# Electronic Filing- Recived, Clerk's Office: 10/1712013

BEFORE THEILLINOIS POLLUTIONCONTROL BOARD

ILLINOIS POWER HOLDINGS, LLC and ) AMERENENERGY MEDINA VALLEY ) COGEN,LLC; )

AMEREN ENERGY RESOURCES, LLC Petitioners,

Co-Petitioner,



### v. ILLINOIS ENVIRONMENTAL PROTECTION AGENCY, Respondent ) ) ) ) ) ) ) ) ) ) ) ) ) ) PCB No. 14-10 (Variance- Air)

NOTICE OFFILING

To: ALL PARTIES ON 

### THE ATTACHED SERVICE LIST PLEASETAKENOTICE thatwe have today electronically filed withthe Office ofthe Clerk ofthe Illinois Pollution Control Board a MOTION TO FILE INSTANTERand PEmiONERS' AND CO.PETIDONER'S POST-HEARING COMMENT, copies ofwhich are herewith served upon you. ILLINOIS POWERHOLDINGS, LLC

Dated: _October 17, 2013 AMERENENERGY RESOURCES,LLC and AMERENENERGYMEDINA VALLEY COGEN, LLC


# 'q ATTACHMENT---

# Electronic Filing- Recived, Clerk's Office: 10/17/2013

BROWN, HAY & 

### STEPHENS, LLP Claire A. Manning William D. Ingersoll 205 S. fifth Street, Suite 700 P.O. Box 2459 Springfield, IL 62705-2459 (217) 544-8491 Fax: (217)241-3111 

### cmanning@Qhslaw.com wingc:rsoll(cl)bhslaw.com



# ..... ,...; \ ' I 

### ' SCill.F.F HARDIN, LLP Renee Cipriano 

### Amy Antoniolli 233 South WackerDrive, Suite 6600 

### Chicago, fllinois 60606 

### 312-258-5550 Fax: 

### 312-258-5600 rcipJiano:cl:!schifillardL[).conl aantoni

### olli'inschiffhardin .com

# Electronic Filing- Recived. Clerk's Office: 10/1712013

BEFORETHE ILLINOISPOLLUTION CONTROL BOARD

ILLINOIS POWER HOLDINGS, LLC and ) AMERENE:N"ERGY MEDINA VALLEY ) COGEN, LLC; ) Petitioners, AMEREN ENERGY RESOURCES, LLC ) ) ) ) ) ) ) ) ) ) ) ) ) ) Co-Petitioner,


### v. PCB No. 14-10 (Variance

- Air)

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY, Respondent.
MOTION TO FILE INSTANTER

NOW COME Petitioners, ILLINOIS POWERHOLDINGS, LLC ("IPH'') and A.MERENENERGY MEDlNA VALLEY COGEN, LLC ("MEDINAVALLEY'') and CoPetitioner, AMERENENERGYRESOURCES, LLC ("AER'') by and through their attorneys, BROWN, HAY and STEPHENS, LLP and SCHIFF HARDIN, LLP, and pursuant to 35 Ill. Adm. Code 101.522, and respectfully state as follows:
1. Section 101.522 ofthe Illinois Pollution Control Board's ("Board") procedural 

### rules provides;The Board or hearing officer, for good cause shown on a motion after notice to the opposite party, may extend the time for filing any document or doing any act which is required bythese rules to be done within a limited period, either before or after the expiration oftime. 35lll. Adm. Code 101.522.

# Electronic Filing- Recived, Clerk's Office: 10/1712013

2. During this proceeding, the Petitioners and Co-Petitioner explained that approval ofthe transactionby the Federal Energy Regulatory Commission ("FERC") was 

### "amandatory regulatory and contractual condition" but thatthey expected FERC approval sometime during the Fourth Quarter of2013, 

### in sufficienttime to execute a Certification ofAcceptance 

### in this variance proceeding. See Petitioners' and Co-Petitioner's Responses to Illinois Pollution Control Board's Question SetForth 

### in

### Hearing Officer Order ofSeptember 12, 2013 (filed on September 16, 

### 2013).

3. Nonetheless, some public comrnenters inthis proceedingraised issues related to whether such approval would actually occur. See Public Comment# 2336, at. p. 4-5; Public Comment# 2337, at p. 20.
4. A 

### public hearingwas heldin this matteron September 17, 2013. Post-heating comments from public commenters were due on September24, 20 13. Post-hearing comments of the parties were due on October 7, 2013. All filings have been timely made andthe record, therefore, is presumed to 

### be closed.

5. 

### On October 11, 2013, FERC issued an order authorizing the proposed transfer of energy centers from AERto IPH and MedinaValley.

6. The Petitioners and Co-Petitioner statethat because FERC'sissuance ofthe above-referenced Orderrelates directly to an issue raisedin this proceeding, and will providethe Boatd with amore complete record, good cause is shown for an extension oflime to allow Petitioners and Co-Petitioner the opportunity to provide the Board with the FERC approval decision, which itfiles concurrently with this motion.

# Electrllnic Filing- Recived. Clerk's Office: 10/17/2013

WHEREFORE, the Petitioners and Co-Petitionerrespectfully request that the Pollution Control J3oard grant this Motion to File Instanter and accept their Post-Hearing Comment as timely filed.

Respectfully 

### submitted, ILLINOIS PO\"VER HOLDINGS, LLC

BROWN, HAY & STEPHENS, LLP Claire A. Manning William D. Ingersoll 205 S. Fifth Street, Suite 700 P.O. Box 2459 Springfield, IL 62705-2459 (217) 544-8491 Fax: (217)241-3111 cmanning(abhslaw.com winrrersoJI(a',bhslaw.com AMEREN ENERGY RESOURCES, LLC and AMERENENERGY MEDINA VALLEY COGEN, LLC

SCHIFF HARDIN, LLP Renee Cipriano Amy Antoniolli 233 South Wacker Drive, Suite 6600 Chicago, Illinois 60606 312-258-5550 Fax: 312-258-5600 rcipriano@;s.;hiffuardin.com aantoniolli@schiffum-din.com

# Electronic Filing- Recived. Clerk's Office: 10/17/2013

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD ILLINOIS POWERHOLDINGS, LLC and ) AMERENENERGY MEDINAVALLEY ) COGEN, LLC, ) Petitioners, ) ) AMEREN ENERGY ) RESOURCES, LLC ) Co-Petitioner, ) )**~** 

### ) ) ILLINOIS ENVIRONMENTAL ) PROTECTION AGENCY, ) Respondent. ) PCB No. 14-10 (Variance- Air)

POST-HEARING COMMENT OF ILLINOIS POWER HOLDINGS, LLC, AMERENENERGY MEDINA VALLEY COGEN, LLC, AND At'\1EREN ENERGY RESOURCES, LLC. NOW COME Petitioners, ILLINOIS POWER HOLDINGS, LLC ("IPH") and AMERENENERGY MEDINA VALLEY COGEN, LLC ("Medina Valley"), and Co-Petitioner, AMEREN ENERGY RESOURCES ("AER"), by and through their attorneys and pursuant to Section 104.224(d) ofthe Illinois Pollution Control Board's ("Board") procedural rules (35 Ill. Adm. Code 104.224(d)). On October 11, 2013, the United States Federal Energy Regulatory Commission ("FERC") issued an order authorizing the Proposed Transaction as consistent with public interest. 1 The Proposed Transaction that is the subject ofthe Order is the same transaction that is the subject ofthis PCB 14-10 proceeding, and was put into evidence as Exhibit B ofthe Motion to Substitute Parties in PCB 12-126. Among its findings, FERC found that the Proposed Transaction would not create horizontal or vertical market concerns,2 and will not have an

1A copy ofthe order, OrderAuthorizingDisposition of JurisdictionalFacilities andAcquisition of Securities, ECI3-93-000, (Oct II, 2013) \'Order"), is attached to this comment. 2 Order, p. 19, 23.

# Electronic Filing- Recived. Clerk's Office: 10/1712013

adverse effect on rates.3 The Order is in effect and remains in effect throughout any rehearing process.4 Ms. Faith Bugel, on behalf of the Environmental Law and Policy Center, Natural Resources Defense Council, Respiratory Health Association, and Sierra Club (collectively, the "ELPC"), asserted in post-hearing comments that the Proposed Transaction is hypothetical, in part, because PERC had not yet authorized the transaction.5 Likewise, 

### Mr. James Gignac, ofthe Illinois Office of the Attorney General, relied on the pending FERC approval in arguing the Proposed Transaction does not provide assurance ofwhen the Petitioners will assume ownership of the energy centers. 6 PERC's authorization of the transaction is further evidence that the
nature ofthe Proposed Transaction is very real, and is now one step closer to consummation. As stated previously, Petitioners and Co-Petitioner expect the transaction to close before the end of the year, assuming a favorable decision from the Board. WHEREFORE, Petitioners, Illinois Power Holdings, LLC and AmerenEnergy Medina Valley Cogen, LLC, and Co-Petitioner, Ameren Energy Resources, LLC, respectfully request that the Illinois Pollution Control Board accept this comment as a supplement to itspost-hearing brief.

3 Order, p. 29. 4 18 C.F.R. 385.713(e). 5PC#2337, p. 20, fn. 13. 6 PC#2336, p. 4-5. 2

## EIBctronic Filing- RBcivBd, CIBrk's Offic8: 

# 10/1712013

Respectfully submitted, 

### ILLINOIS POWER HOLDINGS, LLC

BROWN, HAY & 

### STEPHENS, LLP Claire A. Manning WilliamD. Ingersoll 

### 205 S. Fifth Street, Suite 700 P.O. Box 2459 Springfield, IL 62705-2459 (217) 544-8491 Fax: (217)241-3111 cmanning@bhslaw.com wingersoll@bhslaw.com

3 

### AMEREN ENERGY RESOURCES, LLC and

### AMERENENERGY MEDINA VALLEY COG 

### EN, LLC

# By:~~**O~eir** Attorneys


### SCHIFF HARDIN, LLP Renee Cipriano AmyAntoniolli 

### 233 South WackerDrive, Suite 6600 Chicago, Illinois 60606 312-258-5550 Fax: 

### 312-258-5600 rcipriano@schiffhardin.com aantoniolli@schiflhardin.com

# Electronic Filing- Recived. Clerk's Office: 10/1712013

CERTIFICATE OF SERVICE I, WilliamD. Ingersoll, certify that I have this date served the attachedNotice ofFiling, Motion to File Instanter and Petitioners' and Co-Petitioners's Post Hearing Comment, bymeans described below, upon the followingpersons:

To: Pollution Control Board, Attn: Clerk I00 West Randolph Street James R. Thompson Center, Suite 11-500 Chicago, lllinois 60601-3218 (Via Electronic Filing)

Carol Webb Hearing Officer Illinois Pollution Control Board 1021 North Grand AvenueEast P.O. Box 19274
· Springfield, illinois 62794-9274

webbc@ipcb.state.il.us (Via First-Class Mail and Email) Faith E. Bugel Andrew Armstrong 35 E. WackerDrive, Suite 1600 Chicago, illinois 60601 fbugel@elpc.org aarmstrong@elpc.org (ViaFirst-Class Mail and Email) Dated: September 17, 2013 

### BROWN, HAY & 

### STEPHENS, LLP William D. Ingersoll Registration No. 6186363 wingersoll@bhslaw.com 205 S. Fifth Street, Suite 700 P.O. Box 2459 Springfield, IL 62705-2459 (217) 544-8491 Gina Roccaforte Division ofLegal Counsel illinois Environmental Protection Agency 1021 North Grand Avenue, East P.O. Box 19276 Springfield, Illinois 62794-9276 Gina.roccaforte@illinois.gov (Via First-Class Mail and Email) Renee Cipriano AmyAntoniolli SCHIFF HARDIN, LLP

. 233 SouthWacker Drive, Suite 6600 Chicago, lllinois 60606 AAntoniolli@schiffhardin.com (Via First-Class Mail and Email)

By: Is/William D. Ingersoll William D. Ingersoll20131011-303S FERC

# PJI~gt~~Pi~fJ!ipQ.~**~rrJ~rP·** 

# Clerk's Office: 10/17/2013

145**PERC~** 61,034 UNITED STATES OF AMERICA FEDERALENERGY REGULATORY COMMISSION Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, John

### R. Norris, Cheryl A. LaFleur, and Tony Clark.

Ameren Energy Generating Company AmerenEnergy Resources Generating Company AmerenEnergy Marketing Company Electric Energy, Inc. Midwest Electric Power, Inc. AmerenEnergy Medina Valley Cogen, L.L.C. Dynegyinc. Docket No. EC 13-93-000

ORDERAUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES 

### MTI ACQUISITION OF SECURITIES (Issued October 11, 2013) 

### 1. OnApril16, 2013, AmerenEnergy Generating Company (Ameren Energy Generating), AmerenEnergy Resources Generating Company (Ameren Resources Generating), Ameren Energy Marketing Company (Ameren Marketing), Electric Energy, Inc. (Electric Energy), Midwest Electric Power, Inc. (Midwest Power and, together with Ameren Energy Generating, Ameren Resources Generating, Ameren Marketing and ElectricEnergy, the AmerenMerchant Utilities), AmerenEnergy Medina Valley Cogen, L.L.C. (Medina Valley), and Dynegy Inc. (Dynegy and, together with the Ameren Merchant Utilities and MedinaValley, Applicants), filed an application under sections 203(a)(1) and 203(a)(2) ofthe Federal PowerAct (FPA) 1requesting authorization for a multi-step transaction in whicha specialpurpose subsidiary of Dynegy, Illinois Power Holdings, LLC (Illinois Power Holdings), will acquire all ofthe equity interests indirectly owned by Ameren Corporation (Ameren) in**th~** Ameren

I 16 U.S.C.§ 824b (2006).

# Electronic Filing- Recived, Clerk's Office: 10/17/2013 20131011-3038 FERC PDF \Unofficial) .c0/11/2013 DocketNo. EC13-93-000 

### -2-
Merchant Utilities (Proposed Transaction).2 Applicants supplemented the Application on May 9, 2013 and on August 5, 2013. The Commission

### has reviewed the Proposed Transaction underthe Commission's MergerPolicy Statement.3 As discussedbelow, we will authorize the Proposed Transaction as consistentwith the public interest. 

### I. Background A. Description ofthe Parties 1. Ameren, the Ameren Merchant Utilities, and Affiliates 2. Applicants state that Ameren is a public utility holding company that, among other things, owns two traditional load-serving electric utilities, Ameren Illinois Company (Ameren Illinois) and Union Electric Company, as well as interests in the Ameren Merchant Utilities and two otherpublic utilities, Medina Valley and Ameren Transmission Company ofIllinois (AmerenTransmission Illinois). 3. Applicants state that Ameren Illinois is a direct, wholly-ownedpublic utility subsidiary ofAmerenengaged in: (i) the transmission and sale ofelectric energy subject to the Commission'sjurisdiction; and (ii) the provision ofretail electric and natural gas service in Illinois under thejurisdiction ofthe Illinois Commerce Commission (Illinois Commission). Applicants state that transmission service onthe Ameren Illinois

2 Joint Application for Authorization under Section 203 ofthe Federal Power Act and Request for Expedited Consideration, DocketNo. ECB-93-000 (Application). 3Inquiry Concerningthe Commission'sMergerPolicy Under the Federal Power Act: Policy Statement, OrderNo. 592, FERC Stats. & Regs.**~** 31,044 (1996), reconsideration denied, OrderNo. 592-A, 79 FERC**~** 61,321 (1997) (MergerPolicy Statement). See also FPA Section 203 SupplementalPolicyStatement, FERC Stats. & Regs. '\[31,253 (2007) (Supplemental Policy Statement). See also RevisedFiling Requirements Under Part 33 of the Commission'sRegulations, OrderNo. 642, FERC Stats. &**Regs.~** 31,111 (2000), order on reh 'g, OrderNo. 642-A, 94 FERC '\[61,289 (2001). See also Transactions Subject to FPA Section 203, OrderNo. 669, FERC Stats. & Regs. '\[31,200 (2005), order on reh 'g, OrderNo. 669-A, FERC Stats. & Regs.**~** 31,214, order on reh 'g, OrderNo. 669-B, FERC Stats. & Regs. '\[31,225 (2006).

# Electronic Filino - Recived, Clerk's Office: 10/17/2013 20131011-3038 FERC PDF (Unofficial) ".i.0/11/2013 DocketNo. EC13-93-000 

### - 3 -
transmission system is providedpursuant to the Midwest Independent Transmission System OperatorInc. (MISO) Tariff. 4 4. Applicants state that UnionElectric Company is a direct, wholly-o\\>nedpublic utility subsidiary ofAmeren engaged in: (i) the generation, transmission, and sale of electric energy subjectto the Commission'sjurisdiction; and (ii) the provision ofretail electric and gas service 

### in central and eastern Missouri under thejurisdiction ofthe Missouri Public Service Commission. Applicants state that transmission service on the Ameren Missouri transmission system is provided pursuantto the MISO Tariff. 5. Applicants state that Ameren Transmission Illinois is a transmission-only subsidiary ofAmeren that provides transmission service under the MISO Tariffin the Ameren Illinois pricing zone ofMISO. 6. Applicants state that Medina Valley is a wholly-owned subsidiary ofAmeren. It currently does not O\\>TI any generation capacity, but it is authorized to make sales at market-based rates. Applicants state that Medina Valley is not one ofthe Ameren Merchant Utilities, and Dynegy will not acquire it in the Proposed Transaction. Applicants state, however, that MedinaValley will acquire from Ameren Energy Generating three active gas-fired generating facilities (the Grand TowerEnergy Center, the Gibson City Energy Center, and Elgin Energy Center) and two mothballed generating facilities (the Hutsonville Plant and the MeredosiaPlant) after Commission approval of, but prior to, closing ofthe ProposedTransaction. Applicants state that, as a result, these facilities will not be among those acquired byDynegy in the ProposedTransaction. 7. Applicants state that AmerenEnergy Resources Company, LLC (Ameren Resources) is a wholly-owned intermediate holding company through which Ameren owns indirect interests in the AmerenMerchant Utilities, which are described below.


### a. Ameren Energy Generating 8. Applicants state that Ameren Energy Generating, a wholly-owned subsidiary of Ameren Resources, has received market-based rate authority from the Commission. Arneren Energy Generating currently owns (excluding Electric Energy and Midwest Power) approximately 3,293 MW ofgeneration capacity (summer rating) located in Illinois, Applicants state that all ofthis generation is located within the MISO balancing authority area, with the exception ofthe 452 MW (summerrating) Elgin Energy Center which is locatednearElgin, Illinois within the PJMInterconnection, LLC (PJM)

4Effective April26, 2013, MISO changedits name from "Midwest Independent Transmission System Operator, Inc." to "MidcontinentIndependent System Operator, Inc."

# · Electronic Filino- Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF (Unofficial) "::1.0/11/2013 DocketNo. EC13-93-000 

### - 4 - balancing authority area. Applicants statethat Ameren Energy Generating sells 100 percent ofthe output ofits generating facilities to Arneren Marketing, 

### b. Ameren Resources Generating 9. Applicants state that Ameren Resources Generating, a wholly-owned subsidiary of Ameren Resources, has received market-based rate authority from the Commission. Applicants state thatAmeren Resources Generating owns approximately 1,060 MW of capacity within the MISO balancing authority area, and that it sells 100 percent ofthe output from its generating facilities to Ameren Marketing.


### c. Ameren Marketing 10. Applicants statethat Ameren Marketing, a wholly-owned subsidiary ofAmeren Resources, has received market-based rate authority from the Commission. Applicants statethat Ameren Marketing is a power marketer and does not own any generation capacity. However, through long-term power sales agreements with Ameren Energy Generating, Ameren Resources Generating, and Electric Energy, Arneren Marketing currently controls approxinlately 5,600 MW ofcapacity. The Commission has granted AmerenMarketing waivers to sell electric capacity and energy to its affiliates under certain circumstances.5 Applicants state that 

### in addition to making wholesale sales, Ameren Marketing is engaged in retail marketing inthe State ofIllinois and is regulated by the Illinois Commission as an Alternative Retail Electric Supplier. 

### d. Electric Energy 11. Applicants state that Electric Energy owns and operates coal and gas-fired

.generatingunits having a combined capacity ofapproximately 1,167 MW (summer rating), located 

### in Joppa, Illinois (JoppaFacility). Applicants state thatAmeren Energy Generating owns an 80 percent equity interest in Electric Energy, and an unaffiliated utility, Kentucky Utilities, owns the remaining 20 percent interest. Electric Energy is an exempt wholesale generator and has received market-based rate authority from the Commission. Applicants state that Electric Energy owns six parallel transmission lines approximately eight miles long that interconnectthe JoppaFacility with the MISO, Tennessee Valley Authority (TVA), and Louisville Gas & Electric (LG&E)/Kentucky Utilities balancing authority areas through a DepartmentofEnergy transmission bus in Paducah, Kentucky. Applicants state that, becausethe lines thatElectric Energy owns could conceivably be used by an unaffiliated third party for transmission service, the

5 SeeAmeren EnergyMarketing Co., DocketNo. ER0&-651-000 (May 9, 2008) (delegated letter order); Ameren EnergyMarketing Co., DocketNo. ER0?-361-000 (May 31, 2007) (delegated letter order).

### Docket No. EC13-93-000 - 5

- Commission has required Electric Energy to file an Open Access Transmission Tariff (OATT), but the Commission has granted waiver ofcertain other transmission owner requirements.
e. Midwest Power 

### 12. Applicants state that Midwest Power is awholly-owned subsidiary ofElectric Energy. Applicants state that it owns and operates two gas turbines with a total capacity ofapproximately 74 MW (summerrating) located in Joppa, Illinois. Applicants state that all ofthe output ofMidwest Power's generating facilities is soldto Electric Energy IIDder a cost-based, long-term sales agreement. Applicants state that Midwest Energy does not have any otherrate schedules in effect. 2. Dynegy, the Dynegy Public Utilities, and Other Dynegy Generation 

### 13. Applicants state that Dynegy is apublic utility holding company. Applicants state that Dynegy controls approximately 11,400 MW ofelectric generation and produces and sells electric energy, capacity, and ancillary services in U.S. markets through public utilities and other generation-owning subsidiaries, as described below.6



### a. Casco Bay Energy Company, LLC 

### 14. Applicants state that Casco Bay Energy Company, LLC (Casco Bay) is an indirect, wholly-owned subsidiary ofDynegy. It

### is an exempt wholesale generator that owns and operates the Maine Independence Station, anatural gas-fired, combined cycle generating facility with anet capacity of490 MW (summerrating), located in Veazie, Maine. Applicants state that Maine Independence Station is interconnected with the transmission grid controlled by ISO New England Inc. Applicants state that Casco Bay has received authority from the Commission to sell energy, capacity, and certain ancillary services at market-based rates. b. Dynegy Danskammer, L.L.C. 

### 15. Applicants state that Dynegy Danskammer, L.L.C. (Dynegy Danskammer) is an indirect, wholly-owned subsidiary ofDynegy. It is an exempt wholesale generatorthat leases, owns, and operates, and has the right to the output from, the Danskammer Generating Station, acoal-, gas-, and oil-fired electric generating facility with a net capacity of497 MW (summer rating), located in Orange, New York. Applicants state

6

### Dynegy is approximately 35 percent controlledby investment management subsidiaries ofFranklinResources, Inc., an investment management company. Application at n.11.

# Electronic Filinn - Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF**(Unorric>a~)"~o/ilT2013** DocketNo. EC13-93-000
- 6- that Danskammer Generating Stationis interconnected withthe transmission grid controlled by the New York Independent System Operator, Inc. (NYISO). The Commission has authorized DynegyDanskammerto sell energy, capacity, and certain ancillary services at market-based rates. Applicants state that the Danskammer Generating Station is not in operation, and the Commission has recently authorized Dynegy Danskammerto acquire title to units ofthe Danskammer Generating Stationthat it currently leases and to sell the entire DanskammerGenerating Station to an unaffiliated third party for purposes ofdemolition.7



### c. Dynegy Kendall Energy. LLC 16. Applicants statethat Dynegy Kendall Energy, LLC (Dynegy Kendall) is an indirect, wholly-owned subsidiary ofDynegy. Applicants statethat it is an exempt wholesale generatorthat ovms and operatesthe Kendall County Generation Facility, a natural gas-fired electric generating facility with a net capacity of 1,140 MW (summer rating), located in Kendall, Illinois. Applicants state that the Kendall County Generation Facility is interconnected with thetransmission grid controlled by PJM. The Commission has authorized Dynegy Kendall to sell energy, capacity, and certain ancillary services at market-based rates. Applicants statethat Dynegy Kendall also has a rate schedule for cost-based reactive power compensation. 

### d. Dynegy Marketing and Trade, LLC 17. Applicants state that DynegyMarketing and Trade, LLC (Dynegy Marketing and Trade) is an indirect, wholly-owned subsidiary ofDynegy. Applicants state that 

### it is a power marketer and currently controls 200 MW ofa unit in PJM owned by its affiliate, Dynegy Kendall, under a long-term capacity and energy purchase agreement that Constellation Energy Commodities Group, Inc. assigned to Dynegy Marketing and Trade. The Commission has authorized Dynegy Marketing and Trade to sell energy, capacity, and certain ancillary services at market-basedrates.


### e. Dynegy Midwest Generation, LLC 18. Applicants state that Dynegy Midwest Generation, LLC (Dynegy Midwest Generation) is an indirect, wholly-owned subsidiary ofDynegy. Applicants state that it is

7 OnMarch 11, 2013, the Commission authorized the disposition ofthe Danskammer Generating Station. DynegyDanskammer, LLC, 142 FERC "i[62,197 (2013). The Commission was informed on September 5, 2013 that the disposition authorized would notbe occurring. On September 9, 2013, DynegyDanskammer filed a new application to request authorization for disposition ofthe Danskammer Generating Station in DocketNo. EC13-144-000. That application is pending.

# Electronic Filino- Recived, Clerk's Office: 10/1712013 20131011-3038 FERC PDF (Unofficial)**~0/11/2013** DocketNo. EC13-93-000 - 7

-

an exempt wholesale generatorthat owns and operates six fossil-fueled generating facilities at various locations in Illinois with a total capacity ofapproximately 2,980 MW. Applicants state that Dynegy Midwest Generation's facilities are interconnected with the transmission grid controlled by MISO. Applicants state that Dynegy Midwest Generation is authorized to sell energy, capacity, and certain ancillary services at market-basedrates. Applicants state that Dynegy Midwest Generation also has a rate schedule for cost-based reactive power compensation. 

### f. Dynegy Morro Bay, LLC 19. Applicants state that Dynegy Morro Bay, LLC (Dynegy Morro Bay) is an indirect, wholly-ovmed subsidiary ofDynegy. Applicants state that it is an exempt wholesale generatorthat ovms and operates the Morro Bay Power Plant, which consists ofnatural gas-fired generating units with a combined net capacity of650 MW (summer rating), located in Morro Bay, California. Applicants state that theMorro BayPowerPlantis interconnected with the transmission grid controlled by the California Independent System Operator Corporation (CAISO). The Commission has authorized Dynegy Morro Bay to sell energy, capacity, and certain ancillary services at market-based rates. g. Dynegy Moss Landing, LLC 20. Applicants state that Dynegy Moss Landing, LLC (Dynegy Moss Landing) is an indirect, wholly-owned subsidiary ofDynegy. It is an exempt wholesale generator that owns and operates the Moss LandingPowerPlant, which consists ofnatural gas-fired combined cycle/conventional steam generatingunits with a combined capacity of 2,529 MW (summerrating), located in Monterey County, California. Applicants state thatthe Moss LandingPowerPlant is interconnectedwith the transmission grid controlled by CAISO. The Cornn1ission has authorizedDynegy Moss Landing to sell energy, capacity, and certain ancillary services atmarket-based rates. h. Dynegy Oakland, LLC 21. Applicants state that Dynegy Oakland, LLC (Dynegy Oakland) is an exempt wholesale generatorthat O\vns and operates the Oakland Power Plant, which consists of oil-flred generating units with a combined capacity of 165 MW (summerrating), located in Oakland, California. Applicants state that the Oakland PowerPlantis interconnected with the transmission grid controlled by CAISO. The Cornn1ission has authorized Dynegy Oakland to sell energy, capacity, and certain ancillary services at market-based rates. 

### In addition, Applicants state that Dynegy Oakland is**~ubject** to a cost-based Reliability Must-Run agreement with CAISO. 

### i. Dynegy Power Marketing,LLC 22. Applicants state thatDynegy PowerMarketing, LLC is an indirect, wholly-owned subsidiary ofDynegy and a powermarketer. Applicants state that it has received

## Electrllnic Filin[J - RecivBd, CIBrk's OfficB: 

# 10/1712013 20131011-3038 FERC PDF Tunofficial) 'i'0/11/2013 DocketNo. EC13-93-000 

### - 8 - authority from the Commission to sell energy, capacity, and certain ancillary services at market-based rates. 

### j. Dynegy Roseton, L.L.C. 23. Applicants statethatDynegy Roseton, L.L.C. (Dynegy Roseton) is an indirect, wholly-owned subsidiary ofDynegy. Applicants state that it is an exempt wholesale generatorthat leases, operates, andhas the right to the output from the Roseton Generating Station, a natural gas- and oil-fired electric generating facility with a net capacity of 1,213 MW (summer rating), located in Orange, NewYork. Applicants state thattheRoseton Generating Station is interconnected withthe transmission grid controlled by NYISO. The Commissionhas authorized Dynegy Roseton to sell energy, capacity, and certain ancillary services at market-based rates. The Commission has recently authorized Dynegy Roseton to acquire title tothe Roseton Generating Station from its passive lessor and to sell the entire facility to an unaffiliated thirdparty. 8 

### k. Ontelaunee Power Operating Companv. LLC 24. Applicants state that Ontelaunee Power Operating Company, LLC (Ontelaunee Power) is an indirect, wholly-owned subsidiary ofDynegy. Applicants state that it is an exempt wholesale generator that owns and operates the Ontelaunee Energy Center, a natural gas-fired electricgenerating facility with a net capacity of516 MW (summer rating), located in Ontelaunee, Pennsylvania. Applicants state thatthe Ontelaunee Energy Center is interconnected withthe transmission grid controlled by PJM. The Commission has authorized Ontelaunee to sell energy, capacity, and certain ancillary services at market-based rates. Applicants state that Ontelaunee also has a rate schedule on file with the Commission for cost-based reactive power compensation. 

### l. Sithe!Independence Power Partners, L.P. 25. Applicants state that Sithe/Independence Power Partners, L.P. (Sithe/Independence) is an indirect, wholly-owned subsidiary ofDynegy. Applicants state that it is an exempt wholesale generator that owns and operates the Sithe Independence Station, a natural gas-fired electric generating facility with a net capacity of982 MW (summer rating), located in Oswego, New York. Applicants state thatthe Sithe Independence Station is interconnected to the transmission system controlleJ by NYISO. The Commission has authorized Sithe!Independence to sell energy, capacity, and certain ancillary services at market-based rates.

8Application at 13 (citing

### LlynegyRoseton, L.L.C., 142 FERC '1[62, 148 (2013)).

# Electronic Filino- Recived. Clerk's Office: 10/17/2013 20131011-3039 FERC PDF (Unofficial)**~o/il!2013** DocketNo. ECI3-93-000

- 9-



### m. Nevada Cogeneration Associates #2 26. Applicants state that Nevada CogenerationAssociates #2 (Nevada Cogen) is indirectly owned 50 percent by Dynegy and 50 percentby Chevron Corporation. Applicants state that 

### it owns and operates the Black MountainFacility, a natural gas-fired qualifying cogeneration facility with a capacity of85 MW(summer rating), located near Las Vegas, Nevada, that is interconnected with the transmission system ofthe Nevada Power Company. Applicants state that by virtue ofthe qualifying facility status ofthe BlackMountain Facility, Nevada Cogen does not make FPA-jurisdictional sales and therefore does nothave a rate schedule on file with the Commission. 

### B. Description ofthe Proposed Transaction 27. The Proposed Transaction will occurpursuant to the Transaction Agreement Between Ameren Corporation and Illinois PowerHoldings, LLC dated March 14,2013 (Transaction Agreement). Illinois PowerHoldings is an indirectly owned, special purpose vehicle that Dynegy has formed for purposes ofaccomplishing the Proposed Transaction. The generating assets subject to the Proposed Transaction include the Duck Creek (410 MW), Coffeen (895 MW), E.D. Edwards (650 MW), and Newton (1,197 MW) coal-fired stations, all located inthe MISO footprint, and Ameren's indirect 80 percent interest in the Joppagenerating station (1,167 MW) and the MidwestPower gas turbines (74 MW), located in the Electric Energy balancing authority area. The jurisdictional facilities involved in the Proposed Transaction also include: (I) marketbased rate tariffs orschedules; (2) contracts entered into under such tariffs or schedules; (3) reactive power rate schedules, an OATT and a cost-basedrate schedule; (4) associated books and records; and (5) transmission interconnection facilities. 28. Applicants state that theProposed Transaction will be accomplished in a series of steps. lnthe frrst step, whichwill occur following Commission approval ofthe Proposed Transaction but before closing, AmerenEnergy Generating will transfer the Grand Tower Energy Center, the Gibson City Energy Center, and Elgin Energy Center to Medina Valley. Applicants explainthat this step will be taken because these three plants are not being sold to Dynegy. Instead, consistent with its decision announced in December 2012 to exit the merchant generation business, Ameren states that it intends to sell these gasfired units to a non-affiliatedthird party. 9 AmerenEnergy Generating will also transfer to MedinaValley two mothballed generating facilities, the Hutsonville Plant and the MeredosiaPlant, together with certain associated liabilities. Ameren Resources will cause, through contributions ormergers, all ofits remaining assets and liabilities,

9 Applicants state that Ameren has commenced a sale process for these three units andthat any transfer ofthethree units would bethe subject ofa separate application under section 203. Application at n.43.

# Electronic Filino- Recived, Clerk's Office: 10/17/2013 201Jl011-3038 FERC PDF (Unofficial) IO/ll/2013 DocketNo. EC13-93-000

- 10- including its interests inthe Ameren MerchantUtilities, to be held directly or indirectly by a newly-formed subsidiary (New Ameren Resources), except for: (i) any debt owed 

### to the seller group (that is, debt owed to Ameren and its subsidiaries other than Ameren Resources (orNewAmerenResources) and its subsidiaries); and (ii) certain contracts relating to the development ofadvanced coal generation technology. In the second step ofthe ProposedTransaction, Ameren will cause Ameren Resources to transfer 100 percent ofits equity interests in NewAmerenResources to Illinois Power Holdings, with the result that Dynegy will indirectly acquire all ofAmeren's interests in the Ameren Merchant Utilities, including the operating generating facilities that they hold at closing. Also at closing, Ameren and Illinois PowerHoldings will enter into a transitional services agreement, under which Ameren and its subsidiaries will provide to New AmerenResources and the AmerenMerchantUtilities certain administrative services they received prior 

### to closing for a term ofsix months (subjectto one six-month extension). 29. Applicants explain that Ameren will receive no cash proceeds as a result ofthe divestiture ofNew AmerenResources. However, Applicants state that Ameren will receive benefits from the Proposed Transaction, including the removal ofAmeren Energy Generating's debt from Ameren's consolidated balance sheet, as well as certain tax benefits that will accrue to Ameren. In addition, at the closing ofthe Proposed Transaction, Ameren Energy Generating and Ameren Resources Generating will enter into amendments to the agreements by which they acquired their generating facilities from predecessors ofAmeren Illinois. 10 Applicanl<> explainthat, through these amendments, Ameren Energy Generating and Ameren Resources Generating will assume certainenvironmental liabilities currentlyheld by AmerenIllinois relating to ownership and operation ofthe generating facilities prior

### to ownership by Arrieren Energy Generating and Amcrcn Resources Generating. Thus, as Dynegy will indirectly acquire Ameren Energy Generating and Ameren Resources Generating upon consummation of the ProposedTransaction, the assumed environmental liabilities will be transferred out of the Ameren corporate family. Applicants demonstrate that following the closing ofthe Proposed Transaction, Dynegy will obtain a total ofapproximately 4,393 MW of additional capacity, 

### to bring their company-widetotal capacity to 13,868 MW, while Ameren will retain approximately 11,578 MW ofgeneration capacity, which is reduced from 15,971 MWY ·

10 AmerenIllinois was formed by the mergerofCentral IllinoisLight Company and Illinois Power Company into Central Illinois Public Service Company, which then changed its name to AmerenIllinois. 

### See Ameren Corp., 131 FERC**~** 61,240 (2010).
11 Application at21.

# Electronic Filinn -Recived. Clerk's Office: ID/17/2013 20131011-3038 FERC PDF (Unofficial}**~0/11/2013** Docket No. EC13-93-000

- 11

- 

### 11 Notice ofFiling and Responsive Pleadings 30. Notice ofthe Application was published in the

### FederalRegister, 78 Fed. Reg. 25,072 (2013), with interventions and comments due on or before June 17, 2013. Notice ofthe May 9, 2013 supplement to the Application was published in the 

### Federal Register, 78 Fed. Reg. 29,128 (2013), withinterventions and comments due on or before June 17,2013. 31. The Illinois Commission filed a notice ofintervention. Local Union Nos. 51 and 702, International Brotherhood ofElectrical Workers, AFL-CIO ftled a timely motion to intervene. The Illinois Municipal Electric Agency (Illinois Municipal), Southwestern Electric Cooperative, Inc. (Southwestern Electric), and the Missouri Joint Municipal Electric Utility Commission (Missouri Joint Municipal) filed timely motions to intervene andprotest. 32. OnJuly 2, 2013, Applicants ftled an answer to the protests. 12 On July 3, 2013, Illinois Municipal filed an answer to Applicants Answer to Protests. 13 On July 12, 2013, Missouri Joint Municipal filed an answer to Applicants Answer to Protests. 14 33. On July 26, 2013, the Director ofthe Division ofElectric PowerRegulation- West issued a request for additional informationfrom Applicants. 15 Applicants filed a response to the request on August 5, 2013. 16 Notice ofApplicants Response to Information Request was published in the 

### FederalRegister, 78 Fed. Reg. 49,493 (20 13), with interventions and comments due onorbefore August 19, 2013. Sierra Club filed a timely motion to intervene and protestto**Applicant~** Answer (Sierra Club Protest). IllinoisMunicipal and Missouri JointMunicipal (together, Municipal Protesters) filed

12 Request for Leave to Answer and Answer ofAmeren Generating Company, 

### et al., DocketNo. EC13-93-000 (Applicants Answer). 13 Answer ofIllinois Municipal to Applicants motion for leave to file answer and conditional motion forleave to file answerto an answer, DocketNo. EC13-93-000 (Illinois Municipal Answer).
14 Answer ofMissouri JointMunicipal to Applicants motion for leave to file answer and conditional motion for leave to file answer to an answer, DocketNo. EC13- 93-000 (Missouri Joint Municipal Answer). 15 Letter order directing Applicants to provide additional information, Docket No. ECB-93-000.
16 Response to July 26,2013 letter, DocketNo. EC13-93-000 (Applicants Response to Information Request).

# Electronic Filino- Recived. Clerk's Office: 10/17/2013 20131011-3038 FERC FDF (Unofficial) "J.0/1112013 DocketNo. EC13-93-000

- 12

-
comments in response to Applicants' Response to Information Request. 17 On September 3, 2013, the Ameren Merchant Utilities filed a supplemental answer. 18 On September 12, 2013, IllinoisMunicipal filed an answerto the AmerenMerchant Utilities' supplemental answer. 19 

### lll. Discussion A. Procedural Issues 34. Pursuant to Rule 214 ofthe Commission's Rules ofPractice and Procedure, 18 C.F.R. 

### § 385.214 (2013), the notice ofintervention, and timely unopposed motions to intervene serve to make the entities that filed them parties to this proceeding. 35. Rule 213(a)(2) ofthe Commission's Rules ofPractice and Procedure, 18 C.F.R. 

### § 385.213(a)(2) (2013), prohibits an answer to a protest or an answer unless otherwise orderedby the decisional authority. We will acceptthe answers thathave been filed because theyhaveprovided information that assisted us in our decision-making process. B. Standard ofReview Under Section 203 36. Section 203(a)(4) oftheFPArequires the Commission to approve a transaction if it determines that the transaction will be consistent with the public interest. The Commission's analysis ofwhether a transaction will be consistent with the public interest generally involves consideration ofthree factors: (I)the effect on competition; (2) the effect on rates; and (3) the effect on regulation. 10 Section 203(a)(4) also requires the Commissionto find thatthe transaction "will not result in cross-subsidization ofa nonutility associate company or the pledge or encumbrance ofutility assets for the benefit of an associate company, unless the Commission determines that the cross-subsidization,

17 Respectively, Comment ofIllinois Municipal to Applicants response to the Commission's requestfor more information (Illinois Municipal Response to Applicants Response) and Response ofMissouri Joint Municipalto Applicants August 5, 2013 compliance filing (Missouri Joint Municipal Response to Applicants Response). 18 The Ameren Merchant Utilities Supplemental Answer notified the Commission ofa lawsuit filed in the United States District Court in the Central District oflllinois regarding a contractbetween Illinois Municipal and Ameren Marketing. 19 In its Answer to Supplemental Answer, Illinois Municipal informed the Commissionthatthe reliefrequested in the lawsuit was different than the reliefrequested in its protest filed in this proceeding. 20 MergerPolicy Statement, FERC Stats. &**Regs.~** 31,044 at 30,111.

# Electronic Filing- Recived. Clerk's Office: 10/17/2013 20131011-3038 FERC PDF**:u~oiti~ial) ~0/11/2013**  Docket No. EC 13-93-000



### - 13- pledge, or encumbrance will be consistent with the public imerest.''21 The Commission's regulations establish verification and informational requirements for applicants that seek 

### a detem1ination that a transaction will not result in inappropriate cross-subsidization or pledge or encumbrance ofutility a<>scts. 22 

### C.**Analy~is** 

### Under Section 203 1. 

### Effect on Horizontal Competition

a. Applicants' Analysis 37. Applicants state that the Proposed Transaction will not have an adverse effect on competition. Applicants identify the MISO, Electric Energy/TVA and PJM markets as the relevant geographic markets in which Applicants already own or control generation capacity. However, Applicants detennine that the only significant change in generation ownership resulting from theProposed Transaction will be in the M!SO geographic market. 23 Applicant.<> identify the following products as relevant to the Proposed Transaction and analyze them \Vithin the MISO geographic market: electric energy, electric capacity, and ancillary services.'• 38. Applicants submit a forward-looking, competitive analysis screen using the delivered price test framework for the MISO market assuming that the current MISO footprint exists as well 

### as a scenario that assumes the inclusion 

### ofthe transmission systems ofcertain public utilities operating in the southern region into MIS025 expected to occur in December of2013 (M!SO Southern Region). 16 Additionally, Applicants

21 16 U.S.C. 

### § 824b(a)(4) (2006). 22 18 C.F.R. 

### § 33.20) (2013). 23 Application at 21.
2• Jd. at 23. 25 See MJSO Southern Region Integration, https://www.midwestiso.org/What\VeDo/Strategiclnitiatives/SouthernRef!ionlntegrationl Pages/SouthemRegionlntegration.aspx (MISO approved the integration ofthe transmission systems ofEntergy Corporation's public utility subsidiaries, South Mississippi Elcctt·ic PowerAssociation, Cleco Power, LLC, and Lafayette City-Parish Consolidated Government).
26 Application at 22.

# Electronic Filino- Recived, Clerk's Office: 10/17/2013 20131011-3038 FERC PDF (Unofficial) 'i'0/11/2013 DocketNo. ECIJ-93-000

- 14- analyze a combinedElectric Energy/TVA market. 27 Applicants submit an AppendixA analysis as required under section 33.3(a)(2) ofthe Commission's regulations?8 • Applicants performed both an economic capacity (EC) and available economic capacity (AEC) analysis. 29 39. Inconnectionwith their competitive analysis, Applicants were directed by Commission staffto submit a revised simultaneous transmission import limit (SIL) study for the MISO market for 2014 to monitor all the 100 kV and above transmission elements in the first-tier areas, and were directed to rerun the results oftheir Appendix A analysis with the revised SIL.30

27 While Applicants' base case models the output ofthe Joppa Facility in MISO, Application at 21-22, in accepting Electric Energy's market-based rate tariff, the Commissionmadenofmding withrespect to ElectricEnergy's 

### claim thatMISO is the proper relevant geographic market for the Joppa Facility. See ElectricEnergyInc., 113**PERC~** 61,245, at P 15 (2005). 28 Applicants performed anAppendix A analysis, also referred to as a Delivered Price Test or CompetitiveAnalysis Screen, to determine the pre- and post-transaction market shares from which themarket concentration orHerfindahl-Hirschman Index (HHI) change can be derived. The HHI is a widely accepted measure ofmarket concentration, calculated by squaring the market share ofeach firm competing in the market and summingtheresults. The HHI increases both as the number offirms inthe market decreases and as the disparity in size between those firms increases. Markets in which the HHI is less than l,000 points are considered to be unconcentrated; markets in which the HHI is greater than or equal to 1,000 but less than 1,800 points are considered to bemoderately concentrated; and markets in which theHHI is greater than or equal to 1,800 points are consideredto be highly concentrated. In a horizontal merger, an increase ofmore than 50 HHI points in a highly concentrated market or an increase of I00 HI-II points in a moderately concentrated market fails its screen and warrants further review. Merger Policy Statement, PERC Stats. &**Regs.~** 31,044 at 30,129; see also Analysis of Horizontal MarketPower under the FederalPowerAct, 138 FERC**~** 61,!09 (2012) (affirming the Commission's use ofthe thresholds adopted intheMerger Policy Statement).
29 Each supplier'sEC is the amount ofcapacity that could compete in the relevant market given marketprices,.running costs, and transmission availability. AEC is based onthe same factors but subtracts the supplier's native load obligation from its capacity and adjusts transmission availability accordingly. 30 Information Request at 2.

# Electronic Filina- Recived, Clerk's Office: 10/1712013 20131011-3038 FERC PDF (Unofficial)**~o/il/2013** DocketNo. EC13-93-000



### - 15

- 40. Applicants' revised competitive analysis shows no violations ofthe Commission's market power screens in the MISO geographic market for any load/season under various assumptions. The table below shows no screen failures for EC, defining the geographic market as the current MISO footprint under Applicants' base case assumptions.
EC Results in Current MISO Footprint (revised SILl Table 1 

### I Dynegy Ameren Market Market HHI Period MW Share MW Share HHI Change Summer Super Peak 1 6,855 5.3% 9,973 7.8% 393 (361 Summer Super Peak 2 6,855 5.4% 9,973 7.6% 379 (36) Summer Peak 6,647 6.0% 7,563 6.8% 376 (30) Summer Off-Peak 6,183 6.5% 6,105 6.4% 351 (33) Winter Super Peak 6,240 5.5% 8,509 7.5% 378 (33) Winter Peak 16,245 6.1% 6,891 6.7% 361 (29) Winter Off-Peak 4,053 5.0% 5,745 7.1% 342 (26) Shoulder Super Peak 5,715 5.1% 8,642 7.8% 3761 (35) Shoulder Peak 5,602 6.0% 5,876 6.4% 341 (27) Shoulder Off-Peak 1,663 2.3% 4,977 6.8% 342 (11) Source: Applicants' Response to Information Request at Exh. JRS-6. 41. Applicants note thattheresult oftheProposed Transaction is a reduction in EC market concentration as measured byHHI because affiliates ofthe AmerenMerchant Utilities are affiliated with more generation inMISO than the Dynegy affiliates, which is why the HHI changes shown in Table I are negative. 31 Forthe EC measure, Applicants performed the following sensitivity analyses: including the MISO Southern Region as part ofthe relevant geographic market; adjusting for price (both higher and lower by I0 percent); and assuming the retirement ofcertain coal generation in the market ( 4,127 MW), none ofwhich results in screen failllTes or results that differ from the base results presented above.32

31 Application at 26-27. 32 

### I d. at 27.

# Electronic Filinn- Recived, Clerk's Office: 10/1712013 20131011-3038 FERC PD? (Unofficial)**~0/11/2013** DocketNo. ECI3-93-000



### - 16-
42. Applicants' revised competitive analysis, presented in the table below, shows no screen failures for AEC, defining the geographicmarket as the current MISO footprint under their base case assumptions.
AEC Results for Current MISO Footprint System-Wide Dispatch (revised SIL) Table 2 Dynegy Ameren

Market Market HHI Period MW Share MW Share HHI Change Summer Super Peak 1 6,927 25.4% 2,407 8.8% 906 48 Summer Super Peak 2 6,901 16.0% 3,417 7.9% 637 (26) Summer Peak 6,7021 15.2% 1,685 3.8% 634 45 ' Summer Off-Peak 6,253 15.5% 467 1.2% 517 91 Winter Super Peak 6,317 12.3% 2,613 5.1% 519 2 Winter Peak 6,330 13.8% 1,275 2.8% 530 49 Winter Off-Peak 4,053 1 13.3% 444 1.5% 482 68 Shoulder Super Peak 5,771 

## I 11.8% 3,358 6.9% 464 (28) Shoulder Peak 5,638 14.5% 1,109 2.9% 540 56 Shoulder Off-Peak 1,732 6.3% 297 1.1% 426 14 Source: Applicants'·Response to lnformatwn Request at Exh. JRS-7. 43. Applicants explain that to derive AEC, they first assigned the lowest cost generation inMISO to servethe load located in MISO, with theresidual generation available for sale in the market. Applicants further state that they derived an alternate measure of

### AEC by assigning load serving utilities' lowest cost capacity resources to serve their respective load obligations and the residual capacity is available for sale in the market. As with the EC analysis, Applicants performed the following sensitivity analyses: including the MISO SouthernRegion as part ofthe relevant geographic market; adjusting for price (both higher and lowerby 10 percent); and assuming the retirement of certain coal generation in the market (4,127 MW), none ofwhichresults in screen ·failures orresults that differ from the base results presented above.33 44. Applicants further explainthat the characteristics ofthe generation involved inthe Proposed Transaction indicate the absence ofcompetitive concerns. Applicants state that the only generation Dynegy currently owns inMISO and themajority ofthe generation being transferred to Dynegy in the Proposed Transaction is baseload, coal-fired generation. Applicants contendthat the generation assets that Dynegy is acquiring would be unlikely to allow Dynegy to exercise a profitable withholding strategy.

33 Id. at 29.

# Electronic Filino - Recived, Clerk's Office: 10/17/2013 20131011-3038 PERC PDF (Unofficial) 10/11/2013 DocketNo. EC13-93-000

- 17- 45. Applicants state that, in the MISO long-term, forward capacity market, based on the results ofthe auction for the June 2013 to the May 2014 planning year, lhe Proposed Transaction will result in Dynegy's share ofthe capacity market rising from approximately one percent to slightly less than four percent. 34 46. Applicants also studied the ancillary services markets inMISO for regulation and contingency reserves.35 Applicants conclude that the Proposed Transaction will have a deconcentrating effectonthe regulation and the contingency reserves markets because the generation associated with Ameren has more capability to provide those products than does that ofDynegy. 36 

### b. Protests and Comments 47. Illinois Municipal challenges Applicants' claim that there are no relevant submarkets to consider in MlSO. Illinois Municipal asserts that there is evidence, noted by Applicants' study, that there is transmission congestion in SouthernIllinois andthat Applicants should be required to demonstrate that there will be no ability post transaction to drive up locational marginal prices through selective withholding at Illinois flowgates. 37 48. Missouri JointMunicipal claims that Applicants have significantly understated the scope ofthe environmental compliance issue and asks the Commissionto considerthe effect ofan estimated 12,000 

### MW ofcoal-fired plantretirements and 50,000 

### MW ofcoal retrofits.38 Missouri JointMunicipal slates that the Proposed Transaction 

### will eliminate a supply choice for purchasers inthe MISO market and poses a danger ofreal competitive harm. Missouri Joint Municipal requests that the Commission direct Applicants to submit a revised sensitivity analysis to address a greaternumber ofprojected coal retirements and retrofits that are projected in a March 2013 MlSO owner survey ofplant retrofits and retirements.39

34 d /,.at30.
35 Contingency reserves are the sum ofspinningreserves and supplemental reserves. 36 Application at 31. 37 Illinois Municipal Protestat 25. 38 Missouri Joint Municipal Protest at 13-14. 39 

### !d. at n.13.

# Electronic Filina- Recived, Clerk's Office: 10/1712013 20l31011-3038 FERC PDF (Unofficial) '10/11/2013 

### DocketNo. EC13-93-000
- 18- 

### 49. Southwestern Electric states that Applicants did not perform aproper analysis of the ancillary services market because they did not account for the localized nature of regulating reserves, spinning reserves, and supplemental reserves products.40 

### Specifically, Southwestern Electric states that voltage regulation and spinning reserves have to be purchased from local generation within a specified reserve zone.41 

### Southwestern Electric disagrees with Applicants' assertion that the decrease in Hill 

### attributable to Ameren more than offsets the increase 

### in Hill 

### from the Proposed Transaction attributable to Dynegy. Southwestern Electric requests that the Commission require Applicants to provide this information.42 

### 50. Sierra Club asks that the Commission require Applicants to submit a market power analysis focusing on the effect ofthe Proposed Transaction on local markets served by the generators at issue and accounting for a more realistic estimate ofcoal plant retirements in the region, inquire ofDynegy whether there are any plans to acquire additional generation capacity beyond that involved in the Proposed Transaction, and condition authorization on a commitment by Dynegy not to acquire additional generation capacity in Illinois.43 

### Sierra Club posits that local congestion in central and southern Illinois indicates the need for Applicants to study local markets and points to several flowgates within MISO that have experienced congestion.44 

### Sierra Club also states that Applicants' sensitivity analysis for coal retirements is much smallerthan what is likely to occur, reiterating Missouri Joint Municipal's claim 

### and source. 45 

### The Sierra Club also asserts that Applicants failed to properly consider the market for ancillary services.46

· c. 

### Applicants Answer 

### 51. Applicants respond to the Illinois Municipal's concern regarding apossible submarket in MISO by noting that no evidence was presented to counterApplicants'

40 

### Southwestern Electric Protest at 10-11. 41 

### !d. 

### at 12. 42 

### !d. 

### at 10. 43

. 

### Sierra Club Protest at 7. 44 

### !d. 

### at 3-4. 45 

### !d. 

### at 4.
46 

### !d. 

### at 5.

# Electronic Filinn" Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF (Unofficial)**~0/11/2013** DocketNo. EC13-93-000



### - I 9

- analysis ofprice and congestion data in MISO, which concludedthat there are no relevant submarkets.47 52. Applicants respond to Missouri JointMunicipal's concern regarding an underestimation ofcoal-fired power plantretirements by statingthatthere is a substantial degree ofuncertainty and variability in published forecasts ofnear-term coal plant retirements in MTSO. Applicants state that the amount ofplannedretirements ranged from 4,000 to 6,000 MW as reported inthe March 2013 MTSO owner survey cited by Missouri JointMunicipal. Applicants state thatthe assumption of4,000-5,000 MW of retirements assumed inApplicants' analysis is within a reasonable range for a sensitivity l . 48 ana ys1s. 53. Applicants respond to Southwestern Electric's claim that Applicants have failed to consider local markets for procuring ancillary services.49 Applicants state that MTSO establishedreserve zones withinthe MJSO balancing authority area to ensure that regulation and contingency reserves are provided in a mannerthat precludes adverse operating conditions affecting the reliability ofthe transmission system. Applicants explain there are currently sixreserve zones in MISO.50 Applicants state that all of Dynegy's current generating capacity in MISO is located in reserve zone one and that the AmerenMerchantUtilities own generating capacity in bothreserve zone one and reserve zonetwo.51 Applicants state that the Proposed Transaction reduces the share oftotal generation (as well as spinningreserves and regulation) thatAmerenwill retain in both reserve zone one and reserve zone two and does notincrease market concentration because Ameren currently has a higher market share than Dynegy.52 

### d. Commission Determination 54. We fmd that the Proposed Transaction will not create horizontal market power concerns. We fmd that the changes in HHI thatwill result fromthe ProposedTransaction inthe MISO footprint show that the thresholds established inthe Commission's competitive analysis screen under the EC and AEC measures are not exceeded for any

47 Applicants Answer at 4-5, 48 

### !d. at 

### 8. 49 

### !d. at 12.
50 

### !d. 51 

### !d. at 13. 52 

### !d. at 15.

# Electronic Fil\'nn - Recived. Clerk's Office: 10/17/2013 201}1011-3038 FERC PDF TUnofficial**~0/11/2013** DocketNo. EC13-93-000 -20- season/load period, even when tested using various sensitivities. We note that the MISO market remains unconcentratedunder each scenario and sensitivity submitted by Applicants. We also find the Proposed Transaction does notresult in an adverse effect on competition inthe MISO regulation and contingency reserve markets for ancillary services. 55. We fmd that for energy and capacity products, the appropriate geographic market to analyze is the MISO balancing authority area. Applicants appropriately presented data that shows no additional submarkets need to beconsidered, and intervenors have not provided evidence to show that there are bindingtransmission constraints during historical peaks and other competitively significanttinles that would prevent competing supply from customers within the proposed alternative geographic market ofsouthern or central Illinois.53 While Sierra Club notes the existence offlowgates that have experienced historical congestion, there is no mention ofthe direction ofthe congestion that would indicate limits ofavailable supply in southern or central Illinois. 56. Applicants' Delivered Price Test, as revised, was performed in accordance with Commission policy.54 

### In the MISO energy market as a whole, we find that Applicants pass the Commission's screens for market concentration under all season/load levels under both EC and AEC measures.55 Additionally Applicants pass the Commission's screens when sensitivity analyses assuming a I0 percent increase inprice and a 10 percent decrease in price are studied. Applicants also pass the screens under various possible future market conditions, including: an expanded Southern MISO market; using an alternative dispatch methodology to AEC; and assuming the retirement of4,217 MW ofcoal-fired generation. Therefore, we find that in theMISO energy market the Proposed Transaction does not create an adverse effect on competition, 57. We disagree with the SouthwesternElectric's and Sierra Club's assertions that Applicants have not studied coal retirement scenarios sufficiently. The Commissionhas stated that merger analysis should be as forward-looking as practicable.56 Applicants' consideration of4,127 MW ofcoal-fired retirements in their sensitivity analysis is a
53 SeeNRG Energy, Inc., 141 FERC**~** 61,207, at P 75 (2012). 54 See, e.g., MergerPolicy Statement at AppendixA. See also OrderNo. 642, FERC Stats. 

### & Regs.**~** 31,Ill;AEPPowerMarketing, Inc., 107 FERC**~** 61,018, at App. E (2004). 55 BothEC and AEC measures are relevant and useful because MISO market participants are in both restructured markets and markets where traditional publicutilities retain their load serving obligations. 56 OrderNo. 642, FERC Stats. &**Regs.~** 31,111 at P 38.

# Electronic Filinn- Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF**(Unofficial)~o/i1T2013** Docket No. EC13-93-000

- 21

- reasonable figure given the uncertainty surrounding retirement decisions. Applicants note thatthe March 2013 MISO owner survey results have ranged frorri 4,000 to 6,000 MW ofplannedretirements over the prior 12 monthperiod and that an internal MISO analysis in that document forecasts as much as 8,000 MW ofnetretirements over the 2013-2016 time frame.57 Applicants also explain that the 38,000 MW ofretrofit outages would be scheduled byMISO in the spring and fall season and average approximately 4,000 MW.58 Given the wide range ofestimates ofretirements put forth in the record, the uncertain time frame over which those retirements will occur, and that those retirements are not directly impacted by the transaction, we find Applicants' estimate ofretirements for sensitivity analysis purposes to be reasonable. While the overall future concentration levels ofthe market are relevantto the Commission's analysis, we note that future retirements ofcoal-fired generation are independent ofthe Proposed Transaction. Since all ofthe capacity that Applicants are disposing ofis coalfired, had Applicants considered alternate scenarios with more coal retirements, the Proposed Transaction would continue to be deconcentrating, as measuredbyI·llil, under most season/load conditions because Ameren's current larger marketpresence of approximately 14,270 MW ofcapacity wouldbe reduced to approximately 

### 11,118 MW, butnot eliminated, such that each ofDynegy and Ameren will hold less market share than Ameren currently holds priorto the close ofthe Proposed Transaction. 58. While the Proposed Transaction does not trigger screen failures, the Commission has previously made clear that it will consider other evidence ofanticompetitive effects beyondHHI.59 Here we find no evidence ofanticompetitive effects that may be masked in the market concentration measures, and intervenors have notprovided alternative evidence for the Commission to consider. As Applicants**not~,** the Proposed Transaction consists almost entirely ofbaseload capacity. The Commission has previously stated that it is difficult from an operational perspective to withholdbaseload generationbecause of the expense involved in doing 

### so and because ofthe length oftime it typically takes to ramp up and ramp down such generation.60 This provides additional assurance that the Proposed Transaction will not have an adverse effect on competition.

57 Applicants Answer at 7-8. 58 Applicants Answer at 9. 59 Analysis of Horizontal MarketPower under the FederalPowerAct, 138 FERC -,r 61,109 at 

### P 36. 60Arizona Public Service Co., 141 FERC -,r 61,154, atP 33 (2012); First Energy Corp. 133 FERC

### -,r 61,222, at P 50 (2010).DocketNo. EC13-93-000 -22- 59. Inthe market for ancillary services, both spinning reserves and regulation, Applicants have demonstrated that there is no overlap ofsales capabilities in MISO's reserve zone two. Applicants also have demonstrated that where there is overlap in MISO's reserve zone one, the market concentration, as measured by HHI, will decrease because Ameren's current larger market share will be reduced by theProposed Transaction. AftertheProposed Transaction closes, Dynegy will continue to have less capability than Ameren to provide ancillary services. Therefore, because the Proposed Transaction will not increase concentration 

### inthe market for ancillary services in the MISO market, we conclude that it will nothave an adverse effect on competition. 

### 2. Effect on Vertical Competition
a. Applicants' Analvsis 60. Applicants state thatthe ProposedTransaction does not present any vertical inarketpower concerns. Specifically, Applicants statethatDynegy does not own or control any electric transmission facilities, otherthan generator interconnection facilities within the relevant geographic market. Other than localized interconnectionfacilities, Electric Energy's limited transmission facilities are the only transmission facilities being acquired through the Proposed Transaction. All transmission service overtheElectric Energy facilities is provided under a Commission-approved OATT. Applicants state that · under Commissionprecedent, service under a Commission-approved OATT mitigates any vertical marketpower concerns related to Dynegy's acquisition ofthose facilities. 61. Applicants further state that Dynegy does not own any natural gas pipeline or distribution assets used to serve unaffiliated competing generation facilities within the relevant geographic market, and it is not acquiring such facilities through the Proposed Transaction. As a result, Applicants statethatDynegy will not obtain any ability from theProposedTransactionto leverage control over such assets tobenefit its electric generationfacilities. 62. Applicants also state that Dynegy does not currently possess any marketpower with respect to any other inputs to the generation ofelectricity. Through its acquisition of interests in theAmeren MerchantUtilities, Dynegy will acquire certain sites for generation capacity development, undeveloped coal and mineral rights at the Newton and Coffeen generating facilities, and owned and leased rail cars used to delivercoal to the Newton, Coffeen, and other generating facilities. Dynegy will also acquire: (i) the Joppa and Eastem Railroad Company, a subsidiary ofElectric Energy that owns a 3.9-mile rail line and operates and controls associated rail cars thattransport coal to the Joppa Facility; and 

### (ii) the Coffeen and Western Railroad Company, a subsidiary ofAmeren Energy Generating, which owns a 0.48 mile rail line and operates and controls associated rail cars thattransport coal to the Coffeen facility. Applicants maintainthat Dynegy could notuse such assets and facilities to create barriers to entry to rival electricity producers.

# Electronic Filino- Recived, Clerk's Office: 10/17/2013 20l31011-3038 FERC PDF (Unofficial)**~0/11/2013** 

### Docket No. EC13-93-000

- 23-
b. Commission Determination 

### 63. We find that the Proposed Transaction does notraise any vertical marketpower concerns since Dynegy does not own and will not in the Proposed Transaction acquire any transmission facilities, otherthan localized interconnection facilities, does not own and will not be acquiring any upstream natural gas assets used to serve unaffiliated generators, and does not currently possess any marketpower with respect to any other inputs to generation. Additionally, transmission service overthe Electric Energy facilities is provided under a Commission-approved OATT. We note that no party has argued that the Proposed Transaction raises vertical market power concerns. 3. Effect on Rates


### a. Applicants' Analysis 64. Applicants statethat the Proposed Transaction will have no adverse impact on jurisdictional rates. They state that none ofthe Applicants currently provides third-party

.transmission service or has any captive wholesale requirements customers. Applicants

state that Ameren Energy Generating and Ameren Resources Generating have plant specitlc, cost-based reactive powerrate schedules on file. In 

### addition, Midwest Power sells the output ofits assets under a long-term, cost-based contractto Electric Energy. Ameren Energy Generating and Ameren Resources Generating's reactive powerrate schedules are fixed-rate contracts that, according to Applicants, do not contain mechanisms that would allow for the pass-through ofany costs ofthe Proposed Transaction without a separate filing under FP

### A section 205. Applicants state that following closing ofthe Proposed Transaction, Ameren Energy Generating will cancel its reactive power rates with respect to the plants transferred to Medina Valley, and Medina Valley will make a corresponding section 205 filing to adopt those same rates. Applicants maintain that theMidwest Power cost-based contract should not be ofconcern because Electric Energy, Midwest Power's parent company, is the buyer under the contract, and Electric Energy sells powerunder market-based rate authority.61 

### With these exceptions, all ofthe A.meren Merchant Utilities' wholesale sales ofelectric energy, capacity, and ancillary services are, and will continue to be, at market-based rates. Applicants state that Dynegy's existing public utility subsidiaries are not involved in the Proposed Transaction, and theirrates will be unaffected by it. 62

61 

### Application at 35 n.95.
62

### J,d 3

. at 5.

# Eh:u:tronic Filino - Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF (Unofficial) "l.0/11/2013 DocketNo. ECI3-93-000 -24- 65. While Applicants maintainthat the Proposed Transaction will not have an adverse effect onjurisdictional rates, they nevertheless offer a rate freeze commitmentwith respect to theElectricEnergy OAIT and the reactive power rates for the AmerenEnergy Generating and AmerenResources Generating generation units, including those to be transferred to Medina Valley. Applicants explain that the rates subject 

### to this rate freeze are all cost-based, stated rates that can only be changed via filings made under sections 205 and 206 ofthe FPA. Applicants commit for a period offive years following the closing ofthe**Pr~posed** Transaction not to seek any rate increase withrespect to these cost-based rates. 66. Applicants note thatAmeren Marketing has long-term, wholesale sales contracts for the supply ofcapacity and energy to Missouri Joint Municipal and Illinois Municipal (the Municipal Contracts). Applicants state that, while sales under these contracts are made at negotiated rates, the rates are based on formulas that incorporate the costs ofthe Ameren Energy Generating and Ameren Resources Generating facilities usedto supply powerunder the contracts. Applicants state thatAmeren Marketing is currently engaged in disputes with Illinois Municipal under one oftheMunicipal Contracts relating to various matters, including the effect oftransferring generating assets onthe calculation of rates under the contract formula. Applicants state that while Ameren Marketing (and Dynegy to the extentthe disputes continuepastthe closingofthe Proposed Transaction) hope toresolve these disputes amicably in accordance with the provisions ofthe contract, the disputes are not relevant to the consideration ofthe Proposed Transaction's effect on jurisdictional rates because both ofthe Municipal Contracts were entered into under Ameren Marketing's market-basedrate authority. 64 

### b. Protests and Comments 67. Illinois Municipal maintains that the Proposed Transaction will adversely affect its wholesale rates. Itexplainsthat it is responsible for meeting the 

### full load-serving requirements ofits municipal electric system members; which it does through a longterm, wholesalepower purchase contract withAmerenMarketing. Illinois Municipal states thatthis is a cost-based contract based on the costs ofthe Ameren Energy Generating and Ameren Resources Generating generation facilities that supply the power delivered under the contract. Illinois Municipal maintains that the asset values ofthese generating facilities are significantly overstated onthe 2012 FERC Form No. 1of AmerenEnergy Generating and onthe books maintained byAmeren Resources Generating. 

### Itstatesthat inDecember 2012, Ameren recorded animpairment of approximately $2 billion ofgenerating assets owned byAmerenEnergy Generating and

63 

### Id. at 36. 64 

### !d. at 36-37.

# Eli::ctronic Filino- Recived, Clerk's Office: 10/1712013 20131011-3038 FERC PDF (Unofficial)**~0/11/2013** DocketNo. EC13-93-000

- 25-
Ameren Resources Generating to value those assets at significantly lower values (the 2012 impairment).65 Illinois Municipal maintains thatthe saleprice for the Proposed Transaction provides strong evidencethat the real value ofthe generating assets is no more than $439 million. Illinois Municipal argues that theCommission should require the assets be valued at that amount following completion ofthe Proposed Transaction.66 68. Illinois Municipal states that the accounting entries thatApplicants have provided do not reflect a proper reduction in generation facility asset values, as the Securities and Exchange Commission (SEC) requires in accordance with SEC StaffAccounting Bulletin 112. 

### Inthis regard, Illinois Municipal maintainsthat "the stage 

### is being set" for Dynegy to acquire those facilities for about $439 million, but to carry them on its books at the "improperly inflated valuation" now recorded on Ameren Energy Generating's and Ameren Resources Generating's books. Illinois Municipal argues that Dynegy shouldbe requiredto "push down" thepurchase accounting adjustments to the books ofAmeren Energy Generating and Ameren Resources Generating. 

### It also argues that ifthe generation facilities are not valued at the lower amount, the improperly inflated asset values will result inIllinois Municipal being overcharged under its contract.67 69. Illinois Municipal argues thatthe Commission's main objective when considering a merger's effect on rates is to protectcaptive customers that are served under cost-based rates. Illinois Municipal maintains that its status as an Ameren family (soonto be Dynegy family) wholesale customer is the same as that ofa captive customer that is required to obtain power from the merging utilities and pay cost-basedrates for it. Illinois Municipal asserts that Applicants' claim that the contract betweenAmeren Marketing and Illinois Municipal is beyond the Commission's concern since it was entered into under Ameren Marketing's market-based rate authority "badly misstates" the Commission'spolicy and holdings in orders upon which Applicants rely. Quoting from these orders, Illinois Municipal maintains that the fact that contracts at issue were entered under a utility's market-based rate authority was not a determinative factor, as Applicants claim. Rather, Illinois Municipal maintains that the determinative factor in these cases was that the rates chargedunderthe contracts at issue would notbe affected bythe

65 Illinois Municipal Protest at 8-9. The 2012 impairment is discussed in more detail below. 66 

### d I<

. at 10, 16. 67 

### ld. at 14-16.

# Electronic Filinn - Recived, Clerk's Office: 10/1712013 201)1011-3038 FERC PDF (Unofficial) iD/11/2013 DocketNo. ECB-93-000

- 26-
mergerbecause market-based rates, unlike cost-based rates, are set by the market and not the merging companies' costs.68 70. Illinois Municipal argues that, unlike market-basedrate contracts, where the entity surviving the merger can assume the contract without change tothe contract's rates, terms, and conditions because the contract rates are unaffected by the transaction, in this case the Proposed Transaction will have "an immediate, substantial and detrimental impact" on the cost-based rates thatIllinois Municipal pays because of "the resulting cost-structure ofthe new parent company."69 Illinois Municipal maintains that, absent Commission-imposed conditions, Applicants are positioned to inflate Illinois Municipal's cost-of-service with new or overstated costs generated solely by the Proposed Transaction as a result ofApplicants' accounting and asset valuations.70 Illinois Municipal argues thatthe Commission should set the ProposedTransaction for 

### full evidentiary hearing in ,order to develop conditions to ensure thatIllinois Municipal is held harmless as a result ofthe Proposed Transaction.71 71. Missouri JointMunicipal states that it estimates that the ProposedTransaction will, increase its cost-based payment under its contract withAmeren Marketing in an amount thatposes the risk ofsignificant rate impacts, and it maintains that it should be protected from those impacts.72 Missouri Joint Municipal states thatthe fleet ofAmeren Energy Generating resources currently providing service under the contract is a mix ofcoal- and gas-fired facilities, but iftile Proposed Transaction is approved as proposed, the fleet of resources owned by tile sellerunderthe contract, i.e., Dynegy, would be quite different, since it would consist only ofDynegy's currentcoal-fired units andAmeren Energy Generating's CtUTent coal-fired units, but wouldnot include any gas-frred generation (i.e., thethree gas-frred units that will be transferredto MedinaValley prior to closing). Missouri JointMunicipal maintains thattile absence ofgas-fired generation will increase its total annual charges undertile contract.73

68

### /d. at 16-19 (citingExelon Corp., 112**PERC~** 61,011, atP 210 (2005); DuquesneLightHoldings, Inc., 117**PERC~** 61,326, at P 25 (2006)). 69 

### !d. at 19-20. 70 

### /d. at 20-21. 71 

### /d. at22.
72 Missouri Joint Municipal Protest at 5-6.
73

### /d. 

### at 4.

# ·**Ele~::trnni.c** 

# Filing,-**Re~::iverJ.** 

# Clerk's Office : 10/17/2013 20131011-3038 FERC PDF**0)nori~c~a~r ~o/i11201~**  DocketNo. EC13-93-000 -27-
72. Missouri Joint Municipal maintains that the Commission's view that ratepayer protections are not needed for contracts formed under market-based rate authority is expressly premised onthe assumption thatthe rates under such contracts are not cost-based and therefore would not be directly affected by merger transactions. It maintains thatthe Commissionhas recognized that rate protections may still berequired in those situations where the rates established under amarket-based contract depend on the seller's actual cost ofservice. 74 73. Missouri Joint Municipal notes that Applicants argue that OrderNo. 669limitsthe Commission's wholesale customerprotection focus to captive customers. Missouri Joint Municipal answers that, while Order No. 669 sets forth the Commission's main objective in implementing its new cross-subsidization responsibilities under the Energy PolicyAct of2005, it does not confme the Commission's effect on rates analysis to captive customers and thus alter the scope ofthe Commission's obligations under its statutory responsibility to approve merger applications only ifit finds that the transaction is consistent with the public interest.7 74. Missouri Joint Municipal argues that, consistentwith the Merger Policy Statement's emphasis onratepayer protections, the Commission should require, as a condition ofits approval ofthe Proposed Transaction, that Applicants permit Missouri Joint Municipal to terminate its power contract with Ameren Marketing within 90 days after the closing ofthe Proposed Transaction or require that Missouri JointMunicipal be held harmless from all adverse rate impacts ofthe Proposed Transaction that would otherwiseflow through the contract. 76



### c. Applicants' Answer 75. Intheir answer, Applicants state that they offered a rate freeze commitmentwith respectto theElectric Energy OATT and reactive power rates for Ameren Energy Generating's and AmerenEnergy Resources' generating units, including those to be

74 Id. at 7-8 (citing Cinergy Corp., 140 FERC

### ~ 61,180, atP 41 (2012) (finding that the proposedtransaction would not adversely affect wholesale rates because, when there are market-based rates, the effecton rates is not ofconcern); Union Elec. Co., 114 FERC ,[ 61,255, at P 

### 45 (2006) (finding thatrate protections were not needed because wholesale service wasprovided at market-basedrates that were not affected by the cost ofservice)).
75 !d. at 

### 8n.7.
76Id. at 12.

# Electronic Filinn- Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF lUnofhcial)**~0/llr2013** DocketNo. EC13-93-000 -28-
transferred to Medina Valley. They maintain that, under Commission precedent, nothing more should be required concerningthe.effect ofthe Proposed Transaction onrates. 77 76. Responding to Municipal Protesters' claim that theypayAmerenMarketing "costbased rates" for wholesale capacity and energy, Applicants argue that the question is not whether the Municipal Contracts are cost-based; rather, the operative question is how these contracts are regulated. Inthis regard, Applicants assert that contractrates negotiated in the marketplace under a seller's market-based rate authorization are, as recognized bythe Commission in OrderNo. 669, "constrainedby competition, regardless ofthe seller's costs." 78 Applicants assert thatMunicipal Protesters' rates were negotiated pursuant to AmerenMarketing's market-based rate authority, and that, while both customers had access to other suppliers, they electedto execute contracts with Ameren Marketing. Applicants note thatneither ofthe Municipal Customers has suggestedthat the contracts should have been filed with the Commission as cost-of-service regulated contracts. They argue that thefact that "the formula rates fluctuate with changes in costs is simplythe operation ofa pricingmechanism (i.e., a formula rate) thattheseparties chose in arm's-length negotiations." Applicants state these are not "cost-of-service regulated contracts" butrather "market-regulated formula rates.''79 77. 

### In addition, Applicants state that Municipal Protesters confuse market-based rates with statedrates, noting that Illinois Municipal's argumentthat market-based rates do not require protection because they "canbe assumed by the surviving entity without change to the rates, terms and conditions ofthe contract
..." in fact describes stated rates. 80 

### In this regard, Applicants reiterate that Municipal Protesters could have negotiated a fixedprice contract, but instead opted for the risks andbenefits ofa fluctuating formula rate. 81 78. Applicants state thatMunicipalProtesters choseto contract for service under rates that fluctuate based on many factors, and they knowingly accepted the risks ofany number offactual changesthat would impacttheir rates, including a sale ofassets. Applicants state that Municipal Protesters also contracted for the possibility that such fluctuations could lead to rate decreases.82 Applicants state that even ifthe Commission

77 Applicants Answer at 17.
78

### Id. at 20 (citing OrderNo. 669, FERC Stats. &**Regs.~** 31,200 at P 166 n.l18). 79 

### ld 

### 2

. at 

### 1. 80 

### I

### d. at 21-22 (quoting Illinois Municipal Protestat 20).
81 

### Id. at 22. 82 

### Id. at 17-18.

# EIP.ctrnnic.

# Fil\'ng

- 1

# Recived, Clerk's Office: 10/1712013 20131011-3038 FERC PDF TUno!£lc>al -0 ll(2013 DocketNo. EC13-93-000 -29-
views potential rate changes as directly attributable to the Proposed Transaction, such changes are not the types ofadverse rate impacts with which the Commission has been concerned in reviewing section 203 applications. Applicants state that Municipal Protesters were not captive wholesale customers when they negotiatedtheir contracts, as they did not meet ilie Commission's definition ofcaptive customers as "any wholesale or retail electric energy customers servedby a franchised public utility under cost-based regulation." 83 79. Applicants dispute Illinois Municipal's claim that it is required to obtain power from the merging utilities and pay cost-based rates for iliat power. Applicants argue iliat Illinois Municipal is notrequired to obtain power from Ameren Marketing orany oilier Ameren entity, or to pay cost-basedrates. According to Ap£licants, Illinois Municipal's obligations arise from a voluntary contractual arrangement. 4 80. Finally, Applicants rejectIllinois Municipal's argument that ilie Commission should require a post-closing compliance filing 

### "to ensure that any post-transaction accounting adjustments only accrue to its [Illinois Municipal's] benefit."85 They note that, while Illinois Municipal argues iliat AmerenEnergy Generating's accounting entries are insufficient because they do notreflect aproper reduction 

### inpower plant asset values, as requiredby the SEC in accordance wiili SEC StaffAccounting Bulletin 112, Illinois Municipal fails to note iliat SEC StaffAccounting Bulletin 112 does not require that push down accounting be used with respect to the acquired generating assets. 86 

### d. Commission Determination 81. We fmd iliat ilie ProposedTransaction will nothave anadverse effect onrates under our section 203 analysis. 82. Regarding Illinois Municipal's argument that the Commission should require that the asset valuations ofilie transferred facilities in Dynegy'shands be decreased to reflect the 2012 impairment ofthe Ameren Merchant Utilities' generation facilities, we note iliat the 2012 impairmentpredated, and was notilie result of, Applicants' agreement to undertake ilie Proposed Transaction. We express no view regarding the requirements of SEC StaffAccounting Bulletin 112 as it would apply to rates charged to Illinois Municipal under its contractwiili AmerenMarketing aftertheProposed Transaction

83 

### !d. at23 (quoting 18 C.F.R. 

### § 33.1(b)(5) (2013)). 84 

### !d. at 24. 85 

### !d. at 29.
86 

### !d.

# . Electronic Filinn- Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF (Unofficial) 

### "'ta/hnau DocketNo. EC13-93-000 -30-
closes. Further, because the contract at issue was entered into under Ameren's marketbased rate authorization, which includes a waiver ofthe Uniform System ofAccounts (USofA), we will not prescribe any specific accounting requirements to Ameren Marketing for the Proposed Transaction. Any dispute between Illinois Municipal and Ameren Marketing regarding Dynegy's accounting for the Proposed Transaction should beresolved in accordance with any dispute resolution provision ofthe contract orby judicial proceedings. 83. Municipal Protesters' argument thatthere will be an adverse effect onrates concerns the treatment ofmarket-based rates that incorporate a cost-of-service formula. 

### In the case ofmarket-based rates, the Commission has found that: [w)here customers are served under market-based regulation as opposedto cost-based regulation, itis presumed that the seller has no market power over a customer and that the customer has a choice ofsuppliers; thus, there is less opportunity for a customerto involuntarily be in a situation in which its rates subsidize or support another entity

.87 84. The Commission's policy on ratepayerprotection in section 203 proceedings takes this fmding into account. Ourmain objective is the protection ofratepayers served under a regime ofcost-of-service regulation for wholesale sales or transmission service. This policy is encapsulated in the goal ofprotecting "captive customers." The Commission defines the term "captive customers" for purposes ofits section 203 regulations as "any wholesale orretail electric energy customers served by a franchised public utility under cost-basedregulation."88 NeitherIllinois Municipal nor Missouri Joint Municipal is a captive customerunder this definition. 85. Illinois Municipal argues that it is a captive customer on the grounds that "captive customers are required to obtainpower from the merging utilities and to pay cost-based rates for that power." Itmaintains that this is "exactly [Illinois**Municipa~'s** status as an Ameren family (soon to be Dynegy family) wholesalepower customer."8 However, Illinois Mw1icipal is neither served by a franchised public utility nor served under cost-of-service regulation. It is served under a contract it freely negotiated in an arm's length transaction, and the contract is authorized undermarket-basedregulation.

87 Cross-Subsidization Restrictions on Affiliate Transactions, OrderNo. 707, FERC Stats. &**Regs.~** 31,264, at P 42, order on reh 'g, OrderNo. 707-A, FERC Stats. & Regs.**~** 31,272 (2008). 88 18 C.F.R. § 33.l(b)(5) (2013) (emphasis added). 89 Illinois Municipal Protest at 17.DocketNo. ECB-93-000

- 31

- Moreover, while Illinois Municipal states that it is "required to obtain" power from the merged company, this requirement is the result ofcontractual obligations that it freely assumed, notbecause ofthe absence ofcompetitive alternatives. 86. Missouri JointMunicipal argues that whenthe Commission chose to single out captive customers in its section 203 analysis, it was speaking in the context of implementing its new cross-subsidization responsibilities under the EnergyPolicy Act of2005. Missouri Joint Municipal maintains that confining the analysis ofa merger's effect on rates to captive customers is inconsistent with Commissionprecedent, as this precedent encompasses impacts on cost-based rates approved under market-based rate authority. This is incorrect. 87. While the Commission propounded the formal definition ofcaptive customers in its regulations in the course ofimplementing its new cross-subsidization responsibilities, 

### it made clear that this actionrepresented a continuation oflongstandingpolicy. The Commission stated that [i]n ourMergerPolicy Statement, the Commission explainedthat, in determining whether a merger is consistentwith the public interest; one of the factors we consider is the effect the proposed mergerwill have on rates. The Commission's main objective in applying this factor is to protect captive customers who are served under cost-based rates that could be adversely affected by a section 203 transaction. The newprovision in amended section 203(a)(4) concerning cross-subsidization is rooted in



### . "1 90 Simi ar concerns. 88. Missouri Joint Municipal cites a number ofCommission cases that it maintains showthat the Commission'spolicy that ratepayer protections are not needed in section 203 proceedings for contracts formed under market-based rate authority is "expresslypremised" on the assumption that the rates in question are not cost-based. However, Missouri JointMunicipal does not identify any cases wherethe Commission has addressed in a section 203 proceedingthe issue ofcost-based rates under contracts entered into under a seller's market-basedrate authority. For instance, Missouri Joint Municipal notes that, in one case, the Commission statedthatthe transaction would "not adversely affect wholesale rates" because "whenthere are market-based rates, the effect onrates is not ofconcern."91 Missouri JointMunicipal thenpoints out that the Commission went onto say that "[t]he effect on rates is not ofconcern in these

90 Order No. 669, FERC Stats. & Regs. 1 31,200 at P 166. 91 Missouri Joint Municipal Protest at 7 (quoting Cinergy Corp., 140 FERC 161,180, at P 41 (2012)).

# EIBctrnnic.Fi!i1 

# ng - 1

# Recived, Clerk's Office: 10/17/2013 20131011-3038 FERC PDF (Uno"fhoa .•0 11/2013 Docket No. EC 13-93-000

- 32- circumstances because market-based rates will not be affected by the seller's cost-ofservice and, thus, will not be adversely affectedby the Proposed Transaction." 92 However, Missouri JointMunicipal fails to note that these two statements are preceded by an essential express premise --the statementthatno captive customers were involved. 93 In short, the Commission was speakingto the issue ofeffects on cost-ofservice as it pertains to customers served under cost-of-service regulation, not to all instances where a cost-of-service formula is used. A market-basedrate can be set based on a number offactors (including cost) that theparties negotiate. The fact that parties to a transaction entered into under market-based rate authority negotiate a pricethat is equal to cost does notmean that the customer is thereby being served under cost-based regulation. 89. We accept Applicants' rate freeze proposal withrespect to Electric Energy's OATI and the reactive power contracts, as it provides additional assurance thatthe Proposed Transaction does not result 

### in an adverse effecton rates. In the Merger Policy Statement, the Commission noted that a rate freeze is one method for ensuring no adverse effect on rates. We also notethat a rate freeze does not insulate a party from a rate reduction ifthe Commission, pursuant to section 206, determines that the utility's rates are no longerjust and reasonable.94 · 

### 4. Effect on Regulation
a. Applicants' Analysis 90. Applicants state that the ProposedTransaction will have no adverse effect on the effectiveness offederal or state regulation. They state that the Proposed Transactionwill not impair orhave any effect on: (i) the ability ofthe Commission to regulate rates for wholesale power sales ortransmission service provided by Applicants or their affiliates; or (ii) the ability ofthe Illinois Commissionto regulate AmerenMarketing as an Alternative Retail Electric Supplier. 

### b. Commission Determination 91. We find thatneither state nor federal regulation will be impaired by the Proposed Transaction. The Commission's review ofa transaction's effecton regulation focuses on ensuringthatit does not result in a regulatory gap at the federal or state level.95 We find

92 Id.
93 

### Cinergy Corp., 140 FERC

### ~ 61,180 at P 41. 94 Merger Policy Statement, FERC Stats. & Regs.**~** 31,044 at n.52.
95 MergerPolicy Statement, FERC Stats. &**Regs.~** 31,044 at 30,124.

# Electronic FilinD - Recived. Clerk's Office: 10/1712013 20131011-3038 FERC PDF (UnoHinal) "J.o/hT2013 Docl(et No. EC13-93-000

- 33-
that the Proposed Transaction will not create a regulatory gap at the federal level, because the Commission will retain its regulatory authority overthejurisdictional assets after the transaction. We note that no party alleges thatregulation would be impaired by the Proposed Transaction, and

### no state commissionhas contested Applicants' assertion that there are "no affected state commissions" orrequested thatthe Commission address the issue ofthe effect on state regulation. 

### 5. Cross-Subsidization

a. Applicants' Analysis 92. Applicants state, based on facts and circumstances known to them or that are reasonably foreseeable, that the Proposed Transaction will not result in, at the time ofthe Proposed Transaction orinthefuture: (1) any transfers offacilities between a traditional publicutility associate company that has captive customers or that ovms orprovides transmission service overjurisdictionaltransmissionfacilities, and an associate company; (2) any new issuances ofsecurities by a traditional public utility associate company that has captive customers orthat owns orprovides transmission service overjurisdictional transmission facilities, for the benefit ofan associate company; (3) any newpledge or encumbrance ofassets ofa traditional public utility associate company that has captive customers orthat owns orprovidestransmission service overjurisdictionalfacilities, for the benefit ofan associate company; or (4) any new affiliate contracts between a nonutility associate company and a traditional public utility associate company that has captive customers or that owns orprovides transmission service overjurisdictional transmission facilities, otherthan non-power goods and services agreements subjectto review under sections 205 and 206 ofthe FPA. 93. Regardingthe fourth prong ofApplicants' verification described above, Applicants state thattheTransaction Agreementprovides for the acceptanceby Ameren Energy Generating and Ameren Resources Generating ofcertain enviromnentalliabilities (orthe potential therefore) through the Liability Assumption Agreements. Applicants state that the Liability Assumption Agreements, which amend certainhistorical contracts to implement such acceptance, are for the benefit ofAmeren's utility subsidiary, Ameren Illinois, and, according to Applicants, they therefore are not the type ofaffiliate agreement that gives rise to inappropriate cross-subsidization. 94. Applicants also state that while Ameren Illinois is not an Applicant, Applicants disclose that Ameren lilinois' public utility assets are currently encumberedunder the Ameren Illinois mortgage indenture (secured by substantially all Ameren Illinois property formerly owned by Illinois Power Company and Central Illinois Public Service Company) and the CILCO mortgage indenture (secured by substantially all Ameren Illinoisproperty formerly ovmedby Central IllinoisLightCompany).

# Electronic Filinn - 1

# Recived. Clerk's Office: 10/17/2013 20131011-3038 FERC PDF (Unol'f1cial) 'l.o 11/2013 

### DocketNo. EC13-93-000

- 34

- 

### b. Commission Determination 95. Based on the representations as presented in the Application, we fmd thatthe Proposed Transaction will not result in cross-subsidization orthe pledge or encumbrance ofutility assets for the benefit ofan associate company. 

### 6. Other Issues
a. Change in Status 96. OrderNo. 652 requires that sellers with market-based rate authority timely report to the Commission any change in status that would reflect a departure from the characteristics the Commissionrelied upon"in granting market-based rate authority. 96 

### To the extentthatthe foregoing authorization results 

### in a change in status, Applicants are advisedthat it must comply with the requirements ofOrderNo. 652. In 

### addition, Applicants shall make any appropriate filings under section 205 oftheFPAto implement the proposed transaction. 

### b. Accounting Analysis 97. 

### Inthe Proposed Transaction, Dynegy will 

### acquire the majority ofAmeren's existing merchant generating assets, and the remaining generating assets will be transferred to Medina Valley. To the extentthe ProposedTransaction affects the books ofajurisdictional entity subject to 

### the Commission's Uniform System ofAccounts,97 

### the jurisdictional entity must submitits final accounting entries within six months ofthe date the Proposed Transaction is consummated.98 

### The accounting submission mustprovide all accounting entries and amounts related to the Proposed Transaction, including any costs

96 ReportingRequirement for Changes in StatusforPublic Utilities withMarketBasedRateAuthority, 

### OrderNo. 652,70 Fed. Reg. 8,253 (Feb. 18, 2005), FERC Stats. &**Regs.~** 

### 31,175, order on reh'g, 

### 111 FERC**~** 

### 61,413 (2005). See 

### 18 C.F.R. § 35.42 (2013). 97 

### 18 C.F.R. pt. 101 (2013). 98 

### Applicants state that AmerenIllinois' books will be affected by the Proposed Transaction becausethe generatingplants to be transferred were previously owned by predecessors ofAmerenIllinois, causing certain ancillary taximplications. Application atn.98.DocketNo. EC13-93-000

- 35

- incurred to effectuate the transaction, 99 along with narrative explanations describing the basis for the entries.


### c. Reliability and Cyber Security Standards 98. Information and/or systems connected to the bulkpower system involved inthis transaction may be subjectto reliability and cyber security standards approved by the Commission pursuant to FPA section 215. Compliance with these standards is mandatory and enforceable regardless ofthe physical location ofthe affiliates or investors, information databases, and operating systems. Ifaffiliates, personnel or investors are not authorized for access to such information and/or systems connected to the bulk power system, apublic utility is obligated to take the appropriate measures to deny access to this information and/or the equipment/software connected to the bulk power system. The mechanisms that deny access to information, procedures, software, equipment, and the like, must comply with all applicable reliability and cyber security standards. The Commission, North American Electric Reliability Corporation, or the relevant regional entity may audit compliance with reliability and cyber security standards. The Commission orders: (A) The Proposed Transaction is hereby authorized, as discussed in the body of this order. (B) Applicants and any affiliates ofthe Applicants subject to the Commission's Uniform System ofAccounts shall account for the Proposed Transaction in accordance withElectric Plant Instruction No.5 and Account 102 ofthe USofA. Such companies shall submit their fmal accounting entries within six months ofthe date that the Proposed Transaction is consummated, and the accounting submission shall provide all the accounting entries and amounts related to the Proposed Transaction along with narrative explanations describing the basis for the entries. (C) Applicants must inform the Commission within 30 days ofany material change in circumstances that departs from the facts the Commission relied upon in granting the Application.

99 These costs may include, but are not limited to, intemallaborcosts, legal, consulting, and professional services incurred to effectuate the transaction.

### ~IP.r.trnnic 

# Filipn- RP.r:ived, Clerk's Office: 10/1712013 20131011-3038 FERC**PD~ l'Ono1'I'~c~a~**  "Lo/iiT2013 Docket No. EC13-93-000

- 36- (D) The foregoing authorization is without prejudicetothe authority ofthe Commission or any otherregulatory body with respect to rates, service, accounts, valuation, estimates or determinations ofcosts, or any other matter whatsoever now pending orwhichmay come before the Commission. 

### (E) Nothing inthis order shall be construedto imply acquiescence in any estimate ordetermination ofcost or any valuation ofproperty claimed or asserted. (F) The Commission retains authority under sections 203(b) and 309 ofthe FPA to issue supplemental orders as appropriate. (G) Applicants, to the extent thatthey have not already done so, shall make any appropriate fllings under section 205 ofthe FPA, as necessary, to implementthe Proposed Transaction. (H) Applicants shallnotify the Commission within 10 days ofthe date onwhich the Proposed Transaction is consummated. By the Commission. (SEAL)

Nathaniel 

### J. Davis; Sr., Deputy Secretary.