant to the Agreement, Midwest will be merged into CILCORP, and CILCORP will be the surviving corporation. The capital stock of CILCORP issued and outstanding immediately prior to the merger will be canceled and extinguished and converted into the right to receive $65 per share, and AES, as the owner of all the capital stock of Midwest, will become the owner of all the capital stock of CILCORP. Under the Agreement, a second proposed merger may occur. In the second merger, CILCORP will be merged into AES, CILCORP will cease to exist, and AES will become the owner of a majority of the voting capital stock of CILCO. 2 CILCO is a combination gas and electric utility providing retail gas and electric service to customers in Illinois. Midwest was created by AES solely for the purpose of effecting the first merger. AES is a global energy company that operates electric generation facilities in the United States and in foreign countries. AES also owns foreign electric distribution businesses, mostly in South America, and a small amount of natural gas distribution in foreign countries. AES does not own or operate any regulated utilities in the United States. III. APPLICABLE LAW The action of the Commission in this proceeding is governed by Section 7-204 of the Act relating to the approval of reorganizations. Under Section 7-204, the term "reorganization" is defined as "any transaction which, regardless of the means by which it is accomplished, results in a change of a majority of the voting capital stock of an Illinois public utility; or the ownership or control of any entity which owns or controls a majority of the voting capital stock of a public utility . . . ." This section further provides that the "Commission shall not approve any proposed reorganization if the Commission finds, after notice and hearing, that the reorganization will adversely affect the utility's ability to perform its duties under this Act." In reviewing the proposed reorganization, the Commission is required by Section 7-204 to find that: (1) the proposed reorganization will not diminish the utility's ability to provide adequate, reliable, efficient, safe and least-cost public utility service; (2) the proposed reorganization will not result in the unjustified subsidization of non-utility activities by the utility or its customers; (3) costs and facilities are fairly and reasonably allocated between utility and non-utility activities in such a manner that the Commission may identify those costs and facilities which are properly included by the utility for ratemaking purposes; 3 (4) the proposed reorganization will not significantly impair the utility's ability to raise necessary capital on reasonable terms or to maintain a reasonable capital structure; (5) the utility will remain subject to all applicable laws, regulations, rules, decisions and policies governing the regulation of Illinois public utilities; (6) the proposed reorganization is not likely to have a significant adverse effect on competition in those markets over which the Commission has jurisdiction; and (7) the proposed reorganization is not likely to result in any adverse rate impacts on retail customers. Section 7-204(c) provides that the Commission shall not approve a reorganization without ruling on: (i) the allocation of any savings resulting from the proposed reorganization; and (ii) whether the companies should be allowed to recover any costs incurred in accomplishing the proposed reorganization and, if so, the amount of costs eligible for recovery and how the costs will be allocated. Section 7-204(f) provides that "in approving any proposed reorganization pursuant to this Section the Commission may impose such terms, conditions or requirements as, in its judgment, are necessary to protect the interests of the public utility and its customers." After CILCO filed its petition in this proceeding, the Commission entered an order in MidAmerican Energy Company, Docket No. 98-0853. In that docket, which involved a merger of the parent of a combination gas and electric utility, the Commission exercised pre-approval jurisdiction under Section 7-204 of the Act with regard to the gas operations of the utility. In view of the decision in that case, CILCO acknowledges that the Commission has effectively determined that with respect to CILCO's gas operations, the Commission has jurisdiction over the reorganization proposed in this proceeding. Accordingly, without waiving its jurisdictional argument, CILCO has withdrawn its request 4 that the Commission make a specific ruling on the jurisdictional issue in this proceeding, and CILCO requests the Commission to approve the proposed reorganization, based upon the evidence submitted in this proceeding. IV. REQUEST FOR EXPEDITED TREATMENT CILCO requests that the Commission expedite its consideration of the reorganizations proposed in this proceeding and issue an order in this docket by the end of March. In support of its request, CILCO pointed out that CILCORP and AES had not expected that a separate approval proceeding would be required in Illinois, and had planned to have all other regulatory approvals secured so that the mergers could be finalized prior to the middle of 1999. CILCO explained that a closing before the end of June is essential, among other reasons, for CILCO's participation in the initial opening of the Illinois electricity markets on October 1, 1999. CILCO stated that the expectation that no regulatory approval would be required in Illinois was part of the attraction of the merger transactions for AES and CILCORP. The requirement for an additional, unanticipated regulatory approval with respect to CILCO's gas operations adds uncertainty to the proposed mergers. CILCO expressed further concern that federal regulators may wait until state regulators have completed their review before acting on the merger proposals, and that state approval may become crucial in soliciting stockholder approval. For all these reasons, CILCO requested that this proceeding be considered on an expedited basis to assure that it does not interfere with the merger timetable that has been established or endanger the closing of the merger transactions. V. SECTION 7-204 CRITERIA A. CILCO'S ABILITY TO PROVIDE ADEQUATE, RELIABLE, EFFICIENT, SAFE AND LEAST-COST PUBLIC UTILITY SERVICE. With regard to the quality of ClLCO's future customer service, Mr. Shay testified that the proposed reorganizations will involve only CILCORP, Midwest, and AES. The mergers will have no direct effect upon ClLCO other than a change in the ownership of the capital stock of CILCO's parent, and, thereafter, a possible change in the direct ownership of CILCO's common stock. CILCO's gas utility operations and assets and the capital structure of CILCO's gas utility operations will not change as a result of the reorganizations. CILCO's gas operations are not involved in the proposed mergers, and CILCO does not expect 5 any changes in the provision of gas service or its gas budgets because of the proposed mergers. CILCO's ability to perform its duties under the Act will not be impaired. CILCO adds that in all likelihood, its abilities to provide adequate, reliable, efficient, safe and least-cost public utility service will be enhanced by the mergers and that there will be a positive benefit to the public. Mr. Shay testified that the reorganizations will provide an enlarged financial base and access to the extensive experience of AES in energy markets around the world. CILCO asserts that its is an efficient, low-cost provider of energy, and has demonstrated its commitment to the deregulation of retail energy markets through its leadership in offering choice to all customers, including residential customers, through pilot open access programs for both natural gas and electricity. CILCO believes that if it is unable to enlarge its financial and skill base, there is less assurance that CILCO can remain a viable, separate competitor in Illinois, offering an additional option to customers seeking competitive energy services. In addition to the enlarged financial base that will result from the proposed reorganizations, CILCO expects to draw on the experience of AES to improve CILCO's operating efficiency and customer service. B. UNJUSTIFIED SUBSIDIZATION OF NON-UTILITY ACTIVITIES BY CILCO OR ITS CUSTOMERS. CILCO witness Shay testified that because the proposed reorganizations do not directly involve CILCO, CILCO will continue to operate in the same way as before the reorganizations. All the guidelines and procedures currently applicable to CILCO's non-utility transactions will remain applicable after the reorganizations and assure that there is no subsidization of non-utility activities by CILCO's gas operations or CILCO's gas customers. Mr. Shay stated that CILCO has on file with the Commission guidelines and procedures covering transactions between CILCO and its affiliates. These guidelines were adopted and filed pursuant to the Commission's Order in Docket No. 84-0413. In addition, CILCO has filed guidelines and procedures with the Commission applicable to non-utility activities of CILCO. These guidelines and procedures were adopted pursuant to the rule recently approved by the Commission at 83 Ill. Adm. Code, Part 506, Accounting for Non-Public Utility Business of Gas Utilities. Mr. Shay testified that these two sets of procedures assure that there will be no subsidization of affiliate or other non-utility transactions by CILCO's gas utility operations or CILCO's gas customers. 6 CILCO is required by the Commission's rules to make biennial audits of its compliance with the guidelines and procedures described by Mr. Shay. CILCO recently completed those audits and filed them with the Commission on December 1, 1998. The audits found that CILCO was in compliance with the guidelines covering affiliate and other non-utility transactions. Audits of affiliate and non-utility transactions will be performed at two-year intervals in the future, and Mr. Shay testified that the audits and the reports filed with the Commission provide continuing assurance that there will be no subsidy of non-utility activities by CILCO or its customers. C. FAIR AND REASONABLE ALLOCATION OF COSTS AND FACILITIES BETWEEN CILCO'S ILLINOIS GAS UTILITY OPERATIONS AND NON-UTILITY ACTIVITIES. Mr. Shay testified that the guidelines and procedures applicable to non-utility activities assure that costs and facilities are fairly and reasonably allocated between utility and non-utility activities. The procedures applicable under 83 Ill. Adm. Code, Part 506, require that all non-utility transactions be recorded in sub-accounts. The sub-accounts facilitate review of non-utility transactions and cost allocations by the Commission as well as by CILCO's own auditors, and assist in assuring proper allocation of costs and facilities for ratemaking purposes. D. IMPAIRMENT OF THE ABILITY OF CILCO'S GAS UTILITY OPERATIONS TO RAISE NECESSARY CAPITAL ON REASONABLE TERMS OR TO MAINTAIN A REASONABLE CAPITAL STRUCTURE. CILCO witness Sprowls testified that the proposed reorganizations will not impair CILCO's ability to raise capital on reasonable terms, and will not impair CILCO's ability to maintain a reasonable capital structure. Mr. Sprowls stated that the balance sheet and capitalization of CILCO will not be changed by the proposed mergers, and CILCO's financial ratios will not be changed as a result of the proposed mergers. After the mergers, CILCO will continue to have the ability to raise capital through the issuance of short-term debt, and, with Commission approval, the issuance of long-term debt and preferred stock. Mr. Sprowls testified that CILCO's debt and preferred stock ratings were placed on credit watch with negative implications following the announcement of the proposed merger transactions, but Mr. Sprowls stated that 7 this is a normal practice. CILCO's ratings will be more carefully analyzed by the rating agencies after the mergers are completed, and Mr. Sprowls testified that the ratings should remain at investment grade. Mr. Sprowls further testified that common equity capital is provided to CILCO through retained earnings. If common equity is required in greater amounts than normal, CILCO can reduce the amount of dividends payable to its parent corporation. If common equity capital is required in excess of earnings, the parent corporation would have to invest additional capital, out of cash flow, retained earnings, borrowings, or the issuance of common equity or preferred stock by the parent. CILCO has not required an infusion of common equity capital in excess of its own earnings since it became a subsidiary of CILCORP in 1985, and CILCO does not anticipate the need for the investment of common equity capital for its gas operations within the foreseeable future. However, if investments of common equity capital were required after the mergers, the larger financial base of AES would likely make it easier to obtain such capital. In supplemental testimony, Company witness Shay confirmed that in the absence of advance approval of the Commission, no debt incurred by AES will have any recourse against the funds or other assets of CILCO's gas utility. E. CONTINUED APPLICATION OF ALL APPLICABLE LAWS, REGULATIONS, RULES, DECISIONS AND POLICIES GOVERNING THE REGULATION OF ILLINOIS PUBLIC UTILITIES TO CILCO'S GAS UTILITY OPERATIONS. Mr. Shay testified that CILCO will continue to operate as a regulated public utility after the proposed reorganizations, and will remain subject to all requirements applicable to public utilities. The reorganizations will cause no change affecting the regulation of CILCO as a public utility. F. IMPACT OF PROPOSED REORGANIZATION ON COMPETITION IN THE NATURAL GAS UTILITY MARKET OVER WHICH THE COMMISSION HAS JURISDICTION. Mr. Shay testified that the proposed reorganization will have no adverse effects in the retail gas sales markets in Illinois. AES is not engaged in the sale or delivery of gas at wholesale or retail to any customers in Illinois or adjoining states. On the basis of these facts, Mr. Shay concluded that the level of competition in Illinois gas markets will not be diminished in 8 any manner as a result of the proposed reorganizations. Mr. Shay added that the proposed reorganizations are more likely to have a positive effect on competition in Illinois, because CILCO will be part of a larger and economically stronger corporate system, which should enhance CILCO's ability to remain a separate utility and compete with other gas utilities and marketers in Illinois. G. RATE IMPACT OF PROPOSED REORGANIZATIONS ON RETAIL CUSTOMERS. Mr. Shay testified that the proposed reorganizations will not directly affect CILCO's gas operations, and will not result in any increase in the costs incurred by CILCO in providing gas service. Therefore, the proposed mergers will have no rate impact on CILCO's retail gas customers. CILCO indicated in response to Staff data request ML-3 that AES will take a role in the management of CILCO's gas operations in the same manner as CILCORP does at the present time, by electing the Board of Directors, assuring that capable management of CILCO gas operations is being provided, and reviewing the results of operations. To the extent AES personnel take a direct role in the management of gas operations, there would be corresponding reduction in the need for management personnel employed directly by CILCO. Accordingly, CILCO does not expect an increase in the overall costs of gas operations as the result of AES participation in the management of CILCO gas operations. In supplemental testimony, CILCO witness Shay stated that CILCO has no current plans to file a gas rate case. H. ALLOCATION OF SAVINGS AND COSTS ASSOCIATED WITH THE PROPOSED REORGANIZATIONS. Section 7-204(c) of the Act requires the Commission to rule on the allocation of any savings resulting from the proposed reorganizations. This Section also requires the Commission to rule whether the reorganizing companies should be allowed to recovery any costs incurred in accomplishing the proposed reorganizations, and if so, the amount of costs eligible for recovery and how the costs will be allocated. Mr. Shay testified that the proposed mergers involving CILCORP and AES are different from situations in which two public utilities or their holding companies merge. In those cases, it is often possible to reduce operating costs and produce savings by combining operations and eliminating duplicative 9 resources, functions or personnel. No such operational synergies will occur as a result of the mergers proposed in this case, and none are intended. AES is not a regulated public utility and does not own or operate any regulated public utility in the United States. CILCO will remain a separate, public, SEC-reporting company, with preferred stock that is publicly traded. The proposed mergers are strategic in nature, to provide AES a mid-west presence and a base from which to grow in the Illinois energy markets, and perhaps beyond, and to provide CILCO a broader financial base and an assured future as a separate operating utility. For these reasons, CILCO does not anticipate any measurable savings in the operation of its gas utility business as a result of the proposed mergers. In his supplemental testimony, Mr. Shay stated that if savings did unexpectedly result from the mergers in the future, CILCO would not in any future gas rate case request any different treatment for those savings than for any other reduction in the cost of providing gas service. In addition, Mr. Shay stated that CILCO would not seek recovery in any future gas rate case of the costs incurred, including the premium paid by AES for CILCORP's stock, in accomplishing the mergers. These undertakings assure that if the proposed reorganizations do result in any savings in gas operating costs in the future, the Commission will be free to allocate those savings to CILCO's gas customers in any future gas rate case. VI. SECTION 7-204A Section 7-204A of the Act sets forth information to be furnished in connection with certain applications for approval of reorganizations under Section 7-204. Although Section 7-204A is not applicable to CILCO, because CILCO became a subsidiary of CILCORP prior to 1989, CILCO provided to Staff all the information required under Section 7-204A, or proxies for that information, as requested by Staff. VII. FINDINGS AND ORDERING PARAGRAPHS The Commission, having considered the entire record, is of the opinion and finds that: (1) CILCO is an Illinois corporation providing natural gas service to customers in the State of Illinois and is a public utility within the meaning of the Act; (2) the Commission has jurisdiction over CILCO and the subject matter of this proceeding; 10 (3) the recitals of fact and conclusions reached in the prefatory portion of this Order are supported by the evidence of record, and are hereby adopted as findings of fact; (4) the proposed reorganizations meet the criteria set forth in Section 7-204 of the Act with respect to CILCO gas operations, in that: a) the proposed reorganizations will not diminish CILCO's ability to provide adequate, reliable, efficient, safe and least-cost gas public utility service; b) the proposed reorganizations will not result in the unjustified subsidization of non-utility activities by CILCO or its customers with respect to CILCO's gas operations; c) costs and facilities are fairly and reasonably allocated between utility and non-utility activities in such a manner that the Commission may identify those costs and facilities which are properly included by CILCO for ratemaking purposes for its gas utility operations; d) the proposed reorganizations will not significantly impair CILCO's ability to raise necessary capital on reasonable terms or to maintain a reasonable capital structure with respect to its gas utility operations; e) CILCO will remain subject to all applicable laws, regulations, rules, decisions and policies governing the regulation of Illinois public utilities with respect to CILCO's gas utility operations; f) the proposed reorganization is not likely to have a significant adverse effect on competition in the Illinois gas utility markets over which the Commission has jurisdiction; g) the proposed reorganizations are not likely to result in any adverse rate impacts on retail gas customers of CILCO; 11 (5) CILCO has furnished information specified in Section 7-204A adequate to enable the Staff to review and analyze the proposed reorganizations; (6) the proposed reorganizations will not adversely affect the ability of CILCO to perform its duties under the Act with respect to its gas utility operations; (7) any savings resulting from the proposed reorganizations with respect to CILCO's gas utility operations shall be reflected in CILCO's cost of service for recognition in future rate proceedings; (8) transaction costs, including the premium paid for CILCORP's stock, with respect to CILCO's gas utility operations portion of the reorganizations shall be recorded below-the-line at the holding company level; (9) transition costs that result directly from the reorganizations shall not be recovered from CILCO's gas customers; (10) the application of CILCO for approval of the proposed reorganizations with respect to CILCO's gas utility operations should be approved; (11) the consent, authority and approval of the Commission should be granted to CILCO to do any and all other things not contrary to law or to the rules and regulations of the Commission that are incidental, necessary or appropriate to the performance of any and all acts specifically authorized by the Commission in this Order. IT IS THEREFORE ORDERED that approval is hereby granted to Central Illinois Light Company, with respect to its gas utility operations, for the reorganizations that are the result of the transactions in which The AES Corporation will acquire ownership and control of CILCORP Inc., and, at the discretion of The AES Corporation, The AES Corporation will acquire direct ownership of a majority of the voting capital stock of Central Illinois Light Company. 12 IT IS FURTHER ORDERED that Central Illinois Light Company shall file with the Commission written notice of completion of the reorganizations and the effective date thereof within 30 days after the effective dates of the respective reorganizations. IT IS FURTHER ORDERED that the consent, authority and approval of the Commission are granted to Central Illinois Light Company to do any and all other things not contrary to law or to the rules and regulations of the Commission that are incidental, necessary or appropriate to the performance of any and all acts specifically authorized by the Commission in this Order. 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 10th day of March, 1999. (SIGNED) RICHARD L. MATHIAS Chairman (SEAL) 13 EX-99.24 25 EXHIBIT K-18 Exhibit K-18 [Letterhead] [State of Illinois] [Illinois Commerce Commission] 150 NORTH LASALLE STREET SUITE C-800 CHICAGO, ILLINOIS 60601-3104 March 10, 1999 TEL: (312) 814-2859 FAX: (312) 814-1818 [Richard L. Mathias] [Chairman] Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549 Ladies and Gentlemen: We are writing to you with respect to Central Illinois Light Company ("CILCO") and its parent, CILCORP Inc., and the pending merger transaction involving CILCORP Inc. and The AES Corporation. We have been advised that The AES Corporation, through its subsidiaries (other than CILCORP Inc. or subsidiaries of CILCORP Inc.), affiliates, or through other entities, currently holds, and intends to continue to hold and acquire, ownership interest in electric and natural gas facilities in one or more foreign countries. We submit this letter pursuant to the requirements of Section 33(a)(2) of the Public Utility Holding Company Act of 1935, as amended (the "Act"). A 1997 Illinois law implemented changes to historical utility regulation. The law required all regulated electric utilities to reduce their rates to residential consumers in 1998 and, subject to certain specified exceptions, froze such electric rates until 2005. While neither the utilities nor the Illinois Commerce Commission ("Commission") can change bundled electric rates until 2005, the Commission retains jurisdiction to set rates for unbundled delivery service. In addition, electric utilities are subject to other statutory provisions that require a sharing of revenues with consumers if the utility earns more than certain specified thresholds. However, the restructuring legislation gave electric utilities great flexibility in writing down assets and Securities and Exchange Commission Page 2 June 2, 1999 accelerating depreciation, so utilities may be able to avoid triggering the over-earning threshold. Also, the legislation removed Commission authority over the sale, lease or other transfer of assets to affiliated or unaffiliated entities until January 1, 2005. Also, the Commission has jurisdiction over electric and gas delivery system reliability. However, the Commission cannot order a utility to construct additional generation. Finally, while the Commission's authority to approve or disapprove some merger and reorganization transactions has been suspended until 2005, regulated utilities are required to provide the Commission with a 30-day advanced notice of any proposed transaction, with supporting documentation, and to file certain reports thereafter. The Illinois Commerce Commission hereby certifies to you that we have the authority and resources to protect Illinois consumers in accordance with the Illinois statutes discussed in the previous paragraph. We intend to exercise such authority. Sincerely, Illinois Commerce Commission /s/ Richard L. Mathias ---------------------------------------- Richard L. Mathias Chairman cc: Mr. Edward J. Griffin, DeFrees & Fiske Mr. Robert W. Wason, Security and Exchange Commission EX-99.25 26 EXHIBIT K-19 Exhibit K-19 AES Foreign Breakout Gross Revenues - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): 1996 1997 1998 1999 Y-axis (left side of chart): Percentages of AES Gross Revenues earned by AES's foreign operations, on a GAAP basis, Proportional Consolidated basis, and a Total Project basis (listed in increments of 10 percent between and including 0 and 100%) [Bar Chart provides the below-listed percentages of AES gross revenues earned by AES's foreign operations on a GAAP basis, Proportional Consolidated basis, and a Total Project basis. GAAP percentages are reflected by violet bars, Proportional Consolidated percentages are reflected by red bars, and Total Project percentages are reflected by green bars] Proportional Total Year GAAP Consolidated Project - ---- ---- ------------ ------- 1996 33% 52% 83% 1997 58% 72% 90% 1998 76% 83% 93% 1999* 70% 78% 92% * Assumes CILCORP operations for the last two months of 1999. EX-99.26 27 EXHIBIT K-20 Exhibit K-20 AES Foreign Breakout Net Operating Revenues - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): 1996 1997 1998 1999 Y-axis (left side of chart): Percentages of AES Net Operating Revenues earned by AES's foreign operations, on a GAAP basis, Proportional Consolidated basis, and a Total Project basis (listed in increments of 10 percent between and including 0 and 100%) [Bar Chart provides the below-listed percentages of AES net operating revenues earned by AES's foreign operations on a GAAP basis, Proportional Consolidated basis, and a Total Project basis. GAAP percentages are reflected by violet bars, Proportional Consolidated percentages are reflected by red bars, and Total Project percentages are reflected by green bars] Proportional Total Year GAAP Consolidated Project - ---- ---- ------------ ------- 1996 32% 54% 86% 1997 55% 72% 92% 1998 77% 84% 94% 1999* 74% 82% 94% * Assumes CILCORP operations for the last two months of 1999. EX-99.27 28 EXHIBIT K-21 Exhibit K-21 AES Foreign Breakout Operating Income - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): 1996 1997 1998 1999 Y-axis (left side of chart): Percentages of AES Operating Income earned by AES's foreign operations, on a GAAP basis, Proportional Consolidated basis, and a Total Project basis (listed in increments of 10 percent between and including 0 and 100%) [Bar Chart provides the below-listed percentages of AES operating income earned by AES's foreign operations on a GAAP basis, Proportional Consolidated basis, and a Total Project basis. GAAP percentages are reflected by violet bars, Proportional Consolidated percentages are reflected by red bars, and Total Project percentages are reflected by green bars] Proportional Total Year GAAP Consolidated Project - ---- ---- ------------ ------- 1996 9% 32% 67% 1997 30% 58% 83% 1998 59% 70% 87% 1999* 53% 64% 88% * Assumes CILCORP operations for the last two months of 1999. EX-99.28 29 EXHIBIT K-22 Exhibit K-22 AES Foreign Breakout Assets - -------------------------------------------------------------------------------- [Vertical Bar Chart] X-axis (bottom of chart): 1996 1997 1998 1999 Y-axis (left side of chart): Percentages of AES Assets held by AES's foreign operations, on a GAAP basis, Proportional Consolidated basis, and a Total Project basis (listed in increments of 10 percent between and including 0 and 100%) [Bar Chart provides the below-listed percentages of AES assets held by AES's foreign operations on a GAAP basis, Proportional Consolidated basis, and a Total Project basis. GAAP percentages are reflected by violet bars, Proportional Consolidated percentages are reflected by red bars, and Total Project percentages are reflected by green bars] Proportional Total Year GAAP Consolidated Project - ---- ---- ------------ ------- 1996 52% 52% 80% 1997 82% 77% 93% 1998 74% 73% 91% 1999* * Numbers not available EX-99.29 30 EXHIBIT K-23
Exhibit K-23 AES Foreign Breakout for Generation, Power Plants and Distribution - ------------------------------------------------------------------------------------------------------------------------------------ THE AES CORPORATION - ------------------------------------------------------------------------------------------------------------------------------------ AES 1991 1992 1993 1994 1995 1996 1997 1998 6/30/99 12/31/99 2000 - ------------------------------------------------------------------------------------------------------------------------------------ GENERATION - IN OPERATION Capacity (MW) 889 1,829 2,479 2,505 3,383 9,655 17,682 23,086 26,466 27,798 31,892 Foreign 0 760 1,410 1,436 2,314 8,586 16,613 18,061 20,017 20,017 24,111 Domestic 889 1,069 1,069 1,069 1,069 1,069 1,069 5,025 6,449 7,781 7,781 Percentage Foreign 0% 42% 57% 57% 68% 89% 94% 78% 76% 72% 76% - ------------------------------------------------------------------------------------------------------------------------------------ AES Equity (MW) 864 1,401 1,850 1,863 2,221 6,429 9,697 14,596 17,618 18,950 21,251 Foreign 0 357 806 819 1,177 5,385 8,653 9,596 11,194 11,194 13,495 Domestic 864 1,044 1,044 1,044 1,044 1,044 1,044 5,000 6,424 7,756 7,756 Percentage Foreign 0% 25% 44% 44% 53% 84% 89% 66% 64% 59% 64% - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PLANTS - IN OPERATION 5 8 9 10 15 26 75 85 96 101 107 --------------------- Foreign 0 2 3 4 9 20 69 76 81 81 87 Domestic 5 6 6 6 6 6 6 9 15 20 20 Percentage Foreign 0% 25% 33% 40% 60% 77% 92% 89% 84% 80% 81% - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTION COMPANIES Number of Customers 0 0 0 0 0 2,700,000 8,197,000 12,982,000 13,622,000 13,874,800 13,874,800 Foreign 0 0 0 0 0 2,700,000 8,197,000 12,982,000 13,622,000 13,622,000 13,622,000 Domestic 0 0 0 0 0 0 0 0 0 252,800 252,800 Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 98% 98% - ------------------------------------------------------------------------------------------------------------------------------------ AES Equity 0 0 0 0 0 371,250 2,407,550 3,139,527 3,552,027 3,944,938 3,944,938 Foreign 0 0 0 0 0 371,250 2,407,550 3,139,527 3,552,027 3,692,138 3,692,138 Domestic 0 0 0 0 0 0 0 0 0 252,800 252,800 Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 94% 94% - ------------------------------------------------------------------------------------------------------------------------------------ GWH 0 0 0 0 0 19,981 64,686 102,036 106,890 113,042 113,042 Foreign 0 0 0 0 0 19,981 64,686 102,036 106,890 106,890 106,890 Domestic 0 0 0 0 0 0 0 0 0 6,152 6,152 Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 95% 95% - ------------------------------------------------------------------------------------------------------------------------------------ AES Equity GWH 0 0 0 0 0 2,747 19,808 24,950 27,927 35,170 35,170 Foreign 0 0 0 0 0 2,747 19,808 24,950 27,927 29,018 29,018 Domestic 0 0 0 0 0 0 0 0 0 6,152 6,152 Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 83% 83% - ------------------------------------------------------------------------------------------------------------------------------------
Total AES MW [Vertical Bar Chart] X-axis (bottom of chart): Years 1991 through and including 2000. Y-axis (left side of chart): Megawatt capacity of AES power plants (listed in increments of 2,000 megawatts between and including 0 and 26,000 megawatts). [Bar Chart lists two sets of data (i) megawatt capacity of foreign AES power plants and (ii) megawatt capacity of domestic AES power plants. Foreign capacity is represented by blue bars and domestic capacity is represented by yellow bars.]
Foreign Domestic Year Capacity Capacity ---- -------- -------- (MW) (MW) 1991 0 889 1992 760 1,069 1993 1,410 1,069 1994 1,436 1,069 1995 2,314 1,069 1996 8,586 1,069 1997 16,613 1,069 1998 18,061 5,025 6/30/99 20,017 6,449 12/31/99 20,017 7,781 2000 24,111 7,781
AES Equity MW [Vertical Bar Chart] X-axis (bottom of chart): Years 1991 through and including 2000. Y-axis (left side of chart): Megawatt capacity of AES power plants in terms of AES equity in such plants (listed in increments of 1,000 megawatts between and including 0 and 14,000 megawatts). [Bar Chart lists two sets of data (i) megawatt capacity of foreign AES power plants in terms of AES equity in such plants and (ii) megawatt capacity of domestic AES power plants in terms of AES equity in such plants. Foreign capacity is represented by blue bars and domestic capacity is represented by yellow bars.]
Foreign Domestic Year Capacity Capacity ---- -------- -------- (MW) (MW) 1991 0 864 1992 357 1,044 1993 806 1,044 1994 819 1,044 1995 1,177 1,044 1996 5,385 1,044 1997 8,653 1,044 1998 9,596 5,000 6/30/99 11,194 6,424 12/31/99 11,194 7,756 2000 13,495 7,756
Total AES Plants [Vertical Bar Chart] X-axis (bottom of chart): Years 1991 through and including 2000. Y-axis (left side of chart): Number of AES power plants (listed in increments of 5 plants between and including 0 and 90 plants). [Bar Chart lists two sets of data (i) number of foreign AES power plants and (ii) number of domestic AES power plants. The number of foreign power plants is represented by blue bars and the number of domestic power plants is represented by yellow bars.]
Foreign Domestic Year Plants Plants ---- -------- -------- 1991 0 5 1992 2 6 1993 3 6 1994 4 6 1995 9 6 1996 20 6 1997 69 6 1998 76 9 6/30/99 81 15 12/31/99 81 20 2000 87 20
Total AES Distribution Customers [Vertical Bar Chart] X-axis (bottom of chart): Years 1996 through and including 2000. Y-axis (left side of chart): Total AES distribution customers (listed in increments of 1,000,000 customers between and including 0 and 14,000,000 customers). [Bar Chart lists two sets of data (i) total foreign AES distribution customers and (ii) total domestic AES distribution customers. The number of foreign customers is represented by blue bars and the number of domestic customers is represented by yellow bars.]
Foreign Domestic Year Customers Customers ---- --------- --------- 1996 2,700,000 0 1997 8,197,000 0 1998 12,982,000 0 6/30/99 13,622,000 0 12/31/99 13,622,000 252,800 2000 13,622,000 252,800
AES Equity Customers [Vertical Bar Chart] X-axis (bottom of chart): Years 1996 through and including 2000. Y-axis (left side of chart): Total AES distribution customers on a net equity basis (listed in increments of 200,000 customers between and including 0 and 3,800,000 customers). [Bar Chart lists two sets of data (i) total foreign AES distribution customers on a net equity basis and (ii) total domestic AES distribution customers on a net equity basis. The number of foreign customers is represented by blue bars and the number of domestic customers is represented by yellow bars.]
Foreign Domestic Year Customers Customers ---- --------- --------- 1996 371,250 0 1997 2,407,550 0 1998 3,139,527 0 6/30/99 3,552,027 0 12/31/99 3,692,138 252,800 2000 3,692,138 252,800
Total AES GWH [Vertical Bar Chart] X-axis (bottom of chart): Years 1996 through and including 2000. Y-axis (left side of chart): Total AES gigawatt-hour sales (listed in increments of 10,000 gigawatt-hours between and including 0 and 120,000 gigawatt-hours). [Bar Chart lists two sets of data (i) gigawatt-hour sales of foreign AES operations and (ii) gigawatt-hour sales of domestic AES operations. Foreign sales are represented by blue bars and domestic sales are represented by yellow bars.]
Foreign Domestic Year Sales Sales ---- ------- -------- (GWH) (GWH) 1996 19,981 0 1997 64,686 0 1998 102,036 0 6/30/99 106,890 0 12/31/99 106,890 6,152 2000 106,890 6,152
AES Equity GWH [Vertical Bar Chart] X-axis (bottom of chart): Years 1996 through and including 2000. Y-axis (left side of chart): Total AES gigawatt-hour sales on a net equity basis (listed in increments of 2,000 gigawatt-hours between and including 0 and 30,000 gigawatt-hours). [Bar Chart lists two sets of data (i) gigawatt-hour sales of foreign AES operations on a net equity basis and (ii) gigawatt-hour sales of domestic AES operations on a net equity basis. Foreign sales are represented by blue bars and domestic sales are represented by yellow bars.]
Foreign Domestic Year Sales Sales ---- ------- -------- (GWH) (GWH) 1996 2,747 0 1997 19,808 0 1998 24,950 0 6/30/99 27,927 0 12/31/99 29,018 6,152 2000 29,018 6,152
-----END PRIVACY-ENHANCED MESSAGE-----