UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
November 24, 1997
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification
No.
1-10628 CIPSCO INCORPORATED 37-1260920
(AN Illinois Corporation)
607 East Adams Street
Springfield, Illinois 62739
217-523-3600
1-3672 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY 37-0211380
(An Illinois Corporation)
607 East Adams Street
Springfield, Illinois 62739
217-523-3600
Item 5. Other Events
Reference is made to Note 4. Coal Contract Restructuring in the Condensed
Notes to Financial Statements contained in the Form 10-Q for the quarter
ended September 30, 1997 (the "Form 10-Q") of CIPSCO Incorporated (the
"Company") and Central Illinois Public Service Company ("CIPS") for
information regarding the coal contract restructuring with a major coal
supplier.
As previously reported, a group of industrial customers filed with the
Illinois Third District Appellate Court in February 1997 an appeal of the
December 1996 order of the Illinois Commerce Commission ("Illinois
commission") which approved, among other things, recovery of the
restructuring payment and associated carrying costs (the "Restructuring
Charges") through the retail fuel adjustment clause (FAC). Additionally,
in May 1997 FERC approved recovery of the wholesale portion of the
Restructuring Charges through the wholesale FAC.
As a result of the Illinois commission and FERC orders, CIPS classified the
$71.8 million of the Restructuring Charges made to the coal supplier in
February 1997 as a regulatory asset and, through October 1997, recovered
approximately $9.5 million of the Restructuring Charges through the
retail FAC and from wholesale customers.
On November 24, 1997, the Court reversed the Illinois commission's order,
finding that the Restructuring Charges were not direct costs of fuel that
may be recovered through the retail FAC, but rather should be considered as
a part of a review of CIPS' aggregate revenue requirements in a full rate
case.
Restructuring Charges allocated to wholesale customers (about 16% of the
total) are not in question as a result of the opinion of the Court.
The Company is evaluating the impact of the Court decision on its financial
statements as well as the restructuring agreement with the coal supplier
and will request a rehearing by the Third District Appellate Court.
The Company cannot predict the ultimate outcome of this matter. If the
Court's decision should ultimately prevail, CIPS will be required to cease
recovery of the Restructuring Charges through the retail FAC, and could be
required to refund any portion of those charges that had been collected
through the retail FAC. The Company is also exploring various
alternatives for recovery of the Restructuring Charges. Management is currently
evaluating the unamortized retail portion of the Restructuring Charges, which
is currently classified as a regulatory asset to determine if it continues to
meet the criteria for the existence of an asset under Generally Accepted
Accounting Principles (GAAP). If it is determined that such criteria are not
met, the unamortized balance of the Restructuring Charges, approximately $36
million, net of tax, could be charged to earnings. Management is also
evaluating the revenues previously recovered in 1997 through the retail FAC
to determine if a loss contingency, as defined under GAAP, is required.
Such loss contingency, approximately $5 million, net of tax, through October
1997, could also be charged to earnings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants CIPSCO Incorporated and Central Illinois Public Service Company
have duly caused this report to be signed on each registrant's behalf by
the undersigned hereunto duly authorized.
CIPSCO Incorporated
(Registrant)
Central Illinois Public Service Company
(Registrant)
/s/ Robert C. Porter
___________________________________
Robert C. Porter
Treasurer and Assistant Secretary
of each Registrant
Date: December 5, 1997