ML20353A360
| ML20353A360 | |
| Person / Time | |
|---|---|
| Site: | Callaway  |
| Issue date: | 12/17/2020 |
| From: | Ameren Missouri, Union Electric Co |
| To: | Office of Nuclear Security and Incident Response |
| Shared Package | |
| ML20353A355 | List: |
| References | |
| ULNRC-06624 | |
| Download: ML20353A360 (256) | |
Text
Enclosure 4 to ULNRC-06624 2019 ANNUAL REPORT (filed 2/28/2019 includes 2019 FORM 10-K)
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2019 OR El Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to r
Arnere MIssUurn fl 4:Amerefl meren IIUNOtS Exact name of registrant as specified in its charter; Commission State of Incorporation; IRS Employer File Number Address and Telephone Number Identification No.
1-14756 Ameren Corporation 43-1723446 (Missouri Corporation) 1901 Chouteau Avenue St. Louis, Missouri 63103 (314) 621-3222 1-2967 IJnion Electric Company 43-0559760 (Missouri Corporation) 1901 Chouteau Avenue St. Louis, Missouri 63103 (314) 621-3222 1-3672 Ameren Illinois Company 37-0211350 (Illinois Corporation) 10 Executive Drive Collinsville, Illinois 62234 (61$) 343-5150 Securities Registered Pursuant to Section 12(b) ofthe Act:
The following security is registered pursuant to Section 12(b) ofthe Securities Exchange Act of 1934 and is listed on the New York Stock Exchange:
Title ofeach class Trading Symbol(s) Name ofeach exchange on which registered Common Stock, $0.01 par value per share AEE New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act:
Registrant Title of each class Union Electric Company Preferred Stock, cumulative, no par value, stated value $100 per share Ameren Illinois Company Preferred Stock, cumulative, $100 par value Depositary Shares, each representing 1/4 ofa share of 6.625%
Preferred Stock, cumulative, $1 00 par value Indicate by checkmark ifeach registrant is a well-known seasoned issuer, as defmed in Rule 405 ofthe Securities Act.
Arneren Corporation Yes No E Union Electric Company Yes No meren illinois Company Yes No Indicate by checkmark ifeach registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act.
Ameren Corporation Yes No Union Electric Company Yes E No
Arneren Illinois Company Yes 1 No Indicate by checkrnark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
Ameren Corporation Yes No Union Electric Company Yes No E Ameren Illinois Company Yes No E Indicate by checkmark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ( 232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Ameren Corporation Yes No Union Electric Company Yes No Ameren Illinois Company Yes No E Indicate by checkmark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 ofthe Exchange Act.
Ameren Corporation Large accelerated filer Accelerated filer Non-accelerated filer D Smaller reporting company Emerging growth company Union Electric Company Large accelerated filer E Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company E Ameren Illinois Company Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company D Emerging growth company E If an emerging growth company, indicate by check mark ifthe registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) ofthe Exchange Act.
Ameren Corporation LI Union Electric Company Ameren Illinois Company LI Indicate by checkmark whether each registrant is a shell company (as defined in Rule 12b-2 ofthe Act).
Ameren Corporation Yes No Union Electric Company Yes LI No Ameren Illinois Company Yes LI No As ofJune 28, 2019, the aggregate market value ofAmeren Corporations common stock, $0.01 par value. (based upon the closing price ofthe common stock on the New York Stock Exchange on June 28, 2019) held by nonaffihates was $18,378,774,986. All ofthe shares ofcommon stock ofthe other registrants were held by Ameren Corporation as ofJune 28, 2019.
The number ofshares outstanding ofeach registrants classes ofcommon stock as ofJanuaiy 31, 2020, were as follows:
Shares outstanding as of Registrant Title ofeach class ofcommon stock January 31, 2020 Ameren Corporation Common stock, $0.01 par value per share 246,231,712 Union Electric Company Common stock, $5 par value per share, held by Ameren Corporation 102,123,834 Ameren Illmois Company Common stock, no par value, held by Ameren Corporation 25,452,373 DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive proxy statement of Ameren Corporation and portions of the definitive information statements of Union Electric Company and Ameren Illinois Company for the 2020 annual meetings ofshareholders are incorporated by reference into Part III ofthis Fonii 10-K.
This combined Form 10-K is separately filed by Ameren Corporation, Union Electric Company, and Ameren Illinois Company.
Each registrant hereto is filmg on its own behalf all of the infonnation contained in this annual report that relates to such registrant. Each registrant hereto is not filing any infonnation that does not relate to such registrant, and therefore makes no representation as to any such information.
Table of Contents TABLE Of CONTENTS Page GLoSSARY OF TERMS AND ABBREVIATIONS FORWARD-LOOKING STATEMENTS 4
PART I Item 1. Business General Business Segments Rates and Regulation 2
IraIlsflhissK)n SUPPlY of Electric Pover 9 Pover Generation 10 Renewable Energy and Zero FflhISSlOfl Standards (UStOfler Eflerg\EfficIeflCV Prmzrams 11 Natural Gas Supph for [)istribution J2 lndustn Issties 12 Operating Statistics Available Information Item 1A. Risk Factors 16 Item lB. Unresolved Staff Comments Item 2. Properties 25 Item 3. Legal Proceedings 27 Item 4. 1\Iine Safety I)isclosures Information about Otir Executive Officers PART II Item 5. Market for Registrants Common Equity, Related Stockholder Matters. and Issuer Purchase ofEquity Securities Item 6. Selected Financial Data 31 Item 7. Managements I)iscussion and Analysis ofFinancial Condition and Results ofOperations 32 Overview 31 Results of Operations Liquidity and Capital Resources Outlook 31 Regulatory Matters Accounting Matters 63 Effects ofinflation and Changing Prices Item 7A. Otiantitative and Oualitative I)isclostires About Market Risk 66 Item 8. financial Statements and Supplementary I)ata Arneren Corporation 74 Union Electric Aieren Illinois Note 1. Summary ofSignificant Accounting Policies Note 2. Rate and Regu1ato Matters 91 Note 3. Property. Plant, and Equipment. Net Note 4. Short-term I)ebt and Liquidity Note 5. Long-tenu I)eht and Equity Financings jj Note 6. Other Income, Net Note 7. Derivative financial Instruments 109 Note 8. Fair Value Measurements 110 Note 9. Callaway Energy Center 314 Note 10. Retirement Benefits 116 Note 1 1 Stock-based Compensation 321 Note 12. Income Taxes 125 Note I 3. Related-party Transactions 3,31
Note 14. Commitments and Contingencies j3j Note 15. Supplemental Information Note 16. Segment Information Selected Quarterly Information Item 9. Changes in and I)isagreements with Accountants on Accounting and financial Disclosure j4 Item 9A. Controls and Procedures Item 9W ()ther Information 144 PART III Item 10. I)irectors. Executive Officers, and Corporate Governance Item I 1 . Executive Compensation 145 Item 12. Security Owiiership ofCertain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions and L)irector Independence Item 14. Principal ACCO1HtIflg Fees and Services IARI I Item 15. l.xhihits and Financial Statement Schedules 146 Item 16. Form lt)K Summary 151 EXIIIRH IN1)FX 152 SIGNATIJRES This report contains forward-1ooking statements within the meaning ofSection 21E ofthe Securities Exchange Act of 1934, as amended. forward-looking statements should be read with the cautionary statements and important factors under the heading forward-loo king Statements. Forward-looking statements are all statements other than statements ofhistoncal fact, mcluding those statements that are identified by the use of the words antic1pates, estimates, expects, mtends, plans, predicts, projects, and similar expressions.
Table of Contents GLOSSARY OF TERMS AND ABBREVIATIONS We use the words our, ve or us with respect to certain information that relates to Ameren, Ameren Missouri, and Ameren Illinois, collectively.
When appropriate, subsidiaries ofAmeren Corporation are named specifically as their various business activities are discussed.
20171RPIntegrated Resource Plan, a 20-year nonbinding plan Ameren Missouri filed with the MoPSC in September 2017, which includes Arneren Missouris preferred approach for meeting customers projected long-term energy needs in a cost-effective manner while maintaining system reliability.
Ameren Ameren Corporation and its subsidiaries on a consolidated basis. In references to fmancing activities, acquisition activities, or liquidity arrangements, Ameren is defmed as Ameren Corporation, the parent.
Amereia Companies Ameren Corporation, Ameren Missouri, and Ameren Illinois, collectively, which are individual registrants within the Ameren consolidated group.
Anteren Ittiitois Ameren Illinois Company, an Ameren Corporation subsidiary that operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois, doing business as Ameren Illinois.
Arneren Illinois Electric Distribution An Ameren Corporation and Ameren Illinois financial reportmg segment consisting ofthe rate-regulate d electric distribution business ofAmeren Illinois.
Ameren Illinois Natttral Gcts An Ameren Corporation and Ameren Illinois financial reporting segment consisting ofthe rate-regulated natural gas distribution business ofAmeren Illinois.
Ameren Illi;tois Transntission An Ameren Illinois financial reporting segment consisting ofthe rate-regulated electric transmission business ofA.meren Illinois.
Ameren Missotiri Union Electric Company, an Ameren Corporation subsidiary that operates a rate-regulated electric generation, transmission
, and distribution business and a rate-regulated natural gas distribution business in Missouri, doing business as Ameren Missouri. Ameren Missouri is a financial reporting segment of Ameren.
Ameren Services Ameren Services Company, an Ameren Corporation subsidiary that provides support services, such as accounting, legal, treasury, and asset management services, to Ameren (parent) and its subsidiaries.
Anieren Transmission An Ameren Corporation financial reporting segment primarily consisting ofthe aggregated electric transmission businesses of Ameren Illinois and ATXI.
ARO Asset retirement obligations.
A TXI Ameren Transmission Company oflllinois, an Ameren Corporation subsidiary that operates a fERC rate-regulated electric transmission business in the MISO.
Basetoad The minimum amount of electric power delivered or required over a given period oftime at a steady rate.
Btu British thermal unit, a standard unit for measuring the quantity ofheat energy required to raise the temperature ofone pound ofwater by one degree Fahrenheit.
CCR Coal combustion residuals, which include fly ash, bottom ash, boiler slag, and flue gas desulfurization materials generated from burning coal to generate electricity.
CCR Rule Coal Combustion Residuals Rule, a rule promulgated by the EPA that established regulations for the disposal of CCR in landfills and surface impoundments.
Cooling degree days The summation ofpositive differences between the average daily temperature and a 65-degree Fahrenheit base. This statistic is useful as an indicator ofelectricity demand by residential and commercial customers for stimmer cooling.
Credit Agreements The Illinois Credit Agreement and the Missouri Credit Agreement, collectively.
C$APR Cross-State Air Pollution Rule, an EPA rule that requires states that contribute to air pollution in downwind states to limit air emissions from fossil-fuel-fired electric generating units.
CT Combustion turbine, used primarily for peaking electric generation capacity.
DCA Delivery charge adjustment, a rate-adjustment mechanism that decouples natural gas revenues from actual sales volumes for Ameren Missouris natural gas business and allows Ameren Missouri to adjust customer rates without a traditional regulatory rate review, subject to MoPSC prudence reviews.
The decoupling provisions ensure that Ameren Missouris natural gas revenues are not affected by changes in sales volumes, including those resulting from deviations from normal weather conditions.
Dekatherni A standard unit of energy equivalent to approximately one million Btus.
DOE Department of Energy, a United States government agency.
DRPtiis Ameren Corporations dividend reinvestment and direct stock purchase plan.
Electric margins Electric revenues less friel and purchased power costs.
EMANI European Mutual Association for Nuclear Insurance.
EPA Environmental Protection Agency, a United States government agency.
ERISA Employee Retirement Income Security Act of 1974, as amended.
Excess deferred income taxes Amounts resulting from the revaluation of deferred income taxes subject to regulatory ratemaking, which will be collected from, or returned to, customers. Deferred income taxes are revalued when federal or state income tax rates change, and the offset to the revaluation ofdeferred income taxes subject to regulatory ratemakmg is recorded to a regulatory asset or liability.
Exchaitge Act Securities Exchange Act of 1934, as amended.
Table of Contents FAC Fuel adjustment clause, a fuel and purchased power cost recovery mechanism that allows Ameren Missouri to recover or reftrnd, through customer rates, 95% of the variance in net energy costs from the amount set in base rates without a traditional regulatory rate review, subject to MoPSC prudence reviews.
fASB Financial Accounting Standards Board, a rulemaking organization that establishes financial accottnting and reporting standards in the United States.
fEJA Future Energy Jobs Act, an Illinois law that allows Ameren Illinois to earn a return on its electric energy-efficiency investments, decouples electric distribution revenues from sales volumes, offers cttstomer rebates for installing distributed generation, and includes extensions and modifications of certain IEIMA performance-based framework provisions, among other things. The decoupling provisions ensure that electric distribution revenues are not affected by changes in sales volumes, including those resulting from deviations from normal weather conditions.
fERC federal Energy Regulatory Commission, a United States government agency that regulates utility businesses and associated activities ofholding and related service companies, including Ameren, Ameren Missouri, Ameren Illinois, ATXI, and Ameren Services.
GAAP Generally accepted accounting principles in the United States.
Heating degree days The summation ofnegative differences between the average daily temperature and a 65-degree Fahrenheit base. This statistic is useful as an indicator of demand for electricity and natural gas for winter heating by residential and commercial customers.
ICC Illinois Commerce Commission, a state agency that regulates Illinois utility businesses, including Ameren Illinois and ATXI.
IEIMA Illinois Energy Infrastructure Modernization Act, an Illinois law that established a performance-based formula process for determining electric distribution service rates. The formula rateinaking process expires in 2022, unless extended.
Illinois CreditAgreemeitt Amerens and Ameren Illinois $1.1 billion senior unsecured credit agreement. The agreement was amended and restated in December 2019 and, unless extended, will expire in December 2024.
IPA Illinois Power Agency, a state government agency that has broad authority to assist in the procurement of electric power for residential and small commercial customers.
IRS Internal Revenue Service, a United States government agency.
ISRS Infrastructure system replacement surcharge, a rate-adjustment mechanism that provides Ameren Missouris natural gas business with recovery of. and a return on, qualifying infrastructure investments that are placed in service without a traditional regulatory rate review, subject to MoPSC prudence reviews.
Kitowatthour A measure ofelectricity consumption equivalent to the use of 1,000 watts ofpower over one hour.
MATS Mercury and Air Toxics Standards, an EPA rule that limits emissions ofmercury and other air toxics from coal- and oil-fired electric generating units.
MEEIA A rate-adjustment mechanism allowed under the Missouri Energy Efficiency Investment Act, a Missouri law that allows electric utilities to recover costs related to MoPSC-approved customer energy-efficiency programs without a traditional regulatory rate review, subject to MoPSC prudence reviews.
MEEJA 2013 Ameren Missouris portfolio ofcustomer energy-efficiency programs, recovery oflost electric margins, and performance incentive for 2013 through 2015, pursuant to Missouri law. as approved by the MoPSC in August 2012.
MEFIA 2016 Ameren Missouris portfolio of ctistomer energy-efficiency programs, recovery oflost electric margins, and performance incentive for March 2016 through February 2019, pursuant to Missouri law, as approved by the MoPSC in February 2016.
MEEIA 2019 Ameren Missouris portfolio ofcustomer energy-efficiency programs, recovery oflost electric margins, and performance incentive for March 2019 through December 2024, pursuant to Missouri law, as approved by the MoPSC in December 2018.
Megawattitour or MWIt One thousand kilowatthours.
MGP Manufactured gas plant.
MISO Midcontinent Independent System ()perator, Inc. an RTO.
Missouri CreditAgreernent Amerens and Ameren Missouris $1.2 billion senior unsecured credit agreement. The agreement was amended and restated in December 2019 and, unless extended, will expire in December 2024.
Missouri EnvironmentalAuthority Environmental Improvement and Energy Resources Authority ofthe state ofMissouri, a governmental body authorized to finance environmental projects by issuing tax-exempt bonds and notes.
Mmbtu One million Btus.
Money pooi Borrowing agreements among Ameren and its subsidiaries to coordinate and provide for certain short-term cash and working capital requirements.
Moodys Moodys Investors Service, Inc., a credit rating agency.
MoOPC Missouri Office ofPuhlic Counsel, a state agency.
MoPSC Missouri Public Service Commission. a state agency that regulates Missouri utility businesses, including Ameren Missouri.
MTM Mark-to-market.
MW Megawatt.
Native toad End-use retail customers whom we are obligated to serve by statute, franchise, contract, or other regulatory requirement.
Natitral gas margins Natural gas revenues less natural gas purchased for resale.
NA V Net asset value per share.
NEIL Nuclear Electric Insurance Limited, which includes all of its affiliated companies.
NERC North American Electric Reliability Corporation.
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Table of Contents Net eneigy costs Net energy costs, as defined in the FAC, which include fuel and purchased power costs, including transportatio n, net ofoff-system sales and capacity revenues. Substantially all transmission revenues and charges are excluded from net energy costs.
Net metering Net metering allows customers who generate their own electricity or subscribe to receive output from eligible facilities to feed electricity they do not use back into the grid. The customers receive a credit for the energy they add to the grid.
NO Nitrogen oxides.
NPNS Normal purchases and normal sales.
NRC Nuclear Regulatory Commission, a United States government agency that regulates commercial nuclear power plants and uses ofnuclear materials.
N$P$ New Source Perfonnance Standards, provisions under the Clean Air Act.
NSR New Source Review provisions ofthe Clean Air Act, which include Nonattaimnent New Source Review and Prevention of Significant Deterioration regtilations.
NYSE New York Stock Exchange, LLC.
OCI Other comprehensive income (loss) as defined by GAAP.
Off-system sates revenues Revenues from other than native load sales, including wholesale sales.
PGA Purchased gas adjustment tariffs, a cost recovery mechanism that permits prudently incurred natural gas costs to be recovered directly from utility customers without a traditional regulatory rate review, subject to ICC prudence reviews.
PHMSA Pipeline and hazardous Materials Safety Administration PISA Plant-in-service accounting regulatory mechanism, an election under Missouri law that permits electric utilities to defer and recover 85% of the depreciation expense and a return at the applicable WACC on rate base for certain property, plant, and equipment placed in service after the PISA election date.
subject to MoPSC prudence reviews. The rate base on which the return is calculated incorporates qualifying capital expenditures since the PISA election date as well as changes in total accumulated depreciation excluding retirements and plant-related deferred income taxes. The regulatory asset for accumulated PISA deferrals earns a return at the applicable WACC. The PISA was elected by Ameren Missouri. effective September 1, 2018.
IF Qualifying infrastructure plant, a rate-adjustment mechanism that provides Ameren Illinois natural gas business with recovery of and a return on, qualifying infrastructure plant investments that are placed in service between regulatory rate reviews, subject to ICC prudence reviews.
Rate base The basis on which a public utility is pen;itted to earn a WACC. This basis is the net investment in assets used to provide utility service, which generally consists of in-service property, plant, and equipment, net of accumulated depreciation and accumulated deferred income taxes, inventories, and, depending on jurisdiction, construction work in progress.
Regulatory tag The exposure to differences in costs incurred and actual sales volumes as compared with the associated amounts included in customer rates. Rate increase requests in traditional regulatory rate reviews can take up to I 1 months to be acted upon by the MoPSC and the ICC. As a result, revenue increases authorized by regulators will lag behind changing costs and sales volumes when based on historical periods.
RESRAM Renewable energy standard rate-adjustment nechanism, a rate-adjustment mechanism allowed under Missouri law that enables Ameren Missouri to recover costs relating to compliance with Missouri s renewable energy standard, including recovery of investments in wind generation and other renewables, and earn a return at the applicable WACC on those investments not already provided for in customer rates or any other recovery mechanism by adjusting customer rates on an annual basis without a traditional regulatory rate review, subject to MoPSC prudence reviews. RESRAM regulatory assets will earn carrying costs at short-term interest rates.
Reveittte requirement The cost ofproviding utility service to customers, which is calculated as the sum of a utilitys recoverable operating expenses. a return at the weighted-average cost of capital on rate base, and an amount for income taxes, based on the currently applicable statutory income tax rates and amortization associated with excess deferred income taxes.
RfP Request for proposal.
ROE Return on common equity.
RTO Regional transmission organization.
$&P S&P Global Ratings, a credit rating agency.
SEC Securities and Exchange Commission, a United States government agency.
SERC SERC Reliability Corporation, one ofthe regional electric reliability councils organized for coordinating the planning and operation ofthe nations bulk power supply.
Smart Energy Plan Ameren Missouris plan to upgrade Missouris electric grid through at least 2024, which assumes continuation ofthe PISA. Upgrades include investments to improve reliability and accommodate more renewable energy.
So2 Sulfur dioxide.
TCJA The Tax Cuts and Jobs Act of2Ol7, federal income tax legislation enacted in I)ecember 2017, which significantly changed the tax laws applicable to business entities. The TCJA includes specific provisions related to regulated public utilities. Substantially all ofthe provisions ofthe TCJA affecting the Ameren Companies, other than certain transition depreciation rules. were effective for taxable years beginning after December 3 1, 2017.
Testyear The selected period oftime, typically a 12-month period, for which a utilitys historical or forecasted operating results are used to determine the revenue requirement in a regulatory rate review.
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Table of Contents TSR Total shareholder return, the cumulative return of a common stock or index over a specified period oftirne assuming all dividends are reinvested.
VBA Volume balancing adjustment, a rate-adjustment mechanism for Ameren Illinois natural gas business that decouples natural gas revenues from actual sales volumes and allows Ameren Illinois to adjust customer rates without a traditional regulatory rate review, subject to ICC prudence reviews. The decoupling provisions ensure that Ameren Illinois natural gas revenues are not affected by changes in sales volumes, including those resulting from deviations from normal weather conditions, for residential and small nonresidential customers.
WACC Weighted-average cost ofcapital, which is the weighted-average cost ofdebt and equity, as allowed by the applicable regulator.
Zero emission credit A credit that represents the environmental attributes of one MWh of energy produced from certain zero emissions nuclear-powered generation facilities, which certain Illinois utilities are required to purchase pursuant to the FEJA.
FORWARD-LOOKING STATEMENTS Statements in this report not based on historical facts are considered forward-looking and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the safe harbor provisions ofthe Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cattse actual results to differ materially from those anticipated. The following factors, in addition to those discussed within Risk Factors under Part I. Item 1A, ofthis report, and elsewhere in this report and in our other filmgs with the SEC. could cause actual results to differ materially from management expectations suggested in such forward-looking statements:
. regulatory, judicial, or legislative actions, and any changes in regulatory policies and ratemaking determinations, that may change regulatory recovery mechanisms, such as those that may result from a rehearing ofthe November 2019 FERC order determining the allowed base ROE under the MISO tariff the Notices oflnquiry issued by the FERC in March 2019, Ameren Missouris electric service regulatory rate review filed with the MoPSC in July 2019, and Ameren Illinois natural gas delivery service regulatory rate review filed with the ICC in February 2020;
. the effect and continuation ofAmeren Illinois election to participate in performance-based formula ratemaking frameworks for its electric distribution service and its participation in electric energy-efficiency programs, including the direct relationship between Ameren Illinois ROE and the 30-year United States Treasury bond yields,
. the effect on Ameren Missouri ofany customer rate caps pursuant to Ameren Missouris election to use the PISA, including an extension ofuse beyond 2023, ifrequested by Ameren Missouri and approved by the MoPSC:
. the effects ofchanges in federal, state, or local laws and other governmental actions, including monetary, fiscal, and energy policies;
. the effects of changes in federal, state, or local tax laws, regulations. interpretations, or rates, including as a result of amendments or technical corrections to the TCJA, and challenges to the tax positions taken by the Ameren Companies, if any;
. the effects on demand for our services resulting from technological advances, including advances in customer energy efficiency, energy storage. aid private generation sources, which generate electricity at the site of consumption and are becoming more cost-competitive;
. the effectiveness ofAmeren Missouris customer energy-efficiency programs and the related revenues and performance incentives earned under its MEEIA programs;
. Ameren Ilimois ability to achieve the performance standards applicable to its electric distribution busmess asid the FEJA electric customer energy-effici ency goals and the resulting impact on its allowed ROE;
. our ability to align overall spending, both operating and capital, with frameworks established by our regulators and to recover these costs in a timely manner in our attempt to earn our allowed ROEs;
. the cost and availability offuel, such as low-sulfur coal, natural gas, and enriched uranium, used to produce electricity; the cost and availability of purchased power, zero emission credits, renewable energy credits, and nattiral gas for distribution; and the level and volatility of future market prices for such commodities and credits, including our ability to recover the costs for such commodities and credits and our customers tolerance for any related price increases;
. disruptions in the delivery of fuel, failure of our fuel suppliers to provide adequate quantities or quality of ftiel, or lack of adequate inventories of fuel, including nuclear fuel assemblies from the one NRC-licensed supplier ofAmeren Missouris Callaway Energy Centers assemblies; the cost and availability oftransmission capacity for the energy generated by Ameren Missouris energy centers or required to satisfy Ameren Missouris energy sales;
. the effectiveness of our risk management strategies and our use of financial and derivative instruments:
the ability to obtain sufficient insurance, including insurance for Ameren Missouris nuclear and coal-fired energy centers, or, in the absence of insurance, the ability to recover uninsured losses from our customers;
. the impact of cyberattacks on us or our suppliers, which could, among other things, result in the loss of operational control of energy centers and electric and natural gas transmission and distribution systems and/or the loss of data, such as customer, employee, financial, and operating system information; 4
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. business and economic conditions, including their impact on interest rates, collection ofour receivable balances, and demand for our products
. disruptions ofthe capital markets, deterioration in credit inetncs ofthe Arneren Companies, or other events that may have an adverse effect on the cost or availability ofcapital, including short-term credit and liquidity;
. the actions of credit rating agencies and the effects of such actions;
. the inability of our counterparties to meet their obligations with respect to contracts, credit agreements, and financial instruments;
. the impact ofweather conditions and other natural phenomena on us and our customers, including the impact of system outages;
. the construction, installation, performance, and cost recovery ofgeneration, transmission, and distribution assets;
. the effects of failures of electric generation, electric and natural gas transmission or distribution, or natural gas storage facilities systems and equipment, which could result in unanticipated liabilities or unplanned outages;
. the operation ofArneren Missouris Callaway Energy Center, mcludmg planned and unplanned outages, and decommissioning costs;
. Arneren Missouris ability to recover the remaining investment, if any, and decommissioning costs associated with the retirement of an energy center, as well as the ability to earn a return on that remaining investment and those decommissioning costs;
. the impact of current environmental laws and new, more stringent, or changing requirements, including those related to NSR, CO2 and the implementation of the Affordable Clean Energy Rule, other emissions and discharges, cooling water intake structures, CCR, and energy efficiency, that could limit or terminate the operation ofcertain ofAmeren Missouris energy centers, increase our operating costs or investment requirements, result in an impairment ofour assets, cause us to sell our assets, reduce our customers demand for electricity or natural gas, or othenvise have a negative financial effect;
. the impact ofcomplying with renewable energy standards in Missouri and Illinois and with the zero emission standard in Illinois;
. Ameren Missouris ability to acquire wmd and other renewable energy generation facilities and recover its cost of investment and related rettirn in a timely manner, which is affected by the ability to obtain all necessary project approvals; the ability of developers to meet contractual commitment s and timely complete projects, which is dependent upon the availability ofnecessary materials and equipment, among other things; the availability of federal production and investment tax credits related to renewable energy and Ameren Missouris ability to use such credits; the cost ofwind and solar generation technologies; and Ameren Missouris ability to obtain timely interconnection agreements with the MISO or other RTOs at an acceptable cost for each facility;
. the effect ofa possible cash or net share settlement ofthe forward sale agreement relating to common stock in the event ofchanges to Amerens expected cash requirements;
. labor disputes, work force reductions, changes in future wage and employee benefits costs, including those resulting from changes in discount rates, mortality tables, returns on benefit plan assets, and other assumptions;
. the impact ofnegative opinions ofus or our utility services that our customers, investors, legislators, or regulators may have or develop, which could result from a variety of factors, mcluding failures in system reliability, failure to implement our investment plans or to protect sensitive customer information, increases in rates, negative media coverage, or concerns about environmental, social, and/or governance practices;
. the impact of adopting new accounting guidance
. the effects of strategic initiatives, including mergers, acquisitions, and divestitures;
. legal and administrative proceedings; and
. acts of sabotage, war, terrorism, or other intentionally disruptive acts.
New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination offactors, may cause actual results to differ materially from those contained or implied in any forward-looking statement. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.
PART I ITEM I BUSINESS GENERAL Ameren, formed in 1997 and headquartered in St. Louis, Missouri, is a public utility holding company whose primary assets are its equity interests in its subsidiaries. Amerens subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. Dividends on Amerens common stock and the payment ofexpenses by Ameren depend on distributions made to it by its subsidiaries.
Below is a summary description ofAmerens principal subsidiaries Ameren Missouri, Arneren Illinois, and ATXI. Ameren also has other subsidiaries that conduct other activities, such as providing shared senices. A more detailed description can be found üi Note 1 Summary of Significant Accounting Policies under Part II, Item 8, ofthis report.
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. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri.
. Ameren Illinois operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois.
. ATM operates a FERC rate-regulated electric transmission business in the MISO.
The following table presents our employees by function at December 31, 2019:
Ameren Missouri:
Electric and natural gas transmission and distribution 1,716 Generation 1,721 Other support services 635 Total Ameren Missouri 4,072 Ameren Illinois:
Electric and natural gas transmission and distribution 2,856 Other support services 620 Total Anseren Illinois 3,476 Arneren Services support services 1,775 Total Ameren 9,323 Labor UIliOfl5 at Amerens subsidiaries consist ofthe International Brotherhood ofhlectrical Workers, the International Unton oft)peratmg Engineers, the Laborers International Union ofNorth America, the United Association ofPlumbers and Pipefitters, and the United Government Security Officers ofAmerica. At December 31, 2019, these labor unions collectively represented about 50% ofAmerens total employees. They represented 60% and 56% ofthe employees at Ameren Missouri and Ameren Illinois, respectively. The Ameren Missouri collective bargaining unit contracts expire in 2021 mid 2022, which cover 3% and 97%
ofrepresented employees, respectively. The Ameren Illinois collective bargaining unit contracts expire in 2020, 2021, 2022, and 2023, which cover 1%, 92%, 1%,
and 6% ofrepresented employees, respectively.
For additional information about the development of our businesses, our business operations, and factors affecting our results of operations, financial position, and liquidity, see Managements Discussion and Analysis of Financial Condition and Results of Operations under Part II, Item 7, ofthis report and Note 1 Summary ofSignificant Accounting Policies and Note 2 Rate and Regulatory Matters under Part IT, Item 8, ofthis report.
BUSINESS SEGMENTS Ameren has four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission. The Ameren Missouri segment includes all ofthe operations ofAmeren Missouri. Ameren Illinois Electric Distribution consists ofthe electric distribution business of Ameren Illinois. Ameren Illinois Natural Gas consists ofthe natural gas business ofAmeren Illinois. Ameren Transmission primarily consists ofthe aggregated electric transmission businesses of Ameren Illinois and AIXI.
Ameren Missouri has one segment. Ameren Illinois has three segments: Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Illinois Transmission.
An illustration of the Ameren Conspanies reporting structures is provided below.
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Table of Contents (EZEE:
(__*j c:E tiEiZiiii (a) The Ameren Transmission segment also includes allocated Arneren (parent) interest charges, Aineren Transmission Company, RATES AND REGULATION LLC, AIX East, LLC, and AIX Southwest, I,LC.
Rates The rates that Ameren Missouri, Arneren Illinois, and ATXI are allowed to charge for their utility services significantly influence the results of operations, financial position, and liquidity of these companies and Arneren. The electric and natural gas utility industry is highly regulated.
The utility rates charged to customers are determined by governmental entities, including the MoPSC, the ICC, and the fERC. Decisions by these entities are influenced by many factors, including the cost of providing service, the prudency of expenditures, the quality of service, regulatory staff knowledge and experience, customer intervention, and economic conditions, as well as social and political views. Decisions made by these governmental entities regarding rates are largely outside ofour control. These decisions, as well as the regulatory lag involved in the process of getting new rates approved, could have a material adverse effect on the results of operations, financial position, and liquidity ofthe Ameren Companies. The extent ofthe regulatory lag varies for each ofAmerens electric and natural gas jurisdictions, with the Ameren Transmission and Ameren Illinois Electric I)istribution businesses experiencing the least amount of regulatory lag. Depending on the jurisdiction, the effects ofregulatory lag are mitigated by various means, including annual revenue requirement reconcihations, the decoupling ofrevenues from sales volumes to ensure revenues approved in a regtilatory rate review are not affected by changes in sales voltimes, the recovery ofcertain capital investments between traditional regulatory rate reviews, the level and timing of expenditures, the use of a future test year, and the use of trackers and riders.
The MoPSC regulates rates and other matters for Ameren Missouri. The ICC regulates rates and other matters for Ameren Illinois.
The MoPSC and the ICC regulate non-rate utility matters for ATXI. ATXI does not have retail distribution customers therefore, the MoPSC and the ICC do not have authority to regulate ATXIs rates. The FERC regulates Ameren Missouris, Arneren Illinois, and ATXIs cost-based rates for the wholesale transmission and distribution ofenergv in interstate commerce and various other matters discussed below under General Regulatory Matters.
For additional information on Ameren Missouri, Ameren Illinois, and ATXI rate matters, see Results ofOperations and Outlook in Managements Discussion and Analysis of Financial Condition and Results of Operations under Part II, Item 7, Quantitative and Qualitative Disclosures About Market Risk under Part II, Item 7A, and Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report.
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Table of Contents The following table summarizes the key terms ofthe rate orders in effect for customer billings for each ofAmerens rate-regulated utilities as oflanuary 1, 2020:
Portion of Effective Arnerens 2019 Rate Rate Order Allowed Percent of Rate Base Operating Regulator Issued In ROE Common Equity (in billions) Revenuest Ameren Missouri Electric semce 9.2%9.7%
MoPSC March 2O17 (c) (c) 52%
Natural gas delivery service 9.4%
9,95%(d)
MoPSC August 2O19 52.0% (d) 2%
Arneren Illinois Electric distribution delivery serice ICC December 2019 8.91% 50.00o $3.2 25%
Natural gas delivery servicett ICC November 2018 9.87% 50.0% $1.6 l4° Electric transmission service fERC (g) 10.38% 51.3% $2.1 4%
ATXI Electric transmission FERC (g) 1O.3$° 59.3°o $1.4 3%
(a) Includes pass-through costs recovered from customers, such as purclsased power for electric distribution delivery service and tiatural gas purchased for resale for natural gas delivery service, and interconipany eliminations.
(b) Ameren Missouris electric generation, transmission, and delivery service rates are bundled together and charged to retail customers under a combined electric service rate. Anseren Missouri has a pending electric service regulatory rate review it filed with the MoPSC in Jtily 2019. for additional infomsation regarding this regulatory rate review, see Note 2 Rate and Regulatory Matters under Part II, Item 8, of this report.
(c) This rate order specified that an implicit ROE was within a range of 9.2% to 9.7° b. This rate order did not specify a percent of common equity or rate base. The ROE used for allowance for equity funds used during construction is 9.53%.
(d) This rate order specified that an implicit ROE was within a range of 9.4% to 9.95%. This rate order did not specify rate base.
(e) Ameren Illinois electric distribution delivery service rates are updated annually and become effective each January. This rate order was based n 2018 actual costs, expected net plant additions for 2019, and the annual average ofthe monthly yields during 2018 ofthe 30-year United States Treasury bonds plus 580 basis points. Ameren Illinois 2020 electric distribution delivery service revenues will be based on its 2020 actual recoverable costs, rate base, common eqtiity percentage, and an allowed R(E, as calctilated under the IFIMAs performance-based formula ratemaking framework.
(f) This rate order was based on a 2019 future test year. Ameren Illinois has a pending natural gas delivery service regulatory rate review it filed with the ICC in febrtiary 2020. for additional infonnation regarding this regulatory rate review, see Note 2 Rate and Regulatory Matters under Part II, Item 8, of this report.
(g) Transmission rates are updated annually and become effective each January. They are determined by a company-specific, forward-looking formula ratemaking framework based on each years forecasted information. The 10.38% return, which includes a 50 basis points incentive adder for participation in an RTO, is based on the fERCs November 2019 order. For additional information regarding this order and related requests for rehearing, see Note 2 Rate and Regulatory Matters under Part II, Item 8, of this report The ROE applicable to investments in ATXIs Mark Twain project includes an additional 50 basis point incentive adder related to the unique nature ofrisks involved in completing the project.
General Regulatory Matters Ameren Missouri, Amcren Illinois, and ATXI mtist receive FERC approval to enter into various transactions, such as issuing short-term debt securities and conducting certain acquisitions. mergers, and consolidations involving electric utility holding companies. In addition, Anieren Missouri, Arneren illinois, and ATXI must receive authorization from the applicable state public utility regulatory agency to issue stock and long-term debt securities and to conduct mergers, affiliate transactions, and various other activities.
Ameren Missouri, Ameren Illinois, and ATXI are also subject to mandatory reliability standards, including cybersecurity standards adopted by the fERC, to ensure the reliability ofthe bulk electric power system. These standards are developed and enforced by the NERC, pursuant to authority delegated to it by the fERC. Ameren Missouri, Ameren Illinois, and ATXI are members ofthe SERC. The SERC is one ofeight regional entities representing all or portions of 16 central and southeastern states under authority from the NERC for the purpose of implementing and enforcing reliability standards approved by the FERC. The regional entities of the NERC work to safeguard the reliability ofthe bulk power systems throughout North America. If any of Ameren Missouri, Ameren Illinois, or ATXI is found not to be in compliance with these mandatory reliability standards, it could incur substantial monetary penalties and other sanctions.
Under the Public Utility Holding Company Act of2005, the FERC and the state public utility regulatory agencies in each state Ameren and its subsidiaries operate in may access books and records ofAmeren and its subsidiaries that are found to be relevant to costs incurred by Amerens rate-regulated subsidiaries that may affect jurisdictional rates. The act also permits the MoPSC and the ICC to request that the FERC review cost allocations by Ameren Services to other Ameren companies.
Operation ofAmeren Missouris Callaway Energy Center is subject to regulation by the NRC. The license for the Callaway Energy Center expires in 2044.
Ameren Missouris hydroelectric Osage Energy Center and pumped-storage hydroelectric Taum Sauk Energy Center, as licensed projects under the federal Power Act, are subject to FERC regulations affecting, among other aspects, the general operation and maintenance ofthe projects. The licenses for the Osage Energy Center and the Taum Sauk Energy Center expire in 2047 and 2044, respectively. Ameren Missouris Keokuk Energy Center and its dam in the Mississippi River between hamilton, Illinois, and Keokuk, Iowa, are operated under authority granted by an Act ofCongress in 1905.
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Table of Contents For additional information on regulatory matters, see Note 2 Rate and Regulatory Matters, Note 9 Callaway Energy Center, and Note 14 Commitments and Contingencies under Part II, Item 8, ofthis report.
Environmental Matters Certain ofour operations are subject to federal, state, and local environmental laws, mcludmg statutes and regulations, relating to the protection ofthe safety and health of our personnel, the public, and the environment. These laws include requirements relating to identification, generation, storage, handling, transportation, disposal, recordkeeprng, labeling, reporting, and emergency response in connection with hazardous and toxic materials; safety and health standards; and environmental protection requirements, including standards and limitations relating to the discharge of air and water pollutants, water intake, and the management ofwaste and byproduct materials. These environmental regulations could also affect the availability of the cost of and the demand for electricity and natural gas sold to Ameren Missouris and Ameren Illinois customers as well as the demand for off-system sales. Federal, state, and local authorities continually revise these regulations, which adds uncertainty to our planning process and to the ultimate implementation ofthese or other new revised or regulations. Failure to comply with these laws could have a material adverse effect on us. We could be subject to criminal or civil penalties by regulatory agencies, or we could be ordered by the courts to pay private parties. Except as indicated in this report, we believe that we are in material compliance with existing laws that currently apply to our operations.
For discussion ofenvironmental matters, including NO and SO2 emission reduction requirements, regulation ofCO2 emissions, wastewater discharge standards, remediation efthrts, CCR management regulations, and a discussion oflitigation against Ameren Missouri with respect to NSR, the Clean Air Act, and Missouri law in connection with projects at Ameren Missouris Rush Island Energy Center, see Note 14 Commitments and Contingencie s under Part II, Item 8, ofthis report.
TRANSMISSION Ameren owns an integrated transmission system that is composed ofthe transmission assets ofAmeren Missouri. Ameren Illinois, and ATXI. Arneren also operates two MISO balancing authority areas: AMMo and AMIL. The AMMO balancing authority area includes the load and energy centers ofAmeren Missouri, and had a peak demand of7,363 megawatts in 2019. The AMIL balancing authority area includes the load ofAmeren Illinois, and had a peak demand of 8,735 megawatts in 20 19. The Ameren transmission system directly connects with 15 other balancing authority areas for the exchange of electric energy.
Ameren Missouri, Arneren Illinois, and ATXI are transmission-owning members ofthe MISO. Ameren Missouri is authorized by the MoPSC to participate in the MISO through May 2024. Ameren Missouri is periodically required to make a filing with the MoPSC regarding its continued participation in the MISO. The next filing is due in 2023.
StJPPLY OF ELECTRIC POWER Ameren Missouri Ameren Missouris electric supply is primarily generated from its energy centers. Factors that could cause Ameren Missouri to purchase power include, among other things, energy center outages, the fulfillment ofrenewable energy requirements, extreme weather conditions, the availability ofpower at a cost lower than its generation cost, and the lack of sufficient owned generation. Additionally, Ameren Missouri may need to fulfill purchased power needs from another source if a supplier is unable to meet its power supply obligations.
Ameren Missouri files a nonbinding 20-year integrated resource plan vith the MoPSC every three years. The most recent integrated resource plan, filed in September 2017, includes Ameren Missouris preferred approach for meeting customers projected long-term energy needs in cost-effective a manner while maintaining system reliability. The plan targets cleaner and more diverse sources of energy generation, including solar, wind, natural gas, hydroelectric, and nuclear power. It also includes expanding renewable energy generation by adding 700 megawatts of wind generation by 2020 in Missouri, adding 100 megawatts of solar generation by 2027, expanding customer energy-efficiency programs, adding cost-effective demand response programs, and retiring coal-fired energy centers as they reach the end oftheir tiseful lives. Ameren Missouri may be adversely affected ifthe MoPSC does not allow recovery ofthe remaining investment, if any, and decommissioning costs associated with the retirement of an energy center, as well as the ability to earn a return on that remaining investment and those decommissioning costs. Ameren Missouri expects to file its next integrated resource plan in September 2020.
Arneren Missouri continues to evaluate its longer-term needs for new generating capacity. The need for investment in new sources ofenergy is dependent on several key factors, including continuation of and customer participation in energy-efficiency programs, the amount of distributed generation from customers, load growth, technological advancements, costs of generation alternatives, environmental regulation of coal-fired power plants, and state renewable energy requirements, which could lead to the retirement ofcurrent baseload assets before the end oftheir useful lives or alterations in the way those assets operate, which cotild result m increased capital expenditures and/or increased operations and maintenance expenses. Because ofthe significant time required to plan, acquire permits for, and build a baseload energy center, Ameren Missouri continues to study alternatives and to take steps to preserve options to meet future demand. Steps include 9
Table of Contents evaluating the potential ft)f further diversification ofArneren Missouris generation portfolio through renewable energy generation, including wmd and solar generation, additional customer energy-efficiency and demand response programs, distributed energy resources, and energy storage.
Ameren Illinois In Illinois, while electric transmission and distribution service rates are regulated, power supply prices are not. Although electric customers are allowed to purchase power from an alternative retail electric supplier, Ameren Illinois is required to be the provider oflast resort for its electric distribution customers. In 2019, 2018, and 2017, Ameren Illinois procured power on behalfofits customers for 22%, 23%, and 23%, respectively, ofits total kilowatthour sales. Power purchased by Ameren Illinois for its electric distribution customers who do not elect to purchase their power from an alternative retail electric supplier comes either through procurement processes conducted by the IPA or through markets operated by the MISO. The IPA administers an RFP process through which Ameren Illinois procures its expected supply. The power and related procurement costs incurred by Ameren Illinois are passed directly to its electric distribution customers through a cost recovery mechanism. The costs are reflected in Ameren Illinois Electric Distributions results ofoperations, but do not affect Ameren Illmois Electric Distributions earnings, because these costs are offset by corresponding revenues. Ameren Illinois charges transmission and distribution service rates to electric distribution customers who purchase electricity from alternative retail electric suppliers, which does affect Ameren Illinois Electric Distributions earnings.
Illinois law requires Ameren Illinois to offer rebates for certain net metering customers. The cost ofthe rebates are deferred as a regulatory asset, which earn a return at the applicable WACC. Customers that receive these rebates are allowed to net their supply service charges, but not their distribution service charges.
Beginning in 20 1 7, the FEJA decoupled the electric distribution revenues established in a regulatory rate review from the actual sales volumes, which ensures that Ameren Illinois electric distribution revenues are not affected by any changes in sales volumes.
POWER GENERATION Ameren Missouri owns energy centers that rely on a diverse fuel portfolio, including coal, nuclear, and natural gas, as well as renewable sources of generation, which include hydroelectric, methane gas, and solar. All ofAmeren Missouris coal-fired energy centers were constructed prior to 1978. The Callaway nuclear energy center began operation in 1984 and is licensed to operate until 2044. As ofDeceinber 31, 2019, Ameren Missouris coal-fired energy centers represented 12% and 26% ofAmerens and Ameren Missouris rate base, respectively. See Item 2 Properties under Part I ofthis report for information regarding Ameren Missouris energy centers.
Coal Ameren Missouri has an ongoing need for coal as fuel for generation, and pursues a price-hedging strategy consistent with this requirement. Ameren Missouri has agreements in place to purchase and transport coal to its energy centers. As ofDecember 3 1, 2019, Ameren Missouri had price-hedged lOt)% ofits expected coal supply and 100% of its coal transportation requirements for generation in 2020. Ameren Missouri has additional coal supply under contract through 2025 The .
Powder River Basin coal transport agreements that Ameren Missouri has with Union Pacific Railroad and Burlington Northern Santa Fe Railway are currently set to expire at the end of2024. Ameren Missouri burned approximately 14.3 million tons ofcoal in 2019.
About 97% ofAmeren Missouris coal is purchased from the Powder River Basin in Wyoming, which has a limited number ofsuppliers. The remaining coal is typically purchased from the Illinois Basin. Targeted coal inventory levels may be adjusted because ofgeneration levels or uncertainties ofsupply due to potential work stoppages, delays in coal deliveries, equipment breakdowns, and other factors. Deliveries from the Powder River Basin have occasionally been restricted because ofrail congestion and maintenance, derailments, weather, and supplier financial hardship. Coal suppliers in the Power River Basin are experiencing financial hardship because of a decrease in demand resulting from increased natural gas and renewable energy generation, and the impact of environmental regulations, as well as concerns related to coal-fired generation. These financial hardships have resulted in bankruptcy filings by certain coal suppliers in recent years. As of December 3 1, 2019, coal inventories for Ameren Missouri were near targeted levels. Disruptions in coal deliveries could cause Ameren Missouri to pursue a strategy that could include reducing wholesale sales ofpower during low-margin periods, buying higher-cost fuels to generate required electricity, and purchasing power from other sources.
Nuclear The production ofnuclear fuel involves the mining and milling ofuranium ore to produce uranium concentrates, the conversion ofuranmm concentrates to uranmm hexaftuoride gas, the enrichment of that gas, the conversion of the enriched uranium hexafluoridc gas into uranium dioxide fuel pellets, and the fabrication into fuel assemblies. Ameren Missouri has entered into uranium, uranium conversion, uranittm enrichment, and fabrication contracts to procure the fuel supply for its Callaway Energy Center.
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Table of Contents The Callaway Energy Center requires refueling at 18-month intervals. The last reftieling was completed in May 2019. The next refueling is scheduled for the fall of2020. Ameren Missouri has inventories, supply contracts, and fuel fabrication service contracts sufficient to meet all ofits uranium (concentrate and hexafluoride), conversion, and enrichment requirements at least through the 2023 refueling.
RENEWABLE ENERGY AND ZERO EMISSION STANDARDS Missouri and Illinois laws require electric utilities to include renewable energy resources in their portfolios.
Ameren Missouri and Ameren Illinois satisfied their renewable energy portfolio requirements in 2019.
In Missouri, utilities were required to purchase or generate electricity equal to at least 10% ofnative load sales from renewable energy sources in 20 19, and will be required to ptirchase or generate at that same threshold in 2020. The requirement will increase to at least 15% in 2021, subject to an average 1% annual increase on customer rates over any 10-year period. At least 2% ofthe annual renewable energy requirement must be derived from solar energy. Ameren Missouri expects to satisfy the nonsolar requirement in 2020 with its Keokuk and Maryland heights energy centers, a 102-megawatt power purchase agreement with a wind farm operator, and an estimated purchase of approximately $1 million of renewable energy credits in the market. The Keokuk Energy Center generates electricity using a hydroelectric darn located on the Mississippi River. The Maryland heights Energy Center generates electricity by burning methane gas collected from a landfill. Ameren Missouri is meeting the solar energy requirement by purchasing solar-generated renewable energy credits from customer-installed systems and by generating solar energy at its OFallon, Lambert, and HIC energy centers and its headquarters building.
In May 2019, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an tip-to 300-megawatt wind generation facility. In 2018, Ameren Missouri entered mto a build-transfer agreement to acqtiire, after construction, an up-to 400-megawatt wind generation facility. Both facilities are expected to be completed by the end of 2020 and would support Ameren Missouris compliance with the Missouri renewable energy standard. for additional mforrnation on these agreements, see Note 2 Rate and Regulatory Matters tinder Part II, Item 8 ofthis report.
Effective June 201 7, the FEJA requires Ameren Illinois to collect funds from all electric distribution customers to fund IPA procurement events for renewable energy credits. In accordance with Illinois law, the amount collected from customers by Ameren Illinois is capped at $1.81 per megawatthour. The IPA establishes its long-term renewable resources procurement plans in a filing made every two years. The IPAs initial long-term renewable resources procurement plan was approved by the ICC in 2018. The IPAs plan set forth guidelines by which the IPA should procure 15-year contracts for wind renewable energy credits and solar renewable energy credits. As a result, Ameren Illinois is required to purchase 1 .2 million wind renewable energy credits per year and 1.2 million solar renewable energy credits per year, through IPA procurement events, which represented approximately 7% ofAmeren Illinois electric distribution sales in 2019. The IPA has completed several proctirement events, resulting in contractual commitments of 0.9 million wind renewable energy credits per year and 1 1 million solar renewable energy credits per year for Ameren Illinois. Ameren Illinois will execute additional renewable energy credit contracts in 2020 and 202 1, through IPA procurement events, in order to fulfill its remaining obligations. In February 2020, the ICC approved the IPAs second long-term renewable resources procurement plan. Under the second plan, based on forecasted customer collections to fund renewable energy credit contracts, the IPA does not anticipate procuring additional contracts.
however, if customer funds collected exceed the cost of procured contracts, the IPA may procure additional contracts. funds collected but not used to procure renewable energy credits will be refunded to customers pursuant to a reconciliation proceeding that would be initiated after August 202 1.
The FEJA also required Ameren Illinois to enter into contracts for zero emission credits in an amount equal to approximately 1 6% ofthe actual amount of electricity delivered to retail customers during calendar year 2014, pursuant to Illinois zero emission standard. This one-time zero emission credit procurement by the IPA, approval by the ICC, and execution of zero emission credit contracts, which expire in 2026, were completed in 201 8. Both renewable energy credits and zero emission credits have cost recovery mechanisms, which allow Ameren Illinois to collect from, or refund to, customers differences between actual costs incurred from the resulting contracts and the amounts collected from customers.
CUSTOMER ENERGY-EFFICIENCY PROGRAMS Ameren Missouri and Ameren Illinois have implemented energy-efficiency programs to educate and to help their customers become more efficient energy consumers. In Missouri, the Missouri Energy Efficiency Investment Act established a rate-adjustment mechanism that, among other things, allows electric utilities to recover costs with respect to MoPSC-approved customer energy-efficiency programs. The law requires the MoPSC to ensure that a utilitys financial incentives are aligned to help customers use energy more efficiently, to provide timely cost recovery, and to provide earnings opportunities associated with cost-effective energy-efficiency programs. Missouri does not have a law mandating energy-efficiency programs.
In December 2018, the MoPSC issued an order approving Ameren Missouris MEEIA 2019 plan. The plan includes a portfolio ofcustomer energy-efficiency programs through December 202 1 and low-income customer energy-efficiency programs through December 2024, along with a rate-adjustment mechanism.
Ameren Missouri intends to invest $226 million over the life ofthe plan, including $65 million per year through 2021. In addition, the plan includes a performance incentive that provides Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy-efficiency goals. Ifthe target goals are achieved for 2019, 2020, and 2021, additional 11
Table of Contents revenues of$7 million, $10 million, and $13 million would be recognized in late 2020, 2021, and 2022, respectively.
Incremental additional revenues ofup to $1 million, $3 million, and $3 million may be earned for 2019, 2020, and 2021, respectively, and would be recognized in the respective following year, if Ameren Missouri exceeds its targeted energy savings goals. Through 2019, Ameren Missouri has invested $52 million in MEFIA 2019 customer energy-efficiency programs.
The MEEIA 2019 plan includes the continued use ofthe MEEIA rider. The MEEIA rider allows Ameren Missouri to collect from, or refund to, customers any difference between actual program costs, lost electric margins, and any performance incentive and the amounts collected from customers, without a traditional regulatory rate review until lower volumes resulting from the MEEIA programs are reflected in base rates. Customer rates, based upon both forecasted program costs and lost electric margins and collected via the MEEIA rider, are reconciled annually to actual results.
State law requires Ameren Illinois to offer customer energy-efficiency programs, and imposes electric energy-effici ency savings goals and a maximum amount ofinvestment in electric energy-efficiency programs through 2030, which is approximately $100 million annually.
In September 2017, the ICC issued an order approving Ameren Illinois electric and natural gas energy-efficiency plans, as well as regulatory recovery mechanisms.
The order authorized electric and natural gas energy-efficiency program expenditures of$394 million and $62 million, respectively, for the 201$ through 2021 period. Additionally, as part ofits IEIMA capital project investments, Ameren Illinois has invested $420 million in smart-grid infrastructure since 20 12, including smart meters that enable customers to improve their energy efficiency, and expects to spend another $20 million by 2021.
The FEJA allows Ameren Illinois to earn a return on its electric energy-efficiency program investments made since June 2017. Ameren Illinois electric energy-efficiency investments are deferred as a regulatory asset and earn a return at the applicable WACC, with the ROE based on the annual average of the monthly yields ofthe 30-year United States Treasury bonds plus 580 basis points. The allowed ROE on electric energy-effici ency investments can be increased or decreased by up to 200 basis pomts, depending on the achievement of annual energy savings goals. Pursuant to the FEJA, Ameren Illinois plans to invest up to approximately $100 million per year in electric energy-efficiency programs through 2024, and will earn a return on those investments. While the ICC has approved a plan consistent with this spending level through 2021, the ICC has the ability to reduce the amount ofelectric energy-effici ency savings goals in future plan program years ifthere are insufficient cost-effective programs available, which could reduce the investments in electric energy-efficiency programs. The electric energy-efficiency program investments and the return on those investments are collected from customers through rider a and are not mcltided in the electric distribution formula ratemaking framework. Ameren Illinois natural gas energy efficiency program costs are recovered as they are incurred through a regulatory recovery mechanism.
NATURAL GAS SUPPLY FOR DISTRIBUTION Ameren Missouri arid Ameren Illinois are responsible for the purchase and delivery ofnatural gas to their customers.
Ameren Missouri and Ameren Illinois each develop and manage a portfolio ofnatural gas supply resources. These resources include firm natural gas supply agreements with producers, firm interstate and intrastate transportation capacity, firm no-notice storage capacity leased from interstate pipelines, and on-system storage facilities to maintain natural gas deliveries to customers throughout the year and especially during peak demand periods. Ameren Missouri and Ameren Illinois primarily use Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Natural Gas Pipeline Company of America, Mississippi River Transmission Corporation, Northern Border Pipeline Company, and Texas Eastern Transmission Corporation interstate pipeline systems to transport natural gas to their systems.
In addition to transactions requiring physical delivery, certain financial instruments, including those entered into in the New York Mercantile Exchange futures market and iii the over-the-counter financial markets, are used to hedge the price paid for natural gas. Natural gas supply costs are passed on to ctistomers ofAmeren Missouri and Ameren Illinois under PGA clauses, subject to prudence reviews by the MoPSC and the ICC. As ofDecember 3 1, 2019, Ameren Missouri and Ameren Illinois had price-hedged 65% and 79%, respectively, oftheir expected 2020 natural gas supply requirements.
For additional information on our fuel, purchased power, and natural gas for distribution supply, see Results of Operations and Liquidity and Capital Resources in Managements Discussion and Analysis ofFinancial Condition and Results ofOperations under Part II, Item 7, ofthis report and Commodity Price Risk under Part II, Item 7A, ofthis report. Also see Note 1 Summary of Significant Accounting Policies, Note 7 I)erivative Financial Instruments, Note 13 Related-party Transactions, Note 14 Commitments and Contingencies, and Note 15 Supplemental Information under Part II, Item 8 ofthis report.
INDUSTRY ISSUES We are facing issues common to the electric and natural gas utility industry. These issues include:
the potential for changes in laws, regulations, enforcement efforts, and policies at the state and federal levels:
corporate tax law changes, as well as additional interpretations, regulations, amendments, or technical corrections that affect the amount and timing of income tax payments, reduce or limit the ability to claim certain deductions and use carryfonvard tax benefits, or result in rate base reductions 12
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. cybersecurity risks, including the loss of operational control of energy centers and electric and natural gas transmission and distribution systems and/or the theft or inappropriate release of certain types of information, including sensitive customer, employee, financial, and operatmg system information;
. political, regtilatory, and customer resistance to higher rates;
. the potential for more intense competition in generation, supply, and distribution, including new technologies and their declining costs;
. the impact and effectiveness ofvegetation management programs;
. net metering rules and other changes in existing regulatory frameworks and recovery mechanisms to address the allocation of costs to customers who own generation resources that enable them both to sell power to us and to purchase power from us through the use of our transmission and distribution assets;
. legislation or programs to encotirage or mandate energy efficiency, energy conservation, and renewable sources ofpower, and the lack of consensus as to how those programs should be paid for;
. pressure on customer growth and usage in light of economic conditions, distributed generation, energy storage, technological advances, and energy-efficiency or conservation initiatives;
. changes in the structure of the industry as a result of changes in federal and state laws, including the formation and growth of independent transmission entities;
. changes in the allowed ROE on FERC-regulated electric transimssion assets;
. the availability offuiel and fluctuations in fuel prices;
. the availability ofmaterials and equipment, and the potential disruptions in supply chains resulting from the international public health emergency associated with the novel coronavirus (COVID-l9)
. the availability of a skilled work force, including retaining the specialized skills ofthose who are nearing retirement;
. regtilatory lag;
. the influence of macroeconomic factors on yields of United States Treasury securities and on the allowed ROE provided by regulators;
. higher levels of infrastructure and technology investments and adjustments to customer rates associated with the TCJA that are expected to result in negative or decreased free cash flow, which is defined as cash flows from operating activities less cash flows from investing activities and dividends paid;
. the demand for access to renewable energy generation at rates acceptable to customers;
. public concerns about the siting ofnew facilities, and challenges that members ofthe public can assert against applications for governmenta l pennits and other approvals required to site and build new facilities that can result in significant cost increases, delays and denial ofthe permits and approvals by the regulators;
. complex new and proposed environmental laws including statutes, regulations, and requirements, such as air and water quality standards, mercury emissions standards, CCR management requirements, and potential CO2 limitations, which may reduce the frequency at which electric generating units are dispatched based upon their CO2 emissions;
. public concerns about the potential environmental impacts from the combustion of fossil fuels and the use of natural gas;
. certain investors concerns about investing in utility companies that have coal-fired generation assets and increasing scnitmy ofenvironme ntal, social, and governance practices;
. aging infrastructure and the need to construct new power generation, transmission, and distribution facilities, which have long time frames for completion, with limited long-term ability to predict power and commodity prices and regulatory requirements;
. public concerns about nuclear generation, decommissioning, and the disposal ofnuclear waste; and
. consolidation ofelectric and natural gas utility companies.
We are monitoring all these issues. Except as othenvise noted in this report, we are unable to predict what impact, if any, these issues will have on our results ofoperations, financial position, or liquidity. For additional information, see Risk factors under Part I, Item lA, Outlook in Management s Discussion and Analysis offinancial Condition and Restilts of Operations under Part II, Item 7, Note 2 Rate and Regulatory Matters, Note 9 Callaway Energy Center, and Note 14 Commitments and Contingencies under Part II, Item 8, ofthis report.
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Tab!e of Contents OPERATING STATISTICS The following tables present key electric and natural gas operating statistics for Ameren for the past three years:
Electric Operating Statistics Year Ended December 3 1, 2019 2018 2017 Electric Sales kilowatthours (in millions):
Ameren Missouri:
Residential 13,532 14,320 12,653 Commercial 14,269 14,791 14,384 Industrial 4,242 4,499 4,469 Street lighting and public atithority 99 108 1 17 Ameren Missouri retail load subtotal 32,142 33,718 31,623 Off-system 5,477 10,036 10,640 Ameren Missouri total 37,619 43,754 42,263 Ameren Illinois Electric I)istribution°:
Residential 11,675 12,099 10,985 Commercial 12,34 1 12,7 17 12,382 Industrial 11,587 11,673 11,436 Street lighting and public authority 491 513 515 Ameren Illinois Electric Distribution total 36,094 37,002 35,318 Eliminate affiliate sales (84) (288) (440)
Ameren total 73,629 80,468 77,141 Electric (peratmg Revenues (in millions):
Arneren Missouri.
Residential $ 1,403 l,560
$ S 1,417 Commercial 1,157, 1,271 1,208 Industrial 278 312 305 Other, including street lighting and public authority 127 30 111 Ameren Missouri retail load subtotal $ 2,965 3,173
$ $ 3,041 Off-system 144 278 370 Ameren Missouri total $ 3,109 3,451
$ S 3,411 Ameren Illinois Electric Distribution:
Residential $ $48 867
$ $ 870 Commercial 497 511 527 Industrial 127 130 1 13 Other, including street lighting and public authority 32 39 58 Ameren Illinois Electric Distribution total $ 1,504 1,547
$ $ 1,568 Ameren Transmiaaion:
Ameren Illinois Transmission $ 28$ 267
$ $ 258 ATXI 176 166 368 Ameren Transmission total $ 464 433
$ $ 426 Other and intersegment eliminations (96) (92) (98)
Ainerentotal $ 4,981 $ 5,339 $ 5,307 (a) Sales for which power was supplied by Ameren Illinois as well as alternative retail electric suppliers. In 2019, 2018, and 2017, Ameren Illinois procured power on behalf of its customers for 22%, 23%, and 23%, respectively, ofits total kilowatthour sales.
(b) Includes $60 million for the year ended December 31, 2018, for the reduction to revenue for the excess amounts collected in rates related to the TCJA from January 1, 2012, through July 31, 2012. See Note 2 Rate and Regulatory Matters for additional information.
(c) Includes $62 million, $53 million, and $42 million in 2019, 2018, and 2017, respectively, ofelectric operating revenues from transmission services provided to Ameren Illinois Electric I)istribution.
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Table of Contents Electric Operating Statistics Year Ended December 31, 2019 2018 2017 Aineren Missouri fuel costs (cents per kilowatthour generated) 1.3$ 1 .59 1 750 Source ofAmeren Missouri energy sttpply:
Coal 63.4% 67.8% 70.9%
Nuclear 23.3 23.7 19.0 Hydroelectric 5.0 2.5 3.4 Naturalgas 0.5 1.0 0.7 Methane gas and solar 0.2 0.1 0.1 Purchased wind 0.7 0.6 0.7 Purchased power 6.9 4.3 5.2 Ameren Missouri total 100.0% 100.0% 100.0%
(a) Arneren Missouri fuel costs exclude $5 million, $44 million, and $(35) million in 2019, 2018, and 2017, respectively, for changes in FAC recoveries.
Natural Gas Operating Statistics Year Ended December 3 1 2019 2018 2017 Natural Gas Sales dekatherms (in millions):
Ameren Missouri:
Residential 7 7 6 Commercial 4 4 3 Industrial 1 1 Transport 9 9 8 Ameren Missouri total 21 21 18 Ameren Illinois Natural Gas Residential 61 60 50 Commercial 19 18 15 Industrial 4 4 3 Transport 101 100 98 Ameren Illinois Natural Gas total 185 1 82 166 Ameren total 206 203 184 Natural Gas Operating Revenues (in millions):
Ameren Missouri:
Residential S 81 $ 90 $ 77 Commercial 34 37 31 Industrial 4 4 4 Transportandother 15 7 14 Ameren Missouri total $ 134 $ 132 $ 126 Ameren Illinois Natural Gas:
Residential
$ 570 $ 581 $ 531 Commercial 154 159 146 Industrial 13 17 12 Transport and other 60 58 54 Ameren Illinois Natural Gas total
$ 797 $ 815 $ 743 Other and intercompany eliminations (2) (1) (2)
Amerentotal
$ 929 $ 952 $ 867 Rate Base StatisticsAt December 31, 2019 2018
2017 Rate Base (in billions)
Electric and natural gas transmission and distribution
$ 12.8 $ 11.3 $ 10.1 Coal generatioIi:
Labadie Energy Center 0.9 0.8 0.7 SiouxEnergyCenter 0.6 0.6 0.7 Rush Island Energy Center 0.5 0.4 0.4
Meramec Energy Center 0.1 0.2 0.2 generation total 2.1 2.0 2.0 Coal Nuclear generation 1.4 1 .3 1.5 Renewable generation 0.5 0.5 0.4 Natural gas generation 0.4 0.4 0.4 Rate base total $ 17.2 $ 15.5 $ 14.4 15
Table of Contents AVAILABLE INFORMATION The Ameren Companies make available free ofcharge through Amerens website (www.ameren.com) their annual reports on Form 10-K, quarterly reports on Fonn 10-Q, current reports on Form 8-K, and any amendments to those reports filed with or furnished to the SEC pursuant to Sections 13(a) or 15(d) of the Exchange Act as soon as reasonably possible after such reports are electronically filed with, or furnished to, the SEC. These documents are also available through the SECs website (www.sec.gov). Amerens website is a channel ofdistrihution for material information about the Ameren Companies. Financial and other material information is routinely posted to, and accessible at, Amerens website.
The Ameren Companies also make available free of charge through Ameren s website the charters of Ameren s board of directors audit and risk committee, human resources committee, nominating and corporate governance committee, finance committee, and nuclear and operations committee the corporate governance guidelines, a policy regarding communications to the board ofdfrectors, a policy and procedures document with respect to related-person transactions; a code of ethics for principal executive and senior financial officers a code ofbusiness conduct applicable to all directors, officers and employees; and a director nomination policy that applies to the Ameren Companies. The information on Ainerens website, or any other website referenced in this report, is not incorporated by reference into this report.
ITEM 1A.RISK FACTORS Investors should review carefully the following material risk factors and the other information contained in this report. The risks that the Ameren Companies face are not limited to those in this section. There may be further risks and uncertainties that are not presently known or that are not currently believed to be material that may adversely affect the results of operations, financial position, and liquidity ofthe Ameren Companies.
REGULATORY AND LEGISLATIVE RISKS We are subject to extensive regulation of our businesses.
We are subject to federal, state, and local regtilation. The extensive regtilatory frameworks, some ofwhich are more specifically identified in the following risk factors, regulate, among other matters, the electric and natural gas utility industnies the rate and cost structure ofutilities, including an allowed ROE the operation ofnuclear power plants; the construction and operation ofgeneration. transmission, and distribution facilities; the acquisition, disposal, depreciation and amortization of assets and faci1ities the electric transmission system reliability; and wholesale and retail competition. In the planning and management of our operations, we must address the effects of existing and proposed laws and regulations and potential changes in our regulatory frameworks, including initiatives by federal and state legislatures, RTOs, utility regulators, and taxing authorities. Significant changes in the nature ofthe regulation ofour businesses could require changes to our business planning and management of our businesses and could adversely affect our results ofoperations, finmcial position, and liquidity. Failure to obtain adequate rates or regulatory approvals in a timely manner; failure to obtain necessary licenses or permits from regulatory authorities; the impact ofnew or modified laws, regulations, standards, interpretations, or other legal requirements or increased compliance costs could adversely affect our results of operations, financial position, and liquidity.
The electric and natural gas rates that we are allowed to charge are determined through regulatory proceedings, which are subject to intervention and appeal. Rates are also subject to legislative actions, which are largely outside of our control. Certain events could prevent us from recovering our costs in a timely manner or from earning adequate returns on our investments.
The rates that we are allowed to charge for our utility services significantly influence our results of operations, financial position, and liquidity. The electric and natural gas utility industry is highly regulated. The utility rates charged to customers are determined by governmenta l entities, including the MoPSC, the ICC, and the FERC. Decisions by these entities are influenced by many factors, including the cost ofproviding service, the prudency ofexpenditures, the quality of service, regulatory staffknowledge and experience, customer intervention, and economic conditions, as well as social and political views. Decisions made by these governmental entities regarding rates are largely outside of our control. We are exposed to regulatory lag and cost disallowance s to varying degrees by jurisdiction, which, if unmitigated, could adversely affect our results of operations, financial position, and liquidity. Rate orders are also subject to appeal, which creates additional uncertainty as to the rates that we will ultimately he allowed to charge for our services. From time to time, our regulators may approve trackers, riders, or other recovery mechanisms that allow electric or natural gas rates to be adjusted without a traditional regulatory rate review. These mechanisms could be changed or terminated.
Ameren Missouris electric and natural gas utility rates and Ameren Illinois natural gas utility rates are typically established in regulatory proceedings that take up to 1 1 months to complete. Ameren Missouris rates established in those proceedings are primarily based on historical costs and revenues. Ameren Illinois natural gas rates established in those proceedings are based on estimated future costs and revenues. Thus, the rates that we are allowed to charge for utility services may not match our actual costs at any given time.
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Table of Contents Rates include an allowed return on investments established by the regulator, including a return at the applicable WACC on rate base, and an amount for income taxes based on the currently applicable statutory income tax rates and amortization associated with excess deferred income taxes. Although rate regulation is premised on providing an opportunity to earn a reasonable rate ofretum on rate base, there can be no assurance that the regulator will determine that our costs were prudently incurred or that the regulatory process will result in rates that will produce full recovery ofsuch costs or provide for an opportunity to earn a
reasonable return on those investments. Ameren Missouri and Ameren Illinois, and the utility industry generally, have an increased need for cost recovery, primarily driven by capital mvestments, which is likely to continue in the future. The resulting increase to the revenue requirement needed to recover such costs and earn a return on investments could result in more frequent regulatory rate reviews and requests for cost recovery mechanisms. Additionally, increasing rates could result in regulatory or legislative actions, as well as coInpetitwe or political pressures, all of which could adversely affect our results of operations, financial position, and liquidity.
Ameren, through ATXI and Ameren Illinois, is investing significant capital resources in electric transmission. These investments are based on the FERCs regulatory framework and an allowed ROE that is currently higher than that allowed by our state commissions. However, the fERC regulatory framework and rate ofreturn are subject to change, including as a result ofappeals and challenges to the new methodology fbr determining the base ROE established by the FERC in November 2019. Accordingly, the regulatory framework niay be less favorable or the rate ofretum may be lower in the future, compared with the current regulatory environment and rate ofretum, all ofwhich may adversely affect Amerens and Ameren Illinois results ofoperations, financial position, and liquidity.
A 50 basis point reduction in the FERC-allowed ROE would reduce Amerens and Ameren Illinois annual net income by an estimated $10 million and
$6 n;illion, respectively, based on each companys 2020 projected rate base.
As a result of its participation in performance-based formula ratemaking, Ameren Illinois ROE for its electric distribution service and its electric energy-efficiency investments is directly correlated to yields on United States Treasury bonds. Additionally, Ameren Illinois is required to achieve certain performance standards.
Ameren Illinois elects to participate in a performance-based formula ratemakmg framework established pursuant to the IEIMA for its electric distribution service. Arneren Illinois electric distribution revenues are decoupled from sales volumes, which ensures that the electric distribution revenues authorized in a regulatory rate review are not affected by changes in sales volumes. Ameren Illinois also has an electric energy-efficiency program rider, which includes a return at the applicable WACC on its program investments that is subject to performance-based formula ratemaking. The ICC annually reviews Ameren Illinois rate filings for reasonableness and prudency. Ifthe ICC were to conclude that Ameren Illinois costs were not prudently incurred, the ICC would disallow recovery of such costs. The electric distribution service performance-based formula ratemaking framework expires at the end of2022, ifnot extended by the legislature, while the decoupling provisions extend beyond the end offormula ratemaking by law. Ifnot extended, Ameren Illinois would then be required to establish future rates through a traditional regulatory rate review with the ICC, which might result in rates that do not produce a full or timely recovery of costs or provide for an adequate rettirn on investments and would expose Ameren Illinois electric distribution business to the risks described in the immediately preceding risk factor.
The allowed ROE tinder both formula ratemaking recovery mechanisms is based on the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds plus 580 basis points. Therefore, Ameren Illinois annual ROE for its electric distribution business is directly correlated to the yields on such bonds, which are outside ofAmeren Illinois control. With respect to electric distribution service, a 50 basis point change in the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds would result in an estimated $9 million change in Amerens and Ameren Illinois annual net income, based on its 2020 projected rate base.
Ameren Illinois is also subject to performance standards. Failure to achieve the standards would result in a reduction in the companys allowed ROE calculated under the ratemaking formulas. The perforniance standards applicable to electric distribution service include improvements in service reliability to reduce both the frequency and duration of outages, a reduction in the number of estimated bills, a reduction of consumption from inactive meters, and a reduction in bad debt expense. The electric distribution service regulatory framework provides for ROE penalties up to 38 basis points in each year from 2020 through 2022, if these performance standards are not met. The allowed ROE on energy-efficiency investments can be increased or decreased up to 200 basis points, depending on the achievement ofanrntal energy savings goals. Any adjustments to the allowed ROE for energy-efficiency investments will depend on annual performance of a historical period relative to energy savings goals. In 2019, 2018, and 2017, there were no material performance-related basis point adjustments.
Pursuant to the FEJA, Ameren Illinois plans to invest up to approximately $100 million per year in electric energy-efficiency programs through 2024, and will earn a return on those investments. While the ICC has approved a plan consistent with this spending level through 202 1, the ICC has the ability to reduce the amount ofelectric energy-efficiency savings goals in future plan program years ifthere are insufficient cost-effective programs available, which could reduce the investments in electric energy-efficiency programs.
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Table of Contents As a result of the PISA, Ameren Missouris electric rates are subject to a rate cap.
As a result ofAmeren Missouris election to use the PISA, its rate increases are limited to a 2.85% compound annual growth rate in the average overall customer rate per kilowatthour, based on the electric rates that became effective in April 2017, less halfofthe annual savings from the TCJA that was passed on to ctistomcrs as approved in the July 2018 MoPSC order. Ifrate changes from the FAC or the RE$RAM riders would cause rates to temporarily exceed the 2.85% rate cap, the overage would be deferred for future recovery in the next regulatory rate review; however, rates established in such regulatory rate review would he subject to the rate cap. Any deferred overages approved for recovery would be recovered in a manner consistent with costs recovered under the PISA. Increased capital investments and operating costs could cause customer rates to exceed the rate cap. In addition, decrease a in off-system sales, which are included in net energy costs, could also contribute to customer rates exceeding the rate cap. Off-system sales are affected by planned and unplanned outages at Ameren Missouris energy centers, and by ctirtailment of generation resulting from unfavorable economic conditions, among other things. Excluding customer rates under the MEEIA rider, which are not subject to the rate cap, Aineren Missouri would incur a penalty equal to the amount ofdeferred overage that would cause customer rates to exceed the 2.85% rate cap. A penalty incurred as the result ofexceeding the rate cap could adversely affect Amerens and Ameren Missouris results of operations, fmancial position, and liquidity.
Both the rate cap and the PISA election are effective through December 2023, unless Ameren Missouri requests and receives MoPSC approval of an extension through December 2028.
Ye are subject to various environmental laws. Significant capital expenditures are required to achieve and to maintain compliance with these environmental laws. Failure to comply with these laws could result in the closing offacilities, alterations to the manner in which these facilities operate, increased operating costs, delays and increased costs of building new facilities, or exposure to fines and liabilities.
We are subject to various environmental laws, including statutes and regulations, enforced by federal, state, and local authorities. The development and operation of electric generation, transmission, and distribution facilities and natural gas storage, transmission
, and distribution facilities can trigger compliance obligations with respect to environmental laws. These laws address emissions, discharges to water, water intake, impacts to air, land, and water, and chemical and waste handling. Complex and lengthy processes are required to obtain and renew approvals, permits, and licenses for new, existing or modified facilities.
Additionally, the use and handling ofvarious chemicals or hazardous materials require release prevention plans and emergency response procedures. Ameren is also subject to risks from changing or conflicting interpretations ofexisting laws.
We are also subject to liability under environmental laws that address the remediation of environmental contaminatio n on property currently or formerly owned by us or by our predecessors, as well as property contaminated by hazardous substances that we generated.
Such properties include MGP sites and third-party sites, such as landfills. Additionally, private individuals may seek to enforce environmental laws against us. They could allege injury from exposure to hazardous materials, allege a failure to comply with environmental latvs, seek to compel remediation of environment al contamination, or seek to recover damages resulting from that contamination.
The EPA has promulgated environmental regulations that have a significant impact on the electric utility industry.
Over time, compliance with these regulations could be costly for Ameren Missouri, which operates coal-fired power plants. As ofDeceinber 31, 2019, Ameren Missouris coal-fired energy centers represented 12% and 26% ofAmerens and Ameren Missouris rate base, respectively. Regulations that apply to air emissions from the electric utility industry include the NSPS, the CSAPR, the MATS, and the National Ambient Air Quality Standards, which are subject to periodic review for certain pollutants.
Collectively, these regulations cover a variety ofpollutants, such as 502, particulate matter, NON, mercury, toxic metals, and acid gases, and CO2 emissions from new power plants. Water intake and discharges from power plants are regulated under the Clean Water Act.
Such regulation could require modifications to water intake structures or more stringent limitations on wastewater discharges at Ameren Missouris energy centers, either ofwhich could result in significant capital expenditures. The management and disposal ofcoal ash is regulated under the CCR rule, which will require the closure ofsurface impoundments and the installations ofdry ash handling systems at several ofAmeren Missouris energy centers. The individual or combined effects ofexisting environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration ofoperations at some ofAmeren Missouris energy centers.
In January 2011, the Department ofJustice, on behalfofthe EPA, filed a complaint against Ameren Missouri in the United States District Court for the Eastern District ofMissouri alleging that in performing projects at its coal-fired Rush Island Energy Center in 2007 and 2010, Arneren Missouri violated provisions ofthe Clean Air Act and Missouri law. In January 2017, the district court issued a liability ruling and, in September 2019, entered a final order that required Ameren Missouri to install a flue gas desulfurization system at the Rush Island Energy Center and a dry sorbent injection system at the Labadie Energy Center.
There were no fines in the order. In October 2019, Ameren Missouri appealed the district courts ruling to the United States Court ofAppeals for the Eighth Circuit. Additionally, in October 2019, following a request by Ameren Missouri, the district court stayed implementati on ofthe majority ofits orders requirements while the case is appealed. The ultimate resolution ofthis matter could have a material adverse effect on the results ofoperations, financial position, and liquidity ofAmeren and Ameren Missouri. Among other things and subject to economic and regulatory consideration s, resolution ofthis matter could 18
Table of Contents result in increased capital expenditures for the installation of air pollution control equipment, as well as increased operations and maintenance expenses. Based upon engineering studies, capital expenditures to comply with the district courts order for installation ofa flue gas desulfurization system at the Rush Island Energy Center are estimated at approximately $1 billion. further, the flue gas desulfurization system would result in additional operation and maintenance expenses of $30 million to $50 million annually for the life ofthe energy center. Engineering studies required to develop estimated capital expenditures and estimated additional operation and maintenance expenses for the Labadie Energy Center to comply with the district courts order will not be undertaken while the case is under appeal.
In July 2019, the EPA issued the Affordable Clean Energy Rule. which establishes emission guidelines for states to follow in developing plans to limit C)2 emissions from coal-fired electric generating units. The EPA has identified certain efficiency measures as the best system ofemission reduction for coal-fired electric generating units. The Affordable Clean Energy Rule went into effect on September 6, 2019. The rule requires the state ofMissouri to develop a compliance plan and submit it to the EPA for approval by September 2022. The plan is expected to include a standard ofperformance for each affected generating unit. We are evaluating the impact ofthe adoption and implementation ofthe Affordable Clean Energy Rule and, along with other stakeholders, will be working with the state ofMissouri to develop the compliance plan submitted to the EPA. At this time, we cannot predict the outcome ofMissouris compliance plan development process.
As such, the impact on the results ofoperations, financial position, and liquidity ofAmeren and Ameren Missouri is uncertain. We also cannot predict the outcome ofany potential legal challenges to the rule.
Ameren and Ameren Missouri have incurred and expect to inctir significant costs with respect to environmental compliance and site remediation. New or revised environmental regulations, enforcement initiatives, or legislation could result in a significant increase m capital expenditures and operating costs, decreased revenues, increased financing requirements, penalties or fines, or reduced operations of some ofAmeren Missouris coal-fired energy centers, which, in turn, could lead to increased liquidity needs and higher financing costs. Actions required to ensure that Ameren Missouris facilities and operations are in compliance with environmental laws could be prohibitively expensive for Ameren Missouri ifthe costs are not fully recovered through rates. Environmental laws could require Ameren Missouri to close or to alter significantly the operations ofits energy centers. IfAmeren Missouri requests recovery ofcapital expenditures and costs for environmental compliance through rates, the MoPSC could deny recovery of all or a portion of these costs, prevent timely recovery, or make changes to the regulatory framework in an effort to minimize rate volatility and customer rate increases. Capital expenditures and costs to comply with future legislation or regulations might result in Ameren Missouri closing coal-fired energy centers earlier than planned. Ifthese costs are not recoverable through rates, it could lead to an impairment ofassets and reduced revenues. Any ofthe foregoing could have an adverse effect on our results ofoperations, financial positions, and liquidity.
Customers, investors, legislators, and regulators opinions of us are affected by many factors, including system reliability, implementation of our investment plans, protection of customer information, rates, media coverage, and environmental, social, and governance practices. Negative opinions developed by customers, investors, legislators, or regulators could harm our reputation.
Service intemiptions and facility shutdowns can occur due to failures ofequipment as a result ofsevere or destructive weather or other causes. The ability of Ameren Missouri and Ameren Illinois to respond promptly to such failures can affect customer satisfaction. In addition to system reliability issues, the success of modernization efforts, our ability to safeguard sensitive customer information and protect our systems from cyber attacks, and other actions can affect customer satisfaction. The level ofrates, the timing and magnitude ofrate increases, and the volatility ofrates can also affect customer satisfaction. Additionally negative perceptions or publicity resulting from increasing scrutiny of environmental, social, and governance practices could negatively impact our reputation or investment in our common stock. Customers, investors, legislators, and regulators opinions ofus can also be affected by media coverage, including social media, which may include infonnation, whether factual or not, that damages our brand and reputation.
Ifcustomers, investors, legislators, or regulators have or develop a negative opinion ofus and our utility services, this could result in increased costs associated with regulatory oversight and could affect the ROEs we are allowed to earn, as well as the access to, and the cost of, capital. Additionally, negative opinions about us could make it more difficult for our utilities to achieve favorable legislative or regulatory outcomes. Negative opinions could also result in sales volume reductions or increased use of distributed generation by our customers. Any ofthese consequences could adversely affect our results of operations, financial position, and liquidity.
We are subject to federal regulatory compliance and proceedings, which could result in increasing costs and the potential for regulatory penalties and other sanctions.
We are subject to FERC regulations, rules, and orders, incitiding standards required by the NERC. As owners and operators ofbulk power transmission systems and electric energy centers, we are subject to mandatory NERC reliability standards, including cybersecurity standards. In addition, our natural gas transmission, distribution, and storage facilities systems are subject to PIIMSA rules and regulations. Compliance with these reliability standards, rules, and regulations may subject us to higher operating costs and may result in increased capital expenditures. We may also incur higher operating costs to comply with potential new regulations issued by these regulatory bodies. Ifwe were found not to be in compliance with these mandatory NERC reliability standards, PUMSA rules and regulations, or FERC regtilatmns, rules, and orders, we could incur substantial monetary penalties and other sanctions, which could adversely affect our results of operations, 19
Table of Contents financial position, and liquidity. The fERC can impose civil penalties ofapproximately $1.3 million per violation per day for violation ofits regulations, rules, and orders, including mandatory NERC reliability standards. The FERC also conducts audits and reviews ofAmeren Missouris, Ameren Illinois, and ATXIs accounting records to assess the accuracy of its formula ratemaking process, and it can require refunds to customers for previously hilled amounts, with interest.
OPERATIONAL RISKS The construction and acquisition of, and capital improvements to, electric and natural gas utility infrastructure involve substantial risks. These risks include escalating costs; unsatisfactory performance by the projects when completed; the inability to complete projects as scheduled, which could affect the abilit to qualify for some or all of the anticipated federal production or investment tax credits; cost disallowances by regulators; and the inability to earn an adequate return on invested capital. Any of these risks could result in higher costs, inability to complete anticipated projects, or facility closures.
We expect to make significant capital expenditures to maintain and improve our electric and natural gas utility infrastructure and to comply with existing environmental regulations. We estimate that we will invest up to $16.6 billion (Ameren Missouri up to
$8.4 billion; Ameren Illinois up to $8.0 billion ATXI up to $0.2 billion) of capital expenditures from 2020 through 2024. These estimates include allowance for equity funds used during construction, but do not include any capital expenditures related to pollution control equipment that may be required as a result of the NSR and Clean Air Act litigation. Investments in Ameren s rate-regulated operations are expected to be recoverable from customers, but they are subject to prudence reviews and are exposed to regulatory lag of varying degrees by jurisdiction.
Our ability to complete construction projects sticcessfiilly within projected estimates and to acquire wind generation facilities after they are constructed is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, project management expertise, escalating costs for labor and materials, including changes to tariffs on materials, reliance on third parties, the ability to obtain required project approvals, and the ability to obtain necessary rights-of-way, easements, and transmission connections. The schedule, performance, and/or cost, including qualifying for federal production or investment tax credits, ofthese projects can be affected by many factors. These factors include delays in obtaining permits or regulatory approvals shortages in materials, equipment, and qualified labor; suppliers and contractors who do not perform as required under their contracts; changes in the scope and timing of projects; the inability to raise capital on reasonable tenns or other events beyond our control, including construction delays due to weather. In February 2020, the developers ofthe wind generation facilities, to be acquired by Ameren Missouri after constntction, received notice from the wind turbine supplier of potential disruptions in its manufacturing, transport, and/or import/export activities resulting from the international public health emergency associated with the novel coronavirus (COVID-19). The developers notified Ameren Missouri that their performance might be delayed as a result. At this time, Ameren Missouri and the developers are unable to estimate the impact to each project, including the project schedule and contracted megawatts. Additionally, we are evaluating the impact ofthis international public health emergency on our supply chains.
There is a risk that an energy center might not be permitted to continue to operate ifpollution control equipment is not installed by prescribed deadlines or does not perform as expected. Should any such pollution control equipment not be installed on time or not perform as expected, Ameren Missotiri could be subject to additional costs and to the loss of its investment in the project or facility.
All ofthese project and construction risks could adversely affect our results ofoperations, financial position, and liquidity.
Our electric generation, transmission, and distribution facilities are subject to operational risks.
Our financial performance depends on the successful operation ofelectric generation, transmission, and distribution facilities. Operation ofelectric generation, transmission, and distribution facilities involves many risks, including:
. facility shutdowns due to operator error, or a failure of equipment or processes,
. longer-than-anticipated maintenance outages:
failures ofequipment that can result in unanticipated liabilities or unplanned outages:
aging infrastructure that may require significant expenditures to operate and maintain:
. lack of adequate water required for cooling plant operations:
. labor disputes:
disruptions in the delivery ofelectricity to our customers:
suppliers and contractors who do not perform as required under their contracts:
failure ofother operators facilities and the effect ofthat failure on our electric system and customers; inability to comply with regulatory or permit requirements, including those relating to environmental laws:
. handling, storage. and disposition of CCR; unusual or adverse weather conditions or other natural disasters, including severe storms, droughts, floods, tornadoes, earthquakes, sustained high temperatures, solar flares, and electromagnetic pulses; 20
Table of Contents
. the occurrence of catastrophic events such as fires, explosions, acts of sabotage or terrorism, pandemic health events, or other similar events
. accidents that might result in injury or loss ofhfe, extensive property damage, or environmental damage;
. ineffective vegetation management programs;
. cybersecurity risks, including loss ofoperational control ofAmeren Missouris energy centers and our transmission and distribution systems and loss of data, includmg sensitive customer, employee, financial, and operatmg system information, through insider or outsider actions;
. limitations on amounts of insurance available to cover losses that might arise in connection with operating our electric generation, transmission, and distribution facilities;
. inability to implement or maintain information systems;
. failure to keep pace with and the ability to adapt to rapid technological change; and
. other unanticipated operations and maintenance expenses and liabilities.
The foregoing risks could affect the controls and operations ofour facilities or impede our ability to meet regulatory requirements, which could increase operating costs, increase our capital requirements and costs, reduce our revenues or have an adverse effect on our liquidity.
Ameren Missouris ability to obtain an adequate supply of coal could limit operati?n of its coal-fired energy centers.
Ameren Missouri owns and operates coal-fired energy centers. About 97% ofAmeren Missouris coal is purchased from the Powder River Basin in Wyoming.
which has a limited number ofsuppliers. Deliveries from the Powder River Basin have occasionally been restricted because ofrail congestion and maintenance, derailments, weather, and supplier financial hardship. Coal suppliers in the Power River Basin are experiencing financial hardship because of a decrease in demand resulting from increased natural gas and renewable energy generation, and the impact ofenvironmental regulations, as well as concerns related to coal-fired generation. These financial hardships have resulted in bankruptcy filings by certain coal suppliers in recent years. As ofDecember 3 1, 2019, coal inventories for Ameren Missouri were near targeted levels However, disruptions in the delivery of coal, failure of our coal suppliers to provide adequate quantities or quality of coal, or lack of adequate inventories of coal, including low-sulfur coal used to comply with environmental regulations, could have adverse effects on Ameren Missotiris electric generation operations. IfAmeren Missouri is unable to obtain an adequate supply of coal under existing agreements, it may be required to purchase coal at higher prices or be forced to reduce generation at its coal-fired energy centers, which could adversely affect Amerens and Ameren Missouris results of operations, financial position, and liquidity.
Ameren Missouris ownership and operation of a nuclear energy center creates business, financial, and waste disposal risks.
Ameren Missouris ownership ofthe Callaway Energy Center subjects it to risks associated with nuclear generation, including:
. poteIltial harmful effects on the environment and human health resulting from radiological releases associated with the operation of nuclear facilities and the storage, handling, and disposal ofradioactive materials;
. continued uncertainty regarding the federal governments plan to permanently store spent nuclear fuel and, as a result, the need to provide for long-term storage of spent nuclear fuel at the Callaway Energy Center;
. limitations on the amounts and types of insurance available to cover losses that might arise in connection with the Callaway Energy Center or other United States nuclear facilities;
. uncertainties about contingencies and retrospective premium assessments relating to claims at the Callaway Energy Center or any other United States nuclear facilities;
. public and governmental concerns about the safety and adequacy of security at nuclear facilities;
. limited availability offtiel supply and our reliance on licensed fuel assemblies from the one NRC-licensed supplier ofCallaway Energy Centers assemblies;
. costly aid extended outages for scheduled or unscheduled maintenance and refueling;
. uncertainties about the technological and financial aspects ofdecommissioning nuclear facilities at the end oftheir licensed lives:
. the adverse effect ofpoor market performance and other economic factors on the asset values ofnuclear decommissioning trust funds and the corresponding increase, upon MoPSC approval, in customer rates to find the estimated decommissioning costs; and
. potential adverse effects of a natural disaster, acts ofsabotage or terrorism, including a cyber attack, or any accident leading to a radiological release.
The NRC has broad authority under federal law to impose licensing and safety requirements for nuclear facilities. In the event ofnoncompliance, the NRC has the authority to impose fines or to shut down a unit, or both, depending upon its assessment ofthe severity ofthe situation, until compliance is achieved. Revised safety requirements promulgated from time to time by the NRC could necessitate substantial capital expenditures at the Callaway Energy Center. In addition, if a serious nuclear incident were to occur, it could adversely affect Amerens and Ameren Missouris results ofoperations, financial condition, and liquidity. A major incident at a nuclear facility anywhere in the world could cause the NRC to limit or prohibit the operation of any domestic nuclear unit and could also cause the NRC to impose additional conditions or requirements on the industry, which could increase costs and result in additional capital expenditures. NRC standards 21
Table of Contents relating to seismic risk require Ameren Missouri to further evaluate the impact of an earthquake on its Callaway Energy Center due to its proximity to a fault line, whieh could require the installation of additional capital equipment.
Our natural gas distribution and storage activities involve numerous risks that may result in accidents and increased operating costs.
Inherent in our natural gas distribution and storage activities are a variety ofhazards and operating risks, such as leaks, explosions.
mechanical problems and cybersecurity risks, which could cause substantial financial losses, including fines and penalties. In addition, these hazards could result in serious injury, loss of human life, significant damage to property, environmental impacts, and impairment ofour operations, which in turn could lead us to incur substantial losses. The location ofdistribution mains and storage facilities near populated areas, including residential areas, business centers, industrial sites, and other public gathering places, could increase the level ofdamages resulting from these risks. A major domestic incident involving natural gas distribution and storage systems could result in additional capital expenditures for us and increased regulation ofnatural gas utilities. The occurrence ofany ofthese events could adversely affect our results of operations, financial position, and liquidity.
Significant portions of our electric generation, transmission, and distribution facilities and natural gas transmission and distribution facilities are aging. This aging infrastructure may require significant additional maintenance or replacement. Ameren Missouri could be adversely affected if it is unable to recover the remaining investment, if any, and decommissioning costs associated with the retirement of an energy center, as well as the ability to earn a return on that remaining investment and those decommissioning costs.
Our aging infrastructure may pose risks to system reliability and expose us to expedited or tmplanned significant capital expendittires and operating costs. All ofAineren Missouris coal-fired energy centers were constructed prior to 1978, and the Callaway Energy Center began operating in 1984. The age ofthese energy centers increases the risks of unplanned outages, reduced generation output, and higher maintenance expense. Further, Ameren Missouri may be adversely affected if the MoPSC does not allow recovery of the remaining investment, if any, and decommissioning costs associated with the retirement of an energy center, as well as the ability to earn a return on that remaining investment and those decommissioning costs. Aging transmission and distribution facilities are more prone to failure than new facilities, which results in higher maintenance expense and the need to replace these facilities with new infrastructure
. Even ifthe system is properly maintained, its reliability may ultimately deteriorate and negatively affect our ability to serve our customers, which could result in increased costs associated with regulatory oversight. The frequency and duration of customer outages are among the IEIMA performance standards.
Any failure to achieve these standards will result in a reduction in Ameren Illinois allowed ROE on electric distribution assets. The higher maintenance costs associated with aging infrastructure and capital expenditures for new or replacement infrastructure could cause additional rate volatility for our customers, resistance by our regulators to allow customer rate increases. and/or regulatory lag in some of our jurisdictions, any of which could adversely affect our results of operations, financial position, and liquidity.
Energy conservation, energy efficiency, distributed generation, energy storage, technological advances, and other factors could reduce energy demand from Ameren Missouris customers.
Without a regulatory mechanism to ensure recovery, declines in energy usage could result in an under-recovery ofAmeren Missouris revenue requirement, which could adversely affect Amerens and Ameren Missouris results ofoperations, financial position, and liquidity. Such declines could occur due to a number of factors:
Conservation and energy-efficiencyprograms. Missouri allows for conservation and energy-efficiency programs that are designed to reduce energy demand.
. Distribitted generation and other energy-efficiency efforts. Ameren Missouri is exposed to declining usage from energy-efficiency efforts not related to its energy-efficiency programs, as well as from distributed generation sources, such as solar panels and other technologies. Ameren Missouri generates power at utility-scale energy centers to achieve economies of scale. Some distributed generation technologies have become more cost-competi tive, with decreasing costs expected in the future. The costs ofthese distributed generation technologies may decline over time to a level that is competitive with that of Ameren Missouris energy centers. Additionally, technological advances in energy storage may be coupled with distributed generation reduce to the demand for our electric utility services. Increased adoption ofthese technologies by customers could decrease our revenues if customers cease to use our generation, transmission, and distribution services at current levels. Ameren Missouri might incur stranded costs, which ultimately might not be recovered through rates.
Macroeconomicjactors. Macroeconomic factors resulting in low economic growth or contraction withm Ameren Missouris service terntories could reduce energy demand.
We are subject to employee work force factors that could adversely affect our operations.
Our businesses depend upon our ability to employ and retain key officers and other skilled professional and technical employees.
Certain specialized knowledge is required to construct and operate generation, transmission, and distribution assets. Further, a significant 22
Table of Contents portion ofour work force is nearing retirement. We are also party to collective bargaining agreements that collectively represent about 50% ofAmerens total employees. Certain events, such as an aging workforce without adequately trained replacement employees, the mismatch ofskill sets or complement to future needs, or any work stoppage experienced in connection with negotiations of collective bargaining agreements, could adversely affect our operations.
Our operations are subject to acts of terrorism, cyber attacks, and other intentionally disruptive acts.
like other electric and natural gas utilities, our energy centers, fuel storage facilities, transmission and distribution facilities, and information systems may be affected by terrorist activities and other intentionally disruptive acts, including cyber attacks, which cotild disrupt our ability to produce or distribute our energy products. There have been attacks on energy infrastructure, such as substations and related assets, in the past, and there may be more attacks in the future. Any such incident could limit our ability to generate, purchase, or transmit power or natural gas and could have sigmficant regional economic consequence
- s. Any such disruption could result in a significant decrease in revenues, a significant increase in costs includmg those for repair, or adversely affect economic activity in our service territory which, in turn, could adversely affect our results of operations, financial position, and liquidity.
There has been an increase in the number and sophistication of cyber attacks across all industries worldwide. A security breach at our physical assets or in our information systems could affect the reliability ofthe transmission and distribution system, disrupt electric generation, including nuclear generation, and/or subject us to financial harm resulting from theft or the inappropriate release of certain types of information, including sensitive customer, employee, financial, and operating system information. Many of our suppliers, vendors, contractors, and information technology providers have access to systems that support otir operations and maintain customer and employee data. A breach of these third-party systems could adversely affect our business as if it was a breach of our own system. Ifa significant breach occurred, our reputation could be adversely affected, customer confidence could be diminished, and/or we could be subject to increased costs associated with regulatory oversight, fines or legal claims, any ofwhich could result in a significant decrease in revenues or significant costs for reIfledying the impacts of such a breach. Our generation, transmission, and distribution systems are part of an interconnected system. Therefore, a disruption caused by a cyber incident at another utility, electric generator, RTO, or commodity supplier could also adversely affect our businesses. Insurance might not be adequate to cover losses that arise in connection with these events. In addition, new regulations could require changes in our security measures and result in increased costs.
The occurrence ofany ofthese events could adversely affect our results ofoperations, financial position, and liquidity.
FINANCIAL, ECONOMIC, AND MARKET RISKS Our businesses are dependent on our ability to access the capital markets successfully. We might not have access to sufficient capital in the amounts and at the times needed, as well as on reasonable terms.
We rely on the issuance of short-term and long-term debt and equity as significant sources ofliquidity and funding for capital requirements not satisfied by our operating cash flow, as well as to refinance existing long-tern; debt. The inability to raise debt or equity capital on reasonable terms.
or at all, could negatively affect our ability to maintain and to expand our businesses. Events beyond our control, such as depressed economic conditions or extreme volatility in the debt, equity, or credit markets, might create uncertainty that could increase our cost ofcapital or impair or eliminate our ability to access the debt, equity, or credit markets, including our ability to draw on bank credit facilities. Any adverse change in our credit ratings could reduce access to capital and trigger collateral postings and prepayments. Such changes could also increase the cost ofborrowing and the costs of fuel, power, and natural gas supply, among other things, which could adversely affect our results of operations, financial position, and liquidity.
Amerens holding company structure could limit its ability to pay common stock dividends and to service its debt obligations.
Ameren is a holding company; therefore, its primary assets are its investments in the common stock of its subsidiaries, including Ameren Missouri, Ameren Illinois, and ATXI. As a result, Amerens ability to pay dividends on its common stock depends on the earnings of its subsidiaries and the ability of its subsidiaries to pay dividends or otherwise transfer funds to Ameren. Similarly, Amerens ability to service its debt obligations is dependent upon the earnings of its operating subsidiaries and the distribution ofthose earnings and other payments, including payments ofprincipal and interest under affiliate indebtedness
. The payment of dividends to Ameren by its subsidiaries in turn depends on their results ofoperations, and other items affecting retained earnings, and available cash. Amerens subsidiaries are separate and distinct legal entities and have no obligation, contingent or othenvise, to pay any dividends or make any other distributions (except for payments required pursuant to the terms of affiliate borrowing arrangements and cash payments under the tax allocation agreement) to Ameren. Certain financing agreements, corporate organizational documents, and certain statutory and regulatory requirements may impose restrictions on the ability of Ameren Missouri, Ameren Illinois, and ATXI to transfer funds to Ameren in the form ofcash dividends, loans, or advances.
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Table of Contents Costs associated with our defined benefit retirement and postretirement plans, health care plans, and other employee benefits could increase.
Ameren offers defined benefit pension and postretirernent benefit plans covering substantially all of its union employees. Arneren offers defined benefit pension plans covering substantially all of its non-union employees and postretirement benefit plans covering non-union employees hired before October 2015.
Asstirnptions related to future costs, returns on investments, interest rates, timing of employee retirements, and mortality, as well as other actuarial matters, have a significant impact on our customers rates and our plan finding requirements. Amerens total unfunded obligation under its pension and postretirement benefit plans was $216 million as ofDecember 3 1, 2019. Ameren expects to fund its pension plans at a level equal to the greater ofthe pension cost or the legally required minimum contribution. Based on Amerens assumptions at December 3 1, 2019, its investment performance in 2019, and its pension funding policy, Ameren expects to make annual contributions ofup to approximately $45 million in each ofthe next five years, with aggregate estimated contributions of $70 million.
Ameren Missouris and Ameren Illinois portions ofthe future funding requirements are estimated to be 30% and 60%, respectively. These estimates may change with actual rnvestment performance, changes in interest rates, changes in our assumptions. changes in government regulations, and any voluntary contributions.
In addition to the costs ofour pension plans, the costs ofproviding health care benefits to our employees and retirees have increased in recent years. We believe that our employee benefit costs, including costs of health care plans for our employees and former employees, will continue to rise. Future legislative changes related to health care could also significantly change our benefit programs and costs. The increasing costs and funding requirements associated with our defined benefit retirement plans, health care plans, and other employee benefits could increase our financing needs and otherwise adversely affect our financial position and liquidity.
ITEM 1B.UNRESOLVED STAFF COMMENTS None.
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Table of Contents ITEM 2.PROPERTIES For information on our principal properties, see the energy center table below. See also Liquidity and Capital Resources and Regulatory Matters in Managements Discussion and Analysis offinancial Condition and Results ofOperations under Part II, Item 7, ofthis report for a discussion ofplanned additions, replacements, or transfers. See also Note 5 Long-term I)ebt and Equity Financings and Note 14 Commitmen ts and Contingencies under Part II, Item 8, of this report.
The following table shows the anticipated capability ofAmeren Missouris energy centers at the time ofAmeren Missouris expected 2020 peak summer electrical demand:
Primary Fuel Source Energy Center Location Net Kilowatt Capabillty Coal Labadie Franklin County, Missouri 2,372,000 Rush Island Jefferson County, Missouri 1178000 Sioux1 St. Charles County, Missouri 972,000 Meramec° St. Louis County, Missouri 540,000 Total coal 5,062,000 Nuclear Callaway° Callaway County, Missouri 1,194,000 Hydroelectric Osag&° Lakeside, Missouri 23 5,000 Keokuk Keokuk, Iowa 144,000 Total hydroelectric 379,000 Pumped-storage Tatim Sauk Reynolds County, Missouri 440,000 Natural gas (CTs)
Audrain County, Missouri 608,000 Venic&° Venice, Illinois 494,000 Goose Creek Piatt County, Illinois 438,000 Pinckneyville Pmckneyville, Illmois 316,000 Raccoon Creek Clay County, Illinois 308000 Meramec°° St. Louis County, Missouri 272,000 KinrnundyU Kinmundy, Illinois 210,000 Peno Creekc° Bowling Green, Missouri 192,000 Total natural gas 2,838,000 Oil (CTs) fairgrounds Jefferson City, Missouri 55,000 Mexico Mexico, Missouri 54,000 Moberly Moberly, Missouri 54,000 Moreau Jefferson City, Missouri 54,000 Total oil 217,000 Methane gas (CT) Maryland Heights Maryland Heights, Missouri 8,000 Solar Ofallon OFallon, Missouri 3,000 Larnt)ert St. Louis County, Missouri 1,000 BJC St. Louis, Missouri i,ooo Total solar 5,000 Total Ameren and Ameren Missouri 10,141,000 (a) Net kilowatt capability is the generating capacity available for dispatch from the energy center into the electric transmission grid.
(b) The Labadie Energy Center is scheduled to retire 1,186,000 kilowatts by 2036 and 1,186,000 kilowatts by 2042.
(c) The Rush Island Energy Center is scheduled to retire all generating capacity by 2045.
(d) The Sioux Energy Center is scheduled to retire all generating capacity by 2033.
(e) The Meramec Energy Center is scheduled for retirement by 2022.
(f) The Operating licenses for the Callaway, Osage, and Taum Sank energy centers expire in 2044, 2047, and 2044, respectively.
(g) There are economic development arrangements applicable to these CTs, as discussed below.
(Ii) These CTs have the capability to operate on either oil or natural gas (dual fuel).
(i) Two of its three units are steam-powered.
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Table of Contents The following table presents in-service electric and natural gas utility-related properties for Ameren Missouri and Ameren Illinois as ofDecember 31, 2019:
Ameren Ameren Missouri Illinois Circuit miles of electric transmission lines>
2,971 4,643 Circuit miles of electric distribution lines 33,652 45,868 Percentage of circmt miles of electric distribution lines underground 24° 16%
Miles ofnatural gas transmission and distribution mains 3,448 18,503 Underground natural gas storage fields 12 Total working capacity of underground natural gas storage fields in billion cubic feet 24 (a) AIXI owns 505 miles oftransrnission lines not reflected in this table.
)ur other properties include office buildings, warehouses, garages, and repair shops.
With only a few exceptions, we have fee title to all principal energy centers and other units of property material to the operation of our businesses, and to the real property on which such facilities are located (subject to mortgage liens securmg our outstanding first mortgage bonds and to certain permitted liens and judgment liens). The exceptions are as follows:
A portion ofAmeren bssouris Osage Energy Center reservoir, certain facilsties at Ameren Missouris Sioux Energy Center, most ofAmeren Missouris Penn Creek and Audrain CT energy centers, Ameren Missouris Maryland heights Energy Center, Ameren Missouris Lambert and BJC energy centers, certain substations, asid most transmission and distribution lines and natural gas mains are situated on lands occupied under leases, easements, franchises, licenses, or permits. The United States or the state ofMissotiri may own or may have paramount rights with respect to certain lands lying the in bed of the Osage River or located between the inner and outer harbor lines ofthe Mississippi River on which certain ofAmeren Missouris energy centers and other properties are located.
. The United States, the state of Illinois, the state of Iowa, or the city of Keokuk, Iowa, may own or may have paramount rights with respect to certain lands lying in the bed ofthe Mississippi River on which a portion ofAmeren Missouris Keokuk Energy Center is located.
Substantially all ofthe properties and plant ofAmeren Missouri and Ameren Illinois are subject to the liens ofthe indentures securing their mortgage bonds.
Ameren Missouri has conveyed most ofits Peno Creek CT Energy Center to the city ofBowhng Green, Missouri through 2022. Ameren Missouri has rights and obligations as the operator ofthe energy center under a long-tens agreement with the city ofBowhng Green. Under the terms ofthis agreement, Ameren Missouri is responsible for all operation and maintenance for the energy center. Ownership ofthe energy center will transfer to Ameren Missouri at the expiration ofthe agreement, at which time the property, plant, and equipment will become subject to the lien ofthe Ameren Missouri first mortgage bond indenture.
Ameren Missouri operates a CT energy center located in Audrain County, Missouri. Ameren Missouri has rights and obligations as the operator ofthe energy center under a long-terna agreement with Audrain County. Under the terms ofthis agreement, Arneren Missouri is responsible for all operation and maintenance for the energy center. The agreement will expire in December 2023. Ownership ofthe energy center will transfer to Ameren Missouri at the expiration of the agreement, at which time the property, plant, and equipment will become subject to the lien ofthe Ameren Missouri first mortgage bond indenture.
In May 2019, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 300-megawatt wind generation facility. In 2018, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 400-megawatt wind generation facility. Both facilities are expected to be completed by the end of2020 and would support Ameren Missouris compliance with the Missouri renewable energy standard. For additional information on these agreements, see Note 2 Rate and Regulatory Matters under Part II, Item 8 ofthis report.
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Table of Contents ITEM 3.LEGAL PROCEEDINGS We are involved in legal and administrative proceedings before various courts and agencies with respect to matters that arise in the ordinary course of business, some ofwhich involve substantial amounts ofmoncy. We believe that the final disposition ofthese proceedings, except as otherwise disclosed in this report, will not have a material adverse effect on our results ofoperations, financial position, or liquidity. Risk ofloss is mitigated, in some cases, by insurance or contractual or statutory indemnification. We believe that we have established appropriate reserves for potential losses.
Material legal and administrative proceedings, which are discussed in Note 2 Rate and Regulatory Matters, Note 9 Callaway Energy Center, and Note 14 Commitments and Contingencies under Part II, Item 8, ofthis report and are incorporated herein by reference, include the following:
. Amcren Missouris electric service regulatory rate review filed with the MoPSC in July 2019;
. Ameren Illinois natural gas delivery service regulatory rate review filed with the ICC in February 2020;
. the ICCs QIP prudence review requested by Ameren Illinois in March 2019;
. Ameren and the MISt) transmission ovners request for a rehearing ofthe November 2019 fERC order related to the November 2013 complaint case;
. the March 2019 FERC separate Notices oflnquiry regarding its allowed ROE policy and its transmission incentives policy;
. litigation against Arneren Missouri with respect to NSR and the Clean Air Act; and
. remediation matters associated with former MCiP sites ofAmeren Illinois.
ITEM 4.MINE SAFETY DISCLOSURES Not applicable.
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Table of Contents INFORMATION ABoUT OUR EXECUTIVE OFFICERS:
The executive officers ofthe Ameren Companies, including major subsidiaries, are listed below, along with their ages as ofDecember 3 1, 2019, all their positions and offices held with the Ameren Companies as ofFebruary 14, 2020, their tenures as officers, and their business backgrounds for at least the last five years. Some executive officers hold multiple positions within the Ameren Companies; their titles are given in the description oftheir business experience.
AMEREN CORPORATION:
Name Age Positions and Offices Held Warner L. Baxter 58 Chairman, President and ChiefExecutwe Officer, and Director Baxterjomed Ameren Missouri in 1995. lIe was elected to the positions ofexecutive vice president and chieffinancial officer ofAineren, Ameren Missouri, Ameren Illinois, and Ameren Services in 2003 He was elected chairman, president, chief executive officer, and chief financial officer of Arneren Services in 2007. In 2009, he was elected chairman, president, and chiefexecutive officer ofAmeren Missouri. In 2014, he was elected chairman, president, and chief executive officer ofAmeren, and relinquished his positions at Ameren Missouri.
Michael L. Moehn 50 Executive Vice President and Chieffrnancial Officer Moehnjoined Ameren Services in 2000. In 2004, he was elected vice president, corporate planning, ofAmeren Services. In 20t)8, he was elected senior vice president, corporate planning and busmess risk management, ofAmeren Services. In 2012, he was elected senior vice president, customer operations. of Ameren Missouri, and relinquished his position at Ameren Services. In 2014, he was elected chairman and president ofAmeren Missouri. In December 2019, he was elected executive vice president and chief financial officer ofthe Ameren Companies and chairman and president ofAmeren Services and relinquished his positions at Ameren Missouri.
Chonda J. Nwamu 4$ Senior Vice President, General Counsel, and Secretary Nwarnu joined Ameren Services in September 20 16 as vice president and deputy general counsel. In January 2019, she was elected senior vice president and deputy general counsel ofAmeren Services. In August 2019, she was elected senior vice president, general counsel and secretary ofthe Ameren Companies. Prior to jorning Ameren Services, she served as regulatory counsel at Pacific Gas and Electric Company, a public utility, from 2000 to May 2014 and as managing counsel and senior director from June 2014 to June 2016.
Bruce A. Steinke 5$ Senior Vice President, Finance, and ChiefAccounting officer Stemkejomed Ameren Services in 2002. In 200$, he was elected vice president and controller ofAmeren, Ameren Illinois, and Ameren Services. In 2009, he relinquished his positions at Ameren Illinois. In 2013, he was elected senior vice president, finance, and chiefaccounting officer ofthe Ameren Companies.
2$
Table of Contents SUBSIDIARIES:
Name Age Positions and Offices Held Bhavani Amirthalingam 44 Senior Vice President and ChiefDigital Information Officer (Ameren Services)
Arnirthalingamjomed Ameren Services in March 201$ as senior vice president and chiefdigital information officer. She served as the chiefinformation officer and vice president North America for Schneider Electric SE, an energy management and automation solutions company, from January 20 15 to March 20 1 8 and in various roles at World Wide Technology Inc., a technology solution provider, from November 1999 to January 2015, most recently serving as vice president of customer solutions and innovation from September 2013 to January 2015.
Mark C. Birk 55 Senior Vice President, Customer and Power Operations (Ameren Missouri)
Birkjoined Ameren Missouri in 1986. In 2004, he was elected vice president, power operations, ofAmeren Missouri. In 2012, he was elected senior vice president, corporate planning, ofAmeren Services. In 2014, he was also elected senior vice president, oversight, ofAmeren Services, and in 2015, he was elected senior vice president, corporate safety, planning and operations oversight. In January 20 17, he was elected senior vice president, customer operations, at Ameren Missouri and relinquished his positions at Ameren Services. In October 2017, he was elected senior vice president, customer and power operations, at Ameren Missouri.
Fadi M. i)iya 57 Senior Vice President and ChiefNuclear Officer (Ameren Missotiri)
I)iyajomed Ameren Missouri in 2005. In 2008, he was elected vice president, nuclear operations, ofAmeren Missouri. In 2014, he was elected senior vice president and chiefnuclear officer ofAmeren Missouri.
Mary P. Heger 63 Senior Vice President, Customer Experience (Ameren Illinois)
Hegerjoined Ameren Missotiri in 1976. In 2009, she was elected vice president, information technology, ofAmeren Services, and in 2013, she was also elected chiefmformation officer ofAmeren Services. In September 2015, she was elected senior vice president and chiefinforma tion officer ofAmeren Services. In February 2019, she was elected senior vice president, customer experience, at Ameren Illinois and relinquished her position at Ameren Services.
Mark C. Lindgren 52 Senior Vice President, Corporate Communications, and Chiefliuman Resources Officer (Aineren Services)
Lindgrenjoined Ameren Services in 1998. In 2009, he was elected vice president, human resources, ofAmeren Services, and in 2012, he was also elected chief human resources officer ofAmeren Services. In September 2015, he was elected senior vice president, corporate communicati ons, and chiefhuman resources officer ofAmeren Services.
Richard J. Mark 64 Chairman and President (Ameren Illinois)
Markjoined Ameren Services in 2002 as vice president, customer service. In 2003, he was elected vice president, governmenta l policy and constimer affairs, of Ameren Services. In 2005, he was elected senior vice president, customer operations, ofAmeren Missouri. In 2007, he relinquished his position at Arneren Services. In 2012, he relinquished his position at Ameren Missouri and was elected chairman and president ofAmeren Illinois.
Martin J. Lyons, Jr. 53 Chairman and President (Ameren Missouri)
Lyons joined Ameren Services in 2001 In 2008, he was elected senior vice president and chief accounting officer of the Ameren Companies. In 2009, he was also elected chieffinancial officer ofthe Ameren Companies. In 2013, he as elected executive vice president and chieffinancia l officer ofthe Ameren Companies, and relinquished his duties as chiefaccounting officer. In March 2016, he was elected chairman and president ofAmeren Services. In December 2019, he was elected chairman and president ofAmeren Missouri and relinquished his position as executive vice president and chief financial officer ofthe Ameren Comparnes and his positions at Ameren Services.
Shawn E. Schukar 58 Chairman and President (ATXI)
Schukarjoined a predecessor company ofAmeren Illinois in 1984. In 2005, he was elected vice president, commercial RIO operations, ofAmeren Services. In 2013, he was elected senior vice president, transmission operations, construction and project management, ofATXI. In May 2017, he was elected chairman and president of ATXI.
Officers are generally elected or appointed annually by the respective board of directors of each company, following the election of board members at the annual meetings ofshareholders. No special arrangement or understanding exists between any ofthe above-named executive officers and the Ameren Companies nor, to our knowledge, with any other person or persons pursuant to which any executive officer was selected as an officer.
There are no family relationships among the executive officers or between any executive officers and any directors ofthe Ameren Companies. Except as noted, the above-named executive officers have been employed by an Ameren company for more than five years in executive or management positions.
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Table of Contents PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PtIRCIIASE OF EQUITY SECURITIES Arnerens common stock is listed on the NYSE (ticker symbol: AEE). Ameren common shareholders ofrecord totaled 43,576 on January 3 1, 2020. There is no trading market for the common stock ofAmeren Missouri and Ameren Illinois. Ameren holds all outstanding common stock ofArneren Missouri and Asneren Illinois.
Purchases ofEquity Securities Ameren Corporation, Ameren Missouri, and Ameren Illinois did not purchase any equity securities reportable under Item 703 ofRegulation S-K during the period from October 1, 2019, to December 3 1, 2019.
Performance Graph The following graph shows Amerens cumulative TSR during the five years ended December 31, 2019. The graph also shows the cumulative total returns of the Edison Electric Institute Index (EEl Index), S&P 500 Index, S&P 500 Utility Index, and the Philadelphia Utility Index. The EEl Index, S&P 500 Utility Index, and the Philadelphia Utility Index are market capitalization-weighted indices ofU.S. public utility companies. The comparison assumes that $100 was invested on December 31, 2014, in Amercn common stock and in each ofthe indices shovn and that all ofthe dividends were reinvested. The S&P 500 Index and Philadelphia Utility Index are expected to be used as comparisons in flittire years, instead ofthe EEl Index, as management believes these indices provide more readily accessible comparisons to investors.
Comparison of Five-Year Cumulative Return 2oa
$175
$.i 50
$125
$100
$75 2014 2015 2016 2017 201 nurnn1wwn Anitn A1t .-[ YE, iikx sap see ..
isp ioo uiti Inii UIy Lndex 30
Table of Contents December31, 2014 2015 2016 2017 201$ 2019 Ameren (AFE)
$ 100Ot) $ 97.63 $ 122.6$ $ 142,26 $ 162,15 $ 195.91 EEuIndex 100.00 96.lt) 112.86 126.09 130.71 164.43 S&P500Index 100.00 101.38 113.51 138,28 13223 173.86 S&P500Utilitylndex ioo.oo 95.15 110.65 124.05 129.15 163.18 PluladelphiaUtilitylndex ioo.oo 93.83 110,37 124.03 128.45 163.0t)
Aineren management cautions that the stock price performance shown above should not be considered indicative offliture stock price performance.
ITEM 6.SELECTED FINANCIAL DATA 2019 2018 2017 2016 2015 Ameren:
Operating revenues Operating income 5,9f() 6,291 s 6,174 s 6,076 s 6,098 1,267 1,357 1,410 1,322 1,235 Income from continuing operations
$34 $21 529 659 585 Income from discontinued operations, net oftaxes si Net income attributable to Ameren common shareholders 82$ 81 5 523 653 630 Common stock dividends 472 451 431 416 402 Continuing operations earnings per share basic 337 3 34 2 16 2 69 2 39 Continuing operations earnings per share diluted 335 3 32 2 14 2 68 2 38 Common stock dividends per share 1.9200 1.8475 1.7775 1.715 1.655 As of December 3 1 Total assets
$ 28,933 $ 27,215 $ 25,945 $ 24,699 $ 23,640 Long-term debt, excltiding current maturities 8,915 7,859 7,094 6,595 6,880 Total Ameren Corporation shareholders equity 8,059 7,631 7,184 7,103 6,946 Ameren Missouri:
Operating revenues 3,243 s 3,ss9 $ 3,537 $ 3,524 $ 3,609 Operating income 617 749 722 725 742 ° Net income available to common shareholder 426 478 323 ( 357 352 Dividendstoparent 430 375 362 355 575 As of December 31:
Total assets
$ 14,937 $ 14,291 $ 14,043 $ 14,035 $ 13,851 Long-tenn debt, excluding current maturities 4,098 3,418 3,577 3,563 3,844 Total shareholders equity 4,349 4,229 4,081 4,090 4,082 Ameren Illinois:
Operating revenues 2,527 s 2,576 $ 2,527 $ 2,489 $ 2,466 Operatingincome sso 512 569 519 446 Net income available to common shareholder 343 304 268 252 214 Dividends to parent i 10 As of December 31:
Total assets
$ 12,185 $ 1,319 $ 10,345 $ 9,474 $ 8,903 Long-term debt, excludmg current maturities 3,575 3.296 2,373 2,338 2,312 Total shareholders equity 4,132 3,774 3,310 3,034 2,897 (a) Amounts have not been revised to reflect the adoption of accounting guidance on revenue from contracts with customers, effective for the Ameren Companies as of January 1 201 8, and are not comparative. See Note 1 Summary of Significant Accounting Policies under Part II, Item 8, of otir Form ,
10-K for the year ended Decensber 3 1, 2018, filed with the SEC on February 26, 2019, for additional information.
(h) Includes a $69 million provision recorded for all ofthe previously capitalized construction and operating license costs relating to the cancelled second nuclear unit at Ameren Missouris Callaway Energy Center.
( c) Includes an increase to income tax expense of $154 million and $32 million as a restilt ofthe TCJA at Anseren and Ameren Missouri, respectively See Note 12 IncoIne Taxes under Part II, Item 8, of this report for additional infonnation.
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Table of Contents ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Ameren, headquartered in St. Louis, Missouri, is a public utility holding company whose primary assets are its equity interests in its subsidiaries.
Amerens subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. Dividends on Amerens common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries.
Below is a summary description ofAmerens principal subsidiaries Ameren Missouri, Arneren Illinois, and ATXI. Ameren also has other subsidiaries that conduct other activities, such as providing shared services. A more detailed description can be found in Note 1 Summary ofSignificant Accounting Policies under Part II, Item 8, ofthis report.
. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution busmess and a rate-regulated natural gas distribution business in Missouri.
. Ameren Illinois operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois.
. ATM operates a FERC rate-regulated electric transmission business in the MISO.
Ameren has four segments: Arneren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Arneren Transmission. The Ameren Missouri segment includes all ofthe operations ofAmeren Missouri. Ameren Illinois Electric Distribution consists ofthe electric distribution business of Arneren Illinois. Ameren Illinois Natural Gas consists ofthe natural gas business ofAmeren Ilimois. Ameren Transmission primarily consists ofthe aggregated electric transmission businesses ofArneren Illinois and ATXI. See Note 16 Segment Information under Part II, Item 8, ofthis report for further discussion of Arnerens, Ameren Missouris, and Ameren Illinois Segments.
Amerens financial statements are prepared on a consolidated basis and therefore include the accounts ofits majority-owned subsidiaries.
All intercompany transactions have been eliminated, except as disclosed in Note 13 Related-party Iransactions under Part II, Item 8, ofthis report. Ameren Missouri and Ameren Illinois have no subsidiaries. All tabular and graphical dollar amounts are in millions, unless otherwise indicated.
The following discussion should be read in conjunction with the financial statements contained in this Form 1 0-K. We intend for this discussion to provide the reader with infonnation that will assist in understanding our financial statements, the changes in certain key items in those financial statements, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. The discussion also provides information about the financial results of our business segments to provide a better understanding of how those segments and their results affect the financial condition and results of operations ofAmeren as a whole. Discussion regarding our financial condition and results of operations for the year ended December 3 1, 201 7, including comparisons with the year ended December 31, 2018, is included in Item 7 ofour Form 10-K for the year ended I)ecember 31, 2t)l8, filed with the SEC on February 26, 2019.
In addition to presenting results ofoperations and earnings amounts in total, we present certain information in cents per share. These amounts reflect factors that directly affect Amerens earnings. We believe this per share information helps readers to understand the impact ofthese factors on Amerens earnings per share.
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Table of Contents OVERVIEW Our core strategy to invest in regulated infrastructure, continuously improve performance, and advocate for responsible policies to deliver superior customer and shareholder value is driven by three pillars.
Investing in and operating our utilities in a Enhancing regulatory frameworks and creating and capitalizing on opporturntiei for manner consistent with existing regulatory advocating for responsible energy and economic investment for the benefit ofour eustorners and frameworks policies s-. . shareholders *: ..
We seek to earn competitive returns on investments We seek to partner with our stakeholders, including We seek to make prudent investments that benefit in our businesses. Accordingly, we rernam focused our customers, regulators, federal and state our customers. The goal ofthese investments is to on disciplined cost management and strategic legislators, and RTOs, to enhance our regulatory maintain and enhance the reliability ofour services, capital allocation. We align our overall spending, frameworks and advocate for responsible energy and develop cleaner sources of energy, create economic both operating and capital, with economic economic policies for the benefit ofour customers development opportunities in our region, and conditions and with the frameworks established by and shareholders. We believe constructive regulatory provide customers with more options and greater our regulators. to create and capitalize on frameworks for investment exist at all of Amerens control over their energy usage, among other things.
investment opportunities for the benefit of our business segments. Accordingly, we expect to earn By prudently investing in our busmesses, we believe customers and shareholders. We focus on competitive returns on investments in our businesses that we deliver superior value to both customers and minimizing the gap between allowed and earned and realize timely recovery ofour costs in the shareholders.
ROEs and allocating capital resources to business coming years with the benefits accrtting to both opportunities that we expect will provide the most Customer Rates. (/KWI11 customers and shareholders.
benefit to our customers and offer the most attractive risk-adjusted return potential.
.:re Ai .en Musejil J
itr::i 22%24%
io.oj below Average Mcnest ucrs:
Ii.S 4J Rate Base (S in billions) Constructive Regulatory Frameworks TSR 2O14-2O19 Segment Regulatory framework Ameren fronnuta ratemuking Transmission Allowed ROE is JO. 38% Ui :s Ameren Illinois Futitre test rear rutemukrng urni OJP, Natural Gas JGA, JBA Al/OWed ROE is 9.87% ei.ei t3.2 Ameren Illinois h)rni?t/u rutemuking JI I Electric A/towed I?OE is 30-veer U.S. ireusuty +
Distribtition 5.8%
Ameren Ifistorteul test veer ruteniulung unci Missouri PISA, I?ESI?A.Ai FAQ, MEEL4 2014 AltowedROK 9.2% 9. 7%(c)
I I t!(ICe id *l:.L -
.Aner hue s slura i%ea I tees .1.k i ee ) PhHdclphia $&P O0 Anwrn Ut3ity lndei Utilty Indei (a) Reflects year-end rate base except for Ameren Transmission, which is average rate base.
(b) Compound annual growth rate.
(c) Allowed ROE applicable to electric service.
( d) Average residential electric prices. Source: Edison Electric Institute, Typical Bills and Average Rates Report for the 12 months ended June 30, 2019 (e) Ameren managensent cautions that the stock price performance shown above should not be considered indicative of future stock price performance.
Below are some key announcements, updates, legislative actions, and regulatory outcomes that occurred in 2019 and early 2020.
In March 2019, Aineren issued its Building a Cleaner Energy future report, which sets forth Ainerens plan for reducing carbon emissions and addressing climate risk. The plan is largely reflected in the Ameren Missouri 20 17 IRP, which includes expanding renewable sources by adding 700 megawatts of wind generation by the end of 2020 and adding 1 00 megawatts of solar generation by 2027. Ameren Missouri expects to file its next integrated resource plan in September 2020.
In August 2019, Ameren entered into a forward sale agreement with a counterparty relating to 7.5 million shares of common stock. The forward sale agreement can be settled at Amerens discretion on or prior to March 31, 2021. On a settlement date or dates, ifAmeren elects to physically settle the forward sale agreement, Ameren will issue shares of common stock to the counterparty at the then-applicable forward sale price.
The forward sale agreement will be physically settled unless Ameren elects to settle in cash or to net share settle. Ifphysically settled, Ameren expects to receive between $54t) million and $550 million upon settlement, which is expected to be used to fund a portion ofAmeren Missouris wind generation investments.
See Note 5 Long-term Debt and Equity Financings under Part II, Item 8, ofthis report for additional information.
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Table of Contents Consistent with its 2017 IRP filing, in May 2019, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 300-megawatt wind generation facility. In 2018, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 400-megawatt wind generation facility. These two agreements are subject to customary contract terms and conditions. The two build-transfer acquisitions collectively represent $1.2 billion ofcapital expenditures, are expected to be completed by the end of2020, and would support Ameren Missouris compliance with the Missotiri renewable energy standard. Both acquisitions have received all regulatory approvals, and both projects have received all applicable zoning approvals, have entered into RT()
interconnection agreements, and have begun construction activities. The MoPSC has approved a RESRAM, which is designed to mitigate the impacts of regulatory lag for the cost of compliance with Missouris renewable energy standard, including recovery of investments in wind and other renewable energy generation, by providing more timely recovery of costs and a return on investments not already provided for in customer rates or recovered under the PISA.
See Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report for more information regardmg Ameren Missouri wind generation facilities.
In July 2019, Ameren Missouri filed a request with the MoPSC seeking approval to decrease its annual revenues for electric service by
$1 million. In February 2020, Ameren Missouri, the MoPSC staff the MoOPC, and certain intervenors filed a nonunanimous stipulation and agreement with the MoPSC to decrease Ameren Missouris annual revenues for electric service by $32 million. The remaining intervenor did not object to the agreement. The stipulation and agreement, which is subject to MoPSC approval, specified an allowed ROE range of9.4% to 9.8%, but did not specify the common equity percentage or rate base. The stipulation and agreement includes the continued use ofthe FAC and trackers that the MoPSC previously atithorized in earlier electric rate orders.
Ameren Missouri cannot predict whether the MoPSC will approve the stipulation and agreement or, if approved, whether any application for rehearing or appeal will be filed, or the outcome ifso filed. A decision by the MoPSC is expected by March 2020, with new rates effective as early as April 1, 2020. The percentage of net energy cost variances from the amount set in base rates allowed to be recovered or refunded tinder the FAC and costs from services provided by affiliates are still being challenged by the MoOPC, and are expected to be addressed in a proceeding that would begin in March 2020. A MoPSC decision would be expected in the proceeding by the end ofMay 2020. Ifa change to the percentage ofnet energy cost variances from the amount set in base rates allowed to be recovered or refunded under the FAC is ordered by the MoPSC, the ordered percentage will be reflected in the FAC. If any investments or expenses are disallowed by the MoPSC, the effect on customer rates ofsuch disallowances will be deferred as a regulatory liability and refunded to customers over a period oftime determined in the next regulatory rate review. See Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report for more information regarding the Ameren Missouri 2019 electric service regulatory rate review.
In September 2019, the United States District Court for the Eastern I)istrict ofMissouri issued an order in a case brought by the Department ofJustice, on hehalfofthe EPA, alleging that in performing projects at its coal-fired Rush Island Energy Center in 2007 and 2010, Ameren Missouri violated provisions of the Clean Air Act and Missouri law. The order requires Ameren Missouri to install a flue gas desulfurization system at the Rush Island Energy Center and a dry sorbent injection system at the Labadie Energy Center. In October 2019, Ameren Missouri appealed the district courts ruling to the United States Court of Appeals for the Eighth Circuit. Additionally, in October 2019, following a request by Ameren Missouri, the district court stayed implementation ofthe majority of its order requirements while the case is appealed. As a result ofthe district courts stay, Aineren Missouri does not expect to make significant capital expenditures or incur operations and maintenance expenses related to the district courts order while the case is under appeal. The ultimate resolution ofthis matter could have a material adverse effect on the results ofoperations, fmancial position, and liquidity ofAmeren and Ameren Missouri. See Note 14 Commitmen and ts Contingencies under Part II, Item 8, ofthis report for more information regarding NSR and clean air litigation.
In February 2020, Ameren Missouri filed an update to its Smart Energy Plan with the MoPSC, which includes a five-year capital investment overview with a detailed one-year plan for 2020. The plan is designed to upgrade Ameren Missouris electric infrastructure and includes investments that will upgrade the grid and accommodate more renewable energy. Investments under the plan are expected to total approximately $7.6 billion over the five-year period from 2020 through 2024, with expenditures largely recoverable under the PISA and the RESRAM. As a part of its Smart Energy Plan, Ameren Missouri expects to build solar generation facilities, including utility scale facilities and nonresidential customer site facilities. In September 2019, Ameren Missouri filed for certificates of convenience and necessity tvith the MoPSC to build three solar facilities in its service territory. Each 10-megawatt solar energy generation facility will connect to battery storage in order to improve system reliability. All three facilities are expected to be completed by 2022. Also in 2019, the MoPSC approved Ameren Missouris Charge Ahead program, which provides incentives for the development ofover 1,000 electric vehicle charging stations along highways and at various locations in communities throughout Ameren Missouris service territory. The purpose ofthe program is to promote the development ofelectric vehicle charging infrastructure that will enable long-distance electric vehicle travel and encourage electrification ofthe transportation sector.
In February 2020, the MoPSC issued an order approving a stipulation and agreement allowing Ameren Missouri to defer and amortize maintenance expenses related to scheduled refueling and maintenance outages at its Callaway Energy Center. Beginning with the fall 2020 refueling and maintenance otitage, Ameren Missouri will defer the maintenance expenses incurred related to a refueling and maintenance outage as a regulatory asset and amortize those expenses after completion ofthe outage. Maintenance expenses will be amortized over the period bettveen refueling and maintenance outages, which is approximatel y 1 8 months.
Deferring and amortizing refueling maintenance 34
Table of Contents expenses allows the timing of expense recognition to more closely align with revenues and mitigates future earnings volatility between outage and non-outage years.
In December 2019, the ICC isstied an order that approved a $7 million decrease in Ameren Illinois electric distribution service rates beginning in January 2020. In November 2019, the ICC issued an order that approved Ameren Illinois 2020 electric customer energy-effici ency rates of $44 million, which represents an increase of$1O million from 2019 rates.
In February 2020, Ameren Illinois filed a request with the ICC seeking approval to increase its annual revenues for natural gas delivery service by $102 million, which included an estimated $46 million ofannual revenues that would otherwise be recovered under the QIP and other riders. The request is based on a 10.5% allowed ROE, a capital structure composed of54.1% common equity, and a rate base of$2.l billion. See Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report for more information regarding Ameren Illinois natural gas delivery service regulatory rate review.
In November 2019, the FERC issued an order addressing two customer complaint cases filed in November 2013 and February 2015, respectively. The complaint cases were seeking a reduction in the allowed base ROE for FERC-regulated transmission rate base under the MISO tariffof 12.38%. The order set the allowed base ROE at 9.88% and iequired refunds, with interest, for the periods November 2013 to February 2015 and from late September 2016 forward. In December 2019, Ameren and the MISO transmission owners, including Ameren Missouri, Ameren Illinois, and ATXI, as well numerous as other parties, filed requests for rehearing with the FERC. The FERC has not ruled on the merits ofthe rehearing requests and is under no deadline to do so. As ofDecember 3 1, 2019, Ameren and Ameren Illinois had recorded current liabilities of $40 million and $23 million, respectively, to reflect the expected refunds, including interest. See Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report for more information regarding the FERC complaint cases.
ATXI continues to make progress with construction activities for its MISO-approved multi-valtie projects. The Mark hvain project, located in northern Missouri, was completed and placed in service in December 2019. Construction ofthe Illinois Rivers project is substantially complete and eight ofits nine line segments have been completed and placed in service, with the last section expected to be completed in 2t)20.
In october 2019, Amerens board ofdirectors increased the quarterly common stock dividend to 49.5 cents per share, resulting in an annualized equivalent dividend rate of$1.98 per share.
Earnings Net income attributable to Ameren common shareholders was $828 million, or $3.35 per diluted share, for 2019, and $815 million, or $3.32 per diluted share, for 2018. Net income was favorably affected in 2019, compared with 201 8, by increased investments in infrastructure at the Arneren Transmission and Ameren Illinois Electric Distribution segments, each ofwhich benefits from formulaic ratemaking, and by the recognition ofMEEIA performance incentives. Earnings were also favorably affected in 2019, compared with 20 18, by charitable donations returning to more normal levels and lower income tax expense, primarily because ofthe absence ofa noncash charge to earnings for the revaluation ofdeferred taxes recorded in 2018 related to the TCJA and increased tax benefits related to stock-based compensation. Net income was unfavorably affected in 2019, compared with 20 1 8, by milder summer temperatures and higher property taxes, both at Ameren Missouri, and by higher depreciation and amortization expenses at Ameren Illinois Natural Gas and Ameren Missouri. Earnings were also unfavorably affected in 2019, compared with 2018, by a lower recognized ROE at Ameren Illinois Electric Distribution.
Liqztidity At December 3 1, 20 19, Ameren, on a consolidated basis, had available liquidity in the form of cash on hand and amounts available under the Credit Agreements of$l.9 billion. In December 2019, the Credit Agreements were extended and now mature in December 2024.
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Table of Contents Capital Expenditures Ameren remains focused on strategic capital allocation. We believe we have constructive regulatory frameworks for investment at all ofour utility businesses and invested $2.4 billion in those businesses in 2019. The following chart presents 2019 capital expenditures by segment and the midpoint ofprojected cumulative capital expenditures for 202t) through 2024 by segment:
2019 Capital Expenditures by Segment 2020 2024 Projected Capital Expenditures by Segment (in billions) (in billions)
- Ameren Missouri *Ameren Illinois Natural Gas I Arneren Illinois Electric Distribution lArneren Transmission For 2020 through 2024, Amerens cumulative capital expenditures are projected to range from $15.4 billion to
$16.6 billion. The following table presents the range ofprojected spending by segment:
Range (in billions)
Anieren Missouri
$ 78 $ 24 Arneren Illinois Electric Distribution 28 3 0 Arneren Illinois Natural Gas 1 7 1 8 Arneren Transmission 3 1 3 4 Anseren
$ 15 4 $ 6 RESULTS OF OPERATIONS Otir results of operations and financial position are affected by many factors. Economic conditions, energy-efficiency investments by our customers and by us, technological advances, distributed generation, and the actions ofkey customers can significantly affect the demand for our services. Ameren and Ameren Missouri results are also affected by seasonal fluctuations in winter heating and summer cooling demands, as well as by nuclear refueling and other energy center maintenance outages. Additionally, fluctuations in interest rates and conditions in the capital and credit markets affect our cost ofbonowing, and our pension and postretirement benefits costs. Almost all ofAmerens revenues are subject to state or federal regulation. This regulation has a material impact on the rates we charge customers for our services. Customer rates are determined under various regulatory mechanisms. See Note 2 Rate and Regulatory Matters for additional information regarding Ameren Missouris, Ameren Illinois, and ATXIs regulatory mechanisms. Our results ofoperations, financial position, and liquidity are affected by our ability to align our overall spending, both operating and capital, within the frameworks established by our regulators.
Ameren Missouri principally uses coal and enriched uranium for fuel in its electric operations and purchases natural gas for its customers. Ameren Illinois purchases power and natural gas for its customers. The prices for these commodities can fluctuate significantly because ofthe global economic and political environment, weather, supply, demand, and many other factors. We have natural gas cost 36
Table of Contents recovery mechanisms for our Illinois and Missouri natural gas distribution businesses, a purchased power cost recovery mechanism for Ameren Illinois electric distribution business, and a FAC for Ameren Missouris electric business.
We employ various risk management strategies to reduce our exposure to commodity risk and other risks inherent in our business. The reliability of Ameren Missouris energy centers and our transmission and distribution systems and the level and timing ofoperations and maintenance costs and capital investment are key factors that we seek to manage in order to optimize our results of operations, financial position, and liquidity.
Earnings Summary The following table presents a summary ofAmerens earnings for the years ended December 31, 2019 and 2018:
2019 2018 Net income attributable to Ameren common shareholders
$ 828 $ $15 Earnings per common ihare diluted 335 3.32 Net income attributable to Ameren common shareholders in 2019 increased $13 million, or $0.03 per diluted share, from 2018. The increase was due to net income increases of$21 million, $14 million, and $10 million, at Ameren Transmission, Amcren Illinois Natural Gas, and Ameren Illinois Electric Distribution, respectively. Additionally, the net loss for activity not reported as part of a segment, primarily at Ameren (parent), decreased $20 million.
The increases in net income were largely offset by a decrease in net income of $52 million at Ameren Missouri.
Earnings per share in 2019, compared with 2018, were favorably affected by:
. increased Ameren Transmission and Ameren Illinois Electric Distribution earnings under formula ratemaking, primarily as a result of additional rate base investment and Ameren Illinois Electric Distribution energy-efficiency investments (14 cents per share),
. decreased other operation and maintenance expenses not subject to riders or regulatory trackmg mechanisms, excluding the Callaway Energy Centers scheduled refueling and maintenance outage costs, primarily because of changes in the cash surrender value of company-owned life insurance (I 0 cents per share);
. increased other income, net, primarily because charitable donations returned to more normal levels at Ameren Missouri and Ameren (parent),
and increased non-service cost components ofnet periodic benefit income (9 cents per share);
. the recognition ofMEEIA 2013 and MEEIA 2016 performance incentives (8 cents per share);
. the absence ofa noncash charge to earnings for the revaluation ofdeferred taxes recorded in 2018 related to the TCJA (5 cents per share);
. a decrease in the effective income tax rate at Ameren (parent), primarily because of an increase in the income tax benefit related to stock-based compensation (5 cents per share);
. an increase in base rates at Ameren Illinois Natural Gas pursuant to the ICCs November 2018 natural gas rate order (2 cents per share);
. decreased net financing costs at Ameren Missouri, primarily as a result of the regulatory deferral of interest expense pursuant to the PISA and lower interest rates, partially offset by lower levels of the allowance for funds used during construction (2 cents per share);
. increased Ameren Transmission earnings resulting from the net impact of the November 2019 FERC order addressing the allowed base ROE for FERC regulated transmission rate base under the MISO tariff (2 cents per share); and
. increased Ameren Illinois Natural Gas earnings under the QIP rider resulting from investments in qualifying infrastructure (1 cent per share).
Earnings per share in 2019, compared with 2018, were unfavorably affected by:
decreased electric retail sales at Ameren Missouri, primarily because ofmilder summer temperatures experienced in 2019 (estimated at 26 cents per share);
. increased other operation and maintenance expenses related to the Callaway Energy Centers scheduled reftieling and maintenance outage that was completed in May 2019, as compared with no refueling and maintenance outage in 2018 (9 cents per share);
. increased taxes other than income taxes at Ameren Missouri due to higher property taxes (5 cents per share);
increased depreciation and amortization expenses not subject to riders or regulatory tracking mechanisms at Ameren Illinois Natural Gas and Ameren Missouri, primarily because of additional property, plant, and equipment (5 cents per share);
decreased Ameren Illinois Electric Distribution earnings under formula ratemaking because of a lower recognized ROE (4 cents per share);
increased transmission services charges at Ameren Missouri (3 cents per share); and increased weighted-average basic common shares outstanding (3 cents per share).
37
Table of Contents The cents per share information presented is based on the weighted-average basic shares outstanding in 2018 and does not reflect any change in earnings per share resulting from dilution, unless otherwise noted. Amounts other than variances related to income taxes have been presented net of income taxes using Amerens 201 8 statutory tax rate of 27%. For additional details regardmg the Ameren Companies results of operations. including explanations ofElectric and Natural Gas Margins, Other Operations and Maintenance Expenses, Depreciation and Amortization, Taxes Other Than Income Taxes, Other Income, Net, Interest Charges, and Income Taxes, see the major headings below.
Below is Amerens table ofincome statement components by segment for the years ended December 31, 2019 and 2018:
Ameren Illinois Ameren Other I Ameren Electric Illinois Ameren Intersegment 2019 Missouri Distribution Natural Gas Transmission Eliminations Ameren Electric margins 2,381 1,074 $ $ 464 $ (29) S 3,890 Natural gas margins 81 519 (2) 598 Other operations and maintenance expenses (960) (498) (233) (60) 6 (1,745)
I)epreciation and amortization (556) (273) (78) (84) (4) (995) faxes other than income taxes (329) (73) (67) (4) (8) (481)
Other income, net 33 12 8 19 130 Interest charges (178) (71) (38) (74) (20) (381)
Income (taxes) benefit (68) (45) (30) (64) 25 (182)
Net income (loss) 429 147 85 186 (13) 834 Noncontrolling interests preferred stock dividends (3) (1) (1)
(1) (6)
Net income (loss) attributable to Ameren common shareholders $ 426 $ 146 $ 84 $ 185 $ (13) $ 828 2018 Electric margins 2,518 s 1,065 $ $ 433 S (27) $ 3,989 Natural gas inargms 82 497 (1) 578 Other operations and maintenaisce expenses (972) (506) (241) (63) 10 (1,772)
I)epreciation and amortization (550) (259) (65) (77) (4) (955)
Taxes other than income taxes (329) (75) (66) (4) (9) (483)
Other income, net 56 26 9 7 4 102 Interestcharges (200) (73) (38) (75) (15) (401)
Income (taxes) benefit (124) (41) (25) (56) 9 (237)
Net income (loss) 481 137 71 165 (33) 821 Noncontrolliisg interests preferred stock dividends (3 ) (1 ) (1) (I)
(6)
Net income (loss) attributable to Ameren common shareholders S 478 $ 136 $ 70 $ 164 $ (33) $ 815 3$
Table of Contents Below is Ameren Illinois table ofincome statement components by segment for the years ended I)ecernber 31, 2019 and 201$:
Ameren Illinois Ameren Illinois Ameren Illinois 2019 Electric Distribution Natural Gas Transmission Ameren Illinois Electric margins 1,074 s s 288 $ 1,362 Nahiral gas margins 519 519 Other operations and maintenance expenses (498) (233) (51) (782)
I)epreciation and amortization (273) (78) (55) (406)
Taxes other than income taxes (73) (67) (3) (143)
Other income, net 33 12 53 Interest charges (71) (38) (38) (147)
Income taxes (45) (30) (35) (110)
Netmcome 147 85 114 346 Preferred stock dividends (1) (1) (1) (3)
Net inconie attributable to common shareholder 146 $ 84 $ 113 $ 343 2018 Electric margins 1,065 s s 267 $ 1,332 Natural gas margins 497 497 Other operations and maintenance expenses (506) (241) (52) (799)
Depreciation and amortization (259) (65) (50) (374)
Taxes other than income taxes (7) (66) (3) (141)
Other income, net 26 9 7 42 Interestcharges (73) (38) (3$) (149)
IncoIne taxes (41) (25) (32) (98)
Netincome 137 71 99 307 Preferred stock dividends (1) (1) (1) (3)
Net income attributable to commnn shareholder 136 $ 70 $ 9$ $ 304 Margins We consider electric and natural gas margins useful measures to analyze the change in profitability ofour electric and natural gas operations between periods.
We have included the analysis below as a complement to the financial information we provide in accordance with GAAP.
However, these margins may not be a presentation defined under GAAP, and they may not be consparable to other companies presentations or more useful than the GAAP infonnation we provide elsewhere in this report.
39
Table of Contents Electric Margins Increase (Decrease) by Segment Total by Segment (Overall Ameren Decrease of $99 Million)
$450 7 $40 $31 I
$4000 S3500 520
$9 ,
S3,S0 $0
$3000
$20iQ 0
$2O) 5(40)
I Si0) stSOo st000 S10)
I.
=*: :
$(1O0 soo S0 _j .---
2015 2015 neiO Ti.inrr Ghantngr-n1 2hr9ntons
$(120)
$(140) p
$(13?}
(a) Includes other/intersegment eliminations of$(29) million and $(27) million in 2019 and 2018, respectively.
Natural Gas Margins Increase (Decrease) by Segment Total by Segment (Overall Ameren Increase of $20 Million)
$30
$500
$25
$22
$20
$400 I0 $15
$00
$10
$200
$100
$0 Zrosren rnsin
) 530w
\siIii G;o isis C:i ritrssrisn1 55 so 1 $(i) $(1) 2019* 2015 3(5)
(a) Includes other/intersegment eliminations of $(2) million and $( 1 ) million in 20 1 9 and 20 1 8, respectively.
40
Table of Contents The following table presents the favorable (unfavorable) variations by segment for electric and natural gas margins 2019, in compared with 2018:
Electric and Natural Gas Margins Ameren Illinois Ameren Other I Ameren Electric Illinois Ameren Intersegment 2019 versus 2018 Missouri Distribution Natural Gas Transmission Eliminations Ameren Electric revenue change:
Effect ofweather (estiinate) $ (1 18) $ $ $ $ (1 18)
Base rates, including the effects ofTCJA (estimateY (39) 5 31 (3)
Power restoration efforts provided to other utilities (1 1) (9)
(20)
Changes in ctistonser usage patterns and sales volumes (excluding the estinsated effects ofweather and MEEIA) 5 5
Off-system sales and capacity revenues (140)
(140)
MEEIA 2013 and MEEIA 2016 performance incentives 26 26 Energy-efficiency program investments 12 12 Other (4) (4)
Cost recovery mechanisms offset in fuel and purchased power (49) (53) (102)
Other cost recovery rnecharnsms (16) 2 (14)
Total electric revenue change $ (342) $ (43) $ $ 31 S (4) $ (358)
Fuel and ptirchased power change:
Energy costs (excluding the estimated effect ofweather) $ 146 S $ $ $ $ 146 Ftfict ofwL ither (estirnte)n 21 A-i:% 1 Transmission services charges (9)
(9)
Other (2) (1) 2 (1)
Cost recovery mechanisms offset in electric revenu& 49 53 102 Total fuel and purchased power change $ 205 $ 52 $ $ $ 2 $ 259 Net change in electric margins $ (137) $ 9 $ $ 31 S (2) $ (99)
Natural gas revenue change:
Effect ofweather (estimate) $ (4) $ $ $ $ $ (4)
Base rates (estimate) (fl 8 7
QlPrider 7 7
Software licensing agreement 5 5
Other 1 2 (1) 2 Cost recovery Inechanisms offset in natural gas purchased for resale I (40)
(39)
Other cost recovery mechamsms (1 )
(1) fotal natural gas revenue change $ (4) $ (1)
$ $ $ (1) $ (23)
Natural gas purchased for resale change:
Effect ofweather (estimate)t $ 4 $ $ $ $ $ 4 Cost recovery meclsanisms offset in natural gas revenue5 (1) 40 39 Total natural gas purchased for resale change $ 3 $ $ 40
$ $ $ 43 Net change in natural gas niargins $ (1) $ $ 22 $
S (1) $ 20 (a) Includes au increase in transmission margms of$21 million in 2019, compared with 2018, at Aineren Illinois.
(b) Represents the estimated variation resulting primarily from changes in cooling and heating degree days on electric and nattiral gas demand compared with the prior year; this variation is based on temperature readings from the National Oceanic and Atmospheric Administration weather stations at local airports in our service territories.
(c) For Ameren Illinois Electric Distribution and Ameren Transmission, base rates include increases or decreases to operating revenues related to the reventie requirement reconciliation adjustment under formula rates.
(d) Electric and natural gas revenue changes are offset by corresponding changes in Fuel, Purchased power, and Natural gas purchased for resale on the statement of income, resulting in no change to electric and natural gas margins (e) Offsetting expense increases or decreases are reflected in Other operations and maintenance, Depreciation and amortization
, or in Taxes other than income taxes, within the Operating Expenses section of the statement of income. These items have no overall impact on earnings.
Ameren Amerens electric margins decreased $99 million, or 2%, in 2019, compared with 2018, primarily because ofdecreased margins at Ameren Missouri, partially offset by increased margins at Ameren Transmission and Arneren Illinois Electric Distribution, as discussed below. Amerens natural gas margins increased $20 million, or 3%, between years primarily because of increased margins at Ameren Illinois Natural Gas, as discussed below.
41
Table of Contents Ameren Transmission Ameren Transmission s margins increased $3 1 million, or 7%, in 20 19, compared with 201 8. Margins were favorably affected by increased capital investment, as evidenced by a 12% increase in rate base used to calculate the revenue requirement between years.
Ameren Missouri Ameren Missouris electric margins decreased $137 irnllion, or 5%, in 2019, compared with 2018. Ameren Missouris natural gas margins were comparable between years.
The following items had an unfavorable effect on Ameren Missouris electric margins in 20 19, compared with 2018:
. Stimmer temperatures were milder as cooling degree days decreased 13%, and winter temperattires were warmer heating as degree days decreased 4%. The aggregate effect ofweather decreased margins by an estimated $97 million. The change in margins due to weather is the sum ofthe effect of weather (estimate) on electric revenues (-$1 I 8 million) and the effect ofweather (estimate) on fuel and purchased power (+$2 1 million) in the table above.
. The reduction of customer rates in accordance with the TCJA provisions m Missouri law, which decreased revenues an estimated $39 million.
. Revenues from other cost recovery mechanisms due primarily to gross receipts taxes, which decreased margins
$16 million. See Taxes Other Than Income Taxes in this section for the related offetting decrease in gross receipts tax.
. A reduction in power restoration assistance provided to other utilities and the associated recovery of labor and benefit costs for crews supporting those efforts, which decreased revenues $1 1 million.
. Increased transmission services charges resultmg from cost-sharing by all MISO participants of additional MISO-appro ved electric transmission mvestiuents made by other entities, which decreased margins $9 million.
The following items had a favorable effect on Ameren Missouris electric margins in 2019, compared with 2018:
. The MEEIA 2013 and 2016 performance incentives, which increased revenues $26 million. See Note 2 Rate and Regulatory Matters under Part II, Item 8, of this report for information regarding the MEEIA 2013 and MEEIA 2016 performance incentives.
. Net energy costs increased margins $6 million as a result oflower energy costs (+$146 million), largely offset by a reduction in off-system sales revenue
(-$ 140 million). The decrease in energy costs is the result of lower fuel costs and decreased generation volumes, while the reduction in off-system sales revenue is primarily due to generation facility outages.
. Excluding the estimated effects ofweather and MEEIA customer energy-efficiency programs, electric revenues increased an estimated $5 million, primarily due to an increase in the average retail price per kilowatthour due to changes in customer usage patterns. While the MEEIA customer energy-efficiency programs reduced retail sales volumes, the recovery oflost electric margins ensured that electric margins were not affected.
Ameren filinois Ameren Illinois electric margins increased $30 million, or 2%, in 2019, compared with 2018, driven by increased margins at Ameren Illinois Transmission
( +$2l million) and Ameren Illinois Electric Distribution (+$9 million). Ameren Illinois Natural (las iiargins increased $22 million, or 4%, between years.
Ameren Illinois Electric Distribution Ameren Illinois Electric Distributions margins increased $9 million, or l0/, in 2019, compared with 2018. The following items had a favorable effect on Ameren Illinois Electric Distributions margins between years:
. Revenues increased $12 million due to return on increased energy-efficiency program investments (+$2 million) and recovery of associated expenses (+$ 10 i;illion) under formula ratemaking.
. Increased margins due to higher rate base (+$10 million) and higher recoverable expenses (+$5 million), partially offset by lower recognized ROE (-$10 million) due to a 53 basis point decrease in the annual average ofthe monthly 30-year United States Treasury bond yields under formula ratemaking. The sum ofthese changes collectively increased margins $5 million.
Ameren Illinois Electric Distributions margins were unfavorably affected by a reduction in power restoration assistance provided to other utilities and the associated recovery oflabor and benefit costs for crews supporting those efforts, which decreased revenues $9 million 2019, in compared with 2018.
42
Table of Contents Aineren Illinois Natztiat Gas Ameren Illinois Natural Gas margins increased $22 million, or 4%, in 2t)19, compared with 2018. The following items had a favorable effect on Ameren Illinois Natural Gas margins:
. higher natural gas base rates as a result ofthe November 201 8 natural gas rate order, which increased revenues
$8 million.
. Revenues from QIP recoveries due to additional investment in qualified natural gas infrastructure, which increased margins $7 million.
. A software licensing agreement with Ameren Missouri, which increased revenues $5 million. See Note 13 Related-party Transactions under Software Licensing Agreement for infonnation regarding this transaction.
Arneren Illinois Transmission Ameren Illmois Transmission s margms increased $2 1 million, or 8%, in 20 19, compared with 201 8. Margins were favorably affected by increased capital investment, as evidenced by a 1 7% increase in rate base used to calculate the revenue requirement hctveen years.
Other Operations and Maintenance Expenses Increase (Decrease) by Segment Total by Segment (overall Ameren I)ecrease of$27 Million)
$2,000 55
$4
$1500 o.
$1 ,000 I, Sf5)
LlJ 5500
- .,9Br I .
F .riri Ct.- it (:r $l:to) iirne i NIir NNnI Gs so ii Cih&t.ini 2015 2015 E:
(a) Incitides other/interseginent eliminailons of $(6) million and $( 1 0) million in 20 1 9 and 20 1 8, respeciively.
Ameren Other operations and maintenance expenses were $27 million lower in 20 19, compared with 201 8. In addition to changes by segment discussed below, other operations and maintenance expenses increased $4 million in 2019 for activity not reported as part of a segment, as reflected in Other/Intersegment Eliminations above, primarily because ofincreased costs for support services.
Ameren Transmission The $3 million decrease in other operations and maintenance expenses in 20 19, compared with 20 1 8, was primarily due to an increase in the cash surrender value of company-owned life insurance due to favorable market conditions.
Ameren Missouri The $12 million decrease in other operations and maintenance expenses in 2019, compared with 2018, was primarily due to the following items:
The cash surrender value of company-owned life insurance increased $ 19 million, primarily because of favorable market conditions.
43
Table of Contents
. Nonnuclear energy center operations and maintenance costs decreased $1 5 million, primarily because ofhigher-than-normal scheduled outages and increased routine marntenance work in 2018.
. Power restoration assistance provided to other utilities decreased $ I 1 million.
The following items partially offset the decrease in other operations and maintenance expenses between years:
. Callaway Energy Center operations and maintenance costs increased $28 million, primarily because of the refueling and maintenance outage that was completed in May 2019. The previous Callaway Energy Center refueling and maintenance outage took place in the fourth quarter of 2017.
. Employee benefit costs increased $3 irnihon because ofhigher medical costs.
Arneren Illinois Other operations and maintenance expenses were $17 inilhon lower at Ameren Illinois in 2019 compared with 2018, as discussed below. Other operations and maintenance expenses were comparable at Ameren Illinois Transmission between 2019 and 2018.
Arneren Illinois Electric I)istribzttion The $8 million decrease in other operations and maintenance expenses in 2019, compared with 2018, was primarily due to the following items:
. Power restoration assistance provided to other utilities decreased $9 million.
. The cash surrender value of company-owned life insurance increased $8 million, primarily because of favorable market conditions.
. Bad debt costs, which are recoverable through a rider, decreased $6 million, primarily because of improved collections experience.
. Meter reading costs decreased $4 million, primarily because of increased automated meter deployment.
The following items partially offset the decrease in other operations and maintenance expense between years:
. Amortization of regulatory assets associated with energy-efficiency program investments increased $8 million.
. Environmental remediation costs, which are recoverable through a rider, increased $6 million, primarily because of increased remediation efforts.
Ameren Illinois Natural Gas The $8 million decrease in other operations and maintenance expenses in 2019, compared with 201 8, was primarily due to an increase in the cash surrender value of company-owned life insurance, primarily due to favorable market conditions, and decreased meter reading costs, primarily due to increased automated meter deployment.
44
Table of Contents Depreciation and Amortization Increase (Decrease) by Segment Total by Segment ( Overall Ameren Increase of $40 Million)
$995 $15
$1,000
$900
$000
$700
$10
$600 0 Si
- $500 0
$400 ieirI ,/ t.SULS
$300 55 Aner:r I
$200 FI: C
. %nsrsr I
$100 im trw IT or so IF Listt1stosrtit Eliniriatono so (a) Includes other/mtersegrnent eliminations of $4 million and $4 million in 2019 and 2t)l8, respectively.
The $40 million, $6 million, and $32 million increase in depreciation and amortization expenses in 2019, compared with 2018, at Ameren, Ameren Missouri, and Ameren Illinois, respectively, was primarily due to additional property, plant, and equipment across their respective segments. Ameren Missouris depreciation and amortization expenses include a reduction for the regulatory deferral of depreciation and amortization expenses pursuant to the PISA of $22 million between years.
Taxes Other Than Income Taxes Increase (Decrease) by Segment Total by Segment (Overall Ameren Decrease of$2 Million)
$500 $41 $483 $2
$450 5400 SI S50 U,
5300 C
0 So U,
$250 0
$200 5(1)
$150 U, Aroro,i littrt
$CIJ I_ Arsron lhr:
$100 H . :tt all rsrn hires NFi:.r:, Gs S12
$50
) Areron Tanrnisior
$0 Cths;.Intossç isri 2019 2018 Eltninatc ,e
${3) -
(a) Incltides $4 million and $4 million at Ameren Transmission in 2019 and 2018, respectively, and other/intersegment eliminations of$8 million and $9 million in 2019 and 201$,
respectively.
45
Table of Contents Taxes other than income taxes were comparable between 2019 and 2018. Ameren Missouris property taxes increased $17 million, primarily because of higher assessed values, which was offset by a $17 million decrease in excise taxes as a result ofreduced sales, primarily driven by mild summer temperatures
. See Excise Taxes in Note 15 Supplemental Information under Part II, Item 8, ofthis report for additional information.
Other Income, Net Increase (Decrease) by Segment Total by Segment (Overall Ameren Increase of $28 Million)
$130
$15
$15
$t20
$102
$10 4I
$60
$40 ..
An itri II A1T3ten ll $5 k::
$20 .
n-eni Ir Gi5 I-Arrn Trn3m :icr so -
Ctier1niersgrnt Z019 201 The $28 million increase in Other Income, net in 2019, compared with 2018, was primarily due to an $11 million decrease in charitable donations at Ameren Missouri and a $10 million decrease in charitable donations at Ameren (parent), which is reflected in Other/Intersegment Eliminations above.
Charitable donations returned to more normal levels in 2019. Additionally. the non-service cost components ofnet periodic benefit income increased
$9 million, $5 million, and $4 million at Ameren Illinois Electric Distribution, for activity not reported as part ofa segment (as reflected in Other/Intersegment Eliminations above), and at Ameren Illinois Natural Gas, respectively. These increases were partially offset by an $8 million reduction in allowance for equity funds used during construction at Ameren Missouri, resulting from a lower average equity-to-debt ratio and a lower average balance of construction work in progress.
See Note 6 Other Income, Net under Part II, Item 8, ofthis report for additional information. See Note 10 Retirement Benefits under Part II, Item 8, ofthis report for more information on the non-service cost components ofnct periodic benefit income.
46
Table of Contents Interest Charges Increase (Decrease) by Segment Total by Segment (Overall Ameren Decrease of $20 Million)
$401 $10
$40O 1 S5 so A
$200
.0 S(5l z;; si
$100 I. krsen cia $(10)
,t hi ia4 ;E Arsrn Ca
- u C Arrirn Iraram saior $(20 so Dtitritrssqrrnt 2019 201J The $20 million decrease in interest charges in 20 19, compared with 201 8, was pnmanly due to a
$22 million reduction in interest charges at Ameren Missouri, which resulted from increased regulatory deferrals of interest expense pursuant to the PISA of $ 1 6 million between years and lower average interest rates on long-term debt. The decrease at Arneren Missouri was partially offset by a $5 million increase for activity not reported as part ofa segment, as reflected in Other/Intersegment Eliminations above, primarily due to a higher average interest rate on an increased level of short-term bonotvings and an increased level of long-term debt at Ameren (parent).
Income Taxes The following table presents effective income tax rates for the years ended December 31, 2019 and 2018:
2019 2018 Arneren 18% 22°o Ameren Missouri 14% 20%
Ameren Illinois 24% 24°c Arneren Illinois Electric Distribution 23% 23%
Arneren Illinois Natural Gas 26% 26° Ameren Illinois Transmission 24% 24 Ameren Transmission 25% 25%
See Note 12 Income Taxes under Part II, Item 8, ofthis report for information regarding reconciliation Missouri, and Ameren Illinois. See Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis related to the lower federal statutory corporate income tax rate enacted under the TCJA and the return s ofeffective income tax rates for Ameren, Ameren report for information regarding reductions in revenues ofexcess deferred income taxes to customers.
Ameren The effective income tax rate was lower in 2019 compared with 2018, primarily because ofhigher amortization ofexcess deferred income taxes in 2019 as discussed below, along with revaluation ofcertain deferred taxes in 2018. Additionally, the effective tax rate was lower becatise oflower tax benefits related to company-owned life insurance in 2018.
Ameren Transmission The effective tax rate was comparable between years.
47 i-. --.
Table of Contents Ameren Missoitri The effective income tax rate was lower in 2019 compared with 2018, primarily because ofa ff11 year ofamortizatio n ofexcess deferred income taxes in 2019 compared with a partial year in 2018.
Ameren Illinois The effective tax rate was comparable between years at Arneren Illinois and its respective segments.
LIQUIDITY AND CAPITAL RESOURCES Collections from our tariff-based revenues are our principal source of cash provided by operating activities. A diversified retail customer mix, primarily consisting of rate-regttlated residential, commercial, and industrial ctistomers, provides us with a reasonably predictable source of cash. In addition to using cash provided by operating activities, we use available cash, drawings under committed credit agreements, commercial paper issuances, and/or, in the case of Ameren Missouri and Ameren lilmois, short-term affiliate borrowings to support normal operations and temporary capital requirements
. We may reduce our short-term borrowings with cash provided by operations or, at our discretion, with long-term borrowings, or, in the case of Ameren Missouri and Ameren Illinois, with capital contributions from Ameren (parent). In the near term, our operating cash flows will decrease due to the reduction in the federal statutory income tax rate enacted under the TCJA. The decrease in operatmg cash flows results from redticed customer rates, reflecting the tax rate decrease, without a correspondmg reduction in incon tax payments until about 2020 because ofour use ofnet operating losses and tax credit canyfonvards, which we expect to be fully utilized in 2020.
Additionally, operating cash flows will be further reduced by lower customer rates, resulting from the return of excess deferred income taxes. Over time, the decrease in operating cash flows xill be offset as temporary differences between book and taxable income reverse, and by increased customer rates due to higher rate base amounts resulting from lower accumulated deferred income tax liabilities. We expect to make significant capital expenditures over the next five years as we invest in our electric and natural gas utility infrastructure to support overall system reliability, grid modernizatio n, renewable energy requirements, environmental compliance, and other improvements. As part of its plan to fund these cash flow requirements, Ameren is using newly issued shares of common stock, rather than market-purchased shares, to satisfy requirements under the DRP1us and employee benefit plans and expects to continue to do so through at least 2024. Ameren expects these issuances to provide equity funding ofabout $100 million annually. Ameren also plans to issue incremental common equity to fund a portion ofAmeren Missouris wind generation investments through the physical settlement ofthe forward sale agreement entered into in August 2019 relating to 7.5 million shares of common stock. Additionally, Ameren plans to issue incremental equity of about $150 million annually from 2t)21 to 2024. For additional information about the forward sale agreement, see Note 5 Long-term Debt and Equity Financings under Part II, Item 8, ofthis report. Ameren expects its equity to total capitalization to be about 45% through the period ending December 2024, with the long-tenn intent to support solid investment-grade credit ratings.
The use of cash provided by operating activities and short-term borrowings to fund capital expenditures and other long-term investments at the Ameren Compames frequently results in a working capital deficit, defined as current liabilities exceeding current assets, as was the case at December 3 1, 2019. The working capital deficit as ofDecember 31, 2019, was primarily the result ofcurrent maturities oflong-term debt and our decision to finance our businesses with lower-cost commercial paper issuances. With the credit capacity available under the Credit Agreements, along with cash and cash equivalents, the Ameren Companies had net available liquidity of$1.9 billion at December 3 1, 2019. See Credit Facility Borrowings and liquidity below for additional information.
The following table presents net cash provided by (used in) operating, investing and financing activities for the years ended December 3 1, 2019 and 2018:
Net Cash Provided by Net Cash Used in Net Cash Provided by (Used in)
Operating Activities Investing Activities financing Activities 2019 2018 Variance 2019 2018 Variance 2019 2018 Variance Arneren $ 2,170 $ 2,170 $ $
(2,435) $ (2,336) $ (99) $ 334 $ 205 $ 129 Ameren Missouri 1,067 1,260 (193) (1,095) (976) (119) 59 (283) 342 Ameren Illinois 962 659 303 (1,205) (1,248) 43 288 628 (340)
Cash Flows from Operating Activities Our cash provided by operating activities is affected by fluctuations oftrade accounts receivable, inventories, and accounts and wages payable, among other things, as well as the unique regtilatory environment for each ofour businesses. Substantially all expenditures related to fuel, purchased power, and natural gas purchased for resale are recovered from customers through rate-adjustment mechanisms, which may be adjusted withotit a traditional regulatory rate review, subject to prudence reviews. Similar regulatory mechanisms exist for certain operating expenses that can also affect the timing of cash provided by operating activities. The timing ofcash payments for costs recoverable under our regulatory mechanisms differs from the recovery period ofthose costs. Additionally, the seasonality of our electric and natural gas businesses, primarily caused by changes in customer demand due to weather, significantly affect the amount and timing of our cash provided 48 I
Table of Contents by operating activities. See Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report for more information about our regulatory mechanisms.
Arneren Amerens cash from operating activities was flat in 20 19, compared with 20 1 8 The following items increased cash from operating activities between periods:
. A $36 million decrease in pension and postretirement benefit plan contributions.
. A net $15 million increase in collateral received from counterparties, prunarily resulting from changes in the market prices ofpower and nattiral gas, changes in contracted commodity volumes, and increases resulting from Ameren Illinois renewable energy contracts entered into pursuant to the FEJA.
. A $ 14 million decrease in payments to contractors for electric distribution maintenance costs, primarily due to decreased vegetation management costs at Ameren Illinois.
. A $13 million decrease in payments related to charitable donations.
. An $1 1 million decrease in property tax payments at Ameren Missouri due to lower property tax values.
The following items decreased Amerens cash from operating activities between periods:
. A $33 million decrease resulting from decreased customer collections, primarily due to a decrease m weather-related sales volumes at Ameren Missouri, and a net decrease attributable to regulatory recovery mechanisms, partially offset by decreased fuel costs and generation volumes at Ameren Missouri and decreased purchase power costs and volumes and nattiral gas costs at Ameren Illinois.
. A $28 million increase in payments for nuclear refueling and mamtenance outages at Ameren Missouris Callaway Energy Center. There was no refueling and maintenance outage in 2018.
. A $14 million decrease resulting from increased Ameren Missouri purchases to mamtam coal inventory at near targeted levels.
Ameren Missouri Ameren Missouris cash from operating activities decreased $193 million in 2019, compared with 2018. The following items contribitted to the decrease:
. A $236 million decrease resulting from decreased customer collections, primarily due to a decrease in weather-related sales volumes, and a net decrease attributable to regulatory recovery mechanisms, partially offset by decreased fuel costs and generation volumes.
. A $28 million increase in payments for nuclear refueling and maintenance outages at the Callaway Energy Center. There was no refueling and maintenance otitage in 2018.
. A $ 14 million decrease resulting from increased purchases to maintain coal inventory at near targeted levels.
The following items partially offset the decrease in Ameren Missouris cash from operating activities between periods:
. A $27 million decrease in income tax payments to Ameren (parent) pursuant to the tax allocation agreement, primarily due to lower taxable income in 2019.
. A $15 million decrease in pension and postretirement benefit plan contributions.
. A net $1 1 million increase in collateral received from counterparties, primarily resulting from changes in the market prices ofpower and natural gas and in contracted commodity volumes.
. An $1 1 million decrease in property tax payments due to lower property tax values.
Anzeren Illinois Ameren Illinois cash from operating activities increased $303 million in 2019, compared with 2018. The following items contributed to the increase:
. A $200 million increase primarily resulting from decreased purchased power costs and volumes, decreased natural gas costs, and a net increase attributable to regulatory recovery mechanisms.
. A $24 million decrease in income tax payments to Ameren (parent) pursuant to the tax allocation agreement, pnmanly due to the timing of payments.
. A $ 16 million decrease in pension and postretirement benefit plan contributions.
. A $14 million decrease in payments to contractors for electric distribution maintenance costs, primarily due to decreased vegetation management costs.
49
Table of Contents
. A net $4 million increase in collateral received from counterparties, primarily restiltmg from changes in the market prices of power and natural gas, changes in contracted commodity volumes, and increases resulting from renewable energy contracts entered into pursuant to the FEJA.
Pension Plans Amerens pension plans are funded in compliance with income tax regulations, federal funding requirements, and other regulatory requirements
. As a result, Ameren expects to fund its pension plans at a level equal to the greater ofthe pension cost or the legally reqtiired minimum contribution.
Based on Amerens assumptions at December 3 1, 2019, its investment performance in 20 19, and its pension funding policy, Ameren expects to make annual contributions ofup to $45 million in each ofthe next five years, with aggregate estimated contributions of$70 million. We estimate that Ameren Missouris and Ameren Illinois portions of the future funding requirements will be approximately 30% and 60%, respectively. These estimates may change based on actual investment performance, changes in interest rates, changes in our assumptions, changes in government regulations, and any voluntary contributions. In 2019, Ameren contributed
$23 million to its pension plans. See Note 10 Retirement Benefits under Part II, Item 8, ofthis report for additional infoniiation.
Cash Flows from Investing Activities Amerens cash used in investing activities increased $99 million durmg 2019, compared with 2018, primarily as a result ofincreased capital expenditures of
$125 million, partially offset by a $21 million decrease due to the timing ofnuclear fuel expenditures. In addition to the capital expenditure changes at Ameren Missouri and Ameren Illinois disctissed below, ATXIs capital expenditures increased $38 million. ATXIs capital expenditures increased as a result of increased expenditures on the Mark Twain project offset by decreased capital expenditures on the Spoon River project. The Mark Twain project was placed in service in I)ecember 2019, while the Spoon River project was placed in service in February 2018.
Ameren Missouris cash used m investing activities increased $1 19 million during 2019, compared with 2018, primarily as a result ofincreased capital expenditures of$162 million, partially offiiet by a $21 million decrease due to the timing ofnuclear fuel expenditures. Ameren Missouris
$162 million increase in capital expenditures between periods was primarily related to energy delivery infrastructure upgrades and substation upgrades.
Ameren Illinois cash used in investing activities decreased $43 million during 2019, compared with 2018, due to decreased capital expenditures of $50 million, primarily related to electric transmission system reliability projects.
50
Table of Contents Capital Expeizditttres The following charts present our capital expenditures for the years ended I)ecember 31, 2019, and 2018:
2019 Total Ameren $2,411
- 201$ Total Ameren $2,2$6 Ameren Missouri Ameren Illinois Transmission I Ameren Illinois Electric Distribution Ameren Transmission Company of Illinois r .
Arneren Illinois Natural Gas
() Includes Other capital expenditures of $(29) million and $(4) million for the years ended December 3 1 20 1 9 and 20 1 8, respectively, which includes amoonts for the elimination of intercompany transfera Amerens 2019 capital expenditures consisted of expenditures made by its subsidiaries, including ATXI, which spent $156 million primarily on the Mark Twain and Illinois Rivers projects. In 2019, Ameren Illinois spent $372 million on transmission projects, $203 million on natural gas projects eligible for QIP recovery, and $67 million on IEIMA projects. In both years, other capital expenditures were made principally to maintain, upgrade, and improve the reliability of the transmission and distribution systems ofAmeren Missouri and Ameren Illinois by investing in substation upgrades, energy center projects, and smart-grid technology. Additionally, the Arneren Companies invested in various software projects. As ofDecember 31, 2t)19, Ameren Illinois exceeded the minimum capital spending levels required pursuant to IEIMA.
Amerens 2018 capital expenditures consisted of expenditures made by its subsidiaries, including ATXI, which spent $1 18 million primarily on the Illinois Rivers and Mark Twain projects. In 2018, Aiueren Illinois spent $444 million on transmission projects, $188 million on natural gas projects eligible for QIP recovery, and $89 million on IEIMA projects.
The following table presents Amerens estimate of capital expenditures that will be incurred from 2020 through 2024, including construction expenditures.
allowance for funds used during construction, and expenditures for compliance with existing environmental regulations:
2020 2021-2024 Total Ameren Missouri $ 2,440 $ 5,380 $ 5,945 $ 7,820 $ 2,385 Ameren Illinois Electric Distribution 550 2,245 2,480 2,795 3,030 Ameren Illinois Natural Gas 345 1,310 1,450 1,655 1,795 Ameren Illinois Transmission 605 2,310 2,555 2,915 3,160 ATXI 25 110 120 195 205 Other 5 10 10 15 15 Ameren $ 4,030 $ 11,365 $ 12,560 $ 15,395 $ 16,590 Ameren Missouris estimated capital expenditures include transmission, distribution, grid modernization, and generation-related investments, as well as expenditures fbr compliance with environmental regulations. In addition. Ameren Missouris estimated capital 51
Table of Contents expenditures include approximately $ 1 .2 billion in wind generation investments expected to be acquired by the end of 2020. Ameren Illinois estimated capital expenditures are primarily for electric and natural gas transmission and distribution-related investments, capital expenditures to modernize its distribution system pursuant to the IEIMA, and capital expenditures for qualified investments in natural gas inftastrticture under the QIP rider. ATXIs estimated capital expenditures include expenditures for the Illinois Rivers MISO-approved mttlti-value transmission project, and construction of a transmission operating center.
Ameren Missouri continually reviews its generation portfolio and expected power needs. As a result, Ameren Missouri could modify its plan for generation capacity, the type ofgeneration asset technology that will be employed, and whether capacity or power may be purchased, among other changes. Additionally, we continually review the reliability ofour transmission and distribution systems, expected capacity needs, and opportunities for transmission investments within and outside our service territories. The timing and amount ofrnvestments could vary because ofchanges in expected capacity, the condition oftransmission and distribution systems, and our ability and willingness to pursue transmission investments, among other factors. Any changes in future generation, transmission, or distribution needs could result in significant changes in capital expenditures or losses, which could be material.
Compliance with environmental regulations could also have significant impacts on the level of capital expenditures.
Environmental Capital Expenditures Ameren Missouri will continue to incur costs to comply with federal and state regulations, including those requiring the reduction of SO2, NON, and mercury emissions from its coal-fired energy centers. See Note 14 Comirntments and Contingencies under Part II, Item 8, ofthis report for a discussion ofexisting and proposed environmental laws that affect, or may affect, our facilities aiid capital expenditures to comply with such laws.
Cash flows from Financing Activities Cash provided by, or used in, financmg activities is a result of our financmg needs, which depend on the level of cash provided by operating activities, the level ofcash used in investing activities, the level ofdividends, and our long-term debt maturities, among other things.
In 2O9, Ameren issued $1 527 million oflong-term debt to repay then-outstanding commercial paper borrowings, including short-term debt incurred in connection with the repayment at maturity oflong-term debt, and to repay at maturity other long-ten;; debt. Collectively, in 2019, An;eren repaid long-term debt of
$580 million and net commercial paper borrowings totaling $157 million. In comparison, in 201$, Ameren utilized net proceeds fron; the issuance of $1,352 n;ilhon oflong-tern; debt, along with cash on-hand, to repay then-outstanding commercial paper borrowings, including short-term debt incurred in connection with the repayn;ent at maturity oflong-tenn debt, and to repay at maturity other long-term debt. Collectively, in 201 8, An;eren repaid $841 million oflong-tenn debt and received $112 n;ilhon from net commercial paper issuances. In 2019 and 201$, Ameren used cash provided by financing activities to fund, in part, investing activities.
In 2019, Ameren Missouri issued $778 million oflong-term debt to repay then-outstanding commercial paper borrowings, including short-term debt incurred in connection with the repayment at maturity oflong-term debt. and to repay at maturity other long-ten;; debt. Collectively, in 2019, An;eren Missouri repaid long-term debt of $580 n;illion and received $ 1 79 million fton; net commercial paper issuances. In comparison, in 20 1 8, An;eren Missouri utilized net proceeds of $423 million fron; tl;e issuance in long-term debt, along with cash on hand, to repay then-outstanding commercial paper borrowings, including short-term debt incurred in connection with the repayn;ent at maturity oflong-tenn debt, and to repay at maturity other long-term debt. Collectively, in 2018, Ameren Missouri received $16 million from net comn;ercial paper issuances. Collectively, in 201$, Ameren Missouri repaid $384 million ofloi;g-tenn debt. During 2019, Ameren Missouri paid comn;on stock dividends of$430 n;illion, compared with $375 n;illion in dividend payments in the year-ago period.
In addition, during 2019, Ameren Missouri received $124 million in capital contributions fron; Ameren (parent) associated with the tax allocation agreement, con;pared with $45 million received in 2018. In 2019, An;eren Missouri used cash provided by financing activities to fund, in part, investing activities.
In 20 19, Ameren Illinois issued $299 nulhon oflong-tem; debt to repay then outstanding commercial paper borrowings.
Ameren Illinois repaid outstanding net commercial paper borrowings totaling $19 million. In comparison, in 2018, Ameren Illinois utilized net proceeds of$929 million from the issuance of long-tenn debt to repay then-outstanding cornn;ercial paper borrowings, including short-term debt incurred in connection with the repayment at maturity of long-ten;;
debt, and to repay at maturity other long-term debt. Collectively, in 2018, Ameren Illinois repaid $457 million oflong-term debt and received $10 million from I;et commercial paper issuances. In addition, durmg 2019, Ameren Illinois received $15 million in capital contributions fron; Ameren (parent) associated with the tax allocation agreement, coi;;pared with $160 million received in 2018. In 2019 and 2018, Ameren Illinois used cash provided by financing activities to fund, in part, investing activities.
Credit fctcitity Borrowings and Liquiditj Tl;e liquidity needs ofthe Ameren Companies are typically supported through the use ofavailable cash, drawings under committed credit agreements, commercial paper issuances, or, in the case ofAmeren Missouri and Ameren Illinois, short-term affiliate borrowings.
See Note 4 Short-term Debt and Liquidity under Part II, Iten; 8, ofthis report for additional information on credit agreements. comi;;ercial paper issuances, Amerens money pool arrangements and related borrowings, and relevant interest rates.
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Table of Contents The following table presents Amerens consolidated net available liquidity as ofDecernber 31, 2019:
Available at December 31, 2019 Ameren (parent) and Ameren MissouriN:
Missouri Credit Agreement borrowing capacity
$ 1,200 less: Aineren (parent) commercial paper outstanding 98 Less: Ameren Missouri commercial paper outstanding 234 Less. Letters of credit 2
Missouri Credit Agreement subtotal 866 Ameren (parent) and Ameren I11inois:
Illinois Credit Agreement bonowmg capacity 1,100 Less: Arneren (parent) commercial paper outstanding 55 Less: Ameren Illinois commercial paper outstanding 53 Less: Letters ofcrcdit 1
Illinois Credit Agreement subtotal 991 Subtotal
$ 1,857 Cash and cash equivalents 16 Net Available Liqtiiditv 1,873 (a) The rnaximtim aggregate amount available to Arneren (parent) and Ameren Missouri under the Missoun Credit Agreement is $9t)0 million and
$850 million, respectively. See Note 1 Short-term Debt and Liquidity tinder Part II, Item 8, ofthis report for further discussion of the Credit Agreements (b) The maximum aggregate amount available to Ameren (pareist) and Ameren Illinois tinder the Illinois Credit Agreement is $500 million and
$800 million. respectively. See Note 4 Short-term Debt and Liquidity under Part II, Item 8, of this report for further discussion of the Credit Agreements.
In December 2019, the Credit Agreements were amended and restated. The amended and restated agreements. among other things, provide
$2.3 billion of credit until maturity in December 2024. See Note 4 Short-term Debt and Liquidity under Part II, Item 8, ofthis report for additional information on the amended and restated agreements. Issuances under the Ameren (parent), Ameren Missouri, and Arneren Illinois commercial paper programs were available at lower mnterest rates than the interest rates ofborrowings under the Credit Agreements. Commercial paper issuances were thtms preferred to credit facility borrowings as a source of third-party short-term debt.
Ameren has a money pool agreement with and among its utility subsidiaries to coordinate and to provide for certain short-term cash and working capital requirements. As short-term capital needs arise, and based on availability of funding sources, Ameren Missouri and Ameren Illinois will access funds from the utility money pool. the Credit Agreements, or the commercial paper programs depending on which option has the lowest interest rates.
The issuance of short-term debt securities by Amerens utility subsidiaries is subject to FERC approval under the federal Power Act. In 2018, the FERC issued orders authorizing Ameren Missouri and Ameren Illinois to each issue up to $1 billion of short-term debt securities through March 2020 and September 2020, respectively. In July 2019, the fERC issued an order authorizing ATXI to issue up to $300 million ofshort-tems debt securities through July 2021.
The Ameren Companies continually evaluate the adequacy and appropriateness of their liquidity arrangements for changing business conditions. When business conditions warrant, changes may be made to existing credit agreements or to other short-term borrowing arrangements.
Long-term Debt and Equity The following table presents Arnerens equity issuances, as well as mssuances (net of issuance premiums or discotmnts), redemptions, repurchases, and maturities oflong-term debt for the years ended December 3 1, 2019 and 2018. For additional information related to the terms and uses ofthese issuances and effective registration statements, and Amerens forward sale agreement relating to common stock, see Note 5 Iong-term Debt and Equity Financings under Part II, Item 8, ofthis report. for information on capital contributions received by Ameren Missouri and Ameren Illinois from Ameren (parent),
see Note 13 Related-party Transactions under Part II, Item 8 ofthis report.
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Table of Contents Month Issued, Redeemed, Repurchased,orMatured 2019 2018 Issuances of Long-term Debt Ameren:
2.500o Senior unsecured notes due 2024 September $ 450 $
Ameren Missouri:
350% First mortgage bends due 2029 March 450 3.25% First mortgage bonds due 2049 October 328 4.Ot)° First mortgage bonds due 2048 April 423 Ameren Illinois:
3.25°c First mortgage bonds due 2050 November 299 3.80% First mortgage bonds due 2028 May 430 4.50 First mortgage bonds due 2049 November 499 Total lone-term debt issuances 1,527 $ 1,352 Issuances ofCommon Stock Ameren:
I)RPltis and 4t)1(k)t Variotis S 68 $ 74 Total common stock isstiances 68 $ 74 Total Anseren long-term debt and common stock issuances 1,595 $ 1,426 Redemptions, Repurchases, and Maturities of Long-term Debt Ameren Missouri:
6.70% Senior secured notes dtie 2019 February $ 329 $
5l0° Senior unsecured notes due 2019 October 244 5.45- First mortgage bonds due 2028 October (c) 6.00% Senior secured notes due 2018 April 179 5.10% Senior secured notes due 201$
August 199 City of Bowling Green financing obligation (Peno Creek CT)
December 7 6 Ameren Illinois:
570% First nsortgage bonds due 2024 September (c) 5.90 First mortgage bonds due 2023 October (c) 625% Senior secured notes due 2018 April 114 9.75% Senior secured notes due 201$
November 313 Total long-term debt redemptions, repurchases, and mattirities s so s Ill (a) Anseren issued a total of 0.9 naillion and 1 .2 million shares of comnson stock under its DRPlus and 401(k) plan in 2019 and 201$, respectively.
(b) Excludes 0.8 million and 0.7 million shares ofcommon stock valued at $54 million and $35 million issued for no cash consideration in connection with stock-based compensation in 2019 and 201$, respectively.
(c) Amount less than $1 million.
The Ameren Companies may sell securities registered under their effective registration statements ifmarket conditions and capital requirements warrant such sales. Any offer and sale will be made only by means ofa prospectus that meets the requirements ofthe Securities Act of 1933 and the rules and regulations theretinder.
Indebtedness Provisions and Other Covenants At December 3 1, 20 19, the Aineren Coiupanies were in compliance with the provisions and covenants contained within their credit agreements, indentures, and articles of incorporation. as applicable, and ATXI was in compliance with the provisions and covenants contained in its note purchase agreement. See Note 4 Short-term Debt and Liquidity and Note 5 Long-term Debt and Equity financings under Part II, Item 8, ofthis report for a discussion of covenants and provisions (and applicable cross-default provisions) contained in our credit agreements, certain ofthe Arneren Companies indentures and articles of incorporation, and ATXI S note purchase agreement.
We consider access to short-term and long-term capital markets to be a significant source of funding for capital requirements not satisfied by cash provided by our operating activities. Inability to raise capital on reasonable terms, particularly during times ofuncertainty in the capital markets, could negatively affect our ability to maintain and expand our businesses. After assessing its current operating performance, liquidity, and credit ratings (see Credit Ratings below), Aineren, Ameren Missouri, and Ameren Illinois each believes that it will continue to have access to the capital markets. However, events beyond Amerens, Ameren Missouris, and Ameren Illinois control may create uncertainty in the capital markets or make access to the capital markets uncertain or limited. Such events could increase our cost of capital and adversely affect our ability to access the capital markets.
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Table of Contents Dividends Ameren paid to its shareholders common stock dividends totaling $472 million, or $19200 per share, in 2019 and $451 million, or $18475 per share, in 2018.
The amount and timing ofdividends payable on Amerens common stock are within the sole discretion ofAmerens board ofdirectors.
Amerens board of directors has not set specific targets or payout parameters when declaring common stock dividends, but it considers various factors, including Amerens overall payout ratio, payout ratios of our peers, projected cash flow and potential future cash flow requirements, historical earnings and cash flow, projected earnings, impacts ofregulatory orders or legislation, and other key business considerations. Ameren expects its dividend payout ratio to be between 55% and 70% of earnings over the next few years. (.)n February 14, 2020, the board of directors ofAmeren declared a quarterly dividend on Amerens common stock of49.5 cents per share, payable on March 3, 2020, to shareholders ofrecord on March 1 1, 2020.
Certain of our financial agreements and corporate organizational documents contain covenants and conditions that, among other things, restrict the Ameren Companies payment of dividends in certain circumstances.
Ameren Illinois articles ofincorporation require its dividend payments on common stock to be based on ratios ofcommon stock to total capitalization and other provisions with respect to certain operating expenses and accumulations of earned surpltis. Additionally, Ameren has committed to the FERC to maintain a minimtim of 30% equitY in the capital structure at Ameren Illinois.
Ameren Missouri and Ameren Illinois, as well as certain other nonregistrant Ameren subsidiaries, are subject to Section 305(a) ofthe Federal Power Act, which makes it unlawfttl for any officer or director ofa public utility, as defined in the Federal Power Act, to participate in the making or paying ofany dividend from any funds properly included in capital account. The FERC has consistently interpreted the provision to allow dividends to be paid as long as (1) the sotirce ofthe dividends is clearly disclosed, (2) the dividends are not excessive, and (3) there is no self-dealing on the part ofcorporate officials. At a minimum. Ameren believes that dividends can be paid by its subsidiaries that are public utilities from net income and from retained earnings. In addition, under Illinois law, Ameren Illinois and ATXI may not pay any dividend on their respective stock unless, among other things, their respective earnings and earned surplus are sufficient to declare and pay a dividend after provisions are made for reasonable and proper reserves, or unless Ameren Illinois or ATXI has specific authorization from the ICC.
At I)ecember 3 1, 2019, the amount ofrestricted net assets ofAmerens subsidiaries that may not be distributed to Ameren in the form ofa loan or dividend was $3. 1 billion.
The following table presents common stock dividends declared and paid by Arneren Corporation to its common shareholders and by Ameren subsidiaries to their parent, Ameren:
2019 2018 Arneren
$ 472 $ 451 Arneren Missouri 430 375 Ameren Illinois ATXI 15 75 Ameren Missouri and Ameren Illinois each have issued preferred stock, which provides for cumulative preferred stock dividends.
Each companys board of directors considers the declaration ofpreferred stock dividends to shareholders ofrecord on a certain date, stating the date on which the dividend is payable and the amount to be paid. See Note 5 Long-term Debt and Equity Financings tinder Part II, Item 8, ofthis report for further detail concerning the preferred stock issuances.
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Table of Contents Contractual Obligations The following table presents our contractual obligations as ofDecember 31, 2019. See Note 10 Retirement Benefits under Part II, Item 8, ofthis report for information regarding expected minimum funding levels for our pension plans, which are not included in the table below.
In addition, routine short-term purchase order commitments are not included.
2020 2021 2022 2023 2024 2025 and Thereafter Total Ameren:
Long-term debt and financing obhgations $ 442 $ 513 S 1,090 $ 7,397 S 9,442 Interest payments 378 733 674 4,582 6,367 Operating leases 8 15 11 5 39 Other obligationsihi 763 696 260 167 1,886 Total cash contractual obligations 1,591 $ 1,957 S 2,035 $ 12,151 $ 17,734 Arneren Missouri:
Long-term debt and financing obligations $ 92 $ 63 $ 590 $ 3,484 S 4,229 Interestpayments 188 373 338 2,140 3,039 Operating leases 8 13 11 5 37 Other obligations 471 501 229 lt)9 1,310 Total cash contractual obligations 759 $ 950 $ 1,168 $ 5,738 $ 8,615 Ameren Illinois: -
Long-term debt $ $ 400 S 3,2 13 $ 3,613 Interest payments 143 282 264 2,261 2,950 Operating leases 2 2
Other obligationsib) 28 1 1 90 31 24 526 Total cash contractual obligations 424 S 874 $ 295 $ 5,498 $ 7,091 (a) Excludes unamortized discount and premium and debt issuance costs of$85 million, $39 million, and $38 million at Ameren, Ameren Missouri, and Ameren Illinois, respectively See Note 5 Long-term Debt and Equity Financmgs tinder Part II, Item 8 of this report, for discussion of items included herein.
(b) See Other Obligations in Note 14 Commitments and Contingencies under Part II, Item 8 ofthis report, for discussion ofiteins included herein.
Off-balance-sheet Arrangements At December 3 1 2019, none ofthe Ameren Companies had any significant off-balance-sheet financing arrangements
, other than a forward sale agreement relating to common stock, variable interest entities, letters of credit, and Ameren (parent) guarantee arrangements on behalfof its subsidiaries. See Note 1 Summary ofSignificant Accounting Policies under Part II, Item 8, ofthis report for further detail concerning variable interest entities. See Note 5 Long-term Debt and Equity financings under Part II, Item 8, ofthis report for further detail concerning the forward sale agreement relating to common stock.
Credit Ratings Our credit ratings affect our liquidity, our access to the capital markets and credit markets, our cost of borrowing under our credit facilities and our commercial paper programs, and our collateral posting requirements under commodity contracts.
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Table of Contents The following table presents the principal credit ratings ofthe Ameren Companies by Moodys and S&P effective on the date ofthis report:
Moodys S&P Arneren:
Issuer/corporate credit rating Baal BBB+
Seiuor unsecured debt Baal B3B Commercial paper P-2 A-2 Arneren Missouri:
Issuer/corrnrate credit rating BaaI 033+
Secured debt A2 A Senior unsecured debt Baal Not Rated Commercial paper P-2 A-2 Arneren Illinois:
Issuer/corporate credit rating A3 BBB+
Secureddebt Al A Senior unsectired debt A3 BOB-f Commercial paper P-2 A-2 ATXI:
Issuer credit rating A2 Not Rated Senior unsecured debt A2 Not Rated A credit rating is not a recommendation to buy, sell, or hold securities. It should be evaluated independently of any other rating. Ratings are subject to revision or withdrawal at any time by the rating organization.
Collateral Postings Any weakening ofour credit ratings may reduce access to capital and trigger additional collateral postings and prepayments. Such changes may also increase the cost ofborrowing, resulting in an adverse effect on earnings. Cash collateral postings and prepayments made with external parties, including postings related to exchange-traded contracts, and cash collateral posted by external parties were immaterial at December 3 1 20 19. A sub-investment-grade isstier or senior unsecured debt rating (below Baa3 from Moodys or below BRB- from S&P) at December 3 1, 2019, could have resulted in Ameren, Ameren Missouri, or Ameren Illinois being required to post additional collateral or other assurances for certam trade obligations amounting to $143 million, $111 million, and $32 million, respectively.
Changes in commodity prices cotild trigger additional collateral postings and prepayments. Based on credit ratings at December 3 1, 2019, ifmarket prices were 15% higher or lower than I)ecember 3 1, 2019 levels in the next 12 months and 20% higher or lower thereafier through the end ofthe term ofthe commodity contracts, then Ameren, Ameren Missouri, or Ameren Illinois could be required to post an nmnaterial amount, compared to each companys liquidity, of collateral or provide other assurances for certain trade obligations.
OUTLOOK Below are some key trends, events, and uncertainties that may reasonably affect our results of operations, financial condition, or liquidity, as well as our ability to achieve strategic and financial objectives, for 2020 and beyond.
Operations
. In 2018, Missouri Senate Bill 564 was enacted and Ameren Missouri elected the PISA in accordance with the provisions ofthe law. Ptirsuant to its PISA election, Ameren Missouri is permitted to defer and recover 85% ofthe depreciation expense and a return at the applicable WACC on investments in certain property, plant, and equipment placed in service after September 1, 201$, and not included in base rates. The regulatory asset for accumulated PISA deferrals also earns a return at the applicable WACC, with all approved PISA deferrals added to rate base prospectively and recovered over a period of2O years following a regulatory rate review. Additionally, under the RESRAM, Ameren Missouri is permitted to recover the 15% of depreciation expense and a return at the applicable WACC for investments in renewable generation plant placed in service and not recovered under the PISA. Accumulated RESRAM deferrals earn carrying costs at short-term interest rates. The PISA and the RESRAM mitigate the effects ofregulatory lag between regulatory rate reviews. Those investments not eligible for recovery under the PISA and the remaining 15% ofcertain property. plant, and equipment placed in service, unless eligible for recovery under the RESRAM, remain subject to regulatory lag. Ameren Missouri recognizes the cost of debt on PISA deferrals in revenue, instead of using the applicable WACC, with the difference recognized in revenues when recovery ofsuch deferrals is reflected in customer rates. As a result ofthe PISA election, additional provisions ofthe law apply to Ameren Missouri, including limitations on electric customer rate increases. Both the rate increase limitation and PISA are effective throtigh December 2023, unless Ameren Missouri requests and receives MoPSC approval of an extension through December 202$.
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Table of Contents In February 2020, Ameren Missouri filed an update to its Smart Energy Plan with the MoPSC, which includes a five-year capital investment overview with a detailed one-year plan for 2020. The plan is designed to upgrade Ameren Missouris electric infrastructure and includes investments that will upgrade the grid and accommodate more renewable energy. Investments under the plan are expected to total approximately $7.6 billion over the five-year period from 2020 through 2024, with expenditures largely recoverable under the PISA and the RESRAM. The planned investments in 2024 are based on the asstimption that Ameren Missouri requests and receives MoPSC approval ofan extension ofthe PISA through December 2028. As a part ofits Smart Energy Plan, Ameren Missouri expects to build solar generation facilities, including utility scale facilities and nonresidential customer site facilities.
In September 2019, Ameren Missouri filed for certificates ofconvenience and necessity with the MoPSC to build three solar facilities in its service territory.
Each 10-megawatt solar energy generation facility will connect to battery storage in order to improve system reliability. All three facilities are expected to be completed by 2022. Also in 2019, the MoPSC approved Ameren Missouris Charge Ahead program, which provides incentives for the development ofover 1,000 electric vehicle charging stations along highways and at various locations in communities throughout Ameren Missouris service territory.
The purpose ofthe program is to promote the development of electric vehicle charging infrastructure that will enable long-distance electric vehicle travel and encourage electrification of the transportation sector.
IIi 20 1 8, the MoPSC issued an order approving Ameren Missouri s MEEIA 2019 plan. The plan includes a portfolio of customer energy-efficiency programs through December 2021 and low-income customer energy-efficiency programs through December 2024, along with a rate-adjustme nt mechanism. Ameren Missouri intends to invest $226 million over the life ofthe plan, including $65 million per year through 202 1. The plan includes the continued use of the MEEIA rider, which allows Arneren Missouri to collect from, or refund to, customers any difference in actual MEEIA program costs and related lost electric margins and the amounts collected from customers. In addition, the plan includes a performance incentive that provides Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy-efficiency goals. Ifthe target goals are achieved for 2019, 2020, and 202 1, additional revenues of$7 million, $10 million, and $13 million would be recognized in late 2020, 2021, and 2022, respectively. Incremental additional revenues of$1 million, $3 million, and $3 million may be earned for 2019, 2020, and 2021, respectively, and tvould be recognized in the respective following year, ifAmeren Missouri exceeds its targeted energy savings goals. Ameren Missouri recognized $28 million, $11 million, and $37 million in revenues related to MEEIA performance incentives in 2016, 2018, and 2019, respectively.
In June 20 1 8, the MoPSC approved Ameren Missouris Renewable Choice Program, which allows large commercial and industrial customers and municipalities to elect to receive up to 100% oftheir energy from renewable resources. The tariff-based program is designed to recover the costs of the election. Ameren Missouri is working to meet its customers top priorities for this program, including prices competitive with existing rates, long-term price predictability, and the preference for renewable power generated in Missouri. Ameren Missouri has not yet developed a project that effectively meets the needs ofthose customers who have expressed an interest in the program. Ameren Missouri will remain focused on finding solutions to best meet customer needs and expectations.
In July 2019, Arneren Missouri filed a request with the MoPSC seeking approval to decrease its annual revenues for electric service by $1 million. In February 2020, Ameren Missouri, the MoPSC staff, the MoOPC, and certain intervenors filed a nonunanimo us stipulation and agreement with the MoPSC to decrease Arneren Missouris annual revenues for electric service by $32 million.
The remaining intervenor did not object to the agreement. The stipulation and agreement, which is subject to MoPSC approval, specified an allowed ROE range of 94% to 9.8%, but did not specify the common equity percentage or rate base. The stipulation and agreement includes the continued use of the FAC and trackers for pension and postretirement benefits, uncertain income tax positions, certain excess deferred income taxes, and renewable energy standard compliance costs that the MoPSC previously authorized in earlier electric rate orders. Ameren Missouri cannot predict whether the MoPSC will approve the stipulation and agreement or, if approved, whether any application for rehearing or appeal will be filed, or the outcome ifso filed. A decision by the MoPSC is expected by March 2020, with new rates effective as early as April 1, 2020.The percentage ofnet energy cost variances from the amount set in base rates allowed to be recovered or refunded under the FAC and costs from services provided by affiliates are still being challenged by the MoOPC, and are expected to be addressed in a proceeding that would begin in March 2020. A MoPSC decision would be expected in the proceeding by the end ofMay 2020.
Ameren Illinois and ATXI use a forward-looking rate calculation with an annual revenue requirement reconciliation for each companys electric transmission business. Based on expected rate base growth and the currently allowed 10.38% ROE, the revenue requirements that will be included in 2020 rates for Ameren Illinois and ATXIs electric transmission businesses are $3 1 1 million and $190 million, respectively. These revenue requirements represent an increase in Ameren Illinois and ATXIs revenue requirements of $14 million and $13 million, respectively, from the revenue requirements reflected in 2019 rates, primarily due to the expected rate base growth. These rates will affect Ameren Illinois and ATXIs cash receipts during 2020, but will not determine their respective electric transmission service operating revenues, which will instead be based on 2020 actual recoverable costs, rate base, and a return on rate base at the applicable WACC as calculated under the FERC formula ratemaking framework.
The ROE for MISO transmission owners, including Ameren Illinois and ATXI, is the subject ofFERC complaint cases filed in November 2013 and February 2015 challenging the allowed base ROE. In November 2019, the fERC issued an order addressing the November 2013 complaint case, which set the allowed base ROE at 9. 88% and required refunds, with interest, for the periods November 2013 to February 2015 and from late September 2016 forward. The order also dismissed the February 2015 complaint case. As a result of this 58 I
Table of Contents order, Ameren and Ameren Illinois expect to pay refunds ofapproximately $40 million and $23 million, respectively, in 2020. In December 2019, Ameren and the MISO transmission owners, including Ameren Missouri, Ameren Illinois, and ATXI, filed requests for rehearing with the FERC. Additionally, in December 2019, various parties filed requests for rehearing with the FERC, challenging the dismissal ofthe February 2015 complaint case. The FERC has not ruled on the merits ofthe rehearing requests and is under no deadline to do so. In March 2019, the FERC issued separate Notices oflnquiry regarding its allowed base ROE policy and its transmission incentives policy. Initial comments were due by June 20 19, and reply comments were due by late August 2019.
The Notice oflnquiry addressing the FERCs base ROE policy, among other things, broadened the ability to comment on the new methodology beyond electric utilities that are participants in the complaint cases. The transmission incentives Notice oflnquiry was open for comment on the FERCs transmission incentive policy, including incentive adders to the base ROE. Ameren is unable to predict the ultimate impact ofthe Notices oflnquiry or the requests for rehearing at this time. A 50 basis point reduction in the FERC-allowed base ROE would reduce Ainerens and Ameren Illmois annual net income by an estimated $10 million and $6 million, respectively, based on each companys 2020 projected rate base.
Ameren Illinois electric distribution service performance-based formula ratemaking framework allows Ameren Illinois to reconcile electric distribution service rates to its actual revenue requirement on an annual basis. If a given years revenue requirement varies from the amount collected from customers, an adjustment is made to electric operating revenues with an offset to a regulatory asset or liability to reflect that years actual revenue requirement, independent ofactual sales volumes. The regulatory balance is then collected from, or refunded to, customers within two years from the end ofthe year. Unless extended, the formula ratemaking framework expires at the end of2022. Ifnot extended, Ameren Illinois would then be required to establish future rates through a traditional regulatory rate review with the ICC. The decoupling provisions extend beyond the end ofthe formula ratemalung by law, which ensures that Ameren Illinois electric distribution revenues authorized in a regulatory rate review are not affected by changes in sales volumes.
In December 2019, the ICC issued an order in Ameren Illinois anntial update filing that approved a $7 million decrease in Ameren Illinois electric distribution service rates beginning in January 2020. Illinois law provides for an annual reconciliation ofthe electric distribution revenue requirement as is necessary to reflect the actual costs incurred and a return at the applicable WACC on year-end rate base in a given year with the revenue requirement that was reflected in customer rates for that year. Consequently, Ameren Illinois 2020 electric distribtition service revenues will be based on its 2020 actual recoverable costs, 2020 year-end rate base, and return at the applicable WACC as calculated under the Illinois performance
-based formula ratemaking framework. The 2020 reventie requirement is expected to be higher than the 20 19 revenue requirement because of an expected increase in recoverable costs and expected rate base growth of approximately 7%, partially offset by the impact of an expected decrease in the annual average of the monthly yields of the 30-year United States Treasury bonds. Ihe 2020 revenue requirement reconciliation is expected to result in a regulatory asset that will be collected from customers in 2022. A 50 basis point change in the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds would result in an estimated $9 million change in Amerens and Ameren Illinois annual net income, based on Ameren Illinois 2020 projected year-end rate base.
In february 2020, Ameren Illinois filed a request with the ICC seeking approval to increase its annual revenues for natural gas delivery service by $102 million, which included an estimated $46 million of annual revenues that would otherwise be recovered under the QIP and other riders. The request is based on a 10.5% allowed ROE, a capital structure composed of54.l% common equity, and a rate base of$2.l billion.
Ameren Illmois earns a return at the applicable WACC on its electric energy-efficiency program investments. Ameren Illinois electric energy-efficiency investments are deferred as a regulatory asset and earn a return at the applicable WACC, with the ROE based on the annual average ofthe monthly yields of the 30-year United States Treasury bonds plus 580 basis points. The allowed ROE on electric energy-efficiency investments can be increased or decreased by up to 200 basis points, depending on the achievement of annual energy savings goals. Pursuant to the FEJA, Ameren Illinois plans to invest up to approximately $100 million per year in electric energy-efficiency programs through 2024, and will earn a return on those investments. While the ICC has approved a plan consistent with this spending level through 2021, the ICC has the ability to reduce the amount ofelectric energy-effici ency savings goals in future plan program years ifthere are insufficient cost-effective programs available, which could reduce the investments in electric energy-efficiency programs. The electric energy-efficiency program investments and the return on those investments are collected from customers through a rider and are not included in the electric distribution formula ratemaking framework.
In February 2020, the MoPSU issued an order approving a stipulation and agreement allowing Ameren Missouri to defer and amortize maintenance expenses related to scheduled refueling and maintenance outages at its Callaway Energy Center. Beginning with the fall 2020 refueling and maintenance outage, Ameren Missouri will defer the maintenance expenses incurred related to a refueling and maintenance outage as a regulatory asset and amortize those expenses after completion ofthe outage. Maintenance expenses will be amortized over the period between refueling and maintenance outages, which is approximately 1$ months. Ameren Missouri expects to incur approximately $40 million m maintenance expenses related to the fall 2020 outage. During a scheduled outage, depending on the availability ofits other generation sources and the market prices for power, Ameren Missouris purchased power costs may increase and the amount ofexcess power available for sale may decrease versus non-outage years. Changes in purchased power costs and excess 59
Table of Contents power available for sale are included in the FAC, which results in limited impacts to earnings. Prior to 2020, maintenance expenses for refueling and maintenance outages were expensed as incurred.
Ameren Missouri and Ameren Illinois continue to make infrastructure investments and expect to seek increases to electric and natural gas rates to recover the cost of investments and earn an adequate return. Ameren Missouri and Ameren Illinois will also seek new, or to maintain existing, legislative solutions to address regulatory lag and to support investment in their utility infrastructure for the benefit oftheir customers. Ameren Missouri and Ameren Illinois continue to face cost recovery pressures, including limited economic growth in their service territories, customer conservation efforts, the impacts of additional customer energy-efficiency programs, and increased customer use of increasingly cost-effective technological advances, including private generation and energy storage. However, over the long-term, we expect the decreased demand to be partially offset by increased demand resulting from increased electrification ofthe economy for efficiencies and as a means to address economywide CO2 emission concerns.
Increased investments, including expected future investments for environmental compliance, system reliability improvements, and potential new generation sources, result in rate base and revenue growth but also higher depreciation and fmancing costs.
For additional information regarding recent rate orders, lawsuits, and pending requests filed with state and federal regulatory commissions, see Note 2 Rate and Regulatory Matters tinder Part II, Item 8, ofthis report.
Liquidity and Capital Resources Arneren 1vhssouris 2017 IRP targets cleaner and more diverse sources ofenergy generation, including solar, wind, natural gas, hydro, and nuclear power. It also includes expanding renewable sources by adding 700 megawatts ofwind generation by the end of2020 in Missouri and adding 100 megawatts of solar generation by 2027. These new renewable energy sources would support Ameren Missouris compliance with the state ofMissouns requirement of achieving 15% ofnatwe load sales from renewable energy sources by 2021, subject to ctistomer rate increase limitations. Based on current and projected market prices for energy and for wind and solar generation technologies, among other factors, Ameren Missouri expects its ownership of these renewable resources would represent the lowest-cost option for customers. The plan also provides for the expected implementation of continued customer energy-efficiency programs.
Ameren Missouris plan for the addition ofrenewable resources could be affected by, among other factors: the availability of federal production and investment tax credits related to renewable energy and Ameren Missouris ability to use such credits the cost ofwrnd and solar generation technologies; energy prices; Ameren Missouris ability to obtain timely interconnection agreements with the MISO or other RTOs at an acceptable cost; and Ameren Missouris ability to obtain a certificate ofconvenience and necessity from the MoPSC, and any other required project approvals. Ameren Missouri expects to file its next integrated resource plan in September 2020. Ameren Missouri will seek stakeholder feedback and assess different scenarios to meet future energy needs, which will be used to create an ttpdated plan for its current generation portfolio and ongoing transition to cleaner sottrces of energy.
In connection with the 2017 IRP filing, Ameren Missouri established a goal ofreducing CO2 emissions 80% by 2050 from a 2005 base level. Ameren Missouri is also targeting a 35% CO2 emission reduction by 2030 and a 50% reduction by 2040 from the 2005 level. In order to meet these goals, among other things, Ameren Missouri expects to retire its coal-fired generation at the end ofeach energy centers useftil life. The Meramec, Sioux, Labadie, and Rush Island energy centers are expected to be retired in 2022, 2033, 2042, and 2045, respectively.
Consistent with its 201 7 IRP filing, in May 2019, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 300-megawatt wind generation facility. In 201$, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 400-megawatt wind generation facility. These two agreements are subject to customary contract terms and conditions. The two build-transfer acquisitions collectively represent $1.2 billion ofcapital expenditures, are expected to be completed by the end of2020, and would support Ameren Missouris compliance with the Missouri renewable energy standard. Both acquisitions have received all regulatory approvals, and both projects have received all applicable zoning approvals, have entered into RTO interconnection agreements, and have begun construction activities.
Through 2024, we expect to make significant capital expenditures to improve our electric and natural gas utility infrastructure, with a major portion directed to our transmission and distribution systems. We estimate that we will invest up to $16.6 billion (Ameren Missouri up to $8.4 billion; Ameren Illinois up to
$8.0 billion; ATXI up to $0.2 billion) ofcapital expenditures during the period from 2020 through 2024. Amerens and Ameren Missouris estimates exclude any capital expenditures related to poihition control eqttipment that may be required as a result ofthe NSR and Clean Air Act litigation discussed in Note 14 Commitments and Contingencies under Part II, Item 8, ofthis report.
Environmental regulations, including those related to CO2 emissions, or other actions taken by the EPA, could result in significant increases in capital expenditures and operating costs. Certain ofthese regulations are being challenged through litigation, or reviewed or recommended for repeal by the EPA, or new replacement or alternative regulations are being contemplated, proposed, or adopted by the EPA and state regulators.
The ultimate implementation of any of these regulations, as well as the timing of any such implementation, is uncertain. However, the individual or combined effects of existing and new environmental regulations could result in significant capital 60
Table of Contents expenditures, increased operating costs, or the closure or alteration ofsome ofAmeren Missouris coal-fired energy centers. Ameren Missouris capital expenditures are subject to MoPSC prudence reviews, which could result in cost disallowances as well as regulatory lag. The cost ofAmeren Illinois purchased power and natural gas purchased for resale cotild increase. However, Arneren Illinois expects that these costs would be recovered from customers with no material adverse effect on its results ofoperations, financial position, or liquidity. Amerens and Ameren Missouris earnings could benefit from increased investment to comply with environmental regulations ifthose investments are reflected and recovered on a timely basis in customer rates.
The Ameren Companies have multiyear credit agreements that cumulatively provide
$2.3 billion ofcredit through December 2024, subject to a 364-day repayment term for Ameren Missouri and Ameren Illinois, with the option to seek incremental commitments to increase the cuInulatwe credit provided to $2.7 billion. See Note 4 Short-term Debt and Liquidity under Part II, Item 8, ofthis report for additional information regarding the Credit Agreements. Ameren, Ameren Missouri, and Ameren Illinois believe that their liquidity is adequate given their expected operating cash flows, capital expenditures
, and related financmg plans. However, there can be no assurance that significant changes in economic conditions, disruptions in the capital and credit markets, or other unforeseen events will not materially affect their ability to execute their expected operating, capital, or financing plans.
Ameren expects its cash used for currently planned capital expenditures and dividends to exceed cash provided by operating activities over the next several years. As part of its plan to fund these cash flow requirements, Ameren is tising newly issued shares of common stock, rather than market-purch ased shares, to satisfy requirements under the DRP1us and employee benefit plans and expects to continue to do so through at least 2024. Ameren expects these issuaices to provide equity ftinding ofahout $100 million annually. Ameren also plans to issue incremental common equity to fhnd a portion ofAmeren Missouris wind generation investments through the settlement of the forward sale agreement discussed below. Additionally, Amercn plans to issue incremental equity of about
$150 million annually from 202 1 to 2024. Ameren expects its equity to total capitalization to be about 45% through the period ending December 2024, with the long-term intent to support solid investment-grade credit ratings. Ameren Missouri and Ameren Illinois expect to hind cash flow needs through debt issuances, adjustments of dividends to Ameren (parent), and/or capital contributions from Ameren (parent).
In August 2019, Ameren entered into a forward sale agreement with a counterparty relating to 7.5 million shares ofcommon stock. The forward sale agreement can be settled at Amerens discretion on or prior to March 3 1, 2021 On a settlement date or dates, ifAmeren elects to physically settle the forward sale agreement, Ameren will issue shares of common stock to the counterparty at the then-applicable forward sale price. The forward sale agreement will be physically settled unless Ameren elects to settle in cash or to net share settle. Ifphysically settled, Ameren expects to receive between
$540 million and $550 inilhon upon settlement. See Note 5 Long-term Debt and Equity Financmgs under Part II, Item 8, ofthis report for additional information.
Federal mcoine tax legislation enacted under the TCJA will continue to have significant impacts on our results ofoperations, financial position, liquidity, and financial metrics. The TCJA, among other things, reduced the federal statutory corporate income tax rate from 35% to 21%, effective January 1, 2018.
Customer rates were reduced to reflect the lower income tax rate, without a corresponding reduction in income tax payments because our of use of net operating losses and tax credit carryforwards until about 2020. Customer rates were also reduced to reflect the return ofexcess deferred income taxes. The result ofthese customer rate reductions is a decrease in operating cash flows in the near term. Over time, the decrease in operating cash flows will be offset as temporary differences between book and taxable income reverse, and by increased customer rates due to higher rate base amounts resulting from lower accumulated deferred income tax liabilities.
The following table presents the net regulatory liabilities/(assets) associated with excess deferred income taxes as ofDecernber 31, 2019, and the related amortization periods:
Amortization Period Ameren Missouri Ameren Illinois ATXI Total 2565years $ 913 $ 774 $ 84 $ 1,771 6lOyears 502 (3) 1 500 Total $ 1,415 $ 771 $ 85 $ 2,271 As ofDecember 3 1, 2019, Ameren had $98 million in tax benefits related to federal and state income tax credit cariyforwards. Ameren has utilized all tax benefits from net operating loss carryforwards. Future expected income tax payments and refunds are based on planned capital expenditures and any related income tax credits and, in the case ofAineren Missouri and Ameren Illinois, are consistent with the tax allocation agreement between Ameren (parent) and its subsidiaries. Ameren expects to make income tax payments between $5 million and $75 million in each year from 2020 to 2024, totaling
$150 million to $200 million for the five-year period. Ameren Missouri expects to make income tax payments to Ameren (parent) between $35 million and
$45 million in 2020.
Additionally, Ameren Missouri expects to receive refunds from Ameren (parent) in each year from 202 1 to 2024, totaling $60 million to
$100 million for the four-year period. Ameren Illinois expects to make income tax payments to Ameren (parent) between $20 million and $30 million in 2020 and between $50 million and $90 million in each year from 2021 to 2024, totaling $260 million to $3 10 million for the five-year period.
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. Arneren Missouri expects its 202t) wind generation acquisitions to generate federal production tax credits between
$65 million and $70 million in each year from 2021 to 2030. Ameren expects to utilize approximately $140 million ofthese federal production tax credits from 2021 to 2024. Delays in the timely completion ofthe wind generation facilities may affect the ability to realize some or all ofthe anticipated federal production tax credits. Ifthese facilities are not completed in 2020, Ameren Missouri will need to satisfy additional IRS requirements in order to qualify for some or all ofthe anticipated federal production tax credits.
. In 2018, legislation modifying Missouri tax law was enacted to decrease the states corporate income tax rate from 6.25% to 4%, effective January 1, 2020.
Ameren Missouri anticipates that the effect ofthis tax decrease will he reflected in customer rates upon completion ofits current electric service regulatory rate review. Ameren (parent) and nonregistrant subsidiaries do not expect this income tax decrease to have a material impact on net income.
The above items could have a material impact on our results ofoperations, financial position, and liquidity. Additionally
, in the ordinary course of business, we evaluate strategies to enhance our results ofoperations, financial position, and liquidity. These strategies may include acquisitions, divestitures, opportunities to reduce costs or increase revenues, and other strategic initiatives to increase Amerens shareholder value. We are unable to predict which. if any, ofthese initiatives will be executed. The execution ofthese initiatives may have a material impact on our future results ofoperations, financial position, or liquidity.
REGULATORY MATTERS See Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report.
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Table of Contents ACCOUNTING MATTERS Critical Accounting Estimates Preparation of thc financial statements and related disclosures in compliance with GAAP requires the application of appropriate technical accounting rules and guidance, as well as the use ofestimates. These estimates involve judgments regarding many factors that in and ofthernselves could materially affect the financial statements and disclosures. We have outlined below the critical accounting estimates that we believe are the most difficult, subjective, or complex. Any change in the assumptions or judgments applied in determining the following matters, among others, could have a material impact on future financial results.
Accounting Estimate Uncertainties Affecting Application Regitlatoty Mechanisms and Cost Recovery We defer costs and recognize revenues that we intend to collect in future Regulatory enviromiient and external regulatory decisions and rates. requirements
. Anticipated future regulatory decisions and our assessment of their impact
. The impact ofprudence reviews, complaint cases, limitations on electric rate increases in Missouri, and opposition during the ratemaking process that may limit our ability to timely recover costs and earn a fair return on our investments
. Ameren Illinois assessment ofand ability to estimate the current years electric distribution service costs to be reflected in revenues and recovered from customers in a subsequent year under performance-based formula ratemaking framework
. Ameren Illinois and ATXIs assessment ofand ability to estimate the current years electric transmission service costs to be reflected in revenues and recovered from customers in a subsequent year under the fERC ratemaking frameworks
. Ameren Missouris estimate ofrevenue recovery under the MEEIA plans Basis for Judgment The application of accounting guidance for rate-regulated businesses results in recording regulatory assets and liabilities. Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. Regulatory assets are amortized as the incurred costs are recovered through customer rates. In some cases, we record regulatory assets before approval for recovery has been received from the applicable regulatory commission. We must use judgment to conclude that costs deferred as regulatory assets are probable of future recovery. We base our conclusion on certain factors including, but not limited to, orders issued by our regulatory commissions, legislation, or historical experience, as well as discussions with legal counsel. Iffacts and circumstances lead us to conclude that a recorded regulatory asset is no longer probable ofrecovery or that plant assets are probable of disallowance, we record a charge to earnings, which could be material. Regulatory liabilities represent revenues received from customers to fund expected costs that have not yet been incurred or that are probable of future refunds to customers. We also recognize revenues for alternative revenue programs authorized by our regulators that allow for an automatic rate adjustment, are probable ofrecovery, and are collected within 24 months following the end ofthe annual period in which they are recognized. Under performance-based formula ratemaking. which expires at the end of 2022 unless extended, Ameren Illinois estimates its annual electric distribution revenue requirement for interim periods by using internal forecasted rate base and published forecasted data regarding the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds. Ameren Illinois estimates its annual revenue requirement as ofDecember 3 1 ofeach year using that years actual operating results and assesses the probability ofrecovery from or refund to customers that the ICC will order at the end ofthe following year. Variations in investments made or orders by the ICC or courts can result in a subseqtient change in Ameren Illinois estimate. Ameren Illinois and ATXI follow a similar process for their fERC rate-regulated electric transmission btisinesses. Ameren Missouri estimates lost electric margins resulting from its MEEIA customer energy-efficiency programs, which are subsequently recovered through the MEEIA rider. See Note 2 Rate and Regulatory Matters under Part H, Item 8, ofthis report for a description ofour regulatory mechanisms and quantification ofthese assets or liabilities for each ofthe Ameren Companies.
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Table of Contents Benefit Plan Accounting Based on actuarial calculations, we accrue costs of providing future . Future rate ofreturn on pension and other plan assets employee benefits for the benefit plans we offer our employees. See . Valuation inputs and assumptions used in the fair value measurements of Note 10 Retirement Benefits under Part II, Item 8, ofthis report.
plan assets, excluding those inputs that are readily observable Discount rate
. Future compensation increase assumption Health care cost trend rates
. Tuning of employee retirements and mortality assumptions
. Ability to recover certain benefit plan costs from our customers
. Changing market conditions that may affect investment and interest rate environments Basis for Judgment Ameren has defined benefit pension and postretirement benefit plans covering substantially all of its union employees. Ameren has defined benefit pension plans covering substantially all of its non-union employees and postretirement benefit plans covering non-union employees hired before October 2015 Our ultimate selection ofthe discount rate, health care trend rate, and expected rate ofreturn on pension and other postretiremen t benefit plan assets is based on our consistent application of assumption-setting methodologies and our review of available historical, current, and projected rates, as applicable. We also make mortality assumptions to estimate our pension and other postretirement benefit obligations. See Note 10 Retirement Benefits under Part II, Item 8, ofthis report for these assumptions and the sensitivity ofAmerens benefit plans to potential changes in these assumptions.
Accountingfor Contingencies We make judgments and estimates in the recording and the disclosing of . Estimating financial impact of events liabilities for claims, litigation, environmental remediation, the actions of . Estimating likelihood of various potential outcomes various regulatory agencies. or other matters that occur in the nonnal course . Regulatory and political environments and requirements ofbusiness. We record a loss contingency when it is probable that a liability . Outcome oflegal proceedings, settlements, or other factors has been incurred and that the amount ofthe loss can be reasonably . Changes in regulation, expected scope ofwork, technology, or timing of estimated. environmental remediation Basis for Judgment The determination of a loss contingency requires significantjudgment as to the expected outcome ofthe contingency in future periods. In making the detenriination as to the amount ofpotential loss and the probability ofloss. we consider the nature ofthe litigation, the claim or assessment, opinions or views of legal counsel, and the expected outcome of potential litigation, among other things. If no estimate is better than another within our range of estimates, we record as our best estimate ofa loss the minimum value ofour estimated range ofoutcomes. As additional information becomes available, we reassess the potential liability related to the contingency and revise our estimates. The amount recorded for any contingency may differ from actual costs incurred when the contingency is resolved. Contingencies are normally resolved over long periods oftime. In our evaluation oflegal matters, management consults with legal counsel and relies on analysis ofrelevant case law and legal precedents. See Note 2 Rate and Regulatory Matters, Note 9 Callaway Energy Center, and Note 14 Commitments and Contingencies under Part II, Item 8, ofthis report for information on the Ameren Compames contingencies.
Accountingfor Income Taxes We record a provision for income taxes, deferred tax assets and liabilities, . Changes in business, industry, laws, technology, or economic and market and a valuation allowance against net deferred tax assets, if any. See conditions affecting forecasted financial condition andlor results of Note 12 Income Taxes under Part II, Item 8, ofthis report.
operations
. Estimates of the amount and character of future taxable income and forecasted use ofour tax credit carryfonvards
. Enacted tax rates applicable to taxable income in years in which temporary differences are recovered or settled
. Effectiveness of implementing tax planning strategies
. Changes in income tax laws, including amounts subject to income tax, and the regulatory treatment of any tax reform changes
. Results of audits and examinations by taxing authorities 64
Table of Contents Basis for Judgment The reporting oftax-related assets and liabilities requires the use ofestimates and significant managementjudgment. Deferred tax assets and liabilities are recorded to represent future effects on income taxes for temporary differences between the basis of assets for financial reporting and tax purposes. Although management believes that current estimates for deferred tax assets and liabilities are reasonable, actual results could differ from these estimates for a variety of reasons, including: a change in forecasted financial condition and/or results ofoperations changes in income tax laws, enacted tax rates or amounts subject to income tax: the form, structure, and timmg of asset or stock sales or dispositions changes in the regulatory treatment of any tax reform benefits: and changes resulting from audits and examinations by taxing authorities. Valuation allowances against deferred tax assets are recorded when management concludes it is nore likely than not such asset will not be realized in future periods. Accounting for income taxes also requires that only tax benefits for positions taken or expected to be taken on tax returns that meet the more-likely-than-not recognition threshold can be recognized or continue to be recognized. Management evaluates each position solely on the technical merits and facts and circumstances ofthe position, assuming that the position will be examined by a taxing authority that has full knowledge ofall relevant information. Significantjudgment is required to determine recognition thresholds and the related amount of tax benefits to be recognized. At each period end, and as new developments occur, management reevaluates its tax positions.
See Note 12 Income Taxes under Part II, Item 8, ofthis report for the amount ofdeferred income taxes recorded at December 31, 2019.
Accountingfor Asset Retirement Obligations We record the estimated fair value oflegal obligations associated with the
- Discount rates retirement oftangible long-lived assets. See Note 1 Summary of
- Cost escalation rates Significant Accounting Policies under Part II, Item 8, ofthis report.
- Changes in regulation, expected scope ofwork, technology, or timing of environmental remediation
. Estimates as to the probability, timing, or amount of cash expenditures associated with AROs Basis for Judgment We record the estimated fair value oflegal obligations associated with the retirement oftangible long-lived assets in the period in which the liabilities are incurred or when sufficient information becomes available to determine fair value and capitalize a corresponding amount as part of the book value of the related long-lived asset. In subsequent periods, we adjust ARt)s based on changes in the estimated fair values of the obligations with a corresponding increase or decrease in the asset book value. We estimate the fair value ofour AROs using present value techniques, in which we make various assumptions about discount rates and cost escalation rates. In addition, these estimates include assumptions ofthe probability, timing, and amount of cash expenditures to settle the ARO, and are based on currently available technology. Ameren and Ameren Missouri have recorded AROs for retirement costs associated with Ameren Missouris Callaway Energy Center decommissioning, CCR facilities, and river structures. Also, Ameren, Ameren Missouri, and Ameren Illinois have recorded AROs for retirement costs associated with asbestos removal and the disposal ofcertain transformers. An increase of0.25% in the assumed escalation rates would increase Amerens AROs at December 31, 2019 by $35 million. See Note 15 Supplemental Information under Part II, Item 8, ofthis report for the amount of AROs recorded at December 3 1, 2019.
Impact ofNew Accounting Pronouncements See Note 1 Summary of Significant Accounting Policies under Part II, Item 8, ofthis report.
EFFECTS OF INFLATION AND ChANGING PRICES Amerens rates for retail electric and natural gas utility service are regulated by the MoPSC and the ICC. Nonretail electric rates are regulated by the FERC.
Rate regulation is generally based on the recovery ofhistorical or projected costs. As a result, revenue increases could lag behind changing prices. The current replacement cost of our utility plant substantially exceeds our recorded historical cost. Under existing regulatory practice, only the historical cost of plant is recoverable from customers. As a result, customer rates designed to provide recovery ofhistorical costs through depreciation might not be adequate to replace plant in future years.
Ameren Illinois participates in performance-based formula ratemaking for its electric distribution business and its electric energy-efficiency investments.
Within Ameren Illinois formula ratemaking frameworks, the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds are the basis for Ameren Illinois allowed ROE. Therefore, there is a direct correlation between the yield ofUnited States Treasury bonds, which are affected by inflation, and the allowed ROE applicable to Ameren Illinois electric distribution business and electric energy-efficiency investments.
Ameren Illinois and ATXIs electric transmission rates are determined pursuant to formula ratemaking. Additionally, Ameren Illinois and ATXI use company-spe a cific, forward-looking formtila ratemaking framework in setting their transmission rates. These forward-looking rates are updated each January with forecasted information. A reconciliation during the year, which adjusts for the actual revenue requirement and for actual sales volumes, is used to adjust billing rates in a subsequent year.
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Table of Contents Arneren Missouri recovers the cost offuel for electric generation and the cost ofpurchased power by adjusting rates as allowed through the FAC. However, the FAC excludes substantially all transmission revenues and charges. Ameren Missouri is therefore exposed to transmission charges to the extent that they exceed transmission revenues. Ameren Illinois is required to purchase all ofits expected power supply through procurement processes administered by the IPA. The cost ofprocured power can be affected by inflation. Ameren Illinois recovers power supply costs from electric customers by adjusting rates through a rider mechanism to accommodate changes in power prices.
In our Missouri and Illinois retail natural gas utility jurisdictions, changes in natural gas costs are generally reflected in billings to natural gas customers through PGA clauses.
See Part I, Item 1, and Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthis report for additional information on our recovery mechanisms.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the risk of changes in value of a physical asset or a financial instrument, derivative or nonderivative, caused by fluctuations in market variables such as interest rates, commodity prices, and equity security prices. A derivative is a contract whose value is dependent on, or derived from, the value of some underlying asset or index. The followmg discussion of our risk management activities includes forward-looking statements that involve risks and tincertainties.
Actual results could differ materially from those projected in the forward-looking statements. We handle market risks in accordance with established policies, which may include entering into various derivative transactions. In the normal course ofbusiness, we also face risks that are either nonfinancial or nonquantifiable.
Such risks, principally business, legal, and operational risks, are not part ofthe following discussion.
Our risk management objectives are to optimize our physical generating assets and to pursue market opportunities within prudent risk parameters. Our risk management policies are set by a risk management steerIng committee, which is composed ofsenior-level Ameren officers, with Ameren board of directors oversight.
Interest Rate Risk We are exposed to market risk through changes in interest rates associated with:
. short-term variable-rate debt:
. fixed-rate debt;
. United States Treasury bonds; and
. the discount rate applicable to asset retirement obligations, goodwill, and defined pension and postretirement benefit plans.
We manage our interest rate exposure by controlling the amount of debt instruments within our total capitalization portfolio and by monitoring the effects of market changes on interest rates. For defined pension and postretirement benefit plans, we control the duration and the portfolio mix ofour plan assets. See Note 1 Summary ofSignificant Accounting Policies and Note 10 Retirement Benefits under Part II, Item 8, ofthis report for additional information related to asset retirement obligations. goodwill, and the defined pension and postretirement benefit plans.
The estimated increase in our annual interest expense and decrease in net income if interest rates were to increase by 100 basis points on variable-rate debt outstanding at December 3 1, 2019 is immaterial.
The allowed ROE under Ameren Illinois electric distribution service and its electric energy-efficiency investments formula ratemaking recovery mechanisms is based on the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds plus 580 basis points.
Therefore, Ameren Illinois annual ROE for its electric distribution business is directly correlated to the yields on such bonds, which are outside ofAmeren Illinois control. A 50 basis point change in the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds would restilt in an estimated $9 million change in Amerens and Arneren Illinois annual net income, based on its 2020 projected rate base. Interest rate levels also influence the ROE allowed by our regulators in our other ratemaking jurisdictions as well as the carrying costs associated with certain regulatory assets and liabilities.
Credit Risk Credit risk represents the loss that would be recognized if counterparties should fail to perform as contracted. Exchange-tra ded contracts are supported by the financial and credit quality ofthe clearing members ofthe respective exchanges and carry only a nominal credit risk. In all other transactions, we are exposed to credit risk in the event ofnonperformance by the counterparties to the transaction. See Note 7 Derivative financial Instruments under Part II, Item 8, of this report for information on the potential loss on counterparty exposure as ofDecember 31, 2019.
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Table of Contents Our revenues are primarily derived from sales or delivery ofelectricity and natural gas to customers in Missouri and illinois. Our physical and financial instruments are subject to credit risk consisting oftrade accounts receivables and executory contracts with market risk exposures. The risk associated with trade receivables is mitigated by the large number ofcustomers in a broad range ofindustry groups who make up our customer base. At December 3 1, 2019, no nonaffihiated customer represented more than 10% ofour accounts receivable. Additionally, Ameren Illinois faces risks associated with the purchase of receivables.
The Illinois Public Utilities Act requires Ameren Illinois to establish electric utility consolidated billing and purchase ofreceivables services. At the option of an alternative retail electric supplier. Ameren Illinois may be required to purchase the suppliers receivables relating to Ameren Illinois distribution customers who elected to receive power supply from the alternative retail electric supplier. When that option is selected, Ameren Illinois produces consolidated bills for the applicable retail customers to reflect charges for electric distribution and purchased receivables. As ofDecember 1, 3 2019, Ameren Illinois balance of purchased accounts receivable associated with the utility consolidated billmg and purchase ofreccivables services was
$32 million. The risk associated with Ameren Illinois electric and natural gas trade receivables is also mitigated by a rate-adjustment mechanism that allows Ameren Illinois to recover the difference between its actual net bad debt write-offs under GAAP and the amount ofnet bad debt write-offs included in its base rates. Ameren Missouri and Ameren Illinois continue to monitor the impact of increasing rates on customer collections, as applicable. Ameren Missouri and Ameren Illinois make adjustments to their respective allowance for doubtful accounts as deemed necessary to ensure that such allowances are adequate to cover estimated uncollectible customer account balances.
Investment Price Risk Plan assets ofthe pension and postretirement trtists, the nuclear decommissioning trust fund, and company-owned life insurance contracts include equity and debt securities. The equity securities are exposed to price fluctuations in equity markets. The debt securities are exposed to changes in interest rates.
Our costs for providing defined benefit retirement and postretirement benefit plans are dependent upon a number of factors, including the rate of return on plan assets. Ameren manages plan assets in accordance with the prudent investor guidelines contained in ERISA. Amerens goal is to ensure that sufficient funds are available to provide benefits at the time they are payable, while also maximizing total return on plan assets and minimizing expense volatility consistent with its tolerance for risk. Ameren delegates investment management to specialists. Where appropriate, Ameren provides the investment manager with guidelines that specify allowable and prohibited investment types. Ameren regularly monitors manager performance and compliance with investment guidelines.
The expected return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Projected rates ofreturn for each asset class are estimated after an analysis ofhistorical experience, future expectations. and the volatility ofthe various asset classes. After considering the target asset allocation for each asset class, we adjust the overall expected rate ofreturn for the portfolio for historical and expected experience ofactive portfolio management results compared with benchmark returns, and for the effect ofexpenses paid from plan assets. Contributions to the plans and future costs could increase materially ifwe do not achieve pension and postretirement asset portfolio investment returns equal to or in excess of our 2020 assumed return on plan assets of 7.00%.
Ameren Missouri also maintains a trust fund, as reqtiired by the NRC and Missouri law, to fund certain costs ofnuclear plant decommissioning. As of I)ecember 31, 2019, this fund was invested in domestic equity securities (67%) and debt securities (32%). By maintaining a portfolio that includes long-term equity investments, Ameren Missouri seeks to maximize the returns to be used to fund nuclear decommissioning costs within acceptable parameters ofrisk. Ameren Missouri actively monitors the portfolio by benchmarking the performance of its investments against certain indices and by maintaining and periodically reviewing established target allocation percentages ofthe trust assets to various investment options. Ameren Missouris exposure to equity price market risk is in large part mitigated because Ameren Missouri is currently allowed to recover its decommissioning costs, which would include unfavorable investment restilts, through electric rates.
Additionally, Ameren and Ameren Illinois have company-owned life insurance contracts with net asset values of
$150 million and $9 million, respectively, as ofDecember 31, 2019. Changes in the market values ofthese contracts are reflected in earnings.
Commodity Price Risk Ameren Missouris and Ameren Illinois electric and natural gas distribution businesses exposure to changing market prices for commodities is in large part mitigated by the fact that there are cost recovery mechanisms in place. These cost recovery mechanisms allow Ameren Missouri and Ameren Illinois to pass on to retail customers prudently incurred costs for fuel, purchased power, and natural gas supply.
Ameren Missouris and Ameren Illinois strategy is designed to reduce the effect ofmarket fluctuations fbr their customers.
The effects ofprice volatility cannot be eliminated. however, procurement and sales strategies involve risk management techniques and instruments, as well as the management of physical assets.
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Table of Contents Ameren Missouri has a FAC that allows it to recover or refund, through customer rates, 95% ofthe variance in net energy costs from the amount set in base rates without a traditional regulatory rate review, subject to MoP$C prudence reviews. Ameren Missouri remains exposed to the remaining 5% of such changes.
Ameren Illinois has cost recovery mechanisms for power purchased, capacity, zero emission credit, and renewable energy credit costs and expects full recovery of such costs. Ameren Illinois is required to serve as the provider oflast resort for electric customers in its service territory who have not chosen an alternative retail electric supplier. In 2t)l9, Ameren lllmois procured power on behalfofits customers for 22% ofits total kilowatthour sales. Ameren Illinois purchases energy and capacity through the MISO and through bilateral contracts resulting from IPA procurement events. The IPA has proposed and the ICC has approved multiple procurement events covermg portions ofycars through 2022 for capacity and energy. Ameren Illinois has also entered into ICC-approved contracts for zero emission credits through 2026 and for renewable energy credits with 15-year terms commencing on the date of first renewable energy credit delivery. Ameren Illinois does not generate earnings based on the resale ofpower or purchase ofzero emission credits or renewable energy credits but rather on the delivery ofthe energy.
Ameren Missouri and Ameren Illinois have PGA clauses that permit costs incurred for natural gas to be recovered directly from utility customers vithout a traditional regulatory rate review, subject to prudence reviews.
The following table presents, as ofDecember 31, 2t)19, the percentages ofthe projected required supply ofcoal and coal transportation for Ameren Missouris coal-fired energy centers, nuclear fuel for Ameren Missouris Callaway Energy Center, natural gas for Ameren Missouris retail distribution, and purchased power for Ameren Illinois that are price-hedged over the period 2020 through 2024. The projected required supply ofthese commodities could be significantly affected by changes in our assumptions about customer demand for our electric generation and our electric and natural gas distribution services, generation output, and inventory levels, among other matters.
2020 2021 2022-2024 Ameren:
Coal 100% 94° 36%
Coal transportation 100 1t)O 98 Nuclear fuel 90 (a) 72° Natural gas for distribution 77 34 10 Purchased power for Aineren Illmoist° 69 35 11 Ameren Missouri:
Coal 100% 94% 36%
Coal transportation 100 WO 97 Nuclear fuel 90 (a) 72° Natural gas for distribution 65 34 9 Ameren Illinois:
Natural gas for distnbutioWhj 79% 34% 10%
Purchased power° 69 35 1I (a) The Callaway Energy Center requires refueling at 18-month intervals. The next refueling is sclseduled for the fall of2020.
As there are no refuelings schedtiled to occur during 2021 or 2024, tlsere are also no nuclear fuel deliveries anticipated to occur in these years.
(b) Represents the percentage ofnatural gas pnce-lsedged for peak winter season ofNovensber tlsrough March. The year 2020 represents January 2020 through Marcls 2020. The year 2021 represents Novensber 2020 through March 202 1 This continues each successive year through March 2024.
(c) Represents the percentage of purchased power price-hedged for fixed-price residential assd nonresidential customers with less than 150 kilowatts of demand Our exposure to commodity price risk for construction and maintenance activities is related to changes in market prices for metal commodities and to labor availability.
Also see Note 14 Commitments and Contingencies under Part II, Item 8, ofthis report for additional information.
Commodity Supplier Risk The use oflow-sulfusr coal is part ofAmeren Missouris environmental compliance strategy. Ameren Missoitri has agreements with multiple suppliers to purchase low-sulfur coal through 2025 to comply with environmental regulations. Disruptions to the deliveries of low-sulfur coal from a supplier could compromise Ameren Missouris ability to operate in compliance with emission standards. The suppliers oflow-sulfur coal are limited, and the construction of pollution control equipment requires significant lead time. If Ameren Missouri were to experience a temporary disruption of low-sulfur coal deliveries that caused it to exhaust its existtng inventory, and if other sources oflow-sulfrir coal were not avatlable, Ameren Missouri would have to use its existing emission allowances, purchase emission allowances to achieve compliance with environmental regulations, or purchase power necessary to meet demand.
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Table of Contents During 2019, one ofArneren Missouris low-sulfur coal suppliers and a partial owner ofanother supplier filed voluntary petitions for restructuring under Chapter 1 1 ofthe United States Bankruptcy Code. Ameren Missouri replaced any resulting volume shortfall through its other coal supply contracts and through the use ofexistmg inventory. As such, Arneren Missouri did not experience any material impact to its operations as a result ofthese restructuring proceedings. As of December 3 1, 2019, both entities have emerged from bankruptcy proceedings and shipments oflow-suiftir coal have resumed in accordance with Ameren Missouris supply contracts in place with the affected suppliers prior to the bankruptcy proceedings.
Currently, the Callaway Energy Center uses nuclear fuel assemblies of a design fabricated by only a single supplier. That supplier is currently the only NRC-licensed supplier able to provide fuel assemblies to the Callaway Energy Center. Ameren Missouri is pursuing a program to qualify an alternate NRC-licensed supplier, and expects to obtain NRC approval in 2023.
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Table of Contents ITEM 8.fINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report oflndependent Registered Public Accounting firm To the Board ofDirectors and Shareholders of Ameren Corporation Opinions on the financial Statements and Internal Control over fi;tanciat Reporthtg We have audited the accompanying consolidated balance sheets of Arneren Corporation and its subsidiaries (the Company) as of December 3 1, 201 9 and 2018, and the related consolidated statements of income and comprehensive income, of shareholders equity and of cash flows for each of the three years in the period ended December 31, 2019, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the consolidated financial statements). We also have audited the Companys internal control over financial reporting ofl)ecemher as 3 1, 2019, based on criteria established in Internal Control fntegiatedFrarnework (2013) issued by the Committee ofSponsoring Organization s ofthe Treadway Commission (COSO).
In OUf opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position ofthe Company as of I)ecember 31, 2019 and 2018, and the results ofits operations and its cash flows for each ofthe three years in the period ended I)ecember 31, 2019, in confonrnty with accountmg principles generally accepted in the United States ofAmenca. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as ofl)ecember 3 1, 2019, based on criteria established in Internal Control Integrated
- Erarnenork (2013) issued by the COSO.
Basisfor Opinions The Companys management is responsible for these consolidated financial statements, for mamtaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management s Report on Internal Control over financial Reporting appearmg under Item 9A. Our responsibility is to express opinions on the Companys consolidated financial statements and on the Companys internal control over financial reporting based on our audits. We are a public accounting firn registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rttles and regulations ofthe Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards ofthe PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedtires to assess the risks of material misstatemen t of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation ofthe consolidated financial statements. Our audit ofinternal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included perfirming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations oflnternat Control over finctncial Reporting A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect the transactions and dispositions ofthe assets ofthe company (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe company are being made only in accordance with authorizations ofmanagement and directors ofthe company and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition ofthe companys assets that could have a material effect on the fmancial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Table of Contents Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit ofthe consolidated fmancial statements that was communicated or required to he conimunicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging. subjective, or complexjudgments. The communication ofcritical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accountingfor the Effects ofRegttlation As described in Notes 1 and 2 to the consolidated financial statements, the Company has operations that are subject to the decisions and requirements of its regulators. The Companys use of accounting guidance for rate-regulated businesses results in recording regulatory assets and liabilities for certain transactions that management expects will be recovered from, or returned to, customers in future rates. Regulatory assets and liabilities are amortized consistent with the period of expected regulatory treatment. As ofl)ecember 31, 2019, the Companys consolidated balance sheet reflected
$1.1 billion ofregulatory assets and $5.1 billion of regulatory liabilities. As disclosed by management, in some cases, management must applyjudgment related to the probability ofrecovery ifregulatory balances are recorded before approval has been received from the regulator or probability ofrefund of amounts collected in rates that may be returned to customers.
Additionally, management recognizes revenue for alternative revenue programs that allow for an automatic rate adjustment, are probable of recovery, and are collected within 24 months ofthe end ofthe annual period in winch they are recognized. Management s conclusions are based on certain factors including, but not limited to, regulatory commission orders, legislation, or historical experience, as well as managements discussions with legal counsel.
The principal considerations for our determination that performing procedures relating to accountmg for the effects ofregulation is a critical audit matter are there was significantjudgment by management when accounting for (i) new or existing regulatory assets or liabilities that were impacted by updates in regulatory commission orders, legislation, historical experience, or managements discussions with legal counsel, (ii) the probability ofrecovery ofregulatory assets and refund ofregulatory liabilities recorded before approval has been received from the regulator and (iii) regulatory assets meeting the alternative revenue program criteria. This resulted in significant auditor judgment and effort when performing audit procedures and evaluating audit evidence relating to managements application ofregulatory accounting, assessment ofprobability ofrecovesy, and expected timing of collection within 24 months ofthe end ofthe annual period in which they are recognized.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures mclttded testing the effectiveness of controls relating to managements implementat ion and application ofnew or existing regulatory assets or liabilities, including controls related to evaluating the probability ofrecovery ofregulatory assets and refund ofregulatory liabilities, and alternative revenue programs. These procedures also included, among others, (i) testing calculations ofnew and existing regulatory assets or liabilities by comparison to provisions and formulas outlined in regulatory commission orders, legislation, or external legal counsel correspondence, (ii) evaluating managements assessment ofthe probability ofrecovery ofregulatory assets and refund ofregulatory liabilities, and (iii) evaluating managements assessment ofregulatory mechanisms meeting the alternative revenue program criteria and testing the expected timing of collection within 24 months ofthe end ofthe annual period in which they are recognized.
/5/ PricewaterhouseCoopers LIY St. Louis, Missouri February 28, 2020 We have served as the Companys auditor since at least 1932. We have not been able to determine the specific year we began serving as auditor ofthe Company.
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Table of Contents Report oflndependent Registered Public Accounting Firm To the Board ofDirectors and Shareholders ofUnion Electric Company Opinion on tite financial Statements We have audited the accompanying balance sheets ofUnion Electric Company (the Company) as ofDecember 31, 2019 and 2018, and the related statements of income, ofshareholders equity and ofcash flows for each ofthe three years in the period ended December 31, 2019. including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position ofthe Company as ofDecember 31, 2019 and 2018, and the results ofits operations and its cash flows for each ofthe three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Basisfor Opinioit These financial statements are the responsibility ofthe Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accotmting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits ofthese financial statements in accordance with the standards ofthe PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose ofexpressing an opinion on the effectiveness ofthe Companys internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks ofmaterial misstatement ofthe financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our atidits also included evaluating the accounting principles used and significant estimates made by management
, as well as evaluating the overall presentation ofthe financial statements. We believe that our audits provide a reasonable basis for our opinion.
/5/ PricewaterhouseCoopers LLP St. Louis, Missoun February 28, 2t)20 We have served as the Companys auditor since at least 1932. We have not been able to determine the specific year we began serving as auditor ofthe Company.
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Table of Contents Report of Independent Registered Public Accounting Firm To the Board ofDirectors and Shareholders ofAmeren Illinois Company Opinion on tite financial Statements We have audited the accompanying balance sheets ofAmeren Illinois Company (the Company) as ofDecember 31, 2019 and 2018, and the related statements of income, of shareholders equity and of cash flows for each of the three years in the period ended December 3 1 20 19,
, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position ofthe Company as ofDecember 3 1, 2019 and 2018, and the results ofits operations and its cash flows for each ofthe three years in the period ended December 3 1, 2019, in conformity with accounting principles generally accepted in the United States of America.
Basisfor Opinion These financial statements are the responsibility ofthe Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal sectirities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits ofthese financial statements in accordance with the standards ofthe PCAOB. Those standards require that we plaii and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding ofintemal control over financial reporting but not thr the purpose ofexpressing an opinion on the effectiveness ofthe Companys internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks ofmaterial misstatement ofthe financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amotmts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management
, as well as evaluating the overall presentation ofthe financial statements. We believe that our audits provide a reasonable basis for our opinion.
Is! PricewaterhouseCoopers liP St. Louis, Missouri February 28, 2020 We have served as the Companys auditor since 1998.
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Table of Contents AMEREN CORPORATION CONSOLIDATED STATEMENT Of INCOME AND COMPREHENSIVE INCOME (In millions, except per share amounts)
Year Ended December 31, 2019 201$ 2017 Operating Revenues:
Electric
$ 4,981 $ 5,339 $ 5,307 Natural gas 929 952 867 Total operating revenues 5,910 6,291 6,174 Operating Expenses:
Fuel 535 769 737 Purchased power 556 581 638 Natural gas purchased for resale 331 374 311 Other operations and maintenance 1,745 1,772 1,705 Depreciation and amortization 995 955 896 Taxes other than income taxes 4$1 483 477 Total operating expenses 4,643 4,934 4,764 Operating Income 1,267 1,357 1,410 Other Income, Net 130 102 86 Interest Charges 381 401 391 Income Before Income Taxes 1,016 1,058 1,105 Income Taxes 182 237 576 Net Income 834 821 529 Less: Net Income Attributable to Noncontrolling Interests 6 6 6 Net Income Attributable to Ameren Common Shareholders
$ $28 $ 815 $ 523 Netlncome
$ $34 $ 821 $ 529 Other Comprehensive Income (Loss), Net of Taxes Pension and other postretirement benefit plan activity, net of income taxes (benefit) of $1, $(l ), and
$3, respectively 5 (4) 5 Comprehensive Income
$39 817 534 Less: Comprehensive Income Attributable to Noncontrolling Interests 6 6 6 Comprehensive Income Attributable to Ameren Common Shareholders
$ $33 $ 81 1 $ 52$
Earnings per Common ShareBasic S 3.37 $ 3.34 $ 2.16 Earnings per Common Share Diluted S 3.35 3.32
$ $ 2.14 Weighted-average Common Shares Outstanding Basic 245.6 243.8 242.6 tVeighted-average Common Shares Outstanding Diluted 247.1 245.8 244.2 The accompanying notes are an integral part of these consolidated financial statements.
74
Table of Contents AIEREN CORPORATION CONSOLIDATED BALANCE SIIEET (In millions, except per share amounts)
December 31, 2019 2018 ASSETS Current Assets:
Cash and cash equivalents
$ 16 S 16 Accounts receivable trade (less allowance for doubtful accotints of $ 1 7 and $ 1 8, respectively) 393 463 finbilled revenue 278 295 Miscellaneous accounts receivable 63 79 Inventories 494 483 Current regulatory assets 69 134 Other current assets 118 63 Total current assets 1,431 1,533 Property, Plant, and Equipment, Net 24,376 22,810 Investments and Other Assets:
Nuclear decommissioning trust fund
$47 684 Goodwill 411 411 Regulatory assets 992 1,127 Other assets 876 650 Total investments and other assets 3,126 2,872 TOTAL ASSETS
$ 28,933 $ 27,215 LIABILITIES AND EQUITY Current Liabilities:
Current maturities oflong-term debt S 442 $ 580 Short-term debt 440 597 Accounts and wages payable 874 217 Current regulatory liabilities 164 149 Other current liabilities 585 544 Total current liabilities 2,505 2,687 Long-term Debt, Net 8,915 7,859 Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net 2,919 2,666 Regulatory liabilities 4,887 4,637 Asset retirement obligations 63$ 627 Pension and other postretirement benefits 401 558 Other deferred credits and liabilities 467 408 Total deferred credits and other liabilities 9,312 8,896 Commitments and Contingencies (Notes 2, 9, and 14)
Ameren Corporation Shareholders Equity:
Common stock, $01 par value, 400.0 shares authorized shares outstanding of246.2 and 244.5, respectively 2 2 Other paid-in capital, principally premium on common stock 5,694 5.627 Retained earnings 2,380 2,024 Accumulated other comprehensive loss (17) (22)
Total Ameren Corporation shareholders equity 8,059 7,631 Noncontrolling Interests 142 142 Total equity 8,201 7,773 TOTAL LIABILITIES AND EQUITY S 28,933 27,215 The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents AIvIEREN CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (In millions)
Year Ended December 31, 2019 2018 2017 Cash Flows From operating Activities:
Net income $ 834 $ 821 $ 529 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,002 938 $76 Amortization ofnuclear fuel 79 95 76 Amortization of debt issuance costs and premium/discounts 19 20 22 I)eferred income taxes and investment tax credits, net 167 224 539 Allowance for equity funds used during construction (2$) (36) (24)
Stock-based compensation costs 20 2t) 17 Other (14) 44 (10)
Changes in assets and liabilities:
Receivables 79 (24) (53)
Inventories (10) 39 17 Accounts and wages payable (3) (22) 32 Taxes accrued (8) (it)) 55 Regulatory assets and liabilities 164 201 36 Assets. other (59) 2 34 Liabilities, other (33) (117) (7)
Pension and other postretirement benefits (39) (25) (21)
Net cash provided by operatmg activities 2,170 2,170 2,118 Cash flows from Investing Activities:
Capital expenditures (2,411) (2,286) (2,132)
Nuclear fuel expenditures (31) (52) (63)
Purchases of securities nuclear decommissioning trust fund (256) (315)
(321)
Sales and maturities of securities nuclear decommissioning trust fund 260 299 305 Purchase of bonds (207)
Proceeds from sale ofrernarketed bonds 207 Other 3 18 7 Net cash used in investing activities (2,435) (2,336) (2,204)
Cash Flows From Financing Activities:
Dividends on common stock (472) (451) (431)
Dividends paid to noncontrolling interest holders (6)
(6)
(6)
Short-term debt, net (157) 112 (74)
Maturities oflong-term debt (580) ($41) (681)
Issuances of long-term debt 1,527 1,352 1,345 Issuances ofcommon stock 6$ 74 Repurchases of common stock for stock-based compensation (24)
Employee payroll taxes related to stock-based compensation (29) (19) (15)
Debt issuance costs (17) (14) (11)
Other (2) (1)
Net cash provided by financing activities 334 205 102 Net change in cash, cash equivalents, and restricted cash 69 39 16 Cash, cash equivalents, and restricted cash at beginning of year 107 68 52 Cash, cash equivalents, and restricted cash at end of year $ 176 $ 107 $ 68 Cash Paid (Refunded) During the Year:
Interest (net of$20, $21, and $14 capitalized, respectively) $ 367 $ 387 $ 370 Income taxes, net 13 21 (19)
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents AMEREN CORPORATION CONSOLIDATED STATEMENT OF ShAREhOLDERS EQUITY (In millions)
December 31, 2019 2018 2017 Common Stock S 2 $ 2$ 2 Other Paid-in Capital:
Beginning of year 5,627 5,540 5,556 Shares issued under the DRP1us and 401(k) plan 6$ 74 Stock-based compensation activity (1) 13 (16)
Other paid-in capital. end of year 5,694 5,627 5,540 Retained Earnings:
Beginning of year 2,024 1,660 1,568 Net income attributable to Ameren common shareholders 828 815 523 Dividends (472) (451) (431)
Retained earnings. end of year 2,380 2,024 1,660 Accumulated Other Comprehensive Income (Loss):
Deferred retirement benefit costs, beginning of year (22) (18) (23)
Change iii deferred retirement benefit costs 5 (4) 5 I)eferred retirement benefit costs, end of year (17) (22) (18)
Total accumulated other comprehensive loss, end of year (17) (22) (18)
Total Ameren Corporation Shareholders Equity $ 8,059 $ 7,631 $ 7,124 Noncontrolling Interests:
Beginning of year 142 142 142 Net income attributable to noncontrolling interest holders 6 6 6 Dividends paid to noncontrolling interest holders (6) (6) (6)
Noncontrolling interests, end of year 142 142 142 Total Equity S 8,201 $ 7,773 7,326 Common stock shares outstanding at beginning of year 244.5 242.6 242.6 Shares issued under the DRNus and 401(k) plan 0.9 1.2 Shares issued for stock-based compensation 0.8 0.7 Common stock shares outstanding at end of year 246.2 244.5 242.6 Dividends per common share S 1.9200 1.8475
$ $ 1.7775 The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents IJNIt)N ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
STATErIENT OF INCOME (In millions)
Year Ended December 31, 2019 2018 2017 Operating Revenues:
Electric $ 3,109 $ 3,451 S 3,411 Natural gas 134 138 126 Total operating revenues 3,243 3,589 3,537 Operating Expenses:
Fuel 535 769 737 Purchased power 193 164 245 Natural gas purchased for resale 53 56 47 Other operations and maintenance 960 972 925 Depreciation and amortization 556 550 533 Taxes other than income taxes 329 329 328 Total operating expenses 2,626 2,840 2,815 Operating Income 617 749 722 Other Income, Net 5$ 56 65 Interest Charges 178 200 207 Income Before Income Taxes 497 605 580 IncomeTaxes 68 124 254 Net Income
$ 429 $ 48 1 $ 326 Preferred Stock Dividends 3 3 3 Net Income Available to Common Shareholder
$ 426 $ 478 $ 323 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
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Table of Contents UNION ELECTRIC COMPANY (dlbla AMEREN MISSOURI)
BALANCE ShEET (In millions, except per share amounts)
December 31, 2019 2018 ASSETS Current Assets:
Cash and cash equivalents $ 9$
Accounts receivable trade (less allowance for doubtful accounts of $7 and $7, respectively) 164 223 Accounts receivable affiliates 30 14 Unbilled revenue 139 155 Miscellaneous accounts receivable 33 42 Inventories 373 358 Other current assets 66 40 Total current assets 814 832 Property, Plant, and Equipment, Net 12,635 12,103 Investments and Other Assets:
Nuclear decommissioning trust fund 847 684 Regulatory assets 285 366 Other assets 356 306 Total investments and other assets 1,488 1,356 TOTAL ASSETS
$ 14,937 $ 14,291 LIABILITIES AND SIIAREHOLDERS EQUITY Current Liabilities:
Current maturities of long-tern; debt $ 92 $ 580 Short-term debt 234 55 Accounts and wages payable 465 428 Accounts payable affiliates 52 69 Current regulatory liabilities 62 68 Other current liabilities 221 202 Total current liabilities 1,126 1,402 Long-term Debt, Net 4,098 3,418 Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net 1,612 1,576 Regulatory liabilities 2,937 2,799 Asset retirement obligations 634 623 Pension and other postretirement benefits 141 228 Other deferred credits and liabilities 40 16 Total deferred credits and other liabilities 5,364 5,242 Commitments and Contingencies (Notes 2, 9, 13, and 14)
Shareholders Equity:
Common stock, $5 par value, 150.0 shares authorized 102. 1 shares outstanding 511 511 Other paid-in capital, principally premium on common stock 2,027 1,903 Preferred stock 80 80 Retained earnings 1,731 1,735 Total shareholders equity 4,349 4,229 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
$ 14,937 $ 14,291 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
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Table of Contents UNION ELECTRIC COMPANY (dlbla AMEREN MISSOURI)
STATEMENT OF CASII FLOWS (In millions)
Year Ended December 31, 2019 2018 2017 (ash Flows From Operating Activities:
Netincome
$ 429 $ 481 $ 326 Adjustments to reconcile net income to net cash provided by operating activities:
I)epreciation and amortization 564 533 514 Amortization ofnuclear fuel 79 95 76 Amortization of debt issuance costs and premium/discounts 5 6 6 I)eferred income taxes and investment tax credits. net (19) (9) 82 Allowance for equity funds used during construction (19) (27) (21)
Other 13 17 4 Changes in assets and liabilities:
Receivables 75 (32) (46)
Inventories (13) 30 18 Accounts and wages payable 16 (21) 27 Taxes accrued (15) (1) (1)
Regulatory assets and liabilities 17 20 1 26 Assets, other (2$) 2 31 Liabilities, other (32) (13) (23)
Pension and other postretirernent benefits (5) (2) (2)
Net cash provided by operating activities 1,067 1,260 1,017 Cash Flows From Investing Activities:
Capital expenditures (1,076) (914) (773)
Nuclear fuel expenditures (31) (52) (63)
Purchases ofsecurities nuclear decommissioning trust fund (256) (315) (321)
Sales and maturities of securities nuclear decommissioning trust fund 260 299 305 Purchase ofhonds (207)
Proceeds from sale ofremarketed bonds 207 Money pool advances, net 161 Other 8 6 7 Net cash used in investing activities (1,095) (976) (684)
(ash Flows From Financing Activities:
Dividends on common stock (430) (375) (362)
Dividends on preferred stock (3) (3) (3)
Short-tenn debt, net 179 16 39 Maturities oflong-term debt (5$0) (384) (431)
Issuances oflong-term debt 778 423 399 Debt issuance costs (9) (5) (3)
Capital contribution from parent 124 45 30 Net cash provided by (used in) financing activities 59 (283) (331)
Net change in cash, cash equivalents, and restricted cash 31 1 2 Cash, cash equivalents, and restricted cash at beginning ofyear 8 7 5 Cash, cash equivalents, and restricted cash at end ofyear S 39 $ 8 $ 7 Cash Paid During the Year:
Interest (net of$12, $14, and $10 capitalized, respectively) $ 190 $ 196 $ 202 Income taxes, net 101 128 178 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
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Table of Contents tINION ELECTRIC COMPANY (dlbla AMEREN MISSOuRI)
STATEMENT OF SHAREhOLDERS EQUITY (In millions)
December 31, 2019 2018 2017 (ommonStock
$ 511 $ 511 $ 511 Other Paid-in Capital:
Beginningofyear 1,903 1,858 1,828 Capital contribution from parent 124 45 30 Other paid-in capital, end ofyear 2,027 1,903 1,858 Preferred Stock 80 80 80 Retained Earnings:
Beginning ofyear 1,735 1,632 1,671 Netincome 429 481 326 Common stock dividends (430) (375) (362)
Preferred stock dividends (3) (3) (3)
Retained earnings, end ofvear 1,731 1,735 1,632 Total Shareholders Equity $ 4,349 $ 4,229 $ 4,081 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
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Table of Contents AMEREN ILLINOIS COMPANY (dlbla AMEREN ILLINOIS)
STATEMENT OF INCOME (In millions)
Year Ended December 31, 2019 2018 2017 Operating Revenues:
Electric S 1,730 $ 1,761 $ 1,784 Natural gas 797 815 743 Total operating revenues 2,527 2,576 2,527 Operating Expenses:
Purchased power 36$ 429 417 Natural gas purchased for resale 278 3 18 264 Other operations and maintenance 7$2 799 799 I)epreciation and amortization 406 374 341 Taxes other than income taxes 143 144 137 Total operating expenses 1,977 2,064 1,958 Operating Income 550 512 569 Other Income, Net 53 42 12 Interest Charges 147 149 144 Income Before Income Taxes 456 405 437 Income Taxes 110 98 166 Net Income
$ 346 $ 307 $ 271 Preferred Stock Dividends 3 3 3 Net Income Available to Common Shareholder
$ 343 $ 304 $ 268 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
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Table of Contents AMEREN ILLINOIS COMPANY (il/b/a AMEREN ILLINOIS)
BALANCE SHEET (In millions)
December 31, 2019 201$
ASSETS Current Assets:
Cash and cash equivalents Accounts receivable trade (less allowance for doubtful accounts of $1 0 and $ 1 1, respectively) 215 224 Accounts receivable affiliates 28 21 Unbilled revenue 139 l4t)
Miscellaneous accounts receivable 25 40 Inventories 121 125 Current regulatory assets 57 lIt)
Other current assets 29 16 Total current assets 614 676 Property, Plant, and Equipment, Net 10,083 9,198 Investments and Other Assets:
Goodwill 411 411 Regulatory assets 694 759 Other assets 383 275 Total investments and other assets 1,488 1,445 TOTAL ASSETS
$ 12,185 $ 11,319 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities:
Short-term debt
$ 53 $ 72 Accounts and wages payable 299 302 Accounts payable affiliates
$2 58 Customer deposits 77 76 Current environmental remediation 42 42 Current regulatory liabilities
$4 62 Other current liabilities 207 184 Total current liabilities 844 796 Long-term Debt, Net 3,575 3,296 Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net 1,224 1,119 Regulatory liabilities 1,$49 1,741 Pension and other postretirement benefits 214 280 Environmental rernediation
$7 109 Other deferred credits and liabilities 260 204 Total deferred credits and other liabilities 3,634 3,453 Commitments and Contingencies (Notes 2, 13, and 14)
Shareholders Equity:
Common stock, no par value, 45.0 shares authorized 25.5 shares outstanding Other paid-in capital 2,188 2,173 Preferred stock 62 62 Retained earnings 1,$$2 1,539 Total shareholders equity 4,132 3,774 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
$ 12,185 $ 11,319 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
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Table of Contents AMEREN ILLINOIS COMPANY (dlbla AMEREN ILLINOIS)
STATEMENT OF CASH FLOWS (In millions)
Year Ended December 31, 2019 2018 2017 Cash Flows From Operating Activities:
Net income
$ 346 $ 307 $ 271 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 405 375 341 Amortization of debt issuance costs and premium/discounts 12 13 13 Deferred income taxes and investment tax credits, net 80 88 171 Other 7 11 Changes in assets and liabilities:
Receivables 11 (7)
Inventories 2 8 (1)
Accounts and wages payable (19) (13) 19 Taxes accrued 21 (13) 18 Regulatory assets and liabilities 155 1 16 Assets, other (23) (1) (2)
Liabilities, other (5) (92) 3 Pension and other postretirement benefits (30) (25) (14)
Net cash provided by operating activities 962 659 828 Cash Flows From Investing Activities:
Capital expenditures (1,208) (1,258) (1,076)
Other 3 10 6 Net cash used in inesting activities (1,205) (1,248) (1,070)
(ash Flows From Financing Activities:
Dividends on preferred stock (3) (3) (3)
Short-term debt, net (19) 10 11 Maturities oflong-tenn debt (457) (250)
Issuances oflong-term debt 299 929 496 Debt issuance costs (4) (9) (6)
Capital contribution from parent 15 160 8 Other (2) (1)
Net cash provided by financing activities 288 628 255 Net change in cash, cash equivalents, and restricted cash 45 39 13 Cash, cash equivalents, and restricted cash at beginning of year 80 41 28 Cash, cash equivalents, and restricted cash at end of year
$ 125 $ 80 $ 41 Cash Paid (Refunded) During the Year:
Interest (net of$8, $7, and $4 capitalized, respectively)
$ 127 $ 144 $ 139 Income taxes. net 4 28 (22)
The accompanying notes as they relate to Ameren Illinois are an integral part ofthese financial statements.
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Tabte of Contents AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)
STATEMENT OF SHAREhOLDERS EQUITY (In millions)
December 31, 2019 2018 2017 Common Stock $ $ $
Other Paid-in Capital Beginning of year 2,173 2,013 2,005 Capital contribution from parent 15 160 8 Other paid-rn capital, end of year 2,188 2,173 2,013 Preferred Stock 62 62 62 Retained Earnings:
Beginning of year 1,539 1,235 967 Net income 346 307 271 Preferred stock dividends (3) (3) (3)
Retained earnings, end of year 1,882 1,539 L235 Total Shareholders Equity $ 4,132 $ 3,774 $ 3,310 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
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Table of Contents AMEREN CORPORATION (Consolidated)
UNR)N ELECTRIC COMPANY (dlb/a Ameren Missouri)
AMEREN ILLINOIS COMPANY (dlb/a Ameren Illinois)
COMBINED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 1 -
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES General Ameren, headquartered in St. Louis, Missouri, is a public utility holding company whose primary assets are its equity interests in its subsidiaries. Arnerens subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. Dividends on Arnerens common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries. Amerens principal subsidiaries are listed below.
Ameren also has other subsidiaries that conduct other activities, such as providing shared services.
. Union Electric Company, doing business as Ameren Missouri, operates a rate-regulated electric generation, transmission
, and distribution business and a rate-regulated natural gas distribution business in Missouri. Ameren Missouri was incorporated in Missouri in 1922 and is successor to a number of companies, the oldest ofwhich was organized in 188 1. It is the largest electric utility in the state ofMissouri. It supplies electric and nattiral gas service to a 24,000-square-mile area in central and eastern Missouri, which includes the Greater St. Louis area. Ameren Missouri supplies electric service to I .2 million customers and natural gas service to 0. 1 million customers.
. Ameren Illinois Company, doing business as Ameren Illinois, operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois. Ameren Illinois was incorporated in Illinois in 1923 and is the successor to a number ofcompanies
, the oldest ofwhich was organized in 1902. Ameren Illinois supplies electric and natural gas utility service to a 43,700 square mile area in central and southern Illinois. Ameren Illinois supplies electric service to 1 .2 million customers and natural gas service to 0.8 million customers.
. Ameren Transmission Company ofllhnois, doing business as ATXI, operates a FERC rate-regtilated electric transmission business in the MISO. ATXI was incorporated in Illinois in 2006. ATXI is constructing the Illinois Rivers project, a MISO-approved electric transmission project, and eight of its nine line segments have been completed and placed in service as ofDecember 3 1, 2018. ATXI operates the Spoon River project and the Mark Twain project, which were placed in service in February 2018 and December 2019, respectively.
Amerens financial statements are prepared on a consolidated basis and therefore include the accounts ofits majority-own ed subsidiaries. All intercompany transactions have been eliminated, except as disclosed in Note 13 Related-party Transactions. Ameren Missouri and Ameren Illinois have no subsidiaries. All tabular dollar amounts are in millions, unless otherwise indicated.
Our accounting policies conform to GAAP. Our financial statements reflect all adjustments (which include normal, recurring adjustments) that are necessary, in our opinion, for a fair presentation of our results. The preparation of financial statements in conformity with GAAP reqtiires management to make certain estimates and assumptions. Such estimates and assumptions affect reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates offinancial statements, and the reported amounts ofrevenues and expenses during the reported periods. Actual results could differ from those estimates.
Regulation Our customer rates are regulated by the MoPSC, the ICC, and the FERC. We defer certain costs as assets pursuant to actions ofrate regulators or because of expectations that we will be able to recover such costs in future rates charged to customers. We also defer certain amounts as liabilities pursuant to actions of rate regulators or based on the expectation that such amounts will be returned to customers in future rates. Regulatory assets and liabilities are amortized consistent with the period ofexpected regulatory treatment. See Note 2 Rate and Regulatory Matters for additional information on our regulatory frameworks, regulatory recovery mechanisms, and regulatory assets andliabilities recorded at I)ecember 31, 2019 and 201$.
We continually assess the recoverability ofour respective regulatory assets. Regulatory assets are charged to earnings when it is no longer probable that such amounts will be recovered through future revenues. To the extent that reductions in customers rates or refunds to customers related to regulatory liabilities are no longer probable, the amounts are credited to earnings.
Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents include short-term, highly liquid investments purchased with an original maturity ofthree months or less. Cash and cash equivalents subject to legal or contractual restrictions and not readily available for use for general corporate purposes are classified as restricted cash. See Note 15 Supplemental Information for a reconciliation of cash, cash equivalents, and restricted cash 86
Table of Contents reported within the balance sheets and the statements ofcash flows.
Allowance for Doubtful Accounts Receivable The allowance for doubtful accounts represents our estimate of existing accounts receivable that will ultimately be uncollectible The
. allowance is calculated by applying estimated loss factors to various classes of outstanding receivables, including unbilled revenue. The loss factors used to estimate uncollectible accounts are based upon both historical collections experience and managements estimate offuture collections success given the existing and anticipated future collections environment. Ameren Illinois has a bad debt rider that adjusts rates for net write-offs of customer accounts receivable above or below those being collected in rates.
Inventories Inventories are recorded at the lower ofweighted-average cost or net realizable value. Inventories are capitalized when purchased and then expensed as consumed or capitalized as property, plant, and equipment when installed, as appropriate. See Note 1 5 Supplemental Information for the components of inventories.
Property, Plant, and Equipment, Net We capitalize the cost ofadditions to, and betterments of units ofproperty, plant, and equipment. The cost includes labor, material, applicable taxes, and overhead. An allowance for funds used durmg construction, as disctissed below, is also capitalized as a cost of our rate-regulated assets. Maintenance expenditures are expensed as incurred. Beginning in 2020, maintenance expenses related to scheduled Callaway nuclear refuelmg and mamtenance outages, which were previously expensed as incurred, are deferred and amortized over approximately 1 8 months. See Note 2 Rate and Regulatory Matters for additional information.
When units of depreciable property are retired, the original costs, and the associated removal cost, net of salvage, are charged to accumulated depreciation. If environmental expenditures are related to assets currently in use, as in the case ofthe installation ofpollution control equipment, the cost is capitalized and depreciated over the expected life ofthe asset. See Asset Retirement obligations section below and Note 3 Property, Plant, and Equipment, Net for additional information.
Ameren Missouris cost ofnuclear fuel is capitalized as a part ofProperty, Plant, and Equipment, Net on the balance sheet and then amortized to Operating Expenses fuel in the statement of income on a unit-of-production basis.
Depreciation Depreciation is provided over the estimated lives ofthe various classes ofdepreciable property by applying composite rates on a straight-line basis to the cost basis ofsuch property. The composite rates include a provision for the estimated removal cost ofproperty, plant, and equipment retired from service, net of salvage. The provision for depreciation for the Ameren Companies in 2019, 2018, and 2017 ranged from 3% to 4% ofthe average depreciable cost. See Note 3 Property, Plant, and Equipment, Net for additional information on estimated depreciable lives.
Allowance for Funds tised During Construction As a part of Property, Plant, and Equipment, Net on the balance sheet, we capitalize allowance for hinds used during construction, which is the cost of borrowed funds and the cost of equity funds (preferred and common shareholders equity) applicable to eligible rate-regulated construction work in progress, in accordance with the utility industrys accounting practice and GAAP. The amount of allowance for funds used during construction is calculated using a FERC prescribed formula based on a rate, which includes the average cost ofshort-term debt, the average cost oflong-term debt, and the cost ofequity funds. The portion attributable to borrowed funds is recorded as a reduction of Interest Charges on the statements of income. The portion attributable to equity funds is recorded within Other Income, Net on the statements of income. This accounting practice offsets the effect on earnings of the cost of financing during construction. See Note 1 5 Supplemental Information for the amount of allowance for funds used during construction capitalized and the average rate applied to eligible construction work in progress.
Allowance for funds used during construction does not represent a current source ofcash funds. Under accepted ratemaking practice, cash recovery of allowance for funds used during construction and other construction costs occurs when completed projects are placed in service and reflected in customer rates.
Goodwill Goodwill represents the excess ofthe purchase price ofan acquisition over the fair value ofthe net assets acquired. Ameren and Arneren Illinois had goodwill of $41 1 million at December 3 1, 2019 and 20 18. Ameren has four reporting units: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission. Ameren Illinois has three reporting units: Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Illinois Transmission. Ameren Illinois Electric Distribtition, Ameren Ilimois
$7
Table of Contents Natural Gas, and Ameren Illinois Transmission had goothvill of$238 million, $80 million, and $93 million, respectively, at December 3 1, 2019 and 2018. The Ameren Transmission reporting unit had the same $93 million ofgoodwill as the Arneren Illinois Transmission reporting unit at December 31, 2019 and 2018.
Aineren and Ameren Illinois evaluate goodwill for impairment in each oftheir reporting units as ofOctober 3 1 each year, or more frequently ifevents occur or circumstances change that would more likely than not reduce the fair value oftheir reporting units below their carrying amounts.
To detennme whether the fair value of a reporting unit is more likely than not greater than its carrying amount, Ameren and Ameren Illinois elect to perform either a qualitative assessment or to bypass the qualitative assessment and perform a quantitative test.
Ameren and Ameren Illinois elected to perfonu a qualitative assessment for their annual goodwill impairment test conducted of as October 3 1, 2019. As part ofthis qualitative assessment, Ameren and Ameren Illinois evaluated, among other things, macroeconomic conditions, industry and market considerations such as observable industry market multiples, regulatory frameworks, cost factors, overall financial performance, and entity-specific events.
The results ofAmerens and Ameren Illinois qualitative assessment indicated that it was more likely than not that the fair value ofeach reporting unit exceeded its carrying value as of October 3 1, 2019, resulting in no impairment ofAmerens or Ameren Illinois goodwill.
Impairment of Long-lived Assets We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether an impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets to the carrying value ofthe assets. Ifthe carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the amount by which the carrying value exceeds the estimated fair value ofthe assets. In the period in which we determine that an asset meets held for sale criteria, we record an impairment charge to the extent the book value exceeds its estimated fair value less cost to sell. We did not identify any events or changes in circumstances that indicated that the carrying valtie oflong-lived assets may not be recoverable in 2019 or 2018.
Variable Interest Entities As of December 3 1 20 19, Ameren and Arneren Missouri had interests in unconsolidated variable interest entities that were established to construct wind generation facilities and, ultimately, sell those constructed facilities to Ameren Missouri. Neither Ameren nor Ameren Missouri are the primary beneficiary of these variable interest entities because neither has the power to direct matters that most significantly affect the entities activities, which include designing, financing, and constructing the wind generation facilities. As a result, these variable interest entities are not required to be consolidated. As ofDecember 3 1, 2019, the maximum exposure to loss related to these variable interest entities was approximately $13 million, which primarily represents legal costs incurred.
The risk of a loss was assessed to be remote and, accordingly, Ameren and Ameren Missouri have not recognized a liability associated with any portion ofthe maximum exposure to loss.
See Note 2 Rate and Regulatory Matters for additional information on the agreements to acquire these wind generation facilities.
As ofDecember 31, 2019 and 2018, Ameren had unconsolidated variable interests as a limited partner in various equity method investments, totaling $28 million and $22 million, respectively, included in Other assets on Amerens consolidated balance sheet. Ameren is not the primary beneficiary of these investments because it does not have the power to direct matters that most significantly affect the activities ofthese variable interest entities. As ofl)ecember 31, 2019, the maximum exposure to loss related to these variable interest entities is limited to the investment in these partnerships of$28 million plus associated outstanding funding commitments of $35 million.
Environmental Costs Liabilities for environmental costs are recorded on an undiscounted basis when it is probable that a liability has been incurred and the amount ofthe liability can be reasonably estimated. Costs are expensed or deferred as a regulatory asset when it is expected that the costs will be recovered from customers in future rates.
See Note 14 Commitments and Contingencies for additional information on liabilities for environmental costs.
Asset Retirement Obligations We record the estimated fair value oflegal obligations associated with the retirement oftangible long-lived assets in the period in which the liabilities are incurred and capitalize a corresponding amount as part ofthe book value ofthe related long-lived asset. In subsequent periods, we adjust AROs for accretion and based on changes in the estimated fair values ofthe obligations with a corresponding increase or decrease in the asset book value.
Asset book values, reflected within Property, Plant, and Equipment, Net on the balance sheet, are depreciated over the remaining useful life ofthe related asset. Due to regulatory recovery, that depreciation is deferred as a regulatory balance. The depreciation of the asset book values at Ameren Missouri was 8 million,
$1 $ 14 million, and $26 million for the years ended December 31, 2019, 2018, and 2017, respectively, which was deferred as a reduction to the net regulatory liability. The net regulatory liability also reflects deferrals ofnet realized and unrealized gains and losses within the nuclear decommissioning trust fund for the Callaway Energy 88
Table of Contents Center. The depreciation deferred to the regulatory asset at Ameren Illinois was immaterial in each respective period. Uncertainties as to the probability, timing, or amount of cash expenditures associated with AROs affect our estimates of fair value. Ameren and Ameren Missouri have recorded AROs for retirement costs associated with Ameren Missouris Callaway Energy Center decomrnissionmg, CCR facilities, and river structures. Also, Ameren, Ameren Missouri, and Ameren Illinois have recorded AROs for retirement costs associated with asbestos removal and the disposal ofcertain transformers. See Note 15 Supplemental Information for a reconciliation ofthe beginning and ending carrying amotint of AROs.
Estimated funds collected from customers to pay for the future removal cost of property, plant, and equipment retired from service, net of salvage, represent a cost ofremoval regulatory liability. See the cost ofremoval regulatory liability balance in Note 2 Rate and Regulatory Matters.
Company-owned Life Insurance Ameren and Ameren Illinois have company-owned life insurance, which is recorded at the net cash surrender value. The net cash surrender value is the amount that can be realized under the insurance policies at the balance sheet date. As ofDecember 31, 2019, the cash surrender value ofcornpany-owned life insurance at Ameren and Ameren Illinois was $264 million (December 3 1, 2018 $244 million) and
$123 million (December 3 1, 2018 $122 million),
respectively, while total borrowings against the policies were $114 million (December 31, 2018 $113 million) at both Ameren and Ameren Illinois. Ameren and Ameren Illinois have the right to offset the borrowings against the cash surrender value ofthe policies and, consequently, present the net asset in Other assets on their respective balance sheets. The net cash surrender value ofAmerens company-owned life insurance is affected by the investment performance ofa separate account in which Ameren holds a beneficial interest.
Operating Revenues We record revenues from contracts with customers for various electric and natural gas services, which primarily consist ofretail distribution, electric transmission, and off-system arrangements. When more than one performance obligation exists in a contract, the consideration under the contract is allocated to the perfonnance obligations based on the relative standalone selling price.
Electric and natural gas retail distribution revenues are earned when the commodity is delivered to our customers.
We accrue an estimate ofelectric and natural gas retail distribution revenues for service provided but unbilled at the end of each accounting period.
Electric transmission revenues are earned as electric transmission services are provided.
Off-system revenues are primarily comprised ofMISO revenues and wholesale bilateral revenues. MISO revenues include the sale ofelectricity, capacity, and ancillary services. Wholesale bilateral revenues include the sale ofelectricity and capacity. MISO-related electricity and wholesale bilateral electricity revenues are earned as electricity is delivered. MISO-related capacity and ancillary service revenues and wholesale bilateral capacity revenues are earned as services are provided.
Retail distribution, electric transmission, and off-system revenues, including the tinderlymg components described above, represent a series of goods or services that are substantially the same and have the same pattern oftransfer over time to our customers. Revenues from contracts with customers are equal to the amounts billed and our estimate of electric and natural gas retail distribution services provided but unbilled at the end of each accounting period. Customers are billed at least monthly, and payments are due less than one month after goods andlor services are provided.
See Note 16 Segment Infonnation for disaggregated revenue information.
For certain regulatory recovery mechanisms that are alternative revenue programs rather than revenues from contracts with customers, we recognize revenues that have been authorized for rate recovery, are objectively determinable and probable ofrecovery, and are expected to be collected from customers within two years from the end ofthe year. Our alternative revenue programs include revenue requirement reconciliation s, the MEEIA, and the VBA. These revenues are subsequently recognized as revenues from contracts with customers when billed, with an offset to alternative revenue program revenues.
As ofl)ecember 31, 2019 and 2018, our remaining performance obligations were immaterial. The Ameren Companies elected not to disclose the aggregate amount ofthe transaction price allocated to the performance obligations that are unsatisfied as ofthe end ofthe reporting period for contracts with an initial expected term ofone year or less.
Accounting for MISO Transactions MISO-related purchase and sale transactions are recorded by Ameren, Ameren Missouri, and Ameren Illinois using settlement information provided by the MISO. Ameren Missouri records these purchase and sale transactions on a net hourly position. Ameren Missouri records net purchases in a single hour in Operating Expenses Purchased power and net sales in a single hour in Operating Revenues Electric in its statement of income. Ameren Illinois records net purchases in Operating Expenses Ptirchased power in its statement of 89
Table of Contents income to reflect all ofits MISO transactions relating to the procurement ofpower for its customers. On occasion, Ameren Missouris and Ameren Illinois prior-period transactions will be resettled outside the routine settlement process because of a change in the MISO s tariff or a material interpretation thereof In these cases, Ameren Missouri and Ameren Illinois recognize revenues and expenses associated with resettlements once the resettlement is probable and the resettlement arnotint can be estimated. There were no material MISC) reseftlements in 2019, 2018, or 2017.
Stock-based Compensation Stock-based compensation cost is measured at the grant date based on the fair value ofthe award, net ofan assumed forfeiture rate. Ameren recognizes as compensation expense the estimated fair value of stock-based compensation on a straight-line basis over the requisite vesting period. See Note 1 1 Stock-based Compensation for additional information.
IJnamortized Debt Discounts, Premiums, and Issuance Costs Long-term debt discounts, premiums, and issuance costs are amortized over the lives of the related issuances. Credit agreement fees are amortized over the term ofthe agreement.
Income Taxes Ameren uses an asset and liability approach for its financial accounting and reporting of income taxes. I)eferrcd tax assets and liabilities arc recognized for transactions that are treated differently for financial reporting and income tax return purposes. These deferred tax assets and liabilities are based on statutory tax rates.
We expect that regulators will reduce future revenues for deferred tax liabilities that were initially recorded at rates excess in ofthe current statutory rate.
Therefore, reductions in certain deferred tax liabilities that were recorded because of decreases in the statutory rate have been credited to a regulatory liability. A regulatory asset has been established to recognize the probable recovery through future customer rates of tax benefits related to the equity component of allowance for ftmds used during constrtiction, as well as the effects of tax rate increases. To the extent deferred tax balances are included in rate base, the revaluation of deferred taxes is recorded as a regulatory asset or liability on the balance sheet and will be collected from, or refunded to, customers. For deferred tax balances not included in rate base, the revaluation of deferred taxes is recorded as an adjustment to income tax expense on the income statement. See Note 12 Income Taxes for further information regarding the revaltiation of deferred taxes related to the TCJA and Missouri and Illinois state corporate income tax rate changes.
Ameren Missouri, Ameren Illinois, and all the other Ameren stibsidiarv companies are parties to a tax allocation agreement with Ameren (parent) that provides for the allocation ofconsolidated tax liabilities. The tax allocation agreement specifies that each party be allocated an amount oftax using a stand-alone calculation, which is similar to what would be owed or refunded had the party been separately subject to tax without considering the impact of consolidation. Any net benefit attributable to Ameren (parent) is reallocated to the other parties. This reallocation is treated as a capital contribution to the party receiving the benefit. See Note 13 Related-party Transactions for information regarding capital contributions under the tax allocation agreement.
Accounting Changes and Other Matters The following is a summary ofrecently adopted authoritative accounting guidance, as well as guidance issued but not yet adopted, that could affect the Ameren Companies.
In the first quarter of2Ol9, the Ameren Companies adopted authoritative accounting guidance on leases. See Note 15 Supplemental Information for additional information.
Measurement ofCredit Losses on financial Instruments In June 2016, the FASB issued authoritative guidance that requires an entity to recognize an allowance for financial instruments that reflects its current estimate of credit losses expected to be incurred over the life ofthe financial instruments. The guidance requires an entity to measure expected credit losses using relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. This guidance will be effective for the Ameren Companies in the first quarter of 2020, and will require changes to be applied retrospectively with a cumulative effect adjustment to retained earnings as ofthe adoption date. The adoption ofthis guidance will not have a significant impact on the Arneren Companies financial statements.
Fali Value Measutrement Disclosures In August 201 8, the FASB issued authoritative guidance that affects disclosure requirements for fair value measuremen ts. This guidance will be effective for the Arneren Companies in the first quarter of 2020.
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Table of Contents Defined Benefit Plan Disclosures In August 2018, tile FASB issued authoritative guidance that affects disclosure requirements for defined benefit plans. This guidance will be effective for the Ameren Companies in the fourth quarter of2020, and will require changes to be applied retrospectively to each period presented.
NOTE 2 - RATE AND REGULATORY MATTERS Below is a summary ofour regulatory frameworks and significant regulatory proceedings and related lawsuits. We are unable to predict the ultimate outcome ofthese matters, the timing offinal decisions ofthe various agencies and courts, or the effect n our results ofoperations, financial position, or iiqtiidity.
Regulatory Frameworks Missottri The MoPSC regulates rates and other matters for Arneren Missouris electric service and natural gas distribution businesses. The rates Ameren Missouri charges customers for these services are established in a traditional regulatory rate review, which takes up to 1 1 months to complete, based on a historical test year and the allowed ROE established in the review.
Ameren Missouri has recovery mechanisms, including the RESRAM, FAQ, MEEIA, PGA, DCA, and ISRS, that allow customer rates to be adjusted without a traditional regulatory rate review. These rate-adjustment mechanisms, along with the PISA, each described m more detail below, mitigate the effects of regulatory lag. Ameren Missouri also employs other recovery mechanisms, including a pension and postretirement benefit cost tracker, an uncertain mcome tax position tracker, a tracker on certain excess deferred iflcome taxes, a renewable energy standard cost tracker, and a solar rebate program cost tracker. Each ofthese trackers allows Ameren Missouri to defer the difference between actual costs incurred and costs included in customer rates as a regulatory asset or regulatory liability. The difference will be reflected in base rates in a subsequent MoPSC rate order. Ameren Missouris cost recoven under any ofits recovery mechanisms is subject to MoPSC prudence reviews.
The PISA permits Ameren Missotiri to defer and recover 85% ofthe depreciation expense and a return at the applicable WACC on investments m certain property, plant, and equipment placed in service after September 1, 2018, and not incltided in base rates. The regulatory asset for accumulated PISA deferrals also earns a return at the applicable WACC, with all approved PISA deferrals added to rate base prospectively and recovered over a period of2O years following a regulatory rate review. Additionally, under the RESRAM, Ameren Missouri is permitted to recover the 15% of depreciation expense and a return at the applicable WACC for investments in renewable generation plant placed in service and not recovered under the PISA. The deferrals are a regulatory asset until they are included in customer rates and collected in a subsequent period. Those investments not eligible for recovery under the PISA and the remaining 15% of certain property, plant, and equipment placed in service, unless eligible for recovery under the RESRAM, remain subject to regulatory lag. Ameren Missouri recognizes the cost of debt on PISA deferrals in revenue, instead ofusing the applicable WACC, with the difference recognized in revenues when recovery of stich deferrals is reflected in customer rates. Under Missouri law, as a result ofthe PISA election, additional provisions apply to Ameren Missouri, including limitations on electric customer rate increases. Ifrate changes from the FAC or the RESRAM riders would cause rates to temporarily exceed the 2. 85%
rate cap, the overage would he deferred for future recovery in tile next regulatory rate review however, rates established in such regulatory rate review would be subject to the rate cap. Any deferred overages approved for recovery would be recovered in a manner consistent with costs recovered under the PISA. Excluding customer rates under the MEEIA rider, which are not subject to the rate cap, Ameren Missouri would incur a penalty equal to the amount of deferred overage that would cause customer rates to exceed the 2.85% rate cap. Customer rates for Ameren Missouris electric service did not exceed the cap in 2019.
Both the rate increase limitation and the PISA are effective through December 2023. Missouri law provides for the ability to use the PISA, ifAmeren Missouri requests and receives MoPSC approval for extension, through I)ecernber 202$.
The RESRAM permits Ameren Missouri to recover or refund, through customer rates, the difference between the cost of compliance with Missouris renewable energy standard and the amount set in base rates. Customer rates are adjusted for the RESRAM Oil il annual basis without a traditional regulatory rate review, subject to MoPSC prudence reviews. The difference between actual compliance costs and costs billed to customers in a given period is deferred as a regulatory asset or liability. The deferred amount is either billed or refunded to customers in a subsequent period. RESRAM regulatory assets earn carrying costs at short-term interest rates. The RESRAM permits Ameren Missouri to recover investments in wind generation and other renewables, and earn a return at the applicable WACC on those investments not already provided for in customer rates or any other recovery mechanism.
The FAC permits Ameren Missouri to recover or refund, through customer rates, 95% ofthe variance in net energy costs from the amount set in base rates without a traditional regulatory rate review, subject to MoPSC prudence reviews, with the renlaining 5% of changes retained by Ameren Missouri. Net recovery of these costs through customer rates does not affect Arneren Missouris electric margins, as any change in revenue is offset by a conespondmg change in fuel expense. The difference between actual net energy costs and costs billed to 91
Table of Contents customers in a given period is deferred as a regulatory asset or liability. The deferred amount is either billed or refunded to customers in a subsequent period. FAC regulatory assets earn carrying costs at short-term interest rates. Ameren Missouris base rates for electric service are required to be reset at least every four years to allow for continued use ofthe FAC.
The M.EEIA permits Ameren Missouri to recover customer energy-efficiency program costs, the related lost electric margins, and any performance incentive through the MEEIA without a traditional regulatory rate review. MEEJA assets earn carrying costs at short-term interest rates.
Ameren Missouri is a member ofthe MISO, and its transmission rate is calculated in accordance with the MISO Open Access Transmission, Energy, and Operating Reserve Markets Tariff The FERC regulates the rates charged and the terms and conditions for wholesale electric transmission service. The transmission rate update each June is based on Ameren Missouris actual historical cost from the prior calendar year. This rate is not directly charged to Missouri retail customers because, in Missouri, bundled retail rates include an amount for transmission-related costs and revenues.
The PGA allows Ameren Missouri to recover prudently incurred costs of natural gas purchased on behalf of its customers without a traditional regulatory rate review. These pass-through purchased gas costs do not affect Ameren Missouris natural gas margins, as any change in costs is offset by a correspondmg change in revenues. The difference between actual natural gas costs and costs billed to customers in a given period is deferred as a regulatory asset or liability. The deferred amount is either billed or refunded to customers in a subsequent period. PGA regulatory assets earn carrying costs at short-term interest rates. The DCA ensures recoverability ofthe natural gas delivery service revenue requirement that is dependent on sales volume for nearly all customers. The DCA allows Ameren Missouri to adjust natural gas delivery service rates without a traditional regulatory rate review when changes occur in sales volumes from those volumes approved by the MoPSC in the previous regulatory rate review. The difference between actual gas delivery service revenues billed to customers and revenues approved by the MoPSC in a given period is deferred as a regulatory asset or liability. DCA regulatory assets earn carrying costs at short-term interest rates. The deferred amount is either billed or refunded to customers in a subsequent period. In addition. the ISRS permits certain prudently incurred natural gas infrastructure replacement costs to be recovered from customers on a more timely basis between regulatory rate reviews. The ROE currently used by Ameren Missouri for purposes ofthe ISRS tariffis 9.725%.
Itibtois The ICC regulates rates and other matters for Ameren Illinois electric distribution service and natural gas distribution businesses. The rates Ameren Illinois charges customers for electric distribution service are calculated under a performance-based formula ratemaking framework. The rates Ameren Illinois charges customers for natural gas distribution service are established in a traditional regulatory rate review, which takes up to 1 1 months to complete, based on a future test year and an allowed ROE established in the review.
Ameren Illinois election to use the electric distribution service performance-based formula ratemaking framework allowed by state law, described below, permits Arneren Illinois to adjust customer rates to recover the cost ofelectnc distribution service on an annual basis. Ameren Illinois electric distribution service also has other cost recovery mechanisms in place that allow customer rates to be adjusted without a traditional regulatory rate review. Ameren Illinois electric distribution service business has cost recovery mechanisms for power procurement and transmission services incurred on behalf of its customers, renewable energy credit compliance, zero emission credits, and certain environmental costs, as well as bad debt expense and the costs of certain asbestos-related claims not recovered in base rates. These pass-through costs do not affect Ameren Illinois net income, as any change in costs is offset by a corresponding change in revenues. Ameren Illinois cost recovery under any ofits recovery mechanisms is subject to ICC prudence reviews.
Ameren Illinois electric distribution service performance-based formula ratemaking framework allows Ameren Illinois to reconcile electric distribution service rates to its actual revenue requirement on an annual basis. If a given years revenue requirement varies from the amount collected from customers, an adjustment is made to electric operating revenues with an offset to a regulatory asset or liability to reflect that years actual revenue requirement, independent of actual sales volumes. The regulatory balance is then collected from, or refunded to, customers within two years from the end ofthe year. In addition, Ameren Illinois electric customer energy-efficiency rider provides Ameren Illinois electric distribution service busmess with recovery of and return on, energy-efficiency investments. Under formula ratemaking for both its electric distribution service and its electric energy-efficiency investments, the revenue requirements are based on recoverable costs, year-end rate base, a capital structure ofup to and including 50% common equity, and earn a return at the applicable WACC. The ROE component ofthe applicable WACC is based on the annual average ofthe monthly yields ofthe 30-year United States Treasury bonds plus 580 basis points and any performance-related basis point adjustments, described in more detail below. Therefore, Ameren Illinois annual ROE for its electric distribution business is directly correlated to the yields on such bonds. In addition, regulatory assets applicable to formula ratemaking for both electric distribution service and electric energy-efficiency investments earn a return at the applicable WACC. However, Ameren Illinois recognizes the cost of debt on these regulatory assets in revenue, instead ofthe applicable WACC, with the difference recognized in revenues when recovery of such regtilatory assets is reflected in customer rates.
Ameren Illinois electric distribution service business is also subject to performance standards. Failure to achieve the standards would result in a reduction in the companys allowed ROE calculated under the formulas. The performance standards applicable to electric 92
Table of Contents distribution service include improvements in service reliability to reduce both the frequency and duration ofoutages, a reduction in the number ofestimated bills, a reduction of consumption from inactive meters, and a reduction in bad debt expense. The electric distribution service regulatory framework provides for ROE penalties up to 38 basis points in each year from 2020 through 2022, ifthese performance standards are not met.
The allowed ROE on energy-efficiency investments can be increased or decreased up to 200 basis points, depending on the achievement of annual energy savings goals. Any adjustments to the allowed ROE for energy-efficiency investments will depend on annual performance of a historical period relative to energy savings goals. In 20 19, 20 1 8, and 20 17, there were no material performance-related basis point adjustments.
Ameren Illinois natural gas distribution business has recovery mechanisms, including the QIP, PGA, and VBA, that allow customer rates to be adjusted without a traditional regulatory rate review. These rate-adjustment mechanisms, described in more detail below, mitigate the effects ofregulaton lag. Ameren Illinois employs other cost recovery mechanisms for natural gas customer energy-efficiency program costs and certain environmental costs, as well as bad debt expenses and invested capital taxes not recovered in base rates. Pass-through costs under the cost recovery mechanisms do not affect Arneren Illinois net income, as any change in costs is offset by a corresponding change in revenues. Ameren Illinois cost recovery under any of its recovery mechanisms is stibject to ICC prudence reviews.
The QIP rider provides Ameren Illinois with recovery of and a return on, qualifying natural gas infrastructure investments that are placed in service between regulatory rate reviews. Infrastructure investments under the QIP rider earn a return at the applicable WACC. Eligible natural gas investments include projects to improve safety and reliability and modernization investments, such as smart meters. The deferrals are a regttlatoiy asset until they are included in customer rates in a subsequent period. Recovery ofthe regulatory asset begins two months afier the qualifying natural gas plant is placed in service and continues until such plant is included in base rates in a natural gas delivery service rate order. Ameren Illinois QIP rider is subject to a rate impact limitation ofa cumulative 4% per year since the most recent delivery service rate order, with no single year exceeding 5.5%. Upon issuance ofa natural gas delivery service rate order, QIP rate base is transferred to base rates and the QIP rider is reset to zero, which mitigates the risk that the QIP rider will exceed its statutory limitations in future years and ensures timely recovery ofcapital investments. Without legislative action, the QIP rider will expire in December 2023.
The PGA allows Arneren Illinois to recover prudently incurred costs of natural gas purchased on behalf of its customers without a traditional regulatory rate review. These pass-through purchased gas costs do not affect Ameren Illinois natural gas margins, as any change in costs is offset by a corresponding change in revenues. The difference between actual natural gas costs and costs billed to customers in a given period is deferred as a regulatory asset or liability. The deferred amount is either billed or refunded to customers in a subsequent period. PGA regulatory assets earn carrying costs at short-term interest rates. The VBA ensures recoverability ofthe natural gas distribution service revenue requirement that is dependent on sales volumes for residential and small nonresidential customers. For these rate classes, the VBA allows Ameren Illinois to adjust natural gas distribution service rates without a traditional regulatory rate review when changes occur in sales volumes from those volumes approved by the ICC in a previous regulatory rate review. The difference between allowed sales revenues and amounts billed to customers in a given period is deferred as a regulatory asset or liability. The deferred amount is collected from, or refunded to, customers in a subsequent period.
VBA regulatory assets earn carrying costs at short-term interest rates.
federal The FERC regulates rates and other matters for Ameren Illinois transmission business and ATXI. Both Ameren Illinois and ATXI are members ofthe MISO, and their transmission rates are calculated in accordance with the MISO Open Access Transmission, Energy, and Operating Reserve Markets Tariff Ameren Illinois and ATXI have received FERC approval to use a company-specific, forward-looking formula ratemaking framework in setting their transmission rates.
These forward-looking rates are updated annually and become effective each January with forecasted information.
The formula rate framework provides for an annual reconciliation ofthe electric transmission service revenue requirement, which reflects the actual recoverable costs incurred and the 13-month average rate base for a given year, with the revenue requirement in customer rates, including an allowed ROE. If a given years revenue requirement varies from the amount collected from customers, an adjustment is made to electric operating revenues with an offset to a regulatory asset or liability to reflect that years actual revenue requirement, independent of actual sales volumes. The regulatory balance is collected from, or refunded to, customers within two years from the end ofthe year.
FERC revenue reconciliation adjustment regulatory assets earn carrying costs at each companys short-term interest rates, while each company incurs interest at a FERC-prescribed rate on related regulatory liabilities. In addition. the FERC has approved transmission rate incentives, including a 50 basis point incentive adder to the allowed base ROE for Ameren Illinois and ATXI for participation in an RTO, and an additional 50 basis point ROE incentive adder the Mark Twain project earns based on the unique nature ofrisks involved in the project.
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Table of Contents Proceedings and Updates Missouri 2019 Electric Service Regttlato,y Rate Review In July 201 9, Ameren Missouri filed a request with the MoP$C seeking approval to decrease its annual revenues for electric service by $ 1 million. In February 2020, Ameren Missouri, the MoPSC staff the MoOPC, and certain intervenors filed a nonunannnous stipulation and agreement with the MoPSC to decrease Ameren Missouris anntial revenues for electric service by $32 million. The remaining intervenor did not object to the agreement.
The stipulation and agreement, which is subject to MoPSC approval, specified an allowed R)E range of9.4% to 9.8%, but did not specify the common equity percentage or rate base. The stipulation and agreement mcludes the continued use ofthe FAC and trackers for pension and postretirement benefits, uncertam income tax positions, certam excess deferred income taxes, and renewable energy standard compliance costs that the MoPSC previously authorized in earlier electric rate orders. Arneren Missouri cannot predict whether the MoPSC will approve the stipulation and agreement or, if approved, whether any application for rehearing or appeal will be filed, or the outcome if so filed.
A decision by the MoPSC on the nonunanimous stipulation and agreement is expected by March 2020, with new rates effective as early as April 1, 2020.
Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, when any rate change may go into effect, whether the requested regulatory recovery mechanisms will be approved, or whether any rate change that may eventually be approved will be sufficient for Ameren Missouri to recover its costs and earn a reasonable return on its investments when the rate change goes into effect.
ihe percentage of net energy cost variances from the amount set in base rates allowed to be recovered or refunded under the FAQ and costs from services provided by affiliates are still being challenged by the MoOPC, and are expected to be addressed in a proceeding that would begin in March 2020. A MoPSC decision would be expected in the proceeding by the end ofMay 2020. Ifa change to the percentage ofnet energy cost variances from the amount set in base rates allowed to be recovered or refunded under the FAC is ordered by the MoPSC, the ordered percentage will be reflected in the FAC.
Ifany investments or expenses are disallowed by the MoPSC, the effect on customer rates ofsuch disallowances will be deferred as a regulatory liability and refunded to customers over a period oftime determined in the next regulatory rate review.
Wind Generation facilities and RESRAM In May 2019, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 300-megawa tt wind generation facility. In 2018, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 400-megawatt wind generation facility. Ihese two agreements are subject to customary contract terms and conditions. The two build-transfer acquisitions collectively represent $1 .2 billion of capital expenditures, are expected to be completed by the end of2020. and would support Ameren Missouris compliance with the Missouri renewable energy standard.
Both acquisitions have received all regulatory approvals, and both projects have received all applicable zoning approvals, have entered into RTO interconnecti on agreements, and have begun constniction activities. The following table provides information with respect to each build-transfer agreement:
Up-to 400-Megawatt Facility Up-to 300-Megawatt Facility Build-transfer agreement date April 20 1 8 May 2019 Wind facility developer Terra-Gen, LLC Invenergy Renewables, LLC Location Northeastern Missouri Northwestern Missouri Status of certificate of convenience and necessity from the MoPSC Approved October 2018 Approved August 2019 Status of final interconnection costs Recen ed July 2019 Received July 2019 Status ofRTO transmission interconnection agreement Executed August 2019 Executed October 2019 Status of fERC approval Received December 2018 Received October 2019 Expected completion date By the end of 2020 By the end of 2020 In February 2020, the developers of the wind generation facilities received notice from the wind turbine supplier of potential disruptions in its manufacturing, transport, and/or import/export activities resulting from the international public health emergency associated with the novel coronavirus (COVID-19). The developers notified Ameren Missouri that their performance might be delayed as a result. At this time, Ameren Missouri and the developers are unable to estimate the impact to each project, including the project schedule and contracted megawatts.
In 2018, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, a 157-megawatt wind generation facility. In July 2019, Ameren Missouri and the developer mutually agreed to terminate the project due to unacceptable interconnection costs, which made the project uneconomic and not in the best interest ofAmeren Missouris customers. Abandonment costs incurred as a result ofterminating the project were immaterial to Ameren Missouri.
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Table of Contents In January 2019, the MoOPC filed an appeal with the Missouri Court ofAppeals, Western I)istrict, challenging the MoPSCs I)ecember 2018 order allowing Ameren Missouri to recover, through the RESRAM, the 1 5% of depreciation expense and return at the applicable WACC not recovered under the PISA. In October 2019, the Missouri Court ofAppeals, Western District, upheld the MoPSCs order. In November 2019, the MoOPC filed a request for appeal ofthe MoPSCs order to the Missouri Supreme Court, which was denied in February 2020.
AIEEIA As a result ofMoPSC orders issued in September 2017, October 2018, January 2019, and September 2019 related to performance incentives for the MEEIA 2013 and MEEIA 2016 programs, Ameren Missouri recognized revenues of $37 million and $1 1 million during 2019 and 2018, respectively.
Deferral ofMaintenance Expenses Related to Schedztled Cal1awa Refueling and Maintenance Outages In February 2020, the MoPSC issued an order approving a stipulation and agreement allowing Ameren Missouri to defer and amortize maintenance expenses related to scheduled refueling and maintenance outages at its Callaway Energy Center. Beginning with the fall 2020 refueling and maintenance outage, Ameren Missouri will defer the maintenance expenses incurred related to a refueling and maintenance outage as a regulatory asset and amortize those expenses after completion ofthe outage. Maintenance expenses will be amortized over the period between refuelmg and maintenance outages, which is approximately 1$ months.
2018 Natitral Gas Delivety Service Regttlatoiy Rate Review In December 2018, Ameren Missouri filed a request with the MoPSC to increase its annual revenues for natural gas delivery service. In August 2019, the MoPSC issued an order approving a stiptilation and agreement to decrease Ameren Missouris annual revenues for natural gas delivery service by $1 million from rates approved by the MoPSC in January 2011. The decrease in annual rates is based on an allowed ROE range of9.4% to 9.95% and a capital stnicture composed of52.0% common equity, winch was Ameren Missouris capital structure as ofMay 3 1, 2019. This order permits the use ofthe DCA, as well as ISRS, which will be calculated using an allowed ROE of9.725%. The order represents a $1 million increase to Ameren Missouris annual revenues for natural gas delivery service from interim rates, which were approved by the MoPSC in December 2018. The new rates became effective September 1, 2019.
Illinois Electric I)istribtttion Service Rates In December 2019, the ICC issued an order in Ameren Illinois annual update filing that approved a
$7 million decrease in Arneren Illinois electric distribution service rates beginning in January 2020. This order reflected a decrease for the conclusion ofthe 2017 revenue requirement reconciliation adjustment, which was fully collected from customers in 2019, consistent with the ICCs November 201 8 annual update filing order. It also reflected an increase to the annual formula rate based on 2018 actual costs and expected net plant additions for 2019, and an increase to include the 2018 revenue requirement reconciliation adjustment.
Electric Cztstorner Energy-Efficiency Investments In May 2019, Ameren Illinois filed its annual electric customer energy-efficiency formula rate update establish to the revenue requirement to be used for 2020 rates with the ICC. In November 2019, the ICC issued an order that approved 2020 electric customer energy-effici ency rates of$44 million, which represents an increase of$10 million from 2019 rates.
2020 Natural Gas Delivery Service Regttlatoiy Rate Review In February 2020, Ameren Illinois filed a request with the ICC seeking approval to increase its annual revenues for natural gas delivery service by $102 million, which included an estimated $46 million ofannual revenues that would othenvise be recovered under the QIP and other riders. The request is based on a 10.5% allowed ROE, a capital structure composed of 54. 1% common equity, and a rate base of $2. 1 billion.
In an attempt to reduce regulatory lag, Ameren Illinois used a 2021 future test year in this proceeding. A decision by the ICC in this proceeding is required by January 2021, with new rates expected to be effective in February 202 I Ameren Illinois cannot predict the level of any delivery service rate change the ICC may approve. nor whether any rate change that may eventually be approved will be sufficient to enable Ameren Illinois to recover its costs and to earn a reasonable return on investments when the rate changes go into effect.
QIP Prttdence Review In March 2019, Ameren Illinois filed a request for an ICC prudence review ofnatural gas infrastructure investments recovered under the QIP rider during 2018. In November 2019, the Illinois Attorney Generals office challenged the recovery ofcapital investments, among other things, that were made during 2018, alleging that the amount of investments is excessive based on a comparison to historical investment levels.
The Illinois Attorney Generals office is not alleging imprudence or that the mvestments do not qualify for recovery. In November 2019, 95
Table of Contents the ICC stafffiled testimony that supports recovery ofcapital investments made during 2018. Ameren Illinois 201% QIP rate recovery under review by the ICC is within the rate increase limitations allowed by law. An ICC decision in this proceeding is expected by mid-2020.
federal FERC Complaint Cases In November 20 13 a customer group filed a complaint case vith the fERC seeking a reduction in the allowed base ROE for FERC-regula ted transmission rate base under the MISO tarifffrom 12.38% to 9.15%. In September 2016, the fERC issued an order in the November 2013 complaint case, which lowered the allowed base ROE to 10.32%, or a 10.82% total allowed ROE with the inclusion ofa 50 basis point incentive adder for participation in an RTO, that was effective from late September 2016 forward. The September 2016 order also required refunds for the period November 2013 to February 2015, which were paid in 2017.
With the maximum FERC-allowed refund period for the November 2013 complaint case ended in February 2015, another customer complaint case was filed in February 2015, seeking a further reduction in the allowed base ROE for the period offebruary 2015 to May 2016. In November 2019, the FERC issued an order addressmg the November 2013 complaint case, which set the allowed base ROE at 9.88% and required refunds, with interest. for the periods November 2013 to February 2015 and from late September 2016 forward. The order also dismissed the febniary 2015 complaint case.
As a result ofthe November 2019 order, Arneren and Ameren Illinois fully reduced their regulatory liabilities of $46 million and $27 million, respectively, associated with the February 2015 complaint case. As ofl)ecember 31, 2019, Arneren and Ameren Illinois had recorded current regulatory liabilities of$40 million and $23 million, respectively, to reflect the expected refunds, including interest, associated with the reduced ROEs in the November 2019 decision in the November 2013 complaint case. The reduction in the FERC-allowed base ROE is not material to Arneren Missouris results ofoperations, financial position, or liquidity.
In December 2019, Ameren and the MISO transmission owners, including Ameren Missouri, Ameren Illinois, and ATXI, filed requests for rehearing with the FERC. Additionally, in December 2019, various parties filed requests for rehearing with the FERC, challenging the dismissal ofthe February 2t)l5 complaint case.
The FERC has not ruled on the merits ofthe rehearing requests and is under no deadline to do so. The allowed base ROE for the 15-month period related to the February 2015 complaint case was 12.38%. Each 50 basis point reduction in the allowed base ROE for this period would reduce Amerens and Ameren Illinois net income by an estimated $10 million and $6 million, respectively.
In March 2019, the FERC issued separate Notices oflnquiry regarding its allowed base ROE policy and its transmission incentives policy. Imtial comments were due by June 2019, and reply comments were due by late August 2019. The Notice oflnquiry addressing the FERCs base ROE policy, among other things, broadened the ability to comment on the new methodology beyond electric utilities that are participants in the complaint cases.
The transmission incentives Notice oflnquiry was open for comment on the FERCs transmission incentive policy, including incentive adders to the base ROE.
Ameren is unable to predict the ultimate impact of the Notices of Inquiry at this time.
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Table of Contents Regulatory Assets and Liabilities The following table presents our regulatory assets and regulatory liabilities at December 31, 2019 and 2018:
2019 2018 Ameren Arneren Ameren Ameren i4Iissouri Illinois Ameren Missouri Illinois Ameren Regulatory assets:
Under-recovered Ilirnois electric power costs $ $ 4 $ 4 $ $ $
Under-recovered PGA 7 7 MTM derivative losses 12 242 254 19 197 216 IEIMA revenue requirement reconciliation adjiistrnent 17 17 70 70 FERC revenue requirement reconciliation adjustment 1 16 16 30 Pension and postretirement benefit costa 7 26 33 103 149 252 hicometaxest 114 61 177 119 68 185 Callaway costs 18 18 22 22 Unamortized loss on reacquired debtt 55 31 86 58 40 98 Enviromnental cost riderstt 127 127 148 148 Storm costs° 7 7 13 13 Workers compensation claims1 4 7 11 4 7 11 Construction accounting for pollution control equipmentc 15 15 16 16 Solar rebate prograrn1 5 5 14 14 P1SA 41 41 1 1
RESRAM 9 9 FEJA energy-efficiency 211 211 136 136 Other 13 17 30 24 18 42 Total regulatory assets $ 293 $ 751 $ 1,061 $ 380 $ 869 $ 1,261 Less: current regulatory assets (8) (57) (69) (14) (1 10) (134)
Noncurrent regulatory assets 285
$ $ 694 $ 992 $ 366 $ 759 $ 1,127 Regulatory liabilities:
Over-recovered FAc $ 39 $ $ 39 $ 34 $ $ 34 Over-recovered Illinois electric power costs1 11 11 12 12 Over-recovered PGA 8 14 22 7 3 10 Over-recovered VBA rider 8 8 8 8 MTM derivative gainst1 18 3 21 5 3 8 IEIMA revenue requirement reconciliation adjtistmentt° 18 18 FERC reventie requirensent reconciliation adjustment° 37 38 17 19 MEEIA energy-efficiency ridcrt 3 3 19 19 Estimated refund for FERC complaint cases 23 40 26 44 Income taxest 1,428 813 2,326 1,484 843 2,413 Cost ofrernovaV 1,041 827 1,884 1,027 774 1,811 AROst 303 303 175 175 Pension and postretirernent benefit costa tracker 72 72 43 43 Renewable energy credits and zero emission credits 155 155 102 102 Excess income taxes collected in 2018° 60 60 60 60 Other 27 24 51 13 15 28 Total regulatory liabilities S 2,999 $ 1,933 $ 5,051 $ 2,867 $ 1,803 $ 4,786 Less: current regulatory liabilities (62) (84) (164) (68) (62) $ (149)
NoncurreIlt regulatory liabilities 2,937
$ $ 1,849 $ 4,887 $ 2,799 $ 1,741 $ 4,637 (a) Under-recovered or over-recovered costs from utility customers. Amounts will be recovered from, or refunded to, customers within one year ofthe deferral.
(b) Deferral of commodity-related derivative MTM losses or gains. See Note 7 Derivative financial Instruments for additional infonnation.
(c) The difference between Ameren Illinois electric distribution service annual revenue requirement calculated under the performance-based formula ratemaking framework and the revenue requirement included in customer rates for that year Any under-recovery or over-recoveiy will be recovered from, or refunded to, customers with interest within two years.
(d) These assets eam a return at the applicable WACC.
( e) Ameren Illinois and ATXIs annual revenue reqtiirement reconciliation calculated pursuant to the FERCs electric transmission formula ratemaking framework. Any under-recovery or over-recovery will be recovered from, or refunded to, customers within two years.
97 Table of Contents (f) These costs are being amortized in proportion to the recognition ofprior service costs (credits) snd actuarial losses (gains) attributable to Ainerens pension plan and postretirement benefit plans. See Note 10 Retirement Benefits for additional information.
(g) The regulatory assets represent amounts that will be recovered from customers for deferred income taxes related to the equity component of allowance for funds used during construction and the effects oftax rate changes. The regulatory liabilities represent amounts that will be refunded to customers for deferred income taxes related to depreciation differences, other tax liabilities, and the tmamortized portion of investment tax credits recorded at rates in excess of current statutory rates.
Amounts associated with the equity component of allowance for funds used during construction, and the unamortized portion of investment tax credits will be ansortized over the expected life of the related assets. for net regulatory liabilities related to deferred income taxes recorded at rates other than the current statutory rate, the weighted-average remaining amortization periods at Ameren, Ameren Missouri, and Ameren Illinois are 34, 26, and 43 years.
(h) Ameren Missouris Callaway Energy Center operations and maintenance expenses, property taxes, and carrying costs incurred I)etween the plant in-service date and the date the plant was reflected in rates, These costs are being amortized over the original remaining life ofthe energy center.
(i) Losses related to reacquired debt. These amounts are being amortized over the lives of the related new debt issuances or the original lives of the old debt issuances if no new debt was issued.
ci) The recoverable portion of accrued environmental site liabilities that will be collected from electric and natural gas customers through ICC-approved cost recovery riders. The period of recovery will depend 00 the timing ofremediation expenditures See Note 14 Consmitments and Contingencies for additional information.
(k) Storns costs from 2016 and 2018 deferred in accordance with the IEIMA. these costs are bemg amortized over five-year penods beginning in the year the storm occurred.
( I) The period ofrecovery will depend on the timing of actual expenditures.
(m) The MoPSCs May 2010 electric rate order allowed Ameren Missouri to record an allowance for funds tised durmg construction for pollution control equipment at its Sioux Energy CeIster until the cost of that equipment was included in customer rates beginning in 201 1 These costs are being amortized over the expected life of the Sioux Energy Center, currently through 2033.
(n) Costs associated with Ameren Missouris solar rebate program. The amortization period for these assets will be determined in a future electric service regulatory rate review.
t o) Under the PISA, Aineren Missouri is permitted to defer and recover 85% of the depreciation expense on certain property, plant, and equipment placed in service after September 1 2018, and not incltided in base rates. Accumulated PISA deferrals are added to rate base prospectively and amortized over ,
a period of 20 years following a regulatory rate review.
(p) Costs associated with Aineren Missouris compliance with the state ofMissouris renewable energy standard. Costs incurred over a twelve-month period beginmng each August are amortized over a twelve-month period beginning February the tcilloving year.
(q) The electric energy-efficiency investments are being amortized over their weighted-average useful lives beginning in the period in which they were made, with current rensaining amortization periods ranging from 7 to 12 years.
(r) Under-recovered or over-recovered fuel costs to be recovered or refunded through the FAC. Specific accumulation periods aggregate the under-recovered or over-recovered costs over ftur months, any related adjustments that occur over the following four months, and the recovery from, or refund to, customers that occurs over the next eight months.
( s) Under-recovered or over-recovered natural gas revenue caused by sales volunse deviations from weather normalized sales approved by the ICC in rate regulatory reviews. Each years amount will be recovered from or refunded to custoniers from April through Decensber of the following year (t) The MLEIA rider allows Ameren Missouri to collect from, or refund to, customers any annual difference in the actual amounts incurred and the amounts collected from custonsers for the MEEIA prograns costs, lost electric margins, and the performance incentive, Under the MEFIA rider, collections from or refunds to customers occur one year after the program costs, and lost electric margins are incurred or any perfonnance incentive are eansed.
(U) The 2019 balances represent the estimated refunds to transmission customers related to the November 2019 fERC order in the November 2013 fERC complaint case. The 2018 balances represent the estimated refunds to transmission customers related to the febmaiy 2015 FERC complaint case, which was dismissed in the November 2019 order. See further discussion of the FERC ROE complaint cases above.
(v) Estimated funds collected from customers to pay for the future removal cost of property, plant, and equipment retired from service, net of salvage.
(w) Recoverable or refundable removal costs for AROs, including net realized and unrealized gains and losses related to the nuclear deconunissioning trust fund investments. See Note 1 Summary of Significant Accounting Policies Asset Retirement Obligations.
( x) A regulatory recovery mechanism for the difference between the level of pension and postretirement benefit coats incurred by Ameren Missouri and the level of such costs included in customer rates. The period ofrefund varies based on MoPSC approval in a regulatory rate review. For costs incurred prior to December 2016, the weighted-average remaining amortization period is three years. For costs incurred after December 2016, the amortization period will be determined in the current electric service regulatory rate review.
(y) Funds collected for the purchase ofrenewable energy credits and zero emission credits through IPA procurement
- s. The balance will be amortized as the credits are purchased.
(z) The excess amount collected in rates related to the TCJA from January 1, 2018, through July 31, 2018. The regulatory liability will be reflected in customer rates over a period oftime to be deterimned by the MoPSC in the current electric service regulatory rate review.
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Table of Contents NOTE 3 - PROPERTY, PLANT, AND EQUIPMENT, NET The following table presents property, plant, and equipment, net, at L)ecember 3 1, 2019 and 2018:
Ameren Ameren Missouri Illinois Other Ameren 2019 Property, plant, and equipment at original cost:
Electric generation ii,sso s s s 11,880 Electric distribution 6,371 6,299 12,670 Electric transmission 1,405 3,101 1,642 6,148 Natural gas 528 3,024 3,552 Other 1,173 993 236 2,402 21,357 13,417 1,878 36,652 Less: Accumulated depreciation and amortization 9,195 3,536 275 13,006 12,162 9,881 1,603 23,646 Construction work in progress:
Nuclear fuel in process 135 135 Other 338 202 55 595 Property, plant, and equipment, net 12,635 $ 10,083 $ 1,658 $ 24,376 201$
Property. plant, and equipment at original cost:
Electric generation i 1,432 $ $ $ i 1,432 Electric distribution 59$9 5,970 I 1,959 Electric transmission 1,277 2,647 1,385 5,309 Naturalgas 500 2,701 3,201 Otfier° 1,008 863 230 2,101 20,206 12,181 1,615 34,002 Less: Accumulated depreciation and ansortization 8,726 3,294 253 12273 11.480 8,887 1,362 21,729 Construction work in progress:
Nuclear fuel iIi process 217 217 Other 406 311 147 864 Property, plant, and equipment, net 12,103 S 9,198 $ 1,509 $ 22,810 (a) Amounts include two CTs that have related financing obligations. The gross cunsulative asset value ofthose agreements was $236 million and $235 million at December 3 1, 2019 and 201$, respectively. The total accumulated depreciation associated with the two CTs was $95 million and $89 million atDecember 31, 2019 and 2018, respectively. See Note 5 Long-term Debt and Equity Finaiscings for additional information on these agreements.
(b) The estimated lives for each asset group are as follows: 5 to 72 years for electric generation, excluding Ameren Missouris hydro generating assets which have useful lives of up to 150 years, 20 to $0 years for electric distribution, 50 to 75 years for electric transInission, 20 to $0 years for natural gas, and 5 to 55 years for other
( c) Other property, plant, and equipment includes assets used to support electric and natural gas services.
Capitalized software costs are classified within Property, Plant, and Equipment, Net on the balance sheet and are amortized on a straight-line basis over the expected period ofbenefit, ranging from 5 to 10 years. The following table presents the amortization
, gross carrying value, and related accumulated amortization of capitalized software by year:
Amortization Expense Gross Carrying Value Accumulated Amortization 2019 201$ 2017 2019 201$ 2019 2018 Ameren S 7$ $ 71 $ 58 $ 901 $ 734 $ (584) $ (514)
AmerenMissouri 30 24 20 303 223 (153) (125)
Ameren Illinois 45 44 36 377 297 (221) (183)
Annual amortization expense for capitalized costs for software placed in service as ofDecember 31, 2019, is estimated to be as follows:
2020 202t 2022 2023 2024 Ameren $ 80 $ 74 $ 63 $ 50 $ 24 Ameren Missouri 36 34 29 24 12
Ameren Illinois 41 36 32 24 12 99
Table of Contents NOTE 4 - S1IORT-TER1vI DEBT AND LIQUIDITY The liquidity needs ofthe Ameren Companies are typically supported through the use of available cash, drawings under committed credit agreements, commercial paper issuances, or, in the case ofAmeren Missouri and Ameren Illinois, short-term affiliate borrowings.
Credit Agreements In I)ecember 201 9, the Credit Agreements were amended and restated. The amended and restated agreements, anong other things, extended the maturity dates ofthe Credit Agreements and provide $2.3 billion ofcredit through the extended maturity date.
The total facility size ofthe Missouri Credit Agreement was increased from $1.0 billion to $1 .2 billion. The total facility size ofthe Illinois Credit Agreement remained unchanged at $1. 1 billion. The Credit Agreements, which were previously schcdtiled to mature in December 2022, are now scheduled to mature in I)ecernber 2024. The maturity date may be extended for two additional one-year periods upon mutual consent ofthe borrowers and lenders. Credit available under the agreements is provided by 22 international, national, and regional lenders, with no single lender providing more than $130 million ofcredit in aggregate.
The obligations of each borrower under the respective Credit Agreements to which it is a party are several and not joint. Except under limited circumstances relating to expenses and indemnities, the obligations of Ameren Missouri and Ameren Illinois under the respective Credit Agreements are not guaranteed by Ameren (parent) or any other subsidiary ofAmeren. The following table presents the maximum aggregate amount available to each borrower under each facility:
Missouri Illinois Credit Agreement Credit Agreement Arnereis (parent)
$ 900 1 500 Ameren Missouri
$50 (a)
Ameren Illinois (a) 800 (a) Not applicable.
The bornnvers have the option to seek additional commitments from existing or new lenders to increase the total facility size of the Credit Agreements to a maximum of$l.4 billion for the Missouri Credit Agreement and $1.3 billion for the Illinois Credit Agreement. Ameren (parent) borrowings are due and payable no later than the maturity date ofthe Credit Agreements. Ameren Missouri and Aineren Illinois borrowings under the applicable Credit Agreement are due and payable no later than the earlier ofthe maturity date or 364 days after the date ofthe borrowing.
The obligations ofthe borrowers under the Credit Agreements are unsecured. Loans are available on a revolving basis under each ofthc Credit Agreements.
Funds borrowed may be repaid and, subject to satisfaction ofthe conditions to borrowing, reborrowed from time to time. At the election ofeach borrower, the interest rates on such loans will be the alternate base rate plus the margin applicable to the particular borrower andlor the eurodollar rate plus the margin applicable to the particular borrower. The applicable margins will be determined by the borrowers long-term unsecured credit ratings or, ifno such ratings are in effect, the borrowers corporate/issuer ratings then in effect. The borrowers have received commitments from the lenders to issue letters of credit up to $100 million under each ofthe Credit Agreements. In addition, the issuance ofletters ofcredit is subject to the
$2.3 billion overall combined facility borrowing limitations of the Credit Agreements.
The borrowers will use the proceeds from any borrowings under the Credit Agreements for general corporate purposes, including working capital, commercial paper liquidity support, issuance ofletters ofcredit, loan funding under the Ameren money pool arrangements
, and other short-term affiliate loan arrangements.
The Missouri Credit Agreement and the Illinois Credit Agreement are available to support issuances under Ameren (parent)s, Arneren Missouris and Ameren Illinois commercial paper programs, respectively, subject to borrowing sublimits. As ofDecember 3 1, 2019, based on commercial paper outstanding and letters of credit issued under the Credit Agreements, along with cash and cash equivalents, the net liquidity available to Ameren (parent), Ameren Missouri, and Ameren Illinois, collectively, was $1.9 billion.
Ameren, Ameren Missouri, and Ameren Illinois did not borrow under the Credit Agreements for the years ended I)ecember 3 1, 2019 and 201$.
Commercial Paper The following table summarizes the borrowing activity and relevant interest rates under Ameren (parent)s, Ameren Missouris, and Ameren Illinois commercial paper programs for the years ended December 31, 2019 and 2t)18:
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Tabe of Contents Ameren Ameren (parent) Ameren Missouri Ameren Illinois Consolidated 2019 Average daily commercial paper outstanding 421 $ 122 $ 157 S 700 Outstanding borrowings at period-end 153 234 53 440 Weighted-average interest rate 2.66% 2.62% 2.43% 2.60%
Peak outstanding commerciaf paper during period 651 $ 549 $ 356 $ 1,113 Peak interest rate (b) 3.80% 2.97% 5.00% (b) 5.00% (
2018 Average daily conimercial paper outstanding 410 $ 61 $ 108 $ 579 t)utstanding borrowings at period-end 470 55 72 597 Weighted-average interest rate 2 3 1% 1 94% 2 26% 2 26%
Peak outstanding commercial paper during period 543 $ 4$J $ 442 $ 1,295 Peakinterestrate 3 10% 2 80% 2 85°c 3 10%
(a) The timing ofpeak outstanding commercial paper issuances varies by company. Therefore, the sum ofthe peak amounts presented by the companies may not equal the Ameren consolidated peak amount for the period.
(b) In 2019, the peak interest rate was affected by temporary disruptions in the commercial paper market.
Indebtedness Provisions and Other Covenants The information below is a summary ofthe Ameren Companies compliance with indebtedness provisions and other covenants.
The Credit Agreements contain conditions for borrowings and issuances ofletters of credit. These conditions include the absence of default or unmatured defatilt, material accuracy ofrepresentations and warranties (excluding any representation after the closing date as to the absence ofrnaterial adverse change and material litigation, and the absence of any notice ofviolation, liability, or requirement under any environment al laws that could have a material adverse effect), and obtaining required regulatory authorizations. In addition, it is a condition for any Ameren Illinois borrowing that, at the time of and after giving effect to such borrowing, Ameren Illinois not be in violation of any limitation on its ability to incur unsecured indebtedness contained in its articles of incorporation.
The Credit Agreements also contain nonfinancial covenants, including restrictions on the ability to incur certain liens, to transact with affiliates, to dispose of assets, to make investments in or transfer assets to its affiliates, and to merge with other entities. The Credit Agreements require each ofAmeren, Ameren Missouri, and Ameren Illinois to maintam consolidated indebtedness ofnot more than 65% ofits consolidated total capitalization pursuant to a defined calculation set forth in the agreements. As ofDecember 3 1, 2019, the ratios ofconsolidated indebtedness to total consolidated capitalization
, calculated in accordance with the provisions ofthe Credit Agreements, were 54%, 49%, and 47%, for Ameren, Ameren Missouri, and Ameren Illinois, respectively.
The Credit Agreements contain default provisions that apply separately to each borrower. However, a default of Ameren Missouri or Ameren Illinois under the applicable credit agreement is also deemed to constitute a default ofArneren (parent) under such agreement.
Defaults include a cross-default resulting from a default of such borrower under any other agreement covering outstanding indebtedness of such borrower and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $100 million in the aggregate (including under the other credit agreement). However, under the default provisions ofthe Credit Agreements, any default ofAmeren (parent) under either credit agreement that results solely from a default ofAmeren Missouri or Ameren Illinois does not result in a cross-default ofAmeren (parent) under the other credit agreement. Further. the Credit Agreements default provisions provide that an Ameren (parent) default under either ofthe Credit Agreements does not constitute a default by Ameren Missouri or Ameren Illinois.
None ofthe Credit Agreements or financing agreements contain credit rating triggers that would cause a default or acceleration ofrepayment of outstanding balances. The Ameren Companies were in compliance with the provisions and covenasats ofthe Credit Agreements at December 3 1, 2019.
Money Pools Ameren has money pool agreements with and among its subsidiaries to coordinate and provide for certain short-term cash and working capital requirements.
Ameren Missouri, AIneren Illinois, and ATXI may participate in the utility money pool as both lenders and borrowers. Ameren (parent) and Ameren Services may participate in the utility money pool only as lenders. Surplus internal funds are contributed to the money pool from participants. The primary sources of external funds for the utility money pool are the Credit Agreements and the commercial paper programs. The total amount available to the pool participants from the utility money pool at any given time is reduced by the amount ofbonowings made by participants, but it is increased to the extent that the pool participants advance surplus funds to the utility money pool or remit funds from other external sources. The availability of funds is also determined by funding requirement limits established by regulatory authorizations.
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Tabe of Contents Participants receiving a loan under the utility money pool agreement must repay the principal amount of such loan, together with accrued interest. The rate of interest depends on the composition ofinternal and external funds in the utility money pooi. The average interest rate for borrowing under the utility money pool for the year ended December 31, 2019, was 2.48% (2018 2.10%).
See Note 13 Related-party Transactions for the amount ofinterest income and expense from the utility money pool agreement recorded by Ameren Missouri and Ameren Illinois for the years ended December 31, 2019, 2018, and 2017.
NOTE 5 - LONG-TERM DEBT AND EQUITY FINANCINGS The following table presents long-term debt outstanding, including maturities due within one year, as ofDecember 31, 2019 and 2018:
2019 2018 Arneren (Parent):
2.70% Senior unsecitred notes due 2020 350 $ 350 2.50° o Senior tmsecured notes due 2024 450 3.65% Senior unsecured notes due 2026 350 350 Total long-term debt, gross 1,150 700 Less: Unamortized debt issuance costs (6) (3)
Less: Maturities due vithiii one year (350)
Long-term debt, net 794 697 Ameren Missouri:
Bonds and notes:
6.70% Senior secured notes due 2019 329 5.l0 Senior secured notes due 2019 244 S.OO0o Senior secured notes due 2020°
$5 1.60% 1992 Series bonds due 2022° 3.500o Senior secured notes due 2024 350 350 2.95% Senior secured notes due 2027 400 400 5.45% First mortgage bonds due 202$
(d) 3.50% First mortgage bonds due 2029° 450 2.90°o 199$ SeriesAbondsdue2033t 60 60 2.90°c 199$ Series B bonds due 2033 50 50 2.75% 199$ Series C bonds due 2033° so so 5.50% Senior secured notes due 2034 184 184 5.30°o Senior secured notes due 2037° 300 300
$.45 Senior secured notes due 2039°° 350 350 3.90% Senior secured notes due 2042°° 4$5 4$5 3.65 Senior secured notes due 2045 too 400 4.00° o First mortgage bonds due 2048° 425 425 3.25% First mortgage bonds due 2O49 330 Finance obligations:
City of Bowling Green agreement (Peno Creek CT) due 2022° 23 30 Audrain County agreement (Atidrain County CT) due 2023 240 240 Total long-term debt, gross 4,229 4,029 Less: Unamortized discount and premium (9) (9)
Less: Unamortized debt issuance costs (30) (22)
Less: Maturities due within one year .
(92) (580)
Long-term debt, net 4,098 s 3,418 102
Table of Contents 2019 2018 Ameren Illinois:
Bonds and notes:
27O0/ Senior secured notes due 2O22° 400 S 400 5.90% first mortgage bonds due 2023 (d) 5.70°c First nsortgage bonds due 2024 3.25/ Senior secured notes due 2025 (d 300 300 6.125% Senior secured notes due 2028 60 60 1993 Series B-i Senior unsecured notes due 2028 17 380 first mortgage bonds due 2028 430 430 6.70% Senior secured notes due 2036° 61 61 6.70% Senior secured notes due 2036 42 42 4.80% Senior secured notea dtie 2043 280 28()
4.30% Senior secured notes due 2044 250 250 4.15% Senior secured notes due 2046 490 490 370° first mortgage bonds due 2047 oo soo 4.50% first mortgage bonds due 2049w soo soo 3.25% first mortgage bonds due 2050 300 Total iong-tenn debt, gross 3,613 3,330 Less: Unamortized discount and premium (4) (3)
Less: Unamortized debt issuance costs (34) (31)
Long-term debt, net 3,575 3,296 ATXI:
3.43% Senior notes due 2050° Total long-tenu debt, gross 450 s 450 450 450 Less: Unamortized debt issuance costs (2) (2)
Long-term debt, net 44$ $ 448 Ameren consolidated long-term debt, net 8,915 $ 7,859 (a) These notes are collaterally secured by first mortgage bonds issued by Ameren Missouri under the Ameren Missouri mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any first mortgage bonds issued tinder the Ameren Missouri mortgage indenture remain outstanding Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which tune these notes would become unsecured obligations. Considering the 2049 maturity of the 3 25% first mortgage bonds and the restrictions preventing a release date to occur that are attached to certain senior secured notes described in footnote (e) below, Ameren Missouri does not expect the first mortgage lien protection associated with these notes to fall away.
(b) These bonds are collaterally secured by first mortgage bonds issued by Ameren Missouri under the Ameren Missouri mortgage indenture and have a fall-away lien provision similar to that of Ameren Missouris senior secured notes.
( c) Prior to the change in the nsethod of determining the interest rates applicable to the Ameren Missouri bonds and the extinguishnsent of Ameren Illinois senior unsecured notes, the interest rates and the periods during which such rates apply varied depending on our selection of defined rate modes. The average interest rates for the respective applicable period in 2019 and the year ended December 3 1, 2018 were as follows:
2019 2018 AmereIs Missouri 1992 Series due 2022 2.58% 2.37%
Ameren Missouri 1998 Series A due 2033 3.43% 2.76%
Ameren Missouri 1998 Series B due 2033 3.57% 2.79%
Ameren Missouri 1998 Series C due 2033 3.43% 2 83%
Ameren Illiisois 1993 Series B-i due 2028 168% 1.58%
(d) Amouist less than $1 million (e) Ameren Missouri has agreed that so long as any of the 3 .90% senior secured notes due 2042 are outstanding, Ameren Missotirt will not permit a release date to occur, and so long as any of the 8,45% senior secured notes due 2039 are outstanding, Ameren Missouri will isot optionally redeem, purchase. or otherwise retire in hill the otitstanding first mortgage bonds not subject to release provisions.
(0 These bonds are first mortgage bonds issued by Ameren Missouri under the Ameren Missouri bond indenture.
They are secured by substantially all Ameren Missouri property and franchises.
(g) Payments due related to these fmancing obligations are paid to a trustee, which is authorized to utilize the cash only to pay equal amounts due to Ameren Missouri tinder related bonds issued by tlse city/county and held by Ameren Missouri. TIse tinsing and amounts ofpayments due from Ameren Missouri under the agreements are equal to the timiisg and amount of bond service payments due to Ameren Missouri, resulting in no net cash flow. The balance of both the financing obligations and the related investments iii debt securities, recorded in Other Assets, was $263 million and $270 million, respectively, as ofDecember 31, 2019 and 2018.
(h) These notes are collaterally secured by first mortgage bonds issued by Ameren Illinois under its mortgage indenture. They are secured by substantially all Anseren Illinois property and franchises. The notes have a fall-away lien provision and will remain secured only as long as aisy series of first nsortgage bonds issued under its mortgage indenture reissain outstanding.
Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Considering the 2050 maturity date ofthe 3 25°/a first mortgage bonds, Ameren Illinois does not expect the first mortgage lien protection associated with these notes to fall away.
( 1) Ameren Illinois has agreed that so long as any of the 2.70% senior secured notes due 2022 are outstanding, Ameren Illinois will not pennit a release date to occur.
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Table of Contents (i ) These bonds are first mortgage bonds issued by Ameren illinois under its mortgage indeuttire. They are secured by substantially all Aineren Illinois property and franchises.
(k) The following table presents the principal maturities schedule for the 3.43% senior notes due 2050:
Payment Date Principal Payment August 2022 $ 49.5 August2024 49.5 August2027 49,5 August2030 49.5 August 2032 49.5 August2038 49.5 August 2043 76.5 Augtist2050 76.5 Total
$ 450.0 The following table presents the aggregate maturities oflong-term debt, including current maturities, at December 3 1, 2019:
Ameren Ameren Ameren Ameren (iarent) Missouri Illinoist ATXVt Conso1idatedt 2020
$ 350 $ 92 $ $
2021
$ 412 8
8 2022 55 400 50 505 2023 240 240 2024 450 350 50 850 Thereafter 350 3,484 3,213 350 7,397 Total
$ 1,150 $ 4,229 $ 3,613 $ 45t) $ 9,442 (a) Excludes unamortized discount, unamortized premium, and debt issuance costs of $6 million,
$39 million, $38 million and $2 million at Ameren (parent), Ameren Missouri, Aineren Illinois and ATXI, respectively.
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Table of Contents All classes ofAmeren Missouris and Arneren Illinois preferred stock are entitled to cumulative dividends, have voting rights, and are not subject to mandatory redemption. The preferred stock ofAmerens subsidiaries is included in Noncontro1ling Interests on Amerens consolidated balance sheet. The following table presents the outstanding preferred stock ofArneren Missouri and Ameren Illinois, which is redeemable at the option ofthe issuer, at the prices shown below as ofDecember 31, 2019 and 2018:
Redemption Price Shares Outstanding (per share) 2019 2018 Ameren Missouri:
Without par value and stated value of $100 per share, 25 million shares authorized
$3.50 Series 130,000 shares $ 11000 S 13 $ 13
$3 70 Series 40,000 shares 10475 4 4
$4.00 Series 150,000 shares 105 625 15 15
$4.30 Series 40,000 shares 105.00 4 4
$4.S0Series (a) 213,S95shares 110.00 21 21
$4.56 Series 200,000 shares 102.47 20 20
$4.75 Series 20,000 shares 102,176 2 2
$5.50 Series A 14,000 shares 1 10.00 1 1 Total
$ 80 $ 80 Ameren Illinois:
With par value of $100 per share, 2 million shares authorized 4.00% Series 144,275 shares $ 101.00 $ 14 $ 14 4.08% Series 45,224 shares 103.00 5 5 4.20% Series 23,655 shares 104.00 2 2 4.25°oSeries 50,000shares 10200 5 5 4.26% Series 16,621 shares 103.00 2 2 4.42 Series 16,190 shares 103,00 2 2 4.70% Series 18,429 shares 103.00 2 2 4.90 Series 73,825 shares 102,00 7 7 4.92Series 49,289slsares 103.50 5 5 5.l65 Series 50,000 shares 102.00 5 5 6.625% Series 124,274 shares 100,00 12 12 7.75oSeries 4,S42shares 100.00 1 1 Total
$ 62 $ 62 Total Ameren
$ 142 $ 142 (a) us the event ofvoluntarv liquidation, $105.50.
Arneren has 100 million shares of $0.01 par value preferred stock authorized, with no such shares outstanding.
Ameren Missouri has 7.5 million shares of $1 par value preference stock authorized, with no such shares outstanding. Ameren Illinois has 2.6 million shares ofno par value preferred stock authorized, with no such shares outstanding.
Ameren Under the DRP1us and its 401(k) plan, Ameren issued 0.9 million and 1.2 million shares ofcommon stock in 2019 and 2018, respectively, and received proceeds of$68 million and $74 million for the respective years. In addition, Ameren issued 0.8 million and 0.7 million shares ofcommon stock valued at $54 million and $35 million in 2019 and 2018, respectively, for no cash consideration in connection with stock-based compensation. Ameren did not isstie any common stock in 2017.
In October 201 8, Ameren filed a Form S-8 registration statement with the SEC, authorizing the offering of 4 million additional shares of its common stock under its 401(k) plan. Shares ofcommon stock issuable under the 401(k) plan are. at Arnerens option, newly issued shares, treasury shares, or shares purchased in the open market or in privately negotiated transactions.
In May 2017, Ameren filed a Form S-3 registration statement with the SEC, authorizing the offering of 6 million additional shares of its common stock under the DRPlus, which expires in May 2020. Shares of common stock sold under the DRPIus are, at Amerens option, newly issued shares, treasury shares, or shares purchased in the open market or in privately negotiated transactions..
In December 201 7, Ameren, Ameren Missouri, and Ameren Illinois filed a form 5-3 shelfregistration statement with the SEC, registering the issuance of an indeterminate amount of certain types of securities. The registration statement became effective immediately upon filing and expires in December 2020.
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Table of Contents In August 2019, Ameren entered into a fonvard sale agreement with a counterparty relating to 7.5 million shares ofcommon stock. The forward sale agreement can be settled at Amerens discretion on or prior to March 3 1, 2021. On a settlement date or dates, ifAmeren elects to physically settle the forward sale agreement, Ameren will issue shares of common stock to the counterparty at the then-applicab le forward sale price. The forward sale price was initially $74. 1 8 per share. The initial forward price is subject to adjtistment based on a floating interest rate factor eqtial to the overnight bank funding rate less a spread of 75 basis points, and will be subject to decrease on certain dates specified in the forward sale agreement by specified amounts related to expected dividends on shares of the common stock during the term ofthe forward sale agreement. ffthe overnight bank finding rate is less than the spread on any day, the interest rate factor will result in a redtiction ofthe fonvard sale price.
The forward sale agreement will be physically settled unless Ameren elects to settle in cash or to net share settle. At December 31, 2019, Arneren could have settled the forward sale agreement with physical delivery of7.5 million shares ofcommon stock to the counterparty in exchange for cash of$555 million. The forward sale could have also been settled at December 31, 2019, with delivery ofapproxirnately
$25 million ofcash or approximately 0.3 million shares of common stock to the counterparty, ifAmeren had elected to net cash or net share, respectively.
The forward sale agreement has been classified as an equity transaction because it is indexed to Amerens common stock, physical settlement is within Amerens control, and the other requirements necessary for equity classification were met.
As a result ofthe equity classification, no gain or loss will be recognized within earnings due to subseqtient changes in the fair value ofthe forward sale agreement. Ifthe average price ofAmerens common stock exceeds the adjusted forward sale price during a quarterly period, the forward sale agreement could have a diltitive effect on earnings per share.
In September 2019, Ameren issued $450 million of2.50% senior unsecured notes due September 2024, with interest payable semiannually on March 15 and September 15 ofeach year, beginning March 15, 2020. Ameren received net proceeds of$447 million, which were used to repay outstanding short-term debt.
Ameren Missouri In February 2020, $85 million principal amount ofArneren Missouris 5.00% senior secured notes matured and were repaid with commercial paper borrowings.
In March 2019, Arneren Missouri issued $450 million of3.50% first mortgage bonds due March 2029, with interest payable semiannually on March 15 and September 15 ofeach year, beginning September 15, 2019. Arneren Missouri received net proceeds of$447 million, which were used to repay outstanding short-term debt, including short-term debt that Aineren Missouri incurred in connection with the repayment of $329 million ofits 6. 70% senior secured notes that matured February 1, 2019.
In June and July 2019. all ofthe 1992 Series bonds, 1998 Series A bonds, 199$ Series B bonds, and 1998 Series C bonds issued by the Missouri Environmental Authority on behalfofAmeren Missouri were subject to purchase in lieu ofredemption or a mandatory tender as a result ofa change in the method ofdetennining the interest rates on the bonds. The interest rate method ofeach ofthe series ofbonds, as well as Ameren Missouris first mortgage bonds that collaterally secure each of the series of bonds, was changed from a variable rate to a fixed rate.
Upon the change in the method of determining the interest rate, the bonds, totaling $207 million, were remarketed to new investors. The following table provides additional information on the bonds:
1992 Series 199$ Series A 1998 Series B 199$ Series C Transaction month June 2019 July 2019 July 2019 June 2019 Principal amount $47 $60 $50 $50 Fixed tnterest rate 1.60% 290% 2.90° 2.75%
Variable interest rate 258° 3.43% 3.57% 3.43%
Maturity I)ecember 2022 September 2033 September 2033 September 2033 Interest payment dates June 1 and December 1 March 1 and September 1 March 1 and September 1 March 1 and September 1 Initial interest payment date December 2019 September 2019 September 2019 September 2019 (a) Represents the variable interest rate ofthe bonds effective prior to the change in method ofdeterminin g the interest rate.
In October 2019, Ameren Missouri issued $330 million of3.25% first mortgage bonds due October 2049, with interest payable semiannually on April 1 and October 1 ofeach year, beginning April 1, 2020. Ameren Missouri received net proceeds of$326 million, which were used to repay $244 million ofits 5.10%
senior unsecured notes due October 1, 2019, with the remaining proceeds used to repay a portion of its short-term debt.
In October 2019, Ameren Missouri redeemed the remaining amount outstanding of its 5 .45%
first mortgage bonds due 2028 for less than $1 million.
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Table of Contents In April 2018, Ameren Missouri issued $425 million of4.OO% first mortgage bonds due April 2048, with interest payable semiannually on April 1 and October 1 ofeach year, beginning October 1, 2018. Ameren Missouri received net proceeds of$419 million, which were used to repay outstanding short-term debt, including short-tern debt that Ameren Missouri incurred in connection with the repayment of 179 million
$ of its 6.00% senior secured notes that matured April 1, 2018.
In August 2018, $199 million principal amount ofAmeren Missouris 5. 10% senior secured notes matured and were repaid with cash on hand.
For information on Ameren Missouris capital contributions, refer to Capital Contributions in Note 13 Related-party Transactions Ameren Illinois In 2006, Ameren Illinois purchased all $17 million ofthe 1993 Series B-i bonds due 2028 issued by the Illinois Finance Authority on behalf of Arneren Illinois pursuant to a mandatory tender. Arneren Illinois 1993 Series B-i senior unsecured notes due 2028 were not extinguished and remained as Long-term debt, net on Amerens and Ameren Illinois balance sheets. In September 2019, Ameren Illinois exchanged its bond investments for the extinguishment of its senior unsecured notes.
In September 2019, Ameren Illinois redeemed the remaining amount outstanding ofits 5.70% first mortgage bonds due 2024 for less than $1 million.
Additionally, in October 2019, Ameren Illinois redeemed the remaining amount outstanding ofits 5.90% first mortgage bonds due 2023 for less than $1 million.
Following the redemption ofthe 5.90% first mortgage bonds, Ameren Illinois collaterally secured its 6.70%
semor sectired notes due 2036 with first mortgage bonds issued under its mortgage indenture.
In November 2019, Ameren Illinois issued $300 million of3.25% first mortgage bonds due March 2050, with interest payable semiannually on March 15 and September 1 5 of each year, beginning March 1 5, 2020. Ameren Illinois received net proceeds of $296 million, which were used to repay outstanding short-term debt.
In May 2018, Ameren Illinois issued $430 million of3.80°/o first mortgage bonds due May 2028, with interest payable semiannually on May 15 and November 15 ofeach year, beginning November 15, 2018. Ameren Illinois received net proceeds of$427 million, which were used to repay outstanding short-term debt, including short-term debt that Ameren Illinois incurred in connection with the repayment of $144 million of its 6.25% senior secured notes that matured April 1,2018.
In November 2018, Ameren Illinois issued $500 million of4.50% first mortgage bonds due March 2049, with interest payable semiannually on March 15 and September 15 ofeach year, beginning March 15, 2019. Ameren Illinois received net proceeds of$495 million, which were used to repay outstanding short-term debt, including short-term debt that Ameren Illinois incurred in connection with the repayment of $3 13 million of its 9.75% senior secured notes that matured November 15, 2018.
For information on Amercn Illinois capital contributions, refer to Capital Contributions in Note 13 Related-party Transactions.
Indenture Provisions and Other Covenants Ameren Missouris and Ameren Illinois indentures and articles ofincorporation include covenants and provisions related to issuances offirst mortgage bonds and preferred stock. Ameren Missouri and Ameren Illinois are required to meet certain ratios to issue additional first mortgage bonds and preferred stock. A failure to achieve these ratios would not result in a default under these covenants and provisions but would restrict the companies ability to issue bonds or preferred stock.
The following table summarizes the required and actual interest coverage ratios for interest charges, dividend coverage ratios, and bonds and preferred stock issuable as of December 3 1, 20 19, at an assumed interest rate of 5% and dividend rate of 6%.
Required Interest Actual Interest Required Dividend Actual Dividend Preferred Stock Coverage Rafio Coverage Ratio Bonds IssuabIe Coverage Ratio1 Coverage Ratio Issuable AmerenMissouri
>O 4.0 $ 5,251 2.5 125,7 $ 2,808 Ameren Illinois
>2 0 68 6,668 >1 5 3 2 203 (d
( a) Coverage required on the annual interest charges on first mortgage bonds outstanding and to be issued. Coverage is not required in certain cases when additional first mortgage bonds are issued on the basis ofretired bonds.
(b) Amount of bonds issuable based either on required coverage ratios or unfunded property additions, whichever is more restrictive. The amounts shown also include bonds issuable based on retired bond capacity of $2,358 million and $643 nsillion at Ameren Missouri and Ameren Illinois, respectively.
(c) Coverage reqtured on the annual dividend on preferred stock outstanding amid to be issued, as required in the respective companys articles of incorporation.
(d) Preferred stock issuable is restricted by the amount of preferred stock that is currently authorized by Ameren Illinois articles of incorporation.
Amerens indenture does not require Ameren to comply with any quantitative financial covenants. The indenture does, however, include certain cross-default provisions. Specifically, either (1) the failure by Ameren to pay when due and upon expiration ofany applicable grace period any portion ofany Arneren indebtedness in excess of $25 million, or (2) the acceleration upon default of the maturity of any Amneren 107
Table of Contents indebtedness in excess of $25 million under any indebtedness agreement, including borrowings under the Credit Agreements or the Ameren commercial paper program, constitutes a default under the indenture, unless such past due or accelerated debt is discharged or the acceleration is rescinded or annulled within a specified period.
Ameren Missouri and Ameren Illinois and certain other nonregistrant Ameren subsidiaries are subject to Section 305(a) ofthe Federal Power Act, which makes it unlawful for any officer or director ofa public utility, as defined in the Federal Power Act, to participate in the making or paying ofany dividend from any funds properly included in capital account. The FERC has consistently interpreted the provision to allow dividends to be paid as long as (1) the source of the dividends is clearly disclosed, (2) the dividends are not excessive, and (3) there is no self-dealing on the part ofcorporate officials. At a minimum, Ameren believes that dividends can be paid by its subsidiaries that are public utilities from net income and retained earnings.
In addition, under Illinois law, Ameren Illinois and ATXI may not pay any dividend on their respective stock unless, among other things, their respective earnings and earned surplus are sufficient to declare and pay a dividend after provisions are made for reasonable and proper reserves, or unless Ameren Illinois or ATXI has specific authorization from the ICC.
Ameren Illinois articles of incorporation require dividend payments on its common stock to be based on ratios of common stock to total capitalization and other provisions related to certain operating expenses and accumulations ofearned surplus. Ameren Illinois has made a commitment to the FERC to maintain a mmimum 30% ratio ofcommon stock equity to total capitalization. As ofDecember 31, 2019, using the FERC-agreed upon calculation method. Ameren Illinois ratio ofcommon stock equity to total capitalization was 51%.
ATXIs note purchase agreement includes financial covenants that require ATXI not to permit at any time (1) debt to exceed 70% of total capitalization or (2) secured debt to exceed 10% oftotal assets.
At December 31, 2019, the Ameren Companies were in compliance with the provisions and covenants contained in their indentures and articles of incorporation, as applicable, and ATXI was in compliance with the provisions and covenants contained in its note purchase agreement. In order for the Ameren Companies to issue securities in the future, they will have to comply with all applicable requirements in effect at the time of any such issuances.
Off-Balance-Sheet Arrangements At December 31, 2019, none ofthc Ameren Companies had any significant off-balance-sheet financing arrangements, other than the forward sale agreement relating to common stock, variable interest entities, letters of credit, and Ameren (parent) guarantee arrangements on behalf of its subsidiaries. See Note 1 Summary of Significant Accounting Policies for further detail concerning variable interest entities.
NOTE 6 - OThER INCOME, NET The following table presents the components of Other Income, Net in the Ameren Companies statements of income for the years ended December 3 1 2019, 2018, and 2017:
2019 2018 2017 Ameren:
Other Income, Net Allowaiice for equity funds used during construction 28 $ 36 $ 24 Interest income on industrial developnsent revenue bonds 25 26 26 Other interest income 8 7 8 Non-service cost components ofnet periodic benefit income 90 70 44 Other income 6 8 5 Cisaritable donations (12) (33) (8)
Otherexpense (15) (12) (13)
Total Other Income, Net 130 $ 102 $ 86 Ameren Missouri:
Other Income, Net Allowance for equity funds used during construction 9 $ 27 $ 21 Interest income on industrial developnsent revenue bonds 25 26 26 Other usterest inconse i 2 1 Non-service cost components ofnet periodic benefit income ()
1$ 17 22 Other income 5 4 3 Charitable donations (3) (14) (2)
Other expense (7) (6) (6)
Total Other Inconse, Net 58 s 56 s 65 108
Table of Contents 2019 2018 2017 Ameren Illinois:
Other Income, Net Allowance for equity ftmds used during constructioii 9 $ 9 $ 3 Interest income c 6 7 Non-service cost components ofnet periodic benefit income 47 34 10 Other income 3 3 2 Charitable donations (9 (6) (5)
Other expense (7) (4) (5)
Total Other Income, Net 53 $ 42 $ 12 (a) For the years ended I)ecernber 31, 2019, and 2018, the non-service cost components ofnet periodic benefit income were partially offset by a deferral of$29 million and $17 million, respectively, due to a regulatory tracking mechanism for the difference between the level of such costs incurred by Ameren Missouri under GAAP and the level of such costs included in rates.
NOTE 7 - DERIVATIVE FINANCIAL INSTRUMENTS We tise derivatives to manage the risk of changes in market prices for natural gas, power and uranium, as well as the risk of changes in rail transportation sureharges through fuel oil hedges. Such price fluctuations may cause the following:
. an unrealized appreciation or depreciation of our contracted commitments to purchase or sell when ptirchase or sale prices under the commitments are compared with current commodity prices;
. market values ofnatural gas and uranium inventories that differ from the cost ofthose commodities in inventory;
. actual cash outlays for the purchase ofthese commodities that differ from anticipated cash outlays; and
. actttal off-system sales revenues that differ from anticipated revenues.
The derivatives that we use to hedge these risks are governed by our risk management policies for forvard contracts, ftitures, options, and swaps. Our net positions are continually assessed within our structured hedging programs to determine whether new or offsetting transactions are required. The goal ofthe hedging program is generally to mitigate financial risks while ensuring that sufficient volumes are available to meet our requirements. Contracts we enter into as part of our risk management program may be settled financially, settled by physical delivery, or net settled with the counterparty All contracts considered to be derivative instruments are required to be recorded on the balance sheet at their fair values, unless the NPNS exception applies.
See Note 8 Fair Value Measurements for discussion of our methods of assessing the fair value of derivative instruments.
Many of our physical contracts, such as our purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense on NPNS contracts is recognized at the contract price upon physical delivery. The following disclostires excltide NPNS contracts and other non-derivativ e commodity contracts that are accounted for under the accrual method of accounting.
If we determine that a contract meets the definition of a derivative and is not eligible for the NPNS exception, we review the contract to determine whether the resulting gains or losses qualify for regulatory deferral. Derivative contracts that qualify for regulatory deferral are recorded at fair value, with changes in fair value recorded as regulatory assets or liabilities in the period in which the change occurs. We believe derivative losses and gains deferred as regulatory assets and liabilities are probable ofrecovery, or refund, through ftiture rates charged to customers. Regulatory assets and liabilities are amortized to operating income as related losses and gains are reflected in rates charged to customers. Therefore, gains and losses on these derivatives have no effect on operating income. As of December 3 1, 2019 and 2018, all contracts that met the definition of a derivative and were not eligible for the NPNS exception received regulatory deferral. Cash flows for all derivative financial instruments are classified in cash flows from operating activities.
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Table of Contents The following table presents open gross commodity contract volumes by commodity type for derivative assets and liabilities as ofDecember 3 1, 2019 and 201$. As ofl)ecember 31, 2019, these contracts extended through October 2022, March 2024, May 2032, and March 2023 for fuel oils, natural gas, power, and uranium, respectively.
Quantity (in millions except as indicated) 2019 201$
Ameren Ameren Commodity Missouri Ameren Illinois Ameren Missouri Ameren Illinois Ameren Fuel oils (in gallons) 58 5$ 66 66 Natural gas (in mrnbtu) 20 136 156 19 154 173 Power (in megawatthours) S 7 12 1 8 9 Uranium (pounds in thousands) 565 565 380 380 The following table presents the carrying value and balance sheet location ofall derivative commodity contracts, none ofwhich were designated as hedging instruments, as ofDecernber 31, 2019 and 201$:
2019 2018 Ameren Arneren Ameren Ameren Commodity Balance Sheet Location Missouri Illinois Ameren Missouri Illinois Ameren Fuel oils Other current assets $ 4 S $ 4 $ 3 $ $ 3 Other assets 2 2 5 5
Natural gas Other current assets 3 3 1 1 Other assets 1 1
2 2 Power Other current assets 14 14 4 4
Other assets 2 2 Total assets $ 22 $ 4 $ 26 $ 12 $ 3 $ 15 Fuel oils Other current liabilities $ 4 $ $ 4 $ 4 $ $ 4 Otlser deferred credits and liabilities 3 3 9 9
Natural gas Other current liabilities 1 12 13 4 8 12 Other deferred credits and liabilities 1 6 7 1 6 7 Power Other current liabilities 2 17 19 4 14 18 Other deferred credits and liabilities 1 207 208 169 169 Uranitins Other deferred credits and liabilities 1 1
Total liabilities $ 13 $ 242 $ 255 $ 22 $ 197 $ 219 The Ameren Companies elect to present the fair value amounts of derivative assets and derivative liabilities subject to an enforceable master netting arrangement or similar agreement at the gross amounts on the balance sheet. However, ifthe gross amounts recognized on the balance sheet were netted with derivative instruments and cash collateral received or posted, the net amounts would not be materially different from the gross amounts at December 3 1 20 19 and 201$. ,
Credit Risk In determining our concentrations of credit risk related to derivative instruments. we review our individual counterparties and categorize each counterparty into groupings according to the primary business in which each engages. As ofl)ecember 31, 2019, ifcounterparty groups were to fail completely to perfbrm on contracts, the Ameren Companies maximum exposure related to derivative assets would have been immaterial with or without consideration ofthe application of master netting arrangements or similar agreements and collateral held.
Certain ofour derivative instruments contain collateral provisions tied to the Ameren Companies credit ratings. Ifour credit ratings were downgraded below investment grade, or if a counterparty with reasonable grounds for uncertainty regarding our ability to satisfy an obligation requested adequate assurance of performance, additional collateral postings might be required. The additional collateral required is the net liability position allowed under the master netting arrangements or similar agreements, assuming (1) the credit risk-related contingent features underlying these arrangements were triggered and (2) those counterparties with rights to do so requested collateral. As ofDecember 3 1, 2019, the aggregate fair value of derivative instruments with credit risk-related contingent features in a gross liability position, the cash collateral posted, and the aggregate amount of additional collateral that counterparties could require were each immaterial to Ameren, Ameren Missouri, and Ameren Illinois.
NOTE 8 - FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measuremen t date. We use 110
Table of Contents various methods to determine fair value, including market, income, and cost approaches. With these approaches, we adopt certain assumptions that market participants would use in pricing the asset or liability, including assumptions about market risk or the risks inherent in the inputs to the valuation. Inputs to valuation can be readily observable, market-corroborated, or unobservable. We use valuation techniques that maximize the use of observable inputs and minimize the use ofunobservable inputs. Authoritative accountmg guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value. All financial assets and liabilities carried at fair value are classified and disclosed in one ofthe following three hierarchy levels:
Level 1 (qttotedprices in active rnarketsfor identical assets or liabilities): Inputs based on quoted prices in active markets for identical assets or liabilities.
Level 1 assets and liabilities are primarily exchange-traded derivatives, cash and cash equivalents, and listed equity securities.
The market approach is used to measure the fair value of equity securities held in Ameren Missouri s nuclear decommissioning trust hind. Equity securities in this fund are representative ofthe S&P 500 index, excluding securities ofAmeren Corporation, owners and/or operators ofnuclear power plants, and the trustee and investment managers. The S&P 500 index comprises stocks of large-capitalization companies.
Level 2 (signficant other observable inputs) : Market-based inputs corroborated by third-party brokers or exchanges based on transacted market data. Level 2 assets and liabilities include certain assets held in Ameren Missouris nuclear decomimssiomng trust fund, including United States Treasury and agency securities, corporate bonds and other fixed-income securities, and certain over-the-counter derivative instruments, including natural gas and fmancial power transactions.
Fixed income securities are valued by using prices from independent mdustry-recognized data vendors who provide values that are either exchange-based or matrix-based. The fair value measurements of fixed-income securities classified as Level 2 are based on inpttts other than quoted prices that are observable for the asset or liability. Examples are matrix pricing, market corroborated pricing, and inputs such as yield curves and indices.
Derivative instruments classified as Level 2 are valued by corroborated observable inputs, stich as pricing services or prices from similar instruments that trade in liquid markets. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. To derive our forward view to price otir derivative instniments at fair value, we average the bid/ask spreads to the midpoints. To validate forward prices obtained from outside parties, we compare the pricing to recently settled market transactions. Additionally, a review of all sources is performed to identify any anomalies or potential errors. Further, we consider the volume oftransactions on certain trading platforms in our reasonableness assessment ofthe averaged midpoints. The value ofnatural gas derivative contracts is based upon exchange closing prices without significant unobservable adjustments. The value ofpower derivative contracts is based upon exchange closing prices or the use ofmultiple forward prices provided by third parties. The prices are averaged and shaped to a monthly profile when needed without significant unobservable adjustments.
Level 3 (signJIeant other unobservable inputs) : Unobservable inputs that are not corroborated by market data. Level 3 assets and liabilities are valued by internally developed models and assumptions or methodologies that use significant unobservable inputs. Level 3 assets and liabilities include derivative instruments that trade in less liquid markets, where pricing is largely unobservable. We value Level 3 instruments by using pricing models with inputs that are often unobservable in the market, such as certain internal assumptions, quotes or prices from outside sources not supported by a liquid market, or trend rates. Our development and corroboration process entails reasonableness reviews and an evaluation of all sources to identify any anomalies or potential errors.
We perform an analysis each quarter to determine the appropriate hierarchy level ofthe assets and liabilities subject to fair value measurements. Financial assets and liabilities are classified in their entirety according to the lowest level ofinput that is significant to the fair value measurement. All assets and liabilities whose fair value measurement is based on significant unobservable inputs are classified as Level 3.
We consider nonperformance risk in our valuation of derivative instruments by analyzing our own credit standing and the credit standing of our counterparties, and by considering any credit enhancements (e.g. collateral). Included in our valuation, and based on current market conditions, is a valuation adjustment for counterparty default derived from market data such as the price of credit default swaps, bond yields. and credit ratings. No material gains or losses related to valuation adjustments for counterparty default risk were recorded at Ameren, Ameren Missouri, or Ameren Illinois in 2019, 2018, or 2017. At December 31, 2019 and 20 18, the counterparty default risk valuation adjustment related to derivative contracts was immaterial for Aineren, Aineren Missouri, and Ameren Illinois.
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Table of Contents The following table sets forth, by level within the fair value hierarchy, our assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018:
December 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets:
Arneren Derivative assets commodity contracts:
fuel oils S $ S 6 $ 6
$ I S $ 7 S 8 Natural gas 1 3 4 2 1 3 Power 2 14 16 1 3 4 Total derivative assets commodity contracts $ $ 3 S 23 26
$ $ 1 $ 3 $ 11 $ 15 Nuclear decommissioning trust fund:
EttttltY securities:
tJ.s. large capitalization $ 569 $ S $ 569 $ 427 $ $
$ 427 I)ebt securities:
U.S Treasury and agency securities 107 107 148 14$
Corporate bonds 93 93 72 72 Other 73 73 32 32 Total nuclear decommissioning trust fund $ 569 $ 273 8 $ 842 427
$ $ 252 $ $ 679 Total Ameren S 569 $ 276 S 23 $ 868 $ 42$
$ 255 $ 11 S 694 Anseren Missouri Derivative assets consmodity contracts:
Fuel oils $ S $ 6 8 6
$ 1 $ $ 7 $ 8 Power 2 14 16 1 3 4 Total derivative assets commodity contracts $ $ 2 $ 20 S 22 $ 1 $ I $ 10 S 12 Nuclear decornisiissiomng trust fund:
Equity securities:
U.S. large capitalization $ 569 $ $ $ 569
$ 427 $ $ $ 427 Debt securities:
U.S. Treasury and agency securities 107 107 14$ 148 Corporate bonds 93 93 72 72 Other 73 73 32 32 Total nticlear decommissioning trust fund S 569 S 273 S 842 S S 427 $ 252 $ $ 679 Total Ameren Missouri $ 569 S 275 S 20 864 5 $ 42$ S 253 $ 10 $ 691 Ameren Illinois L)erivative assets commodity contracts:
Natural gas S $ 1 $ 3 $
4 $ $ 2 $ 1 $ 3 Liabilities:
Ameren Derivative liabilities commodity contracts:
Fueloils S 1 S S 6 S 7
$ 2 $ $ 11 $ 13 Natural gas 3 14 3 20 15 4 19 Power 2 225 227 1 186 187 Uranium 1 1
Total Ameren S 4 S 16 S 235 S 255 $ 2 $ 16 $ 201 $ 219 Anieren Missouri Derivative liabilities commodity contracts:
Fuel oils S 1 S S 6 $ 7
$ 2 $ $ 11 $ 13 Natural gas 2 2 5 5 Power 2 1 3 1 3 4 Uranium 1 1
Total Ameren Missouri $ 1 S 4 $ 8 $ 13 S 2 $ 6 $ 14 $ 22 Ameren Illinois Derivative liabilities commodity contracts:
Nattiral gas S 3 S 12 S 3 $ 18 $ $ 10 $ 4 $ 14 Power 224 224 183 183 Total Ameren Illinois S 3 5 12 S 227 S 242 $ $ 10 5 187 $ 197
( a) Balance excludes $5 million and $5 million of cash and cash equivalents, receivables, payables, and accrued income, net for December 3 1, 2019 and 20 18, respectively.
See Note 10 Retirement Benefits for tables that set forth, by level within the fair value hierarchy, Arnerens pension and postretirernent plan assets as of December31, 2019 and 2018.
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Table of Contents Level 3 fuel oils, natural gas and uranium derivative contract assets and liabilities measured at fair value on a recurring basis were immaterial for all periods presented. The following table presents the fair value reconciliation ofLevel 3 power derivative contract assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2019 and 2018:
2019 2018 Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Ameren Beginrnngbalanceatlanuary I (183) $ (183) $ 7 $ (195) $ (188)
Realized and unrealized gains (losses) included in regulatory assets/liabilities 23 (56) (33) (6) (6)
Purchases 5
5 Settlements (7) 15 8 (5) 12 7 Transfers out ofLevel 3 (3) (3) (1) (1)
Ending balance at I)ecember 31 13 $ (224) $ (211) $ $ (183) $ (183)
Clsange in unrealized gains (losses) related to assets/liabilities held at 1)ecember 31 12 s (54) $ (42) $ (I) $ (2) $ (3)
For the years ended December 3 1, 2019 and 2018, there were no material transfers between fair value hierarchy levels.
All gains or losses related to our Level 3 derivative commodity contracts are expected to be recovered or returned through customer rates therefore, there is no impact to net mcoine resulting from changes in the fair value ofthese instruments.
The following table describes the valuation techniques and significant unobservable inputs utilized for the fair value of our Level 3 power derivative contract assets and liabilities as ofDecember 31, 2019 and 2018:
Fair Value Comniodity Assets Liabilities Valuation Technique(s) eighted Unobservable Inputt1 Range Average 2019 Power° $ 14 $ (225) Discounted cash flow Average forward peak and off-peak pricing 22 34 25 fonvards/swaps($/MWh)
Nodal hasis($/MWh) (2)
(6) 0 Trend rate(%) 0 (1) 0 2018 Power $ 3 $ (186) Discounted cash flow Average forward peak and off-peak pricing 23 39 28 forwards/swaps($/MWh)
Nodal basis($/MWh) (9) 0 (2)
Fuisdainental energy Estimated ftiture nattiral gas prices($/rnmbtu) 3 4 3 prodnction model
( a) Generally, significant increases (decreases) in these inputs in isolation would restilt in a significantly higher (lower) fair value ineastirensent.
(b) Unobservable inputs were weighted by relative fair value.
( c) Valuations through 2028 use visible forward prices adjusted for nodal-to-hub basis differentials. Valtiations beyond 2028 use a trend rate factor and are similarly adjusted for nodal-to-hub basis differentials.
(d) Valuations through 2022 use visible forward prices adjusted for nodal-to-hub basis differentials. Valuations beyond 2022 use a fundamental energy production model incoiporatmg estimated future natural gas prices.
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Table of Contents The following table sets forth, by level within the fair value hierarchy, the carrying amount and fair value of financial assets and liabilities disclosed, but not carried, at fair value as ofDcccmber 31, 2019 and 2018:
fair Value Carrying Amount Level 1 Level 2 Level 3 Total Ameren:
December 31, 2019 Cash, cash eqtiivalents, and restricted cash 176 $
Investments in industrial development revenue bonds 176 $ $ s 176 263 263 263 Short-terns debt 440 440 440 Long-term debt (mcluding current portion)° (h) 9,357 9,97 484 ()
10,441 Ameren Missouri:
Cash, cash equivalents, and restricted cash 39 $ 39 $ $ 39 Investments in industrial development revenue bonds 263 263 263 Short-tenn debt 234 234 234 Long-term debt (including current portion) tb) 4,190 4,772 4,772 Ameren Illinois:
Cash, cash equivalents, and restricted cash 125 $ 125 $ $
125 Short-term debt 53 53 53 Long-term debt including current portion) (h) 4,019 4,019 December 31, 2018 Ameren: -..
Cash, cash equivalents, and restricted cash 107 $ 107 Investments in industrial development revenue bonds°
$ $ s 107 270 270 :
270 Short-term debt 597 597 597 Long-term debt (including current portion)° )
8,439 8,240 429 ° 8,669 Ameren Missouri:
Cash, cash equivalents, and restricted cash 8 s s s 8 Investments in industrial development revenue bonds 270 270 270 Short-term debt Long-term debt (including current portion)° (b) 399$ 4,156 4,156 Ameren Illinois:
Cash, cash equivalents, and restricted cash o s 80 $ $ $ $0 Short-term debt 72 72 :
72 Long-term debt (including current portion) h 3,296 3,391 3,391 (a) Ameren and Aineren Missouri have investments in industrial developnsent revenue bonds, classified held-to-matu as rity and recorded in Other Assets, that are equal to the finance obligations for the Peno Creek and Audrain CT energy centers. As of December 31, 20 19 and 201$,
the carrying amount of both the investments in indtistrial development revenue bonds and the finance obligations approximated fair valtie.
(b) Included unamortized debt issuance costs, which were excluded from the fair value nseasureinent, of
$72 million, $30 million, and $34 million for Arneren, Ameren Missouri, and Ameren Illinois, respectively, as of I)ecember 3 1, 2019. Included unamortized debt issuance costs, which were excluded from the fair value measurement, of $58 million, $22 million, and $31 million for Ameren, Ameren Missouri, and Ameren Illinois, respectively, as ofDecember 31, 201$.
(c) The Level 3 fair value amount consists ofATXIs senior unsecured notes NOTE 9 - CALLAWAY ENERGY CENTER Spent Nuclear Fuel Under the Nuclear Waste Policy Act of 1982, as amended, the DOE is responsible for disposing ofspent nuclear fuel from the Callaway Energy Center and other commercial nuclear energy centers. As required by the act, Ameren Massoun and other utthties have entered into standard contracts with the DOE, which stated that the DOE would begin to dispose ofspent nuclear fuel by 1998. However, the DOE failed to fulfill its disposal obligations, and Ameren Missouri and other nuclear energy center owners sued the I)OE to recover costs incurred for ongoing storage oftheir spent fuel. Ameren Missouris lawsuit against the I)OE resulted in a settlement agreement that provides for annual reimbursement of additional spent fuel storage and related costs. Ameren Missouri received reimbursements from the DOE of$2l million, $1 1 million, and $3 million in 2019, 2018, and 2017, respectively. Ameren Missouri will continue to apply for reimbursement from the DOE for allowable costs associated with the ongoing storage of spent fuel.
The DOEs delay in carrying out its obligation to dispose of spent nuclear fuel from the Callaway Energy Center is not expected to adversely affect the continued operations ofthe energy center.
Decommissioning Electric rates charged to customers provide for the recovery ofthe Callaway Energy Centers decommissio ning costs, which include decontamination, dismantling, and site restoration costs, over the expected life ofthe nuclear energy center. Amounts collected from 114
Table of Contents customers are deposited into the external nuclear decommissioning trust fund to provide for the Callaway Energy Centers decommissioning. It is assumed that the Callaway Energy Center site will be decommissioned after its retirement through the immediate dismantleme nt method and removed from service. The Callawav Energy Centers operating license expires in 2044. Ameren and Ameren Missouri have recorded an ARO for the Callaway Energy Center deconimissioning costs at fair value, which represents the present valtie of estimated future cash outflows. Annual decommissioning costs of $7 million are included in the costs used to establish electric rates for Ameren Missouris customers. Every three years, the MoPSC requires Ameren Missouri to file an updated cost study and funding analysis for decommissioning its Callaway Energy Center. An updated cost study and funding analysis was filed with the MoPSC in September 2017 and reflected within the ARO. In January 2018, the MoPSC approved no change in electric rates for decommissioning costs consistent with Ameren Missouris tipdated cost study and funding analysis.
The fair value ofthe trust fund for Ameren Missouris Callaway Energy Center is reported as Nuclear decommissio ning trust fund in Amerens and Ameren Missouris balance sheets. This amount is legally restricted and may be used only to fund the costs ofnuclear decommissioning. Changes in the fair value of the trust fund are recorded as an mcrease or decrease to the nuclear decommissioning trust fund, with an offsetting adjustment to the related regtilatory liability. If the assumed return on trust assets is not earned, Ameren Missouri believes that it is probable that any additional funding requirements resulting from such earnings deficiency will be recovered in customer rates.
Ameren Missouri has investments in debt and equity securities that are held in a trust fund for the purpose of funding the decommissioning of its Callaway Energy Center. We have classified these investments as available for sale, and we have recorded all such investments at their fair market value at December 31, 2019 and 201 8. Investments in the nuclear decommissioning trust ftmd have a target allocation of 60% to 70% in equity securities, with the balance invested in debt securities.
The following table presents proceeds from the sale and maturities of investments in Ameren Missouris nuclear decommissioning trust fund and the gross realized gains and losses resulting from those sales for the years ended December 31, 2019, 2018, and 2017:
2019 2018 2017 Proceeds from sales and maturities 260 $ 299 $ 305 Gross realized gains io is 13 Gross realized losses 2 5 Net realized and unrealized gains and losses are deferred and are currently reflected in the regulatory liability related to AROs on Amerens and Ameren Missouris balance sheets. This reporting is consistent with the method used to accotmt for the decommissio ning costs recovered in rates. See Note 2 Rate and Regulatory Matters for the regulatory liability recorded at December 31, 2019.
The following table presents the cost and fair value of investments in debt and equity securities in Amerens and Ameren Missouris nuclear decommissioning trust fund at December 31, 2019 and 201$:
Security Type Cost Gross IJnrealized Gain Gross Unrealized Loss Fair Value 2019 Debt securities 262 s 11 $ S 273 Equiiy securities 183 393 7 569 Cash and cash equivalents 26 26 Otheru (21)
(21)
Total
$ 450 $ 404 $ 7 $ 847 2018 Debt securities
$ 253 $ 3 $ 252 Equiiy securities 162 277 12 427 Cash and cash equivalents 3 3 Oiher 2
2 Total S 420 $ 280 $ 16 684 (a) Represents net receivables and payables relating to pending iecuniies sales, interest, and securities purchases.
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Table of Contents The following table presents the costs and fair values of investments in debt securities in Amerens and Ameren Missouris nuclear decommissioning trust fund according to their contractual maturities at December 3 1, 2019:
Cost Fair Value Lessthan5years 112 $ 114 5 years to 10 years 56 58 Due after 10 years 94 101 Total
$ 262 $ 273 There are unrealized losses relating to certain available-for-sale mvestments included in the nuclear decommissioning trust fund, deferred within the regulatory liability as discussed above. Decommissioning will not occur until the Callaway Energy Center is retired.
Insurance The following table presents insurance coverage at Ameren Missouris Callaway Energy Center at December 3 1, 2019:
Most Recent Maximum Assessments Type and Source of Coverage Renewal Date Maximum Coverages for Single Incidents Public liability and nuclear worker liability:
American Nuclear Insurers Jantiary I 2020 450 $
Pool participation (a) 13,486 138 (
$ 13,936 () $ 13$
Property damage:
NEIL and EMANI April 1, 2019 $ 3,200 5 27 Replacement power:
NEIL April 1, 2019 $ 490 $ 7
( a) Provided through mandatory participation in an industrywide retrospective premium assessment program. The maximum coverage available is dependent on the number ofUnited States commercial reactors participating in the program.
(b) Retrospective premium under the Price-Anderson Act. This is subject to retrospective assessment with respect to a covered loss excess in of $450 million in the event of an incident at any licensed United States commercial reactor, payable at $21 million per year.
(c) Limit ofliability for each incident under the Price-Anderson liability provisions ofthe Atomic Energy Act of 1954, as amended This limit is subject to change to account for the effects of inflation and changes in the number of licensed power reactors.
(d) NEIL provides $2.7 billion in property damage, stabilization, decontamination, and premature decommissioning instirance for radiation events and $2.3 billion us property damage insurance for nonradiation events. EMANI provides $490 million in property damage insurance for both radiation and nonradiation events.
( e) All NEIL-insured plants could be subject to assessments should losses exceed the accumulated funds frons NEIL.
(0 Provides replacement power cost insurance in the event of a prolonged accidental outage. Weekly indemnity up to $4.5 million for 52 weeks, which commences after the first 12 weeks of an outage, plus up to $3 .6 nullion per week for a minimum of 71 weeks thereafter for a total not exceeding the policy limit of $490 million. Nonradiation events are limited to $328 million.
The Price-Anderson Act is a federal law that limits the liability for claims from an incident involving any licensed United States commercial nuclear energy center. The limit is based on the number of licensed reactors. The limit ofliability and the maximum potential annual payments are adjusted at least every five years for inflation to reflect changes in the Consumer Price Index. The most recent five-year inflationary adjustment became effective in November 20 1 8. Owners of a nuclear reactor cover this exposure through a combination of private insurance and mandatory participation in a financial protection pool, as established by the Price-Anderson Act.
Losses resulting from terrorist attacks on nuclear facilities insured by NEIL are subject to industrywide aggregates, such that terrorist acts against one or more commercial nuclear power plants within a stated time period would be treated as a single event, and the owners ofthe nuclear power plants would share the limit of liability. NEIL policies have an aggregate limit of$3.2 billion within a 12-month period for radiation events, or 1.8 billion for events S not involving radiation contamination, resulting from terrorist attacks. The EMANI policies are not subject to industrywide aggregates in the event oftenorist attacks on nuclear facilities.
Iflosses from a nuclear incident at the CallawayEnergy Center exceed the limits of or are not covered by insurance, or ifcoverage is unavailable, Ameren Missouri is at risk for any timnsured losses. Ifa serious nuclear incident were to occur, it could have a material adverse effect on Amerens and Ameren Missouris results ofoperations, financial position, or liquidity.
NOTE 10 RETIREMENT BENEFITS The primary objective ofthe Ameren pension and postretirement benefit plans is to provide eligible employees with pension and postretiremen t health care and life insurance benefits. Ameren has defined benefit pension plans covering substantially all of its employees. Ameren has postretiremen t benefit plans covering non-union employees hired before October 20 15 arid union employees hired before January 2020. Ameren uses a measurement date of December 3 1 for its pension and postretirement benefit plans. Ameren Missouri and Arneren Illinois each participate in Amerens single-employer pension and other postretirement plans.
Amerens qualified pension plan is the 116
Table of Contents Ameren Retirement Plan. Ameren also has an unfunded nonqualified pension plan, the Ameren Supplemental Retirement Plan, which is available to provide certain management employees and retirees with a supplemental benefit when their qualified pension plan benefits are capped in compliance with Internal Revenue Code limitations. Amerens other postretirement plan is the Ameren Retiree Welfare Benefit Plan. Only Ameren subsidiaries participate in the plans listed above.
Amerens unfunded obligation under its pension and other postretirement benefit plans was $216 million and
$48 1 million as ofDecember 3 1, 2019 and 2018, respectively. These net liabilities are recorded in Other current liabilities, Pension and other postretirement benefits, and Other assets on Amerens consolidated balance sheet. The decrease in the unfunded obligation during 20 19 was primarily the result of an increase in the return on plan assets of the pension and postretirement trusts offset by a 75 basis point decrease in the pension and other postretirement benefit plan discount rates used to determine the present value ofthe obligation. The decrease in the unfunded obligation also resulted in a decrease to Regulatory assets on Amerens, Ameren Missouris, and Arneren Illinois balance sheets.
The following table presents the net benefit liability/(asset) recorded on the balance sheets as ofDecember 31, 2019 and 2018:
2019 2018 Arneren
$ 216 S 481 Ameren Missouri 142 229 Aineren I11inois (16) 120
( a) Assets associated with other postretirernent benefits are recorded in Other assets on the balance sheet.
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Table of Contents Ameren recognizes the underfunded status of its pension and postretirement plans as a liability on its consolidated balance sheet, with offsetting entries to accumulated OCI and regulatory assets. The following table presents the funded status ofAmerens pension and postretirement benefit plans as ofDecember 31, 2019 and 2018. It also provides the amounts included in regulatory assets and accumulated OCI at December 31, 2019 and 2018, that have not been recognized in net periodic benefit costs.
2019 2018 Postretirement Postretirement Pension Benefits Benefits Pension Benefits Benefits Accumulated benefit obligation at end ofyear 4,735 () 4,258 $ (a)
Change in benefit obligation:
Net benefit obligation at beginning ofyear 4,459 1,034 $ 4,827 $ 1,240 Servicecost 88 18 100 21 Interest cost 187 43 169 40 Plan amendments 2
(49)
Participant contributions s
9 Actuarial (gain) loss 469 69 (401) (163)
Benefits paid (236) (64) (236) (64)
Net benefit obligation at end ofyear 4,967 1,110 4,459 1,034 Change in plan assets:
Fair value ofplan assets at beginning ofyear 3,899 1,113 4,293 1,223 Actual return on plan assets 878 237 (218) (57)
Employer contributions 23 3 60 2 Participant contributions 9
Benefits paid (236) (64) (236) (64)
Fair value ofplan assets at end ofyear 4564 1,297 3,899 1,113 Funded status deficiency (surplus) 403 (187) 560 (79)
Accrtied benefit cost (asset) at December 3 1 403 s (187) $ 560 $ (79)
Amounts recognized in the balance sheet consist of:
Noncurrent asset s (187) $ $ (79)
Current liabilityt° 2 2 Noncurrent liability 401 558 Net liability (asset) recognized 403 $ (187) S 560 $ (79)
Amounts recognized in regulatory assets consist of:
Net actuarial (gain) loss 244 $ (170) $ 393 $ (91)
Prior service credit (41) (2) (48)
Amounts recognized in accumulated OCI (pretax) consist of:
Net actuarial loss 26 4 35 3 Total
$ 270 $ (207) $ 426 $ (136)
(a) Not applicable (b) Included in Other assets on Amerens consolidated balance sheet.
(c) Included in Other current liabilities on Arnerens consolidated balance sheet The following table presents the assumptions used to determine our benefit obligations at December 31, 2019 and 201$:
Pension Benefits Postretirement Benefits 2019 2018 2019 201$
I)iscount rate at measurement date 30% 4 250o 3.50% 4 25°o Increase in future compensation 3.50 3 50 3.50 3 50 Medical cost trend rate ( initial)1 (b) (b) 5.00 5 00 Medical cost trend rate (ultimate)° (b) (b) 5.00 5 00 (a) Initial and ultimate medical cost trend rate for certain Medicare-eligible participants is 3.00%
(b) Not applicable.
Ameren determines discount rate assumptions by identifying a theoretical settlement portfolio ofhigh-quality corporate bonds sufficient to provide for a plans projected benefit payments. The settlement portfolio ofbonds is selected from a pool ofnearly 900 high-quality corporate bonds. A single discount rate is then
determined; that rate results in a discounted value ofthe plans benefit payments that equates to the market value ofthe selected bonds. In addition, during 2019, Ameren adopted the Society of Actuaries mortality table and adopted the 118
Table of Contents Society ofAcmaries 2019 Mortality Improvement Scale. The updated mortality table reflects lower life expectancy in aggregate compared with the 201$ Society of Actuaries mortality table. The updated improvement scale assumes a lower rate ofmortality improvemen t, compared with the 20 1 8 Mortality Improvement Scale.
The impact ofthe adoption ofthe table and the scale results in a decrease to our pension and other postretirement benefit obligations.
funding Pension benefits are based on the employees years ofservice, age, and compensation. Amerens pension plans are funded in compliance with income tax regulations. federal funding, and other regulatory requirements. As a result, Arneren expects to fund its pension plan at a level equal to the greater ofthe pension cost or the legally required minimum contribution. Based on its assumptions at December 31, 2019, its investment performance in 2019, and its pension funding policy, Ameren expects to make annual contributions ofup to approximately $45 million in each ofthe next five years, with aggregate estimated contributions of
$70 million. Ameren Missouri and Ameren Illinois estimate that their portion ofthe future funding requirements will be 30% and 60%, respectively. These estimates may change based on actual investment performance, changes in interest rates, changes in our assumptions, changes in government regulations, and any voluntary contributions. Otir funding policy for postretirement benefits is primarily to fund the Voluntary Employee Beneficiary Association (VEBA) trusts to match the annual postretirement expense.
The following table presents the cash contributions made to our defined benefit retirement plan and to our postretirement plans during 2019, 20 1$, and 2017:
Pension Benefits Postretirement Benefits 2019 2018 2017 2019 2018 2017 Ameren Missouri S 3 $ 18 $ 19 S 1 $ 1 $ I Arneren Illinois 19 35 37 1 1 1 Other 1 7 8 1 Ameren $ 23 $ 60 $ 64 $ 3 $ 2 $ 2 Investment Strategy and Policies Ameren manages plan assets in accordance with the prudent investor guidelsnes contamed in ERISA.
The investment committee, which includes members of senior management, approves and implements investment strategy and asset allocation guidelines for the plan assets. The investment committees goals are twofold: first, to ensure that sufficient funds are available to provide the benefits at the time they are payable, and second, to maximize total return on plan assets and to minimize expense volatility consistent with its tolerance for risk. Ameren delegates the task ofinvestment management to specialists in each asset class. As appropriate, Ameren provides each investment manager with guidelines that specify allowable and prohibited investment types. The investment committee regularly monitors manager performance and compliance with investment guidelines.
The expected return on plan assets assumption is based on historical and projected rates ofretum for current and planned asset classes in the investment portfolio. Projected rates of return for each asset class were estimated after an analysis of historical experience, future expectations, and the volatility of the variotis asset classes. After considering the target asset allocation for each asset class, we adjusted the overall expected rate of return for the portfolio for historical and expected expersence ofactive portfolio management results compared with benchmark returns and for the effect ofexpenses paid from plan assets. Ameren will use an expected return on plan assets for its pension and postretirement plan assets of7.00% in 2020.
No plan assets are expected to be returned to Ameren during 2020.
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Table of Contents Amerens investment committee strives to assemble a portfolio ofdwersified assets that does not create a sigmficant concentration ofrisks. The investment committee develops asset allocation guidelines between asset classes, and it creates diversificatio n through investments in assets that differ by type (equity, debt, real estate, private equity), duration, market capitalization, country, style (growth or value), and industry, among other factors. The diversification of assets is displayed in the target allocation table below. The investment committee also routinely rebalances the plan assets to adhere to the diversification goals. The investment committees strategy reduces the concentration ofinvestment risk, however, Ameren is still subject to overall market risk. The following table presents our target allocations for 2020 and our pension and postretirement plans asset categories as ofDecember 31, 2019 and 2018:
Asset Percentage of PZan Assets at December 31, Target Allocation Category 2020 2019 2018 Pension Plan:
Cashandcashequivalents o% 3% 1° Equity securities:
U.S. large-capitalization 21% 31% 27% 24%
U S. small- and mid-capitalization 3% 13% 7y0 7° International 9%19% 14% 13%
Global 3%13% 9% 8%
Total equity 51%61% 57% 52%
Debt securities 35O 45° 36% 42%
Real estate 0% 9% 4% 5%
Private equity 0% 5° o (a) (a)
Total tOO% 100%
Postretirement Plans:
Cash and cash equivalents 0°7% 1% 2°o Equity securities:
U.S. large-capitalization 23% 33% 31% 40%
U.S. small- and mid-capitalization 3% 13% 9% 7%
International 9% 19% 14% 13%
Global 5%l5% 11%
Total equity 55%65° 65% 60%
Debt sectirities 33%43° 34%
Total 100% 100%
(a) Less than 1% ofplan assets.
In general, the United States large-capitalization equity investments are passively managed or indexed, whereas the international, global, United States small-capitalization. and United States mid-capitalization equity investments are actively managed by investment managers. Debt securities include a broad range of fixed-income vehicles. Debt security investments in high-yield securities and non-United-States-dollar-d enominated securities are owned by the plans, but in limited quantities to reduce risk. Most ofthe debt security investments are under active management by investment managers. Real estate investments include private real estate vehicles however, Ameren does not, by policy, hold direct investments in real estate property. Additionally, Amerens investment committee allows investment managers to use derivatives, such as index futures, foreign exchange futures, and options, in certain situations to increase or to reduce market exposure in an efficient and timely manner.
Fair Value Measurements of Plan Assets Investments in the pension and postretirement benefit plans were stated at fair value as ofDecember 31, 2019. The fair value ofan asset is the amount that would be received upon its sale in an orderly transaction between market participants at the meastiremen t date. Cash and cash equivalents have initial maturities of three months or less and are recorded at cost plus accrued interest. Investments traded in active markets on national or international securities exchanges are valued at closing prices on the measurement date or, ifthat is not a business day, on the last business day before that date. Securities traded in over-the-counter markets are valued by quoted niarket prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Investments measured under NAV as a practical expedient are based on the fair values ofthe underlying assets provided by the funds and their administrators. The fair value ofreal estate investments is based on NAV; it is determined by annual appraisal reports prepared by an independent real estate appraiser. Investments measured at NAV often provide for daily, monthly, or quarterly redemptions with 60 or less days of notice depending on the fund. for some funds, redemption may also require approval from the funds board of directors. Derivative contracts are valued at fair value, as determined by the investment managers (or independent third parties on behalf ofthe investment managers), who use proprietary models and take into consideration exchange quotations on underlying instruments, dealer quotations, and other market information.
120
Table of Contents The following table sets forth, by level within the fair value hierarchy discussed in Note 8 Fair Value Measurements, the pension plans assets measured at fair value and NAV as ofDecernber 31, 2019 and 2018:
December 31, 2019 December 31, 2018 Level 1 Level 2 NAV Total Level 1 level 2 NAV Total Cash and cash equivalents 139 $ 139 $ $ $ 41 $ 41 Equity securities:
UPs. lsrge-capitalization 1,253 1,253 955 955 U.S. small- and mid-capitalization 344 344 272 272 International 296 363 659 224 298 522 Global 407 407 321 321 Debt securities:
Corporatebonds 597 13 610 701 19 720 Mumcipal bonds 75 75 $7 87 U.S. Treasury and agency securities i,oio 1,015 891 891 Other 8 8 1 11 12 Real estate 211 211 202 202 Private equity 2 2 3 3 Total S 645 $ 1,690 $ 2,388 $ 4,723 $ 497 $ 1,690 1,839 Less: Medical benefit assets°
$ $ 4,026 (176) (144)
Plus: Net receivab1es 17 17 Fairvalue ofpensionplans assets 4,564 s 3,899
( a) Medical benefit (health and welfare) component for accounts niaintained in accordance with (b) Receivables related to pending securities sales, offset by payahles related to pending securitiesSection 401(h) ofthe Internal Revenue Code to fund a portion ofthe postretirernent obligation.
purchases.
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 Fair Value Measurements, the postretirement benefit plans assets measured at fair value and NAV as ofDecember 31, 2019 and 2018:
December 31, 2019 December 31, 2018 level 1 level 2 NAV Total Level 1 Level 2 NAV Total Cash and cash equivalents 12 $ S S 12 $ 32 Equity securities:
$ $ $ 32 U.S. large-capitalization 238 112 350 297 89 386 U.S. small- and mid-capitalization 93 93 63 63 Interisational 59 102 161 45 84 129 Global 120 120 Other 12 12 Debt securities:
Corporate bonds 144 144 Municipal bonds 107 107 107 107 U.S. Treasury and agency securities 62 62 Other 277 277 7 34 41 Total
$ 402 S 107 $ 611 $ 1,120 S 437 $ 332 $ 207 $ 976 Plus: Medical benefit assets 176 144 Less: Net payables 1 (7) fair value ofpostretirement benefit plans assets 1,297 s 1,113 (a) Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Intemal Revenue Code to fund a portion of the postretirement obligation.
These 401(h) assets are incitided in the pension plan assets shown above.
(b) Payables related to pending securities purchases, offset by interest receivables and receivables related to pending securities sales 121
Table of Contents Net Periodic Benefit Cost The following table presents the components ofthe net periodic benefit cost ofAmerens pension and postretirernent benefit plans during 2019, 2018, and 2017:
Pension Benefits Postretirement Benefits 2019 2018 2017 2019 2018 2017 Service cost S 88 $ ioo s 93 s 1$ $ 21 $ 21 Non-service cost components:
Interest cost 187 169 179 43 40 47 Expected return on plan assets (276) (276) (262) (77) (77) (75)
Amortization of.
Prior service credit (1) (1) (1) (5) (4) (5)
Actuarial (gain) loss 25 68 55 (15) (6) (6)
Total non-service cost components (65) s (40) $ 29 $ (54) $ (47) $ (39)
Net periodic benefit cost (incomc) 23 s 60 $ 64 $ (36) S (26) $ ( 18)
( a) Service cost, net of capitalization, is reflected in Operating Expenses Other operations and maintenance on Amerens statement of income.
(b) 2019 and 2018 aissouists and tlse ison-capitahzed portion of2017 non-service cost components are reflected in Other Income, Net on Amerens consolidated statement ofincome. See Note 6 Other Income, Net for additional information.
The estimated amounts that will he amortized from regulatory assets and accumulated OCI into Amerens net periodic benefit cost in 2020 are as follows:
Pension Benefits Postretirement Benefits Regulatory assets.
Prior service credit I) s (4)
Net actuarial (gain) loss 52 (9)
Accumulated OCI:
Net actuarial loss Total
$ 56 $ (13)
Prior service cost is amortized on a straight-Ime basis over the average future service of active participants benefiting under the plan amendment. Net actuarial gains or losses subject to amortization are amortized on a straight-hoe basis over 10 years.
The Ameren Companies are responsible for their share ofthe pension and postretirement benefit costs. The following table presents the pension costs and the postretirement benefit costs incurred for the years ended December 31, 2019, 2018, and 2017:
Pension Costs Postretirement Costs 2019 2018 2017 2019 2018 2017 Ameren Missouri 22 s 24 s (6) s (1) s (4)
Arneren Illinois 20 39 41 (30) (25) (14)
Other (2) (1) (1)
Anseren S 23 $ 60 s 64 (36) $ (26) $ (18)
(a) Does not include the impact of the regulatory tracking mechanism for the difference beiween the level of pension and postretirensent benefit costs incurred by Ameren Missouri and the level of such costs included in customer rates.
The expected pension and postretirement benefit payments from qualified trust and company funds, which reflect expected future service, as of December 31, 2019, are as follows:
Pension Benefits Postretirement Benefits Paid from Paid from Paid from Paid from Qualified Company Qualified Company Trust Funds Funds Trust Funds Funds 2020
$ 257 $ 3 $ 58 $ 2 2021 269 3 60 2 2022 274 3 61 2 2023 279 3 63 2 2024 284 3 64 2 20252029 1,446 12 313 12 122
Table of Contents The following table presents the assumptions used to determine net periodic benefit cost for our pension and postretirement benefit plans for the years ended I)ecember 31, 2019, 2018, and 2017:
Pension Benefits Postretirement Benefits 2019 2018 2017 2019 2018 2017 I)iscount rate at measurement date 4.25% 3 500 4 00% 4.25% 3 500.o 4 000 Expected return on plan assets 7.00 7 00 7 00 7.00 7 00 7 00 Increase in future compensation 350 3 50 3 50 3.50 3 50 3 50 Medical cost trend rate (initial)
(b) (b) 5.00 5.00 Medical cost trend rate (ultimate)° 5 00 (b) (b) 5.00 5.00 5.00 (a) Initial and ultimate medical cost trend rate for certain Medicare-eligible participants is 3.00%
(b) Not applicable.
The table below reflects the sensitivity ofArnerens plans to potential changes in key assumptions:
Pension Benefits Postretirement Benefits Service Cost Expected Projected Service Cost Expected Postrefirement and Interest Return on Benefit and Interest Return on Benefit Cost Assets Obligation Cost Assets Obligation 0.25% decrease in discount rate $ (1) $ $ 165 $ $ $ 36 0.25% decrease in return on assets 10 3
0.25% increase in future compensation 2
14 I 00% increase in annual medical trend 3 57 1 00 / decrease in annual medical trend (3) ()7)
Other Ameren sponsors a 401(k) plan for eligible employees. The Ameren 401(k) plan covered all eligible Ameren employees at December 31, 2019. The plan allows employees to contribute a portion oftheir compensation in accordance with specific guidelines.
Ameren matches a percentage ofthe employee contributions up to certain limits. The following table presents the portion ofthe matching contribution to the Ameren 401(k) plan attributable to each ofthe Ameren Companies for the years ended December 31, 2019, 2018, and 2017:
2019 2018 2017 Ameren Missouri 19 $ 17 $ 16 Ameren Illinois Other 16 is 13 1 1 Arneren
$ 35 $ 33 $ 30 NOTE 11 - STOCK-BASED CoMPENSATION The 2014 Omnibus Incentive Compensation Plan is Amerens long-term stock-based compensation plan for eligible employees and directors. It provides for a maximum of 8 million common shares to be available for grant to eligible employees and directors. At December 3 1, 2019, there were 3 I million common shares remaining for grant. Awards may be stock options. stock appreciation rights, restricted stock, restricted stock tinits, performance shares, performance share units, cash-based awards, and other stock-based awards. Ameren used newly issued shares to fulfill its stock-based compensation obligations for 2019 and 20 1 8, and intends to use newly issued shares to fulfill its stock-based compensation obligations for 2020.
The following table summarizes Amerens nonvested perfonasance share unit and restricted stock tmit activity for the year ended December 3 1, 2019:
Performance Share tJnits Restricted Stock Units Share Weighted-average Fair Stock Weighted-average Fair Units Value per Share Unit Units a1ue per Stock Unit NonvestedatJanuaryl,2019° 682,811 S 56.5$ 155,253 $ 57.38 Granted 304,384 67.42 132,526 65.89 Forfeitures (35,120) 64.40 (1 1,802) 62.75 Vested and undistrihuted5 (235,275) 62.28 (53,297) 61.99 Vested and distributed (176923) 44.13 (2,403) 54.30 Nonvested at December 31, 20l9 539,877 $ 63.79 220,277 $ 61.13 (a) Does not include 619,783 performance share units and 26,557 restricted stock units that were vested and undistributed.
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Table of Contents (b) Vested and undistributed units are awards that vest on a pro-rata basis due to attainment ofretirernent eligibility by certain employees, but have not yet been distributed. For vested and undistnbuted perfonnance share units, the number of shares issued for retirement-eligible employees will va;y depending on actual perfortuance over the three-year perfonnance period.
(c) Does not include 503,283 ofperformance share units and 79,854 ofrestricted stock units that were vested and undistributed.
Petformance S/sure Units A performance share unit vests and entitles an employee to receive shares ofAmeren common stock (plus accumulated dividends) if at the end ofthe three-year performance period, certain specified market conditions have been met and ifthe individual remains employed by Ameren through the required vesting period. The vesting period for share units awarded extends beyond the three-year perfonnance period to the payotit date, which is approximately 38 months after the grant date. In the event of a participants death or retirement at age 55 or older with five years or more of service, awards vest on a pro-rata basis over the three-year performance period. The exact number ofshares issued pursuant to a share unit varies from 0%
to 200% ofthe target award, depending on actual company performance relative to the performance goals.
The fair value ofeach share unit is based on Arnerens closing common share price at I)ecember 3 1st ofthe year prior to the award year and a Monte Carlo simulation. fhe Monte Carlo simulation is used to estimate expected share payout based on Amerens TSR for a three-year performance period relative to the designated peer group begsnning January 1st ofthe award year. The simulation can produce a greater fair value ftr the share unit than the applicable closing common share price because it includes the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also include a three-year risk-free rate, Amerens common stock volatility, volatility for the peer group, and Amerens attainment ofa three-year average earnings per share threshold during the performance period. The following table presents the fair value ofeach share unit along with the significant assumptions used to calculate the fair value ofeach share unit for the years ended I)ecember 31, 2019, 2018, and 2017:
2019 2018 2017 Fair value of share units awarded
$67.42 $62.88 $59.16 Three-year risk-free rate 2.46% 1 .98° o 1.47%
Amerens common stock vo1atihtv 17% 17% 19%
Volatility range for the peer group 15% 25%
15% 23% 15% 21%
(a) Based on a historical period that is equal to the remaining term of the perfonnance period as of the grant date.
Restricted Stock Units Restricted stock units vest and entitle an employee to receive shares ofAmeren common stock (plus accumulated dividends) ifthe individual remains employed with Ameren through the payment date ofthe awards. Generally, in the event ofa participants death or retirement at age 55 or older with five years or more ofservice, awards vest on a pro-rata basis. The payout date ofthe awards is approximatel y 38 months after the grant date. The fair value ofeach restricted stock unit is determined by Amerens closing common share price on the grant date.
Stock-Based Compensation Expense The following table presents the stock-based compensation expense for the years ended December 31, 2019, 2018, and 2017:
2019 2018 2017 Ameren Missouri 4 $ 4 4 Ameren Illinois 3 3 2
()ther 13 13 12 Anseren 20 20 18 Less income tax benefit 5 6 7 Stock-based compensation expense, net 15 s 14 $ 11 (a) Represents compensation expense for employees ofAineren Services. These amounts are not included in the Ameren Missouri and Ameren Illinois amounts above Ameren settled performance share units and restricted stock units of$83 million, $54 million, and
$39 million for the years ended December 31, 2019, 2018, and 2017. There were no significant stock-based compensation costs capitalized during the years ended December 3 1, 2019, 2018, and 2017. As ofDecember 31, 2019, total compensation cost of $28 million related to nonvested awards not yet recognized is expected to be recognized over a weighted-average period of 22 months.
For the years ended I)ecember 31, 2019, 2018, and 2017, excess tax benefits associated with the settlement ofstock-based compensation awards reduced income tax expense by $15 million, $6 million, and $4 million, respectively.
124 I I I
Table of Contents NOTE 12 - INCOME TAXES Federal Tax Reform The TCJA was enacted on I)ecernber 22, 2017. Substantially all ofthe provisions ofthe TCJA affecting the Arneren Companies, other than certain transition depreciation rules, are effective for taxable years beginning after December 3 1, 20 17. The TCJA includes significant changes to the Internal Revenue Code, including amendments that significantly change the taxation ofbusiness entities and specific provisions related to regulated public utilities. The most significant change that affects the Arneren Companies is the reduction in the federal corporate statutory income tax rate from 35%
to 21%. Specific provisions related to regulated public utilities generally allow for the continued deductibility of interest expense, the elimination of accelerated depreciation tax benefits from certain regulated utility capital investments acquired after September 27. 2017, and the continuation of certain rate normalizatio n requirements related to the flow hack of excess deferred income taxes. Ameren (parent) is subject to provisions ofthe TCJA that limit the deductibility ofinterest expense, but such limitation did not affect Ameren in 2018 or 2019.
In accordance with GAAP, the tax effects of changes m tax laws must be recognized in the period in which the law is enacted.
GAAP also requires deferred tax assets and liabilities to be measured at the tax rate that is expected to apply when temporary differences are realized or settled. Thus, in December 20 17, the Ameren Companies deferred taxes were revalued using the new tax rate. To the extent deferred tax balances are included in rate base, the revaluation of deferred taxes was deferred as a regulatory asset or liability on the balance sheet and will be collected from, or refunded, to customers.
For deferred tax balances not included in rate base, the revaluation ofdeferred taxes was recorded as income tax expense. During the year ended December 3 L 2t)17, Ameren. Ameren Missouri.
and Ameren Illinois recorded provisional estimates of$154 million, $32 million, and ($5) million, respectively, ofmcome tax expense (benefit) primarily related to depreciation transition rules and 201 7 property, plant, and equipment, compensation, and pension-related deductions.
During the year ended December 3 1 2018,,
Ameren, Ameren Missouri, and Ameren Illinois updated their respective provisional estimates in accordance with SEC staffguidance and recorded $13 million, $4 million, and $4 million, respectively, of income tax expense, primarily due to the application ofproposed IRS regulations on depreciation transition rules. As of December 31, 2018, Ameren, Ameren Missouri, and Arneren Illinois completed their accounting for certain effects ofthe TCJA.
For our regulated operations, reductions in accumulated deferred income tax balances due to the reduction in the federal statutory corporate income tax rate to 2 1°/a will result in amounts previously collected from utility customers for these deferred taxes being refundable to those customers, generally through reductions in future rates. The TCJA includes provisions related to the IRS normalization rules that address the time period in which certain plant-related components of the excess deferred income taxes are to be reflected in customer rates. This time period for the Ameren Companies is approximately 25 to 65 years. Other components ofthe excess deferred income taxes will he reflected in customer rates as detennined by our state and federal regulators, which could be a shorter time period than that applicable to certain plant-related components.
Missouri laconic Twc Rate In 2018, legislation modifying Missouri tax law was enacted to decrease the states corporate income tax rate from 6.25% to 4%, effective January 1, 2020. As a result, in 2018, Amerens and Ameren Missouris accumulated deferred tax balances were revalued, resulting in a net decrease of $ 122 million to their accumulated deferred tax liability, which was offset by a regulatory liability. Additionally, Ameren recorded an immaterial amount to income tax expense. Ameren Missouri anticipates that the effect ofthis tax decrease will be reflected in customer rates upon completion of its current electric service regulatory rate review.
Amcren (parent) and nonrcgistrant subsidiaries do not expect this income tax decrease to have a material impact on net income.
Illinois Income Tax Rate In July 2017, Illinois enacted a law that increased the states corporate income tax rate from 7.75% to 9.5% as ofJuly 1, 2017. The law made the increase in the states corporate income tax rate permanent. That rate was previously scheduled to go to 7.3% in 2025. In 2017, Ameren recorded an expense of$14 million at Ameren (parent) due to the revaluation of accumulated deferred taxes and the estimated state apportionment of such taxes. Beyond this expense, Ameren and Ameren Illinois do not expect this tax increase to have a material impact on their net income prospectively. The tax increase is not expected to materially affect the earnings ofthe Aineren Illinois Electric Distribtition, the Ameren Transmission, or the Ameren Illinois Transmission segments, since these businesses operate under formula ratemaking frameworks. The tax increase unfavorably affected the 2017 net income ofthe Ameren Illinois Natural Gas segment by less than $1 million.
125
Table of Contents The following table presents the principal reasons for the difference between the effective income tax rate and the federal statutory corporate income tax rate for the years ended December 31, 2019, 2t)1$, and 2017:
Ameren Missouri Ameren Illinois Ameren 2019 Federal statutory corporate income tax rate:
21 % 21 % 21 %
Increases (decreases) from:
Amortization ofexcess deferred income taxes (11) (4) (7)
Amortization of deferred investment tax credit (1) (1)
State tax 5 7 6 Stock-based compensation (1)
Effective income tax rate 14 % 24 % 18 %
2018 federal statutory corporate income tax rate: O/
21 21 % 21 O Increases (decreases) from:
Amortization ofexcess deferred income taxes (4) (1) (4)
Depreciation differences (1)
Amortization of deferred investment tax credit i) i)
State tax 4 7 6 TCJA I I I Tax credits (1)
Other permanent items (1)
Effective income tax rate 20 o 21 °o 22 %
2017 Federal statutory corporate income tax rate 35 % 35 O 35 O Increases (decreases) from:
Depreciation differences i ( I)
Amortization ofdeferred investment tax credit (I) (I)
State tax 4 6 6 TCJA 6 (1) 14 Taxcredits (1)
Other permanent items (I) (2)
Effective income tax rate 44 % 3$ % 52 %
126
Table of Contents The following table presents the components ofincome tax expense for the years ended I)ecember 3 1, 2019, 2018, and 2017:
Ameren Missouri Ameren Illinois Other Ameren 2019 Current taxes:
federal S 65 $ 19 s (88) s (4)
State 22 11 (14) 19 Deferred taxes:
Federal 37 66 82 185 State 5 29 25 59 Amortization ofexcess deferred income taxes (56) (15) (1) (72)
Amortization of deferred investment tax credits (5) (5)
Total income tax expense 68 $ 110 $ 4 S 182 2018 Current taxes Federal
$ 104 S 4 S (118) $ (10)
State 29 6 (12) 23 L)efened taxes Federal 22 75 123 220 State (2) 28 23 49 Amortization ofexcess deferred income taxes (24) (15) (1) (40)
Amortization of deferred investment tax credits (5) (5)
Total income tax expense 124 $ 98 $ 15 $ 237 2017 Current taxes Federal
$ 149 $ (34) $ (110) $ 5 State 23 29 (20) 32 I)eferred taxes:
Federal 76 185 250 511 State 11 (13) 36 34 Amortization ofdefened investment tax credits (5) (1) (6)
Total income tax expense 254 $ 166 $ 156 $ 576 The following table presents the accumulated deferred income tax assets and liabilities recorded as a result oftemporary differences and accumulated deferred investment tax credits at December 3 1, 2019 and 2018:
Ameren Missouri Ameren Illinois Other Ameren 2019 Accumulated deferred income taxes, net liability (asset).
Plant-related S 2,000 s Regulatoiyassets and liabilities, net
$ 1,423 193 s 3,616 (310) I (214) (24)
(548)
Deferred employee benefit costs (59) 7 (59) (111)
Tax canyforwards (25) (3) (70) (98)
Other (33) 11 43 21 Total net accumulated deferred income tax liabilities (assets) S 1,573 $ 1,224 $ 83 $ 2,880 Accumtdated deferred investment tax credits 39 39 Accumulated deferred income taxes and investment tax credits 1,612 s 1,224 $ 83 $ 2,919 2018 Accumulated deferred income taxes, net liability (asset):
Plant-related
$ 2,010 $ s Reisulatory assets and liabilities, net 1,345 179 s 3,534 (343) (221) (25) (589)
Deferred employee benefit costs (58) (4) (64) (126)
Tax carryforwards (35) (26) (166) (227)
Other (40) 24 47 31
Total net accumulated deferred income tax liabilities (assets) $ 1,534 $ 1,118 $ (29) $ 2,623 Accumulated deferred investment tax credits 42 1 43 Accumulated deferred income taxes and investment tax credits $ 1,576 $ 1,119 $ (29) $ 2,666 127
Table of Contents The following table presents the components of accumulated deferred income tax assets relating to net operating loss carryforwards, tax credit carryfonvards, and charitable contribution carryforwards at T)ecember 31, 2019 and 2018:
Ameren Missouri Ameren Illinois Other Ameren 2019 Tax credit cariyfonvards:
Federa1 S 25 $ 3 $ 67 $ 95 State 3 3 Total tax credit carryforwards 25 $ 3 $ 70 $ 98 Charitable contribution carryforwards 3 $ 3 Valuation a1lowance (3) (3)
Total charitable contribution carryforwards 2018 Net operating loss carryforwards:
federal $ $ 23 $ 55 $ 7$
State 13 13 Total net operating loss carryforwards 23 $ 6$ $ 91 Tax credit cairyfonvards:
Federal $ 35 $ 3 $ 79 $ 117 State 10 10 Total tax credit carryforwards 35 $ 3 $ $9 $ 127 Charitable contribution carryfonvards 14 $ 14 Valuation allowance
&:; (5) (5)
Total charitable contribution carryfonvards 9 5 9 (a) Will expire between 2029 and 2039.
(b) Will expire between 2022 and 2024.
(c) See Schedule II under Part IV, Item 15, in this report for information on changes in the valuation allowance.
Uncertain Tax Positions As ofDecember 31, 2t)19 and 2018, the Ameren Companies did not record any uncertain tax positions.
The Internal Revenue Service is currently examining Amerens 20 18 federal income tax return. State income tax returns are generally subject to examination for a period ofthree years after filing The state impact of any federal changes remains subject to examination by various states for up to one year after formal notification to the states. The Aineren Companies currently do not have material income tax issues under examination, administrative appeals, or litigation.
Ameren Missouri has an uncertain tax position tracker. Under Missouris regulatory framework, uncertain tax positions do not reduce Ameren Missouris electric rate base. When an uncertain income tax position liability is resolved, the MoPSC requires, through the uncertain tax position tracker, the creation of a regulatory asset or regulatory liability to reflect the time value, with a return at the applicable WACC included in each of the electric rate orders in effect before the tax position was resolved, ofthe difference between the uncertain tax position liability that was excluded from rate base and the final tax liability. The resulting regulatory asset or liability will affect earnings in the year it is created. It will then be amortized over three years, beginning on the effective date ofnew rates established in the next electric service regulatory rate review.
NOTE 13 - RELATED-PARTY TRANSACTIONS In the normal course ofbusiness, Ameren Missouri and Ameren Illinois engage in affiliate transactions. These transactions primarily consist ofnatural gas and power purchases and sales, services received or rendered, and borrowings and lendings.
Transactions between Amerens subsidiaries are reported as affiliate transactions on their individual financial statements, but those transactions are elimmated in consolidation for Amerens consolidated financial statements, except as noted in Software Licensing Agreement discussion below. Below are the material related-party agreements.
Electric Power Supply Agreements Ameren Illmms must acquire capacity and energy sufficient to meet its obligations to customers.
Ameren Illinois uses periodic RFP processes, administered by the IPA and approved by the ICC, to contract capacity and energy on behalf of its customers.
Ameren Missouri participates in the RFP process and has been a winning supplier for certain periods.
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Table of Contents Energy Swaps and Eneigy Piodztcts Based on the outcome of IPA-administered procurement events, Ameren Missouri and Arneren Illinois have entered into energy product agreements by which Ameren Missouri agreed to sell, and Ameren Illinois agreed to purchase, a set amount ofmegawatth ours at a predetermined price over a specified period of time.
The following table presents the specified performance period, price, and amount ofmegawatthours included in the agreements:
IPA Procurement Event Performance Period MWh Average Price per MWh September 2015 November 2015 May 2018 339,000 $ 38 April 2016 June 2017September2Ol8 375,200 35 September2016 May2017Septernber2Ol$
82,800 34 April 2017 March 2019May2020 85.600 34 April 2018 Jtine 2019 September 2020 i 10,000 32 April 2019 January 2020 December 2021 288,000 35 September 2019 April 2020 November 2021 170,800 29 Collateral Postings Under the tenns of the Illinois energy product agreements entered into through RFP processes administered by the IPA, suppliers must post collateral under certain market conditions to protect Ameren Illinois in the event ofnonperformance. The collateral postings are unilateral, which means that only the suppliers can be required to post collateral. Therefore, Ameren Missouri, as a winning supplier in the RFP process, may be required to post collateral. As ofDecember 3 1, 2019 and 20 1 8, there were no collateral postings required ofAmeren Missouri related to the Illinois energy product agreements.
Interconnection and Transmission Agreements Ameren Missouri and Ameren Illinois are parties to an interconnection agreement for the use of their respective transmission lines and other facilities for the distribution of power. These agreements have no contractual expiration date, but may be terminated by either party with three years notice.
Support Services Agreements Ameren Services provides support services to its affiliates. The costs ofsupport services including wages, employee benefits, professional services, and other expenses, are based on, or are an allocation of actual costs incurred. The support services agreement can be terminated at any time by the mutual agreement of Ameren Services and that affiliate or by either party with 60 days notice before the end ofa calendar year.
In addition, Ameren Missouri and Ameren Illmois provide affiliates with access to their facilities for administrative purposes and with tise ofother assets. The costs ofthe rent and facility services and other assets are based on, or are an allocation of, actual costs incurred.
Ameren Missouri and Ameren Illinois also provide storm-related and miscellaneous support services to each other on an as-needed basis.
Transmission Services Ameren Illinois receives transmission services from ATXI for its retail load.
Electric Transmission Maintenance and Construction Agreements ATXI entered into separate agreements with Ameren Missouri and Arneren Illinois in which Ameren Missouri or Arneren illinois, as applicable, may perform certain maintenance and construction services related to ATMs electric transmission assets.
Money Pool See Note 4 Short-term I)ebt and Liquidity for a discussion ofaffiliate borrowing arrangements.
Software Licensing Agreement In September 2019, Arneren Missouri purchased a license for advanced metering infrastructure software from Ameren Illinois. The amount ofthe $24 million cost-based transaction price over the $5 million remaining carrying value ofthe software was recorded as revenue by Ameren Illinois, with $14 million of revenue recorded at Ameren Illinois Electric Distribution and $5 million recorded at Ameren Illinois 129
Table of Contents Natural Gas. The revenue recorded at Ameren Illinois Electric Distribution was reflected in formula ratemaking, which resulted in no impact to net inconie. Per authoritative accounting guidance for sales to rate-regulated entities, the revenue recognized by Ameren Illinois was not eliminated upon consolidation by Ameren.
Ameren Missouris $24 million software investment is included in Property, Plant, and Equipment, Net.
Tax Allocation Agreement See Note 1 Summary ofSignificant Accounting Policies for a discussion ofthe tax allocation agreement.
The following table presents the affiliate balances related to income taxes for Ameren Missouri and Ameren Illinois as ofDecember 31, 2019 and 2018:
2019 2018 Ameren Missouri Ameren Illinois Ameren Missouri Ameren Illinois Income taxes payal)le to parent S 15 $ 43 $ 16 $ 7 Income taxes receivable from parent 15 17 6
(a) Included in Accounts payable affiliates on the balance sheet.
(b) Included iii Accounts receivable affiliates on the balance sheet.
Capital Contributions The following table presents cash capital contributions received from Ameren (parent) by Ameren Missouri and Ameren Illinois for the years ended December 31. 2019, 2018, and 2017:
2019 2018 2017 Aineren Missouri°
$ 124 $ 45 $ 30 Ameren Illinois ()
15 160 8 (a) As a result of the tax allocation agreement.
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Table of Contents Effects of Related-party Transactions on the Statement of Income The following table presents the impact on Ameren Missouri and Ameren Illinois ofrelated-party transactions for the years ended December 31, 2019, 201$, and 20 1 7. It is based primarily on the agreements discussed above and the money pool arrangements discussed in Note 4 Short-term Debt and Liquidity.
Ameren Ameren Agreement Income Statement Line Item Missouri Illinois Ameren Missouri power supply agreements Operatiiig Revenues 2019 $ 3 $ (a) with Ameren Illinois 2018 11 (a) 2017 23 (a)
Aineren Missourt and Ameren Illinois Operating Revenues 2019 27 2 rent and facility services 2018 22 3 2017 26 4 Ameren Missouri and Ameren Illinois miscellaneous OperatiIig Revenues 2019 1 2 support services and services provided to ATXI 201 8 1 2017 (b) 1 Ameren Missouri software licensing operating Revenues 2019 (a) 19 with Anseren Illinois 201$ (a) (a) 2017 (a) (a)
Total Operating Revenues 2019 S 31 S 23 201$ 34 4 2017 49 5 Ameren Illinois power supply Ptirchased Power 2019 $ (a) $ 3 agreements with Arneren Missouri 201$ (a) 11 2017 (a) 23 Arneren Illinois transmission Purchased Power 2019 (a) 2 services from ATXI 20 1 8 (a) 1 2017 (a) 2 Total Purchased Power 2019 $ (a) $ 5 201$ (a) 12 2017 (a) 25 Ameren Missouri and Ameren Illinois Other Operations and 2019 $ 2 S 5 rent and facility services Maintenance 201 $ 3 6 2017 (b) (b)
Arneren Services support services Other Operations and 2019 135 127 agreement Maintenance 201$ 136 126 2017 149 139 Total Other Operations and 2019 $ 137 S 132 Maintenance Expenses 2018 139 132 2017 149 139 Money pooi borrowings (advances)
(Interest Charges) 2019 $ (b) $ (b)
Other Income, Net 201$ I (b) 2017 1 (b)
(a) Not applicable.
(b) Amount less than $1 million.
NOTE 14 - COMMITMENTS AND CONTINGENCIES We are involved in legal, tax, and regulatory proceedings before various courts, regulatory commissions, authorities, and governmental agencies with respect to matters that arise in the ordinary course ofbusiness, some ofwhich involve substantial amounts ofmoney. We believe that the final disposition of these proceedings, except as othenvise disclosed in the notes to our financial statements, will not have a material adverse effect on our results of operations, financial position, or liquidity.
See also Note 1 Summary ofSignificant Accounting Policies, Note 2 Rate and Regulatory Matters, Note 9 Callaway Energy Center, Note 13 Related-party Transactions, and Note 15 Supplemental Information in this report.
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Table of Contents Other Obligations To supply a portion ofthe fuel requirements ofArneren Missouris energy centers, Ameren Missouri has entered into various long-term commitments for the procurement of coal, natural gas, nuclear fuel, and methane gas. Ameren Missouri and Ameren Illinois also have entered into various long-term commitments for purchased power and natural gas for distribution. The table below presents our estimated minimum fuel, purchased power, and other commitments at December 31, 2019. Amerens and Ameren Illinois purchased power commitments include the Ameren Illinois agreements entered into as part ofthe IPA-administered power procurement process. Included in the Other column are minimum purchase commitments under contracts for equipment, design and construction, and meter reading services, among other agreements, at December 3 1 2019. ,
Natural Nuclear Purchased Methane Coal Gas1 Fuel Power Gas Other Total Ameren:
2020
$ 325 S 17t S 42 $ 147 (d)
$ 3 $ 75 $ 763 2021 197 109 60 51 3 33 453 2022 137 55 13 13 3 22 243 2023 46 35 43 3 3 22 152 2024 53 12 15 3 25 108 Thereafter 27 43 15 24 52 167 Total
$ 785 $ 425 $ 188 S 214 $ 39 $ 235 $ 1,886 Ameren Missouri:
2020
$ 325 $ 40 $ 42 $ $ 3
$ 61 $ 471 2021 197 26 60 3 26 312 2022 137 14 13 3 22 189 2023 46 13 43 3 22 127 2024 53 6 15 3 25 102 Thereafter 27 19 15 24 24 1t)9 Total
$ 785 $ 118 $ 188 $ S 39
$ 180 $ 1,310 Ameren Illinois:
2020
$ $ 131 $ S 147 (U)
$ 3 $ 281 2021 83 51 .,
- . 2 136 2022 41 13 54 2023 22 2024 3 : 25 6
6 Thereafter =
24 24 Total
$ $ 307 $ $ 214 $ $ 5
$ 526 (a) Includes amounts for gelieration and for distribution.
(b) The purchased power amounts for Arneren and Ameren Illinois exclude agreements for renewable energy credits through 2035 with various renewable energy suppliers due to the contingent nature ofthe payment amounts, with the exception of expected payments of $13 million through 2024.
(c) The purchased power amotints for Arneren and Ameren Missouri exclude a 102-megawatt power purchase agreement with a wind farm operator, which expires in 2024, dtie to the contingent nature of the payment amounts (d) In January 201 8, as required by the FEJA, Ameren Illinois entered into agreements to acquire zero emission credits, through 2026 Annual zero emission credit commitment amounts will be published by the IPA each May prior to the start of the subsequent planning year. The amounts above reflect Aineren Illinois commitment to acquire approximately $27 million of zero emission credits through May 2020.
Environmental Matters We are subject to various environmental laws, including statutes and regulations, enforced by federal, state, and local authorities. The development and operation of electric generation, transmission, and distribution facilities and natural gas storage, transmission
, and distribution facilities can trigger compliance obligations with respect to environmental laws. These laws address emissions, discharges to water, water intake, impacts to air, land, and water, and chemical and waste handling. Complex and lengthy processes are required to obtain and renew approvals, permits, and licenses for new, existing or modified facilities.
Additionally, the use and handling ofvarious chemicals or hazardous materials require release prevention plans and emergency response procedures.
The EPA has promulgated environmental regulations that have a significant impact on the electric utility industry. Over time, compliance with these regulations could be costly for Ameren Missouri, which operates coal-fired power plants. Regulations that apply to air emissions from the electric utility industry include the NSPS, the CSAPR, the MATS, and the National Ambient Air Quality Standards, which are subject to periodic review for certain pollutants.
Collectively, these regulations cover a variety ofpollutants, such as SO2, particulate matter, NON, mercury, toxic metals, and acid gases, and CO2 emissions from new power plants. Water intake and discharges from power plants are regulated under the Clean Water Act.
Such regulation could require modifications to water intake structures or more stringent limitations on wastewater discharges at Ameren Missouris energy centers, either ofwhich could result in significant capital expenditures. The management 132
Table of Contents and disposal of coal ash is regulated under the CCR rule, which will require the closure of surface impoundments and the installations of dry ash handling systems at several ofArneren Missouris energy centers. The individual or combined effects ofexisting environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration of operations at some ofAmeren Missouris energy centers. Ameren and Ameren Missouri expect that such compliance costs would be recoverable through rates, subject to MoPSC prudence review, but the timmg of costs and their recovery could be subject to regulatory lag.
Arneren and Ameren Missouri estimate that they will need to make capital expenditures of $200 million to $250 million from 2020 through 2024 in order to comply with existing environmental regulations. Additional environmental controls beyond 2t)24 could be required. This estimate of capital expenditures includes expenditures required by the CCR regulations, by the Clean Water Act rule applicable to cooling water intake structures at existing power plants, and by effluent limitation guidelines applicable to steam electric generating units, all ofwhich are discussed below. This estimate does not include capital expenditures that may be required as a result ofthe NSR and Clean Air Act litigation discussed below. Ameren Missouris current plan for compliance with existing air emission regulations includes burning low-sulfur coal and installing new or optimizing existing air pollution control equipment. The actual amount of capital expenditures required to comply with existing environmental regulations may vary substantially from the above estimate because of uncertainty as to whether the EPA will substantially revise regulatory obligations, exactly which compliance strategies will be used and their ultimate cost, among other things.
The following sections describe the more significant environmental laws and rules and environmental enforcement and remediation matters that affect or could affect our operations. The EPA has initiated an administrative review of several regtilations and proposed amendments to regulations and guidelines, incitiding to the effluent limitation guidelmes and the CCR Rttle, which cotild ultimately result in the revision ofall or part ofsuch rules.
Clean AirAct Federal and state laws, including CSAPR, regulate emissions of SO2 and NO through the reduction of emissions at their source and the use and retirement of emission allowances. The first phase ofthe CSAPR emission reduction requirements became effective in 2015. The second phase ofemission reduction requirements, which were revised by the EPA in 2016, became effective in 2017; additional emission reduction requirements may apply in subsequent years. To achieve compliance with the CSAPR, Ameren Missouri bums low-sulfur coal, operates two scrubbers at its Sioux Energy Center, and optimizes other existing air pollution control equipment. Ameren Missouri expects to incur additional costs to lower its emissions at one or more of its energy centers to comply with the CSAPR in futtire years. These higher costs are expected to be recovered from customers through the FAC or higher base rates.
CO2 E1OJSSIOflS Standards In July 2019, the EPA issued the Affordable Clean Energy Rule, which establishes emission guidelines for states to follow in developing plans to limit CO2 emissions from coal-fired electric generating units. The EPA has identified certain efficiency measures as the best system of emission reduction for coal-fired electric generating units. The Affordable Clean Energy Rule went into effect on September 6, 2019. The rule requires the state ofMissouri to develop a compliance plan and submit it to the EPA for approval by September 2022. The plan is expected to include a standard ofperformance for each affected generating unit. We are evaluating the impact ofthe adoption and implementation ofthe Affordable Clean Energy Rule and, along with other stakeholders, will be working with the state ofMissouri to develop the compliance plan submitted to the EPA. At this time, we cannot predict the outcome ofMissouris compliance plan development process.
As such, the impact on the results ofoperations, financial position, and liquidity ofAmeren and Ameren Missouri is uncertain. We also cannot predict the outcome ofany potential legal challenges to the rule.
NSR and Clean Al, Act Litigation In January 2011, the I)epartrnent ofJustice, on behalfofthe EPA, filed a complaint against Aineren Missouri in the United States District Court for the Eastern District ofMissouri alleging that in performing projects at its coal-fired Rush Island Energy Center in 2007 and 2010, Ameren Missouri violated provisions ofthe Clean Air Act and Missouri law. In January 2017, the district court issued a liability ruling and, in September 2019, entered a fmal order that required Ameren Missouri to install a flue gas desulfurization system at the Rush Island Energy Center and a dry sorbent injection system at the Labadie Energy Center.
There were no fines in the order. In October 2019, Ameren Missouri appealed the district courts ruling to the United States Court ofAppeals for the Eighth Circuit. Additionally, in october 2019, following a request by Ameren Missouri, the district court stayed implementation ofthe majority of its orders requirements while the case is appealed. Ameren Missouri believes that the district court both misinterpreted and misapplied the law in its ruling.
We are unable to predict the ultimate resolution of this matter. Based on the initial procedural schedule, the Court ofAppeals for the Eighth Circuit is expected to hear oral arguments in 2020 however, it is under no deadline to issue a ruling in this case.
The ultimate resolution ofthis matter could have a material adverse effect on the results ofoperations, financial position, and liquidity ofAmeren and Ameren Missouri. Among other things and subject to economic and regulatory considerations, resolution ofthis matter could result in increased capital expenditures for the installation of air pollution control equipment, as well as increased operations and maintenance expenses. Based upon engineering studies, capital expenditures to comply with the district courts order for installation ofa flue 133 I
Table of Contents gas desulfurization system at the Rush Island Energy Center are estimated at approximately
$1 billion. Further, the flue gas desuiflirization system would result in additional operation and maintenance expenses of $30 million to $50 million annually for the life ofthe energy center. Engineering studies required to develop estimated capital expenditures and estimated additional operation and maintenance expenses for the Labadie Energy Center to comply with the district courts order will not be undertaken while the case is under appeal. As a result ofthe district courts stay, Ameren Missouri does not expect to make significant capital expenditures or incur operations and maintenance expenses related to the district courts order while the case is under appeal.
Clean Water Act In July 2018, the United States Court ofAppeals for the Second Circuit upheld the EPAs Section 316(b) Rule applicable to cooling water intake structures at existing power plants. The rule requires a case-by-case evaluation and plan for reducing the number ofaquatic organisms impinged on a power plants cooling water intake screens or entrained through the plants cooling water system. All ofAmeren Missouris coal-fired and nuclear energy centers are subject to the cooling water intake structures rule. Requirements ofthe rule are being implemented by Ameren Missouri during the permit renewal process ofeach energy centers water discharge permit, which is expected to be completed by 2023.
In 20 15, the EPA issued a rule to revise the effluent limitation guidelines applicable to steam electric generating units. These guidelines established national standards for water discharges that are based on the effectiveness ofavailable control technology.
The EPAs 2015 rule prohibits effluent discharges of certain waste streams and imposes more stringent limitations on certain water discharges from power plants. In September 2017, the EPA published a rule that postponed the compliance dates by two years for the limitations applicable to two specific waste streams so that it cotild potentially revise those standards. To meet the requirements ofthe guidelmes, Arneren Missouri is constructing wastewater treatment facilities and dry ash handling systems at three of its energy centers and is scheduled to complete the projects in 2020. Estimated capital expenditures to complete these projects are included in the CCR management compliance plan, discussed below.
CCR Management In 2015, the EPA issued the CCR nile, which established requirements for the management and disposal ofCCR from coal-fired power plants. These regulations affect CCR disposal and handling costs at Ameren Missouris energy centers.
Ameren Missouri is in the process ofclosing its surface impoundments, with the last of such closures scheduled fbr 2023 The EPA issued revisions to the CCR rule in July 201 8, proposed additional revisions in July and November 2019, and indicated that additional revisions to the CCR rule are likely. Ameren and Ameren Missouri have AROs of$15l million recorded on their respective balance sheets as ofDecember 31, 2019, associated with CCR storage facilities. Ameren Missouri estimates it will need to make capital expenditures of $75 million to $125 million from 2020 through 2024 to implement its CCR management compliance plan, which includes installation ofdry ash handling systems, wastewater treatment facilities, and groundwater monitoring equipment.
Remediation The Ameren Companies are involved in a number of remediation actions to clean up sites impacted by the use or disposal ofmaterials containing hazardous substances. Federal and state laws can require responsible parties to fund remediation regardless oftheir degree of fault, the legality oforiginal disposal, or the ownership of a disposal site. Ameren Missouri and Ameren Illinois have each been identified as a potentially responsible party at several contaminated sites.
As ofDecember 31, 2t)l9, Ameren Illinois has remediated the majority ofthe 44 former MGP sites in Illinois it owned or for which it was otherwise responsible. Ameren Illinois estimates it could substantially conclude remediation efforts at the remaining sites by 2023. The ICC allows Ameren Illinois to recover such remediation and related litigation costs from its electric and natural gas utility customers through environmental cost riders. Costs are subject to annual prudence review by the ICC. As ofDecember 31, 2019, Ameren lilmois estimated the remaining obligation related to these former MGP sites at $129 million to
$213 mrnllion. Ameren and Ameren Illinois recorded a liability of$129 million to represent the estimated minimum obligation for these sites, as no other amount within the range was a better estimate.
The scope of the remediation activities at these former MGP sites may increase as remediation efforts continue. Considerable uncertainty remains in these estimates because many site-specific factors can influence the ultimate actual costs, including unanticipated underground structures, the degree to which groundwater is encountered, regulatory changes, local ordinances, and site accessibility. The actual costs and timing of completion may vary substantially from these estimates.
Our operations or those of our predecessor companies involve the use of disposal of. and, in appropriate circumstances, the cleanup of substances regulated under environmental laws. We are unable to determine whether such practices will result in future environmental commitments or will affect our results of operations. financial position, or liquidity.
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Table of Contents NOTE 15 - SUPPLEMENTAL INFORMATION Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheets and the statements of cash flows as ofl)ecemher3l, 2019 and 2018:
December 31, 2t)19 December 31, 2018 Ameren Ameren Ameren Ameren Ameren ?slissouri Illinois Ameren lslissouri Illinois Cash and cash equivalents $ 16 S 9 $ $ 16 $ $
Restricted cash included in Other culTent assets 14 4 5 13 4 6 Restricted cash included in Other assets 120 120 74 74 Restricted cash included in Nuclear decommissioning trust fund 26 26 4 4 Total cash, cash equivalents, and restricted cash S 176 $ 39 $ 125 $ 107 $ 8 $ 80 Restricted cash included in Other current assets primarily represents funds held by an irrevocable Voluntary Employee Beneficiary Association (VEBA) trust, which provides health care benefits for active employees. Restricted cash included in Other assets on Amerens and Ameren Illinois balance sheets primarily represents amounts collected under a cost recovery rider that are restricted for use in the proctirement ofrenewable energy credits and amounts in a trust fund restricted for the use of funding certain asbestos-related claims.
Accounts Receivable Accounts receivable trade on Amerens and Ameren Illinois balance sheets include certain receivables purchased at a discount from alternative retail electric suppliers that elect to participate in the utility consolidated billing program. At December 31, 2t)l9 and 2018, Other current liabilities on Amerens and Ameren Illinois balance sheets included payables for purchased receivables of$32 million and
$33 million, respectively.
For the years ended December 31, 2t)l9, 2018, and 2017, the Ameren Companies recorded immaterial bad debt expense.
Inventories The following table presents the components ofinventories for each ofthe Ameren Companies at December 3 1, 2019 and 2018:
December 31, 2019 December 31, 2018 Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Ameren Fuel(a)
S 126 $ $ 126 $ 123 $ $ 123 Natural gas stored underground 6 57 63 7 64 71 Materials, supplies, and other 241 64 305 228 61 289 Total inventories
$ 373 $ 121 $ 494 $ 358 $ 125 $ 483 (a) Consists of coal, oil, and propane.
Leases In the first quarter of2019, we adopted authoritative accounting guidance related to leases, which affected our financial position, but did not materially affect our results ofoperations or liquidity. The most significant impact for us was the recognition ofright-of-use assets and lease liabilities for operating leases, while the accounting for our finance leases remained substantially unchanged. Ameren and Ameren Missouri recognized right-of-use assets and offsetting lease liabilities of
$38 million and $36 million at January 1, 2t)19, respectively, primarily related to rail car leases. The effect ofthe adoption was immaterial at Ameren Illinois. No adjustment to comparative periods was made. We elected the available practical expedients upon adoption.
Ameren Missouri primarily leases rail cars under operating lease arrangements for the transportatio n of coal inventory to its energy centers. Although Aaueren Missouri has options to renew a portion ofthese arrangements for up to five years on similar terms, the exercise ofthese options was not assumed in the recognition ofright-of-use assets and lease obligations. For rail car leases, we account for the lease and non-lease components as a single lease component.
The operating lease expense and the cash paid for amounts included in the measurement of operating lease liabilities at Ameren and Ameren Missouri were immaterial for the years ended December 3 1, 2019, 2018, and 2017.
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Table of Contents The following table provides supplemental balance sheet information related to operating leases as ofDecember 3 1, 2019:
Ameren Arneren Missouri Other assets
$ 36 $ 34 Other current liabilities 7 7 other deferred credits and liabilities 29 27 Weighted average remaining operatmg lease term 5 years 5 years Weighted average discount rate 3.5% 34%
(a) As an implicit rate is not readily determinable under most of our lease agreements, we inc our incremental borrowing rate based on the information available at commencement date in determining the present value oflease payments. We use an implicit rate when readily determinable.
The following table presents remaining maturities ofoperating lease liabilities as ofDecember 31, 2019:
Ameren Ameren 1Iissouri 2020
$ 8 $ 8 2021 8 7 2022 7 6 2023 6 6 2024 5 5 Thereafter 5 5 Total lease payments 39 37 Less imputed interest 3 3 Total°
$ 36 $ 34 (a) The amount ofremaining maturities of operating lease liabilities under previous authoritative accounting guidance as of December 3 1, 20 12, is materially consistent with the amount as of I)ecember 31, 2019. Maturities ofcertam financing arrangements, including the Peno Creek and Audram energy centers long-tenn agreements, are no longer required to be disclosed as lease-related maturities. See Note 5 Long-Term Debt and Equity Financings, for furtiser information on financing arrangements Asset Retirement Obligations The following table provides a reconciliation ofthe beginning and ending carrying amount ofAROs for the years ended December 3 1 2019 and 2018:
December 31, 2019 December 31, 2018 Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Ameren Beginning balance at January 1 646 s 4 (1))
$ 650 $ 640 $ 4 $ 644 Liabilities settled (20) (20) (7) (7)
Accretion 28 28 27 27 Change in estimates (d) 33 33 (U)
( 14)
(14)
Ending balance at December 3 1 627 $ 4 h)
$ 691 $ 646 °
$ 4 $ 650 (a) Balance included $53 million and $23 million in Other current liabilities on the balance sheet as ofDecember 31, 2019 and 2018, respectively.
(b) Included iii Other deferred credits and liabilities on the balance sheet.
(c) Ameren Missouris accretion expense was deferred as a decrease to regulatory liabilities.
(d) Ameren Missouri changed its fair value estimate primarily due to an increase in the cost estimate for closure of certain CCR storage facilities.
( e) Ameren Missouri changed its fair value estimate prinsarily due to a reduction in the cost estitsiate for closure ofcertain CCR storage facilities Noncontrolling Interests As ofl)ecember 31, 2019 and 2018, Amerens noncontrolling interests included the preferred stock ofAmeren Missouri and Ameren Illinois.
Deferred Compensation As ofDecember 31, 2019, and 2018, Other current liabilities and Other deferred credits and liabilities on Amerens balance sheet included deferred compensation obligations of $86 million and $80 million, respectively, recorded at the present value of future benefits to be paid.
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Table of Contents Excise Taxes Arneren Missouri and Ameren Illinois collect from their customers excise taxes, including municipal and state excise taxes and gross receipts taxes, that are levied on the sale or distribution ofnatural gas and electricity. The following table presents the excise taxes recorded on a gross basis in Operating Revenues Electric, Operating Revenues Natural gas and Operating Expenses Taxes other than income taxes on the statements of income for the years ended December 3 1, 2019, 2t)18, and 2017:
2019 2018 2017 Ameren Missotiri Amerenllhnois 147 s 14 $ 153 117 11$ 112 Arneren
$ 264 $ 282 s 265 Allowance for Funds Used During Construction The followmg table presents the average rate that was applied to eligible construction work in progress and the amounts of allowance for funds used during construction capitalized in 2019, 2018, and 2017:
2019 2018 2017 Average rate:
Ameren Missouri 6% 7%
Arneren Illinois 5% 5%
Ameren:
Allowance for equity funds used during construction 28 $ 36 $ 24 Allowance for borrowed funds used during construction 20 21 14 Total Ameren 48 s 57 $ 38 Ameren Missouri:
Allowance for equity funds used during constrtiction 19 $ 27 $ 21 Allowance for borrowed funds used during construction 12 14 10 Total Ameren Missouri 31 $ 41 $ 31 Ameren Illinois:
Allowance for equity funds used during construction 9 $ 9 $ 3 Allowance for borrowed funds used during construction 8 7 4 Total Ameren Illinois 17 $ 16 $ 7 Earnings per Share Earnings per basic and diluted share are computed by dividing Net Income Attributable to Ameren Common Shareholders by the weighted-average number of basic and diluted common shares outstanding, respectively, during the applicable period. The weighted-ave rage shares outstanding for earnings per diluted share includes the incremental effects resulting from performance share units, restricted stock units, and the forward sale agreement relating to common stock when the impact would be dilutive, as calculated using the treasury stock method. for information regarding performance share units and restricted stock units, see Note 1 1 Stock-based Compensation. For information regarding the forward sale agreement, see Note 5 Long-term Debt and Equity Financings.
The following table reconciles the weighted-average number of common shares outstanding to the diluted weighted-ave rage number of common shares outstanding for the years ended December 31, 2019, 2018, and 2017:
2019 2018 2017 Weighted-average Common Shares Outstanding Basic 245.6 243 .8 242.6 Assumed settlement ofperformance share units and restricted stock units 1.4 2.0 1.6 Dilutive effect of forward sale agreement related to common stock
- 0. 1 Weighted-average Common Shares Outstanding I)iluted 247.1 245.8 244.2 (a) There were no potentially dilutive securities excluded from the eamings per diluted share calculations for the years ended December 3 1, 2019, 201 8, and 2017.
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Table of Contents Supplemental Cash Flow Information The following table provides noncash financing and investing activity excluded from the statements of cash flows for the years ended December 3 1 2019 and 2018. There was no noncash financing or investing activity for the year ended December 31, 2O7 December 31, 2019 December 31, 2018 December 31, 2017 Ameren Ameren Ameren Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Ameren Missouri Illinois Investing Exchange of bond investments for the extinguishment of senior $ 17 $ $ 17 unsecured notes Accrued caf)ital expenditures 333 140 163 272 121 138 361 159 175 Accrued nuclear fuel expenditures 19 19 20 20 10 10 Net realized and unrealized gain nuclear decommissioning trust 143 143 (38) (38) 3 3 fund Financing Exchange of bond investments for the extinguishment of semor $ (17) $ (17) $ $ $ $ S S unsecured notes Issuance ofcommon stock for stock-based compensation 54 35 (a) See Note 4 Long-term Debt and Equity financmgs for additional information.
NOTE 16 - SEGMENT INFORMATION Ameren has four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission
. The Ameren Missouri segment includes all ofthe operations of Ameren Missouri. Ameren Illinois Electric Distribution consists ofthe electric distribution business of Ameren Illinois. Ameren Illinois Natural Gas consists ofthe natural gas business ofAmeren Illinois. Ameren Transmission primarily consists ofthe aggregated electric transmission businesses ofAmeren Illinois and ATXI. The category called Other primarily includes Ameren (parent) activities and Ameren Services.
Ameren Missouri has one segment. Ameren Illinois has three segments: Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Illinois Transmission. See Note 1 Summary ofSignificant Accounting Policies for additional infonnation regarding the operations ofAmeren Missouri. Ameren Illinois, and ATXI.
Segment operating revenues and a majority ofoperating expenses are directly recognized and incurred by Ameren Illinois to each Ameren Illinois segment.
Common operating expenses, miscellaneous income and expenses, interest charges, and income tax expense are allocated by Ameren Illinois to each Ameren Illinois segment based on certain factors, which primarily relate to the nature ofthe cost. Additionally, Ameren Illinois Transmission earns reventie from transmission service provided to Ameren Illinois Electric Distribution, other retail electric suppliers, and wholesale customers. The transInission expense for Illmois customers who have elected to purchase their power from Ameren Illinois is recovered through a cost recovery mechanism with no net effect on Ameren Illinois Electric Distribution earnings, as costs are offset by corresponding revenues. Transmission revenues from these transactions are reflected in Ameren Transmissions and Ameren illinois Transmissions operating revenues. An intersegment elimination at Ameren and Ameren Illinois occurs to eliminate these transmission revenues and expenses.
138
Table of Contents The following tables present information about the reported revenue and specified items reflected in net income attributable to common shareholders and capital expenditures by segment at Ameren and Ameren Illinois for the years ended December 3 1, 2019, 20 1 8, and 20 17. Ameren, Arneren Missouri, and Ameren Illinois management review segment capital expenditure information rather than any individual or total asset amount.
Ameren Ameren Illinois Ameren Ameren Electric Illinois Arneren Intersegment Missouri Distribution Natural Gas Transmission Other Eliminations Ameren 2019 External revenues 3,212 s 1,487 $ 791 S 401 S S S 5,891 Intersegiuent revenues 31 17 6 63 (98) (5) 19 Depreciation and amortization 556 273 78 84 4 995 Interest income 26 6 i 5 (5) 33 Interest charges 178 71 38 74 25 (5) 381 Income taxes (benefit) 68 45 30 64 (25) 182 Net income (loss) attributable to Arneren common shareholders 426 146 84 185 (13) 828 Capital expenditures 1,076 518 318 528 3 )d)
(32) 2,411 2018 External revenues 3555 544 814 s 378 $ $ $ 6,291 Intersegment revenues 34 3 1 55 (93)
Depreciation and amortization 550 259 65 77 4 955 Interest income 28 6 4 (5 33 Interest charges 200 73 38 75 19 (4) 401 Income taxes (benefit) 124 41 25 56 (9) 237 Net income (loss) attributable to Amereis commonshareholders 478 136 70 164 (33) 815 Capital expenditures 9 14 503 311 562 5 (9) 2,286 2017 External revenues 3,488 s 1,564 $ 742 $ 382 $ (2) $ $ 6,174 Intersegment revenues 49 4 1 44 (98)
Depreciation and amortization 533 239 59 60 5 896 Interestincorne 27 7 11 (Il) 34 Interest charges 207 73 36 67 t) 19 (1 1) 391 Inconsetaxes 254 83 36 90 113 576 Net income (loss) attribtitable to Ameren commonshareholders 323 131 60 140 (131) 523 Capital expenditures 773 176 245 644 1 (7) 2,132 (a) Ameren Transmission earns revenue from transmission service provided to Ameren Illinois Electric Distribution.
See discussion oftransactions above.
(b) Intersegment revenues at Ameren include $14 million and $5 million ofrevenue from Amereis Illinois Electric Distribution and Ameren Illinois Natural Gas, respectively, for the year ended Decensber 3 1, 2019, for a software licensing agreement with Anseren Missouri. I Tnder authoritative accounting guidance for rate-regulated entities, tlse revenue recognized by Ameren Illinois was not eliminated upon consolidation. See Note 13 Related-party Transactions for additional information.
( c) Ameren Transmission interest charges tncltide an allocation offinancing costs frons Ameren (parent).
(d) Intersegment capital expenditure eltmiiiations include $24 nsillion of eliminations for the year ended December 3 1
, 20 19 for a software licensing agreement between Ameren Illinois and Ameren Missouri. See Note 13 Related-party Transactions for additional information.
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TabJe of Contents Ameren Illinois Ameren Illinois Electric Ameren Illinois Ameren Illinois Intersegment Distribution Natural Gas Transmission Eliminations Ameren Illinois 2019 External revenues
$ 1,504 S 797 S 226 $ $ 2,527 Intersegment revenues 62 (62)
Depreciation and amortization 273 78 55 406 Interest ncrnsse 6
6 Interest charges 71 38 38 147 Incornetaxes 45 30 35 110 Net income available to cornnson shareholder 146 84 113 343 Capital expenditures 518 318 372 1,208 2018 External revenues 1,547 s 815 $ 214 $ $ 2,576 Intersegment revenues o) 53 (53) i)epreciation aisd amortization 259 65 50 374 Interest mconie 6
Interest charges 73 3 3$ 149 Incometaxes 41 25 32 9$
Net income available to common shareholder 136 70 98 304 Capital expenditures 503 311 444 1,258 2017 External revenues 1,568 s 743 S 216 $ $ 2,527 Intersegment revenues 42 (42)
Depreciation and amortization 239 59 43 341 Interest income 7 7 Interest charges 73 36 35 144 Income taxes 83 36 47 166 Net income available to cornnson shareholder 131 60 77 268 Capital expenditures 476 245 355 1,076 (a) Ameren Illinois Transmission earns revenue from transmission service provided to Ameren Illinois Electric Distribution. See discussion oftransactions above.
140
Table of Contents The following tables present disaggregated revenues by segment at Ameren and Ameren Illinois for the years ended December 3 1, 2019, 2018, and 2017.
Economic factors affect the nature, timing, amount, and uncertainty ofrevenues and cash flows in a similar manner across customer classes. Revenues from alternative revenue programs have a similar distribution among customer classes as revenues from contracts with customers. Other revenues not associated with contracts with customers are presented in the Other customer classification, along with electric transmission and off-system revenues.
Ameren Ameren Ameren Illinois Illinois Ameren Electric Natural Ameren Intersegment Missouri Distribution Gas Transmission Other Eliminations Ameren 2019 Residential
$ 1,403 $ 848 s $ S $ $ 2,251 Commercial 1,157 497 1,654 Industrial 278 127 405 C)ther 271 32 ()
464 (96) 671 Toial electric reventies 3,109 s 1,504 $ $ 464 $ S (96) S 4,981 Residential
$ $1 $ $ 570 Commercial
$ $ $ $ csi 34 154 iss Industrial 4 13 17 Other 15 60 (2) 73 Total gas revenues $ 134 $ S 797 S $ $ (2) $ 929 Total revenues 5 3,243 $ 1,504 $ 797 $ 464 $ S (98) $ 5,910 2018 Residential
$ 1,560 $ 867 s $ S $ $ 2,427 Commercial 1,271 511
- 1,782 Industrial 312 130 442 Other 308 39 (92) 688 Total electric revenues 3,451 s 1,547 $ $ 433 $ $ (92) $ 5,339 Residential
$ 90 $ $ 581 $ $
$ $ 671 Commercial 37 159 196 Industrial 4 17 21 Other 7 58 (1) 64 Total gas revenues $ 138 $ $ 815
$ $ $ (1) $ 952 Totalrevenues $ 3,589 $ 1,547 $ 815 $ 433 $ $ (93) $ 6,291 2017 Residential
$ 1,417 $ 870 s $ $ $ $ 2,287 Conimercial 1,208 527 . . .
1,735 Industrial 305 113 418 Other 481 58 426 (2)
(96) 867 Total electric reventies 341 i s 1,568 s s 426 $ (2) s (96) $ 5,307 Residential
$ 77 $ $ 531 $ $
$ $ 608 Commercial 31 146 177 Industrial 4 12 16 Other 14 54 (2) 66 Total gas revenues $ 126 $ $ 743 $
$ $ (2) $ 867 Total revenues $ 3,537 $ 1,568 $ 743 $ 426 $ (2) $ (98) $ 6,174 (a) Includes $14 million aisd $5 million for Ameren Illinois Electric Distribution and Ameren Illinois Natural Gas, respectively, for the year ended December 3 1, 2019, for a software licensing agreement with Arneren Missouri. See Note 13 Related-party Transactions for additional infomsation 141
Table of Contents
( b)The following table presents increases/(decreases) in revenues from alternative revenue programs and other revenues not from contracts with customers 2019, 2018, and 2017: for the years ended December 31, Ameren Illinois Ameren Ameren Electric Illinois Ameren Missouri Distribution Natural Gas Transmission Ameren 2019 Revenues from alternative revenue programs 35 $ (74) $ $ (31) $ (70)
Other revenues not from contracts with customers 19 7 2 28 2018 Revenues from alternative revenue programs (8) $ (3) $ (23) $ (25)
Other revenues not from contracts with customers
$ (59) 24 16 2 12 2017 Revenues from alternative revenue programs (2$) $ (5) $ 5 S 13 $ (15)
Other revenues not from contracts with customers i 6 2 23 (c) Includes $60 million for the year ended December 3 1 201$, for the reduction to reventie for the excess amounts collected in rates to be refunded related to the TCJA from January 1, 201$,
through iuly 31, 201$. See Note 2 Rate and Regulatory Matters for additional information.
Ameren Illinois Ameren Illinois Ameren Electric Illinois Natural Ameren Illinois Intersegment Distribution Gas Transmission Eliminations Ameren Illinois 2019 Residential
$ 848 $ 570 s s s 1,418 Commercial 497 154 651 Industrial 127 13 140 Other 32 60 b) 288 (62) 318 Total revenues 1,504 s 797 s 288 S (62) $ 2,527 2018 Residential
$ $67 $ 581 $ $
Commercial
$ 1,448 511 159 670 Industrial 130 17 147 Other 39 5$ 267 (53) 311 lotal revenues° 547 $ $15 s 267 $ (53) $ 2,576 2017 Residential
$ $70 $ 531 s Commercial 8
s 1,401 527 146 673 Industrial 113 12 125 Other 5$ 54 25$ (42) 32$
Total revenues 1,568 $ 743 s 25$ s (42) $ 2,527 (a) Includes $14 million and $5 million for Ameren Illinois Electric Distribution and Ameren Illinois Natural Gas, respectively, for the year ended December 31, 2019, for a software licensing agreement with Ameren Missouri See Note 13 Related-party Transactions for additional information, (b) The following table presents mcreases/(decreases) in revenues from alternative revenue programs and other revenues not from contracts with customers for the Ameren Illinois segments for the years ended December 31, 2019, 201$, and 2017:
Ameren Illinois Ameren Illinois Ameren Illinois Electric Distribution Natural Gas Transmission Ameren Illinois 2019 Revenues from alternative revenue programs (74) $ $ (33) $ (107)
Other revenues not from contracts with ctistomers 7 2 9
2018 Revenues from alternative revenue programs (3) $ (23 ) $ (25) $ (51)
Otiser revenues not from contracts with customers 16 2 18 2017 Revenues from alternative revenue programs
$ (5) 9 $ 9 Other revenues not from contracts with customers 6 2 8
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Table of Contents SELECTED QuARTERLY INFORIvIATION (Unaudited) (In millions, except per share amounts)
Arneren 2019 2018 Quarter ended March 31 June 30 September 30 December 31 March 31 June 30 September 30 December 31 operating revetlues $ 1,556 $ 1,379 $ 1,659 $ 1,316 $ 1,585 S 1,563 $ 1,724 $ 1,419 Operating income 288 280 520 179 273 385 533 166 Netincorne 193 180 366 95 153 240 359 69 Net inorne attributable to Arneren common shareholders $ 191 $ 179 $ 364 $ 94 $ 151 $ 239 $ 357 S 68 Earnings per common share basic $ 0.78 $ 0.73 $ 1.48 $ 0.38
$ 0.62 $ 0.98 $ 1 .46 $ 0.28 Earnings per common share diluted $ 0.78 S 0.72 $ 1.47 $ 0.38
$ 0.62 $ 0.97 $ 1 .45 $ 0.28 Net Income (Loss)
Ameren Missouri Available Operating )perafing to Common Quarter ended Revenues Income Net Income (Loss) Shareholder March3l,2019 7$ 79 40 S 39 March3l,2018 792 90 39 38 June3O,2019 798 152 108 107 June3O,2018 955 258 169 168 Septetnber30,2019 1,059 381 301 300 September30,2018 1,129 394 295 294 December 31, 2019 628 5 (20) (20)
December3l,2018 713 7 (22) (22)
Net Income Ameren Illinois Available Operating Operating to Common Quarter ended Revenues Income Net Income Shareholder March3l,2019 762 s 186 s 121 5 120 March3l,2018 760 159 96 95 June3O,2019 547 104 63 62 June3O,2018 578 105 63 62 September30,2019 564 110 65 65 September30,2018 564 113 63 63 December 31, 2019 654 150 97 96 December3l,2018 674 135 85 84 ITEM 9.CHANGES IN AND DISAGREEMENTS WITh ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
ITEM 9A.CONTROLS AND PROCEDURES
( a) Evaluation of Disclosure Controls and Procedures As ofDecember 31, 2019, evaluations were performed under the supervision and with the participation ofmanageme nt, including the principal executive officer and the principal financial officer ofeach ofthe Ameren Companies, ofthe effectiveness ofthe design and operation ofsuch registrants disclosure controls and procedures (as defined in Rules 13a-15(e) and l5d-15(e) ofthe Exchange Act). Based on those evaluations, as ofDecember 31, 2019, the principal executive officer and the principal financial officer ofeach ofthe Ameren Companies concluded that such disclosure controls and procedures are effective to provide assurance that information reqstired to be disclosed in such registrants reports filed or submitted tinder the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to its management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure.
( b) Managements Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over finsmcial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and l5d-15(f). Under the supervision ofand with the participation ofmanagement, including the principal executive officer and the principal financial officer, an evaluation was conducted ofthe effectiveness ofeach ofthe Ameren Companies 143
Table of Contents internal control over financial reporting based on the framework in Internal Control Integrated framework (2013) issued by the Committee of Sponsoring Organizations ofthe Treadway Commission (COSO). After making that evaluation, management concluded that each ofthe Ameren Companies internal control over financial reporting was effective as ofDecember 31, 2019. The effectiveness ofAmerens internal control over financial reporting as ofDecember 31, 2019, has been audited by PricewaterhouseCoopers LLP, an independent registered ptiblic accounting firm, as stated in its report herein under Part II, Item 8. This annual report does not include an attestation report ofAmeren Missouris or Ameren lilmois (the Subsidiary Registrants) independent registered public accounting firm regarding internal control over financial reporting. Managements report for each ofthe Subsidiary Registrants is not subject to attestation by an independent registered public accounting firm.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness into future periods are subject to the risk that internal controls might become inadequate because of changes in conditions, and to the risk that the degree ofcoinpliance with the policies or procedures might deteriorate.
(c) Change in Internal Control There has been no change in the Arneren Companies internal control over financial reporting during their most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, their internal control over financial reporting.
ITEM 9B.OTHER INFORMATIoN The Arneren Companies have no information reportable under this item that was required to be disclosed in a report on SEC Form 8-K during the fourth quarter of2019 that has not previously been reported on an SEC Form 8-K.
PART III ITEM lO.DIRECTORS, EXECuTIVE OFFICERS, AND CORPORATE GOVERNANCE Information required by Items 401, 4t)5, 406 and 407(c)(3),(d)(4) and (d)(5) ofSEC Regtilation S-K for Ameren will be included in its definitive proxy statement for its 2020 annual meeting of shareholders filed pursuant to SEC Regulation l4A; it is incorporated herein by reference.
Information required by these SEC Regulation S-K items for Ameren Missouri and Ameren Illinois will be included in each companys definitive information statement for its 2020 annual meeting ofshareholders filed pursuant to SEC Regulation 14C it is incorporated herem by reference. Specifically, reference is made to the following sections of Amerens definitive proxy statement and to each ofAmeren Missouris and Amercn Illinois definitive information statements:
Information Concerning Nominees to the Board ofDirectors, Delinquent Section 16(a) Reports, Corporate Governance and Board Structure.
Information concerning executive officers of the Ameren Companies required by Item 40 1 of SEC Regulation S-K is reported under a separate caption entitled Information about our Executive Officers in Part I ofthis report.
Ameren Missouri and Ameren Illinois do not have separately designated standing audit committees, but instead use Amerens audit and risk committee to perform such committee functions for their boards of directors. These companies do not have securities listed on the NYSE and therefore are not subject to the NYSE listing standards. J. Edward Coleman serves as chairman ofAmcrens audit and risk committee and Catherine S.
Bmne, Ward H. Dickson, Noelle K. Eder, and Craig S. Ivey serve as members. The board of directors ofAmeren has determined that J. Edward Coleman and Ward H.
Dickson each qualify as an audit committee financial expert and that each is independent as that term is used in SEC Regulation 14A.
Also, on the same basis as reported above, the boards ofdirectors ofAmeren Missouri and Ameren Illinois use the nominating and corporate governance committee ofAmerens board of directors to perform such committee functions. This committee is responsible for the nomination of directors and for corporate governance practices. Amerens nominating and corporate governance committee ill consider director nominations from shareholders in accordance with its Policy Regarding Nominations ofDirectors, which can be found on Amerens website: www.ameremnvestors.com To encourage ethical conduct in its financial management and reporting, Ameren has adopted a code of ethics that applies to the principal executive officer, the president, the principal financial officer, the principal accounting officer, the controller, and the treasurer ofeach ofthe Ameren Companies. Arneren has also adopted a code ofbusiness conduct that applies to the directors, officers, and employees ofthe Ameren Companies. It is referred to as the Principles of Business Conduct. The Ameren Companies make available free of charge through Amerens website (www. amereninvestors.com) the Code of Ethics and the Principles of Business Conduct. Any amendment to the Code ofEthics or the Principles ofBusiness Conduct and any waiver from a provision ofthe Code ofEthics or the Principles of Business Conduct as it relates to the principal executive officer, the president, the principal financial officer, the principal accounting officer, the controller, or the treasurer ofeach ofthe Ameren Companies will be posted on Amerens website within four business days following the date ofthe amendment or waiver.
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Table of Contents ITEM 11.EXECtTTIVE COIvIPENSATION Information required by Items 402 and 407(e)(4) and (e)(5) ofSEC Regulation S-K for Ameren will be included in its definitive proxy statement for its 2020 annual meeting ofshareholders filed pursuant to SEC Regtilation 14A it is incorporated herein by reference. Information required by these SEC Regulation S-K items for Ameren Missouri and Ameren Illinois will be included in each companys definitive information statement fbr its 2020 annual meeting of shareholders filed pursuant to SEC Regulation 14C; it is incorporated herein by reference. Specifically, reference is made to the following sections ofArnerens definitive proxy statement and to each ofAmeren Missouris and Arneren Illinois definitive information statements: Executive Compensation Matters and Human Resources Committee Interlocks and Insider Participation.
ITEM 12.SECURITY OWNERSHIP Of CERTAIN BENEfICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Equity Compensation Plan Information The following table presents information as ofDecember 3 1, 2019, with respect to the shares ofAmerens common stock that may be issued under its existing equity compensation plans:
Column C Column A Column B Number of Securities Remaining Number ofSecurities To Be Weighted-Average Available for Future Issuance Issued Upon Exercise of Exercise Price of tinder Equity Compensation Plan Outstanding Options, Outstanding options, Plans (excluding Category Warrants and Rights1 Warrants and Rights securities reflected in Column A)
Equity compensation plans approved by security holderst1 1,500,803 (c) 3 081,062 Equity compensation plans not approved by security holders lotal 1 500 803 (C) 081 06 (a) Of the securities to be issued, 1,108,794 of the securities represent the target number of outstanding performance share units (PSUs) and 3 13,396 of the securities represent the outstanding restricted stock units (RSUs), both including accrued and reinvested dividends. number of The actual number of shares issued in respect of the PSUs will vary frons 0% to 200%
target level, depending upon the achievement ofTSR objectives established for such of the awards. For additional information about the PSUs and RSlis, including payout calculations, Compensation I)iscussion and Analysis Long-Term Incentive Compensation in see Amerens definitive proxy statement for its 2020 annual meeting of shareholders, which pursuant to SEC Regulation l4A. The remaining 78,613 ofthe securities represent will be filed shares that may be issued to satisfy obligations under the Ameren Corporation Deferred Plan for Members of the Board of Directors. Compensation (b) Consists ofthe 2014 Omnibus Incentive Compensation Plan.
(c) No cash consideration is received when shares are distributed for earned PSUs, RSUs, and director awards. Accordingly, there is no weighted-average exercise price Ameren Missotiri and Ameren Illinois do not have separate equity compensation plans.
Security Ownership ofCertain Beneficial Owners and Management The information required by Item 403 of SEC Regulation S-K for Ameren will be included in its definitive proxy statement fbr its 2020 annual meeting of shareholders filed pursuant to SEC Regulation 14A; it is incorporated herein by reference.
Information required by this SEC Regulation S-K item for Ameren Missouri and Ameren Illinois will he included in each companys definitive information statement for its 2020 annual meeting ofshareholders filed pursuant to SEC Regulation l4C it is incorporated herein by reference. Specifically, reference is made to the following section ofAmerens definitive proxy statement and each ofAmeren Missouris and Ameren Illinois definitive information statement: Security Ownership.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information required by Items 404 and 407(a) of SEC Regulation S-K for Ameren will be included in its definitive proxy statement for its 2020 annual meeting of shareholders filed pursuant to SEC Regulation l4A it is incorporated herein by reference. Information required by these SEC Regulation S-K items fbr Ameren Missouri and Ameren Illinois will be included in each conspanys definitive information statement for its 2020 annual meeting ofshareholders filed pursuant to SEC Regulation l4C it is incorporated herein by reference. Specifically, reference is made to the following sections ofAmerens definitive proxy statement and to each ofAmeren Missouris and Ameren Illinois definitive information statements: Related Person Transactions Policy and Director Independence.
ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES Information required by Item 9(e) of SEC Schedule 14A for the Ameren Companies will be included in the definitive proxy statement ofAmeren and the definitive information statements ofAmeren Missouri and Ameren Illinois for their 2020 annual meetings ofshareholders filed pursuant to SEC Regulations 14A and 14C, respectively, it is incorporated herein by reference. Specifically, reference is made to the 145 II
Table of Contents following section ofAmerens definitive proxy statement and each ofAmeren Missouris and Arneren Illinois definitive information statement: Selection of Independent Registered Public Accounting Firm.
PART IV ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Page No.
(a)( 1) Financial Statements Ameren Report of Independent Registered Public Accounting Firm Consolidated Statement oflncorne and Comprehensive Income Years Ended December 31, 2019, 2018, and 2017 74 Consolidated Balance Sheet December 31, 2019 and 2018 75 Consolidated Statement ofCash Flows Years Ended December 31, 2019, 2t)18, and 2017 76 Consolidated Statement ofShareholders Equity Years Ended December 31, 2019, 2018, and 2017 77 Ameren Missouri Report of Independent Registered Public Accounting Firm 72 Statement oflncorne Years Ended December 31, 2019, 2018, and 2017 78 Balance SheetI)ecember 31, 2019 and 2018 Statement ofCash Flows Years Ended I)ecember 3 1, 2019, 2018, and 2017 Statement ofShareholders Equity Years Ended I)ecember 3 1, 2019, 2018, and 2017 Ameren Illinois Report oflndependent Registered Public Accounting firm 73 Statement oflncome Years Ended December 3 1, 2019, 20 1 8, and 20 17 82 Balance SheetDecember 31, 2019 and 2018 Statement ofCash Flows Years Ended December 31, 2019, 2018. and 2017 Statement ofShareholders Equity Years Ended December 31, 2019, 2018, and 2017 85 (a)(2) financial Statement Schedtiles Schedule I Condensed Financial Information of Parent Ameren:
Condensed Statement ofincome and Comprehensive Income Years Ended I)ecember 3 1, 2019, 2018, and 2017 147 Condensed Balance Sheet December 31, 2019 and 2018 148 Condensed Statement ofCash Flows Years Ended December 3 1, 2019, 2018, and 2017 149 Schedule II Ameren Valuation and Qualifying Accounts for the years ended I)ecember 31, 2019, 2018, and 2017 151 Ameren Missouri Valuation and Qualifying Accounts for the years ended December 31, 2019, 2018, and 2017 Ameren Illinois Valuation and Qualifying Accounts for the years ended L)ecember 3 1, 2019, 20 18, and 2017 Schedule I and II should be read in conjunction with the aforementioned financial statements. Certain schedules have been omitted because they are not applicable or because the required data is shown in the aforementioned financial statements.
(a)(3) Exhibits reference is made to the Exhibit Index (b) Exhibit Index 146
Table of Contents SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT AMEREN CORPORATION CONDENSED STATEMENT OF INCOME AND COMPREHENSIVE INCOME For the Years Ended December 31, 2019, 2018, and 2017 (Inmillions) 2019 2013 2017 Operating revenues Operating expenses 15 1i 15 Operating loss (15) 1 i) ( I 5)
Equity in earnings ofsubsidiaries
$50 857 659 Interest income from affiliates 3 9 Total other income (expense), net (2) (12) 2 Interest charges 39 34 31 Income tax (benefit)
(29) (12) 101 Net Income Attributable to Arneren Common Shareholders 828 $ 8 15 $ 523 Net Income Attnbtitable to Ameren Common Shareholders
$28 $ 815 $ 523 Other Comprehensive Income (Loss), Net of Taxes Pension and other postretirement benefit plan activity, net ofincome taxes (benefit) ofSl, $(l),
and $3, respectively 5 (4) 5 Comprehensive Income Attributable to Arneren Coimnon Shareholders
$33 $ g11 $ 52$
147
Table of Contents SUIEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT AMEREN CORPORATION CONDENSED BALANCE SHEET (In millions)
December 31, 2019 December 31, 201$
Assets:
Cash and cash equivalents Advances to money pool 102 76 Accounts receivable affiliates 73 43 Miscellaneous accounts and notes receivable 4 2 Other current assets 3 2 Total current assets 182 123 Investments in subsidiaries 9,108 8,559 Note receivable ATXI 75 75 Accwrnilated deferred income taxes, net 49 108 Other assets t45 126 Total assets
$ 9,559 $ 8,991 Liabilities and Shareholders Equity:
Current maturities oflong-term deht 350 $
Short-term debt 153 470 Borrowings from money pool 24 46 Accounts payable affiliates 39 10 Other current liabilities 23 12 Total current liabilities 5$9 53g Long-term debt 794 697 Pension and other postretirernent benefits 37 43 Other deferred credits and liabilities so 82 Total liabilities 1,500 1,360 Commitments and Contingencies (Note 5)
Shareholders Equity:
Common stock, $01 par value, 400.0 shares authorized shares outstanding of 246.2 and 244 5, respectively 2 2 Other paid-in capital, principally prensium on common stock 5,694 5,627 Retained earnings 2,380 2,024 Accumtilated other comprehensive loss (17) (22)
Total shareholders equity 8,059 7,631 Total liabilities and shareholders equity 9,559 $ 8,991 148
Table of Contents SCIIEDtILE I CONDENSED FINANCL4L INFORMATION OF PARENT AMEREN CORPORATION CONDENSED STATEMENT OF CASh FLOWS For the Years Ended December 31, 2019, 2018, and 2017 (In millions) 2019 2018 2017 Net cash flows provided by operating activities 49f $ 550 $ 154 Cash flows from investing activities:
Money pool advances, net (26) (63) 14 Notes receivable ATXI, net 275 Investments in sstbsidiaries (142) (208) (151)
Other 5 5 6 Net cash flows provided by (used in) investing activities (163) (266) 144 Cash flows from financing activities:
Dividends on common stock (472) t 45 1 ) (43 1)
Short-term debt, net (317) 87 ( 124)
Money pooi borrowings, net (22) 18 (5)
Issuances of long-term debt 450 Issuances of common stock 6$ 74 Repurchases ofcomrnon stock for stock-based compensation .
(24)
Employee payroll taxes related to stock-based compensation (29) (19) (15)
Debt issuance costs (4)
Net cash flows used in financing activities (326) (291 ) (599)
Net change in cash, cash equivalents, and restricted cash 2 $ (7) $ (1)
Cash, cash equivalents, and restricted cash at beginning ofyear i s 9 Cash, cash equivalents, and restricted cash at end of year 3 $ 1 $ 8 Cash dividends received from consolidated subsidiaries $ 445 $ 450 $ 362 Noncash financing activity Issuance of common stock for stock-based compensation $ 54 $ 35 AMEREN CORPORATION (parent company only)
NOTES TO CONDENSED FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 1 - BASIS OF PRESENTATION Ameren Corporation (parent company only) is a public utility holding company that conducts substantially all of its business operations through its subsidiaries. Ameren Corporation (parent company only) has accounted for its subsidiaries using the equity method. These financial statements are presented on a condensed basis.
See Note I Summary of Significant Accounting Policies under Part H, Item 8, ofthis report for additional information.
See Note 13 Related-party Transactions under Part II, Item 8, ofthis report for information on the tax allocation agreement between Ameren Corporation (parent company only) and its subsidiaries.
NOTE 2 CASII AND CASh EQUIVALENTS The following table provides a reconciliation ofcash, cash equivalents, and restricted cash reported within the balance sheet as ofl)ecember 31, 2019 and 2018:
2019 201$
Cash and cash equivalents S $
Restricted cash included in Other current assets 3 1 Total cash, cash equivalents, and restricted cash
$ 3 $ 1 See Note 1 Summary of Significant Accounting Policies under Part II, Item 8, of this report for additional information.
NOTE 3 - SHORT-TERM DEBT AND LIQUIDITY Arneren, Arneren Services, and other non-state-regulated Ameren subsidiaries have the ability, subject to Ameren parent company and applicable regulatory short-term borrowing authorizations, to access funding from the Credit Agreements and the commercial paper programs
149 Table of Contents through a non-state-regulated subsidiary money pooi agreement. All participants may borrow from or lend to the non-state-regulated nwney pool. The total amount available to pooi participants from the non-state-regulated subsidiary money pool at any given time is reduced by the amount of borrowings made by participants.
but is increased to the extent that the pool participants advance surplus funds to the non-state-reg ulated subsidiary money pool or remit funds from other external sources. The non-state-regulated subsidiary money pool was established to coordinate and to provide short-term cash and working capital ftr the participants.
Participants receiving a loan under the non-state-regulated subsidiary money pool agreement must repay the principal amount of such loan, together with accrued interest. The rate of interest depends on the composition of internal and external funds in the non-state-regulated subsidiary money pool. Interest revenues and interest charges related to non-state-regulated money pool advances and borrowings were immaterial in 2017, 2018, and 2t)19.
Ameren Corporation (parent company only) had a total of $ 10 million in guarantees outstanding, primarily for ATXI, that were not recorded on its December 3 1, 2019 balance sheet. The ATXI guarantees were issued to local governments as assurance for potential remediation ofdamage caused by ATXI construction.
See Note 4 Short-term Debt and Liquidity under Part II, Item 8, ofthis report for a description and details ofshort-term debt and liquidity needs of Ameren Corporation (parent company only).
NOTE 4 - LONG-TERM OBLIGATIONS See Note 5 Long-term I)ebt and Equity Frnancings under Part IL Item 8, ofthis report for additional information on Ameren Corporations (parent company only) long-term debt, indenture provisions, and forward sale agreement related to common stock.
NOTE 5 - COMMITMENTS AND CONTINGENCIES See Note 14 Commitments and Contingencies under Part IL Item 8, ofthis report for a description of all material contingencies ofAmeren Corporation (parent company only).
NOTE 6 - OTHER INCoME (EXPENSE), NET The following table presents the components of Other Income (Expense), Net in the Condensed Statement of Income and Comprehensive Income for the years ended I)ecember 31, 2019, 2018, and 2017:
2019 2018 2017 Oiher Income (Expense), Net Non-service cost components of net periodic benefit income 2 $ 2 $ 2 Charitable donations (3) (13)
Oiher expense, net (1) (1)
Total Other Income (Expense), Net (2) $ (12) $ 2 NOTE 7 - INCOME TAXES I)uring the year ended December 3 1, 20 1 7, Ameren (parent) recorded $ 1 1 0 million in income tax expense and reduction in accumulated deferred income taxes as a result ofthe TCJA. During the year ended December 31, 2018, Ameren (parent) updated its provisional estimate and recorded $5 million ofincome tax expense and reduction in accumulated deferred income taxes, primarily due to the application ofproposed IRS regulations on depreciation transition rules.
150
Table of Contents SChEDULE II VALuATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2018, AND 2017 (in millions)
Column A Column B Column C Colunin D Column E Balanceat (1) (2)
Beginning Charged to Costs Charged to Other Balance at End Description of Period and Expenses Accounts Deductions5 of Period Ameren:
Deducted from assets allowance for doubtful accounts:
2019 $ 18 $ 26 $ 4 $ 31 $ 17 2018 19 27 4 32 18 2017 19 26 7 33 19 Deferred tax valuation allowance:
2019 $ 5 $ (2) $ $
S 3 2018 5 5
2017 11 (6) (° 5
Ameren Missouri:
Deducted from assets allowance for doubtful accotints 2019 S 7 $ 9 $ $ 9 S 7 2018 7 9 9 7
2017 7 9 9 7 Ameren Illinois:
I)educted frons assets allowance for doubtful accounts 2019 S 11 $ 17 S 4 $ 22 $ 10 2018 12 18 4 23 11 2017 12 17 7 24 12 (a) Amounts associated with the allowance for doubtful accounts relate to the uncollectible account reserve associated with receivables purchased by Ameren Illinois from alternative retail electric suppliers, as required by the Illinois Public Utilities Act.
(b) Uncollectible accounts charged off less recoveries.
( c) Includes an adjustment of$3 million to Aisseren (parent)s valuation allowance for certain deferred tax assets existing at December 31, 2017, for the reduction in the income tax rate.
ITEM 16.fORM 10-K
SUMMARY
The Ameren Companies elected not to provide a stimmaiy ofthe Form 10-K.
151
Table of Contents EXhIBIT INDEX The documents listed below are being filed or have previously been filed on behalfofthe Ameren Companies and are rncorporated herein by reference from the documents indicated and made a part hereof Exhibits not identified as previously filed are filed herewith:
Exhibit Designation Articles of Incorporation! By-Laws Registrant(s) J Nature of Exhibit I Previously Filed as Exhibit to:
Annex F to Part I of the Resistration Statement on Form S 3.1(i) Arneren Restated Articles ofincorporation ofAmeren 4,_file_No. 33-64165 c kmerens Rest:Oed i\rticles of 199$ Form 10K, Exhibit 3(i),
3.2(1) Arneren r 14. 199X File No. 1-14756 ens Restated Articles of April 21, 201 1 Foms 8-K. Exhibit 3(1),
3.3(1) Ameren File No. 1-14756
,-efls Restated Articles of December 18, 2012 fonn 8-K, Exhibit 3.l(i),
3.4(1) Arneren 18,2012 file No. 1-14756 1993 fonis 10-K, Exhibit 3(1),
3.5(1) Arneren Missouri Restated Articles oflncorporation ofArneren Missouri File No. 1-2967 2010 form 10-K, Exhibit 3.4(1),
3.6(1) Ameren Illinois Restated Articles of lncorporatioii ofArneren Illiiiois File No. 13672 February 14, 2017 Forni 8-K, Exhibit 3, 3.7(11) Arneren By-Laws of Ameren. as amended Febniarv 10. 2017 file No. 1-14756 Decensber 18, 2014 form 8-K, 3.8(11) Arneren Missouri 13lass of Aiueren Missotiri. as amended I)ccemher IL 2t)14 Exhibit 3.1, File No. 12967 December 18, 2014 Form 8-K, 3.9(u) Arnereii Illinois Bylaws ofArneren Illinois, as ameisdedDecember 12, 2014 Exhibit 3.2, File No. 1-3672 Instruments Defining Rights of Security Holders, Including Indentures Indenture, dated as ofDecembe 1 3001 frrsm Amsrcn to Th Bank of New York Mellon Trust 41 Ameren trustee, relating to senior.debt s Exhibit 4.5, file No. 333-8 1774 first Supplemental Indenture to Ameren Senior Indenture dated as June 30, 2008 form 10-Q, Exhibit 4 1, 4.2 Ameren ofMav 19, 2008 file No. 1-14756 Am,rn ImlAntltrP Cnmnsnv flrAr btd 1 r 94
,1. November 24, 2015 Form 8-K, Exhibits 4.3, 4.4 and 4.5, 4.3 Ameren FileNo. 1-14756 Ameren Iiidenture Company order, c r 16, 2019, stahlishine the 2 50o Senior Notes tlse September 16, 2019 Fonn 8-K, Exhibits 4.3 and 4.4, File 4.4 Arneren elobal note No. 1-11756 dated June 22, 2017, between Aineren F Illinois and the several purchasers 4.5 Arneren June 26, 2017 form 8-K, Exhibit 4.1, File No. 1-14756 Indenture of Mortgage and Deed of Trust, dated June 15, 1937 (Ameren Missouri Mortgage), from Ameren Missouri to The Ameren Bank of New York Mellon, as successor trustee, as amended May 4.6 Ameren Missouri 1, 1941, and Second Supplemental Indenture dated May 1, 1941 Exhibit B-l, file No. 2-4940 Ameren i Indeiittire to the Ameren Missotiri Mortgaite dated 4.7 Ameren Missouri 1 956 Exhibit 4.22, file No. 333-222108 Ameren Supplensental Indenttire to the Ameren I\4issoun Mortgage dated 4.8 Ameren Missouri ofApril I, 1971 Exhibit 4.23, file No. 333-222 108 Ameren .
Supolemental Indenture to the Ameren Missoun Mortgage dated 4 9 Ameren Missouri sofFebmarv 1 1974 Exhibit 4 24 File No 33 22l08 Ameren Supplemental Indenture to the Ameren Missouri Morteage dated 4.10 Ameren Missouri ofluly 7, 1980 Exhibit 4.25, fileNo. 333-222108 Ameren ---- --.-
-.--1 Indçnture to the Ameren Missouri Mortease uaieu 1993 fonu 10-K, Exhibit 4.8,
- 4. 1 1 Ameren Missouri i993 file No. 1-2967 Ameren Supplemental Indenture to the Ameren Missouri Morteage dated 2000 Form 10-K, Exhibit 4.1,
- 4. 12 Ameren Missouri offebniarv 1, 2000 file No. 1-2967 Amerrn Supltenture to thr Ameren Missouri Mortgaie dated August 2 002 Fonn 8 K Exhibit 4 3 4.13 Ameren Missouri August 15, 2002 File No. 1-2967 152
Table of Contents Arneren Sttoolemental Indenture to the P -n Missouri Mortease dated March 11, 2003 Form 8-K. Exhibit 4.4, 4.14 Aineren Missouri March 5, 2003, relative to $eri File No 1-2967 Anseren . -
7 .., *.
iagedated March3l,2004fomslO-Q,Exhihit4.1, 4.15 Ameren Missouri Q1 file No. 1-2967 Ameren , . . .
1 Indenture to the i Morteace dated
- March 31, 2004 Fofm 1O-Q, Exhibit 4.2,
- 4. 16 Arneren Missouri fl04, reiauve to ) file No. 1-2967 Arneren Suonlernental Indenture to the Ameren Misnuri Moiteace dated March 3 1, 2004 Form 1O-Q, Exhibit 4.3 4.17 Ameren Missouri Febniaiw 1 2004. relativeto Series 2004C (1998C) file No. 1-2967 Arneren Supplemental Indenture to the Amereis Missos;i Mortie dated March 31, 2004 Form 1O-Q, Exhibit 4.8, 4.12 Amereis Missouri February 1. 2004, relative to Series 2004Ff 1992) file No. 1-2967 Ameren Supplemental Indenture to the -----
lissouii Moitgnedaied Septensber 23, 2004 forns 8-K, Exhibit 4 4, 4.19 Arneren Missouri September 1. 2004 relative to file No. 1-2967 Arneren , ., I Indenture to the NIo;to,ie dated 1\1NSO1III Jaisuary 27, 2005 fonis 8K, Exhibit 4.4, 4.20 Ameren Missouri 05 relative to Se6 file No. 1-2967 Ameren Supplemental Indenture to the Anseren Missouri Mortgsee dated July 2 1 2005 fonts 8-K, Exhibit 4 4, 4.2 1 Ameren Missouri Jul I , 2t)05 relative to Series II File No. 1-2967 Ameren Stipplensental Indenture to the Ameren Missouri Mortgage dated June 19, 2008 form 8-K, Exhibit 4 5, 4.22 Arneren Missouri june 1. 2008 relative to Series MM file No 1-2967 ES Arneren C, £. A_,
Missoori Mortgaize dated March 23, 2009 fonn 8-K, Exhibit 4.5, 4.23 Ameren Missouri 9 file No. 1-2967 Ameren inoenture to tne t-meren Missouri Mortgage dated 4.24 Ameren Missouri Exhibit 4.45, file No. 333-182258 Ameren Supplemental Indenture to the Ameren Missouri Morteatte dated September 1 1, 2012 form 8-K, Exlsibit 4.4, 4.25 Arneren Missouri September 1, 2012 relative to Series 00 File No. 1-2967 Arneren Supplemental Indenture to the Anseren Missotiri Mortgage dated April 4, 2014 form 8-K, Exhibit 4.5, 4.26 Ameren Missouri AilIll I. 2014 relative to Series PP file No. 1-2967 Ameren Supplemental Indenture to the Ameren Missotiri Morteage dated 4.27 Amereis Missouri March 15. 2015 relative to Series 00 April 6, 2015 foim 8-K, Exhibit 4.5, File No 1-2967 Ameren .-.
..,-i I - --- reis Missouri sviorigaec oateci 4.28 Arneren Missouri 1-s June 15, 2017 form 8-K, Exhibit 4.5, file No. 1-2967 Aineren Suonlemental Indenture to the Ameren Missotiri Mortgage dated 4.29 Ameren Missouri \pnl 1, 2018 for 4.000% FirstMortgage Bonds due 2048 April 6, 2018 forns 8-K, Exhibit 4.2, file No. 1-2967 Amei en Supplemental Indenture to the Ameren Missouri 1Iortnsee, slated 4.30 Ameren Missouri March 1 , 2019. for 3.50% first Mortgage Bonds due 2f)29 March 6, 2019 form 8-K, Exhibit 4.2, file No. 1-2967 Ameren Supplemental Indenture to the Ameren Missouri Morteace. dated 4 31 Ameren Missouri September 1 5, 2019, for 3.25% First Mortgaize Bonds due 2049 October 1, 2019 form 8-K, Exhibit 4 2, file No. 1-2967 Loan Agreement, dated as of December 1 1992, between the ,
Missouri Environmental Authority and Aineren Missouri, together Arneren with lIsdenture oflrust dated as ofDeceinber 1, 1992, between the Missouri Environmental Authority and UMB Bank, N.A as 1992 Form 10-K, Exhibit 4.38, 4.32 Ameren Missouri successortrustee to Mercantile Bank of St. Louis, NA. file No. 1-2967 Iirt . tI , I ,_2004. to Loan Ameren
)2, between the Missouri March 3 1 2004 form 1 O-Q, Exhibit 4 10, 4.33 Ameren Missouri Li Aiit1inrat
- MJji i File No. 1-2967 Ameren Series 1998A I oan Asreement, dated as ofSepteinber I. 1998, between_the_Missouri Environmental Authority and Ameren September 30, 1998 fonn 10-Q, 4.34 Aineren Missouri Missotiri Exhibit 4.28, file No. 1-2967 Ameren March 31, 2004 form 10-Q, Exhibit 4.11, 4.35 Arneren Missouri File No 1-2967 Aineren t September 30, 1998 fonis l0-Q.
4.36 Arneren Missouri jori Exhibit 4.29, file No 1-2967 153
Table of Contents Ameren 4.37 Arneren Missotiri March 31, 2004 Foriss 10-Q, Exlsibit 4.12, File No. l2967 Arneren 4.38 Ameren Missouri September 30, 1998 Form 10-Q, Exhibit 4.30, File No. 1-2967 Aineren ,00J, 1998C 4.39 Ameren Missouri March 3 1, 2004 Fonn lO-Q, Exhibit 4.13, File No. 1-2967 Ameren -
souri to r trtistee (relating to August 23, 2002 Form 8-K, Exhibit 4.1, 4.40 Ameren Missouri File No. 1-2967 Ameren ,.(
-.------1I--..-.- -fl,,,.,
4.41 Arneren Missouri Exhibit 4.48, File No. 333-182258 Arneren
)o 0 SeOIfW NCtJ1 ccl NcW dn March 1 1, 2003 Forns 8-K, Exhibits 4.2 and 4.3, File No. 1-4.42 Anseren Missouri 2034 ineludiise the slobal tote 2967 Arneren ( ,,,,, jais S tudel. datd.FiioIm\..
4.43 Ameren Missouri Jaisuary 27, 2005 Form 8-K, Exhibits 4 2 and 4.3, File No. 1-2967 Arneren 21. 2005.
Ameren Missouri incliidine July 21, 2005 Form 8-K, Exhibits 4.2 and 4.3, File No. 1-4.44 the ulohsl nofe3 2967 Ameren Company Order, dated March 20, 0 Senior Secured Notes dtie March 23, 2009 Fonn 8-K, Exlsibits 4.2 and 4.3, File No. 1-1.45 Arneren Missouri 2967 Ameren -pany Order, dated September 1 1, 2Ojc S t1s 3.90% Senior Secured Notes due September 30, 2012 Form lO-Q, Exhibit 4.1 and September 4.46 Arneren Missouri 2042 11, 2012 Form 8-K, Exhibit4.2, File No. 1-2967 Ainereis 1snture Comoanv Order, dated April 4, 2f)l4.
04 Senior Secured Notes due 2t)24 (inclutling April 4, 2014 Form 8-K, Exhibits 4.2 and 4.3, File No. 1-4.47 Ameren Missouri the elobal..i1- 2967 Arneren Anril f 2015 Form 8-K, Exhibits 4.2 and 4.3, File No. 1-4.48 Ameren Missouri 2967 Arneren 4A9 June 23, 2016 Form 8-K, Exhibits 4.3, and 4.4, File No. 1-Ameren Missouri 2967 Arneren 4.50 Ameren Missouri June 15, 2017 Form 8-K, Exhibits 4.2 and 4.3, File No. 1-2967 Ameren 4.51 Arneren Illinois (CIPS Indenturel Exhibit 4.4, File bits. 333-59438 Amneren First Supplemssemstal Imsdenture to the (IPS Indenture, dated as of 4.52 Ameren Illinois Jimmie 14. 2006 Jtmne 19, 2006 Form 8-K, Exhibit 4.2, File No. 1-3672 Ameren fl----- ,
nental Indenttmre to the CIPS Indenture, dated as of 4.53 Amerems Illimsois Exhibmt 4 17, File No 333-166095 Ameren lsmrcl Stmoplemsmemstal Imsdemstsmre to the CIPS Indenture, dated as of 4.54 Ameren Illinois October 1. 2t)lO 2010 form 10-K, Exhibit 4.59, File No. 1-3672 Amneren 4merems Illinois Global Note, dated October 1, 2010, representing 4.55 Ameren Illinois cis Indemiture Senior Notes, 6.l25°m due 2028 2010 Form 10-K, Exhibit 4.60, File No. 1-3672 Ameren Amnerems Illinois Global Note. dated October 1 20 1 0, ig ir immuemmmurc Scissor Notes, 6.70% Series Secured 4.56 Ameren Illinois 2010 Fonsi 10-K, Exhibit 4.62, File No. 1-3672 Amneren ) The Amerems Illinois ssor 4.57 frusJCO Indenture) June 19, 2006 Form 8-K, Exhibit 4.3, File No. 1-2732 Ameren
.ental Indenture to the C11CO Indenture. dated 4.58 Ameren Illinois ,,-.-i---
October 7, 2010 Foms 8-K, Exhibit 4.1, File No. 1-3672 Ameren ntal Indenture to the CILUf) lisdemiture dated as September 30. 201 1 fonn 10-Q, Exhibit 4.1, 4.59 .
Ameren Illinois FileNo. 1-3672 154 I t
Table of Contents Arneren Indenlure 10 lhe CILCO Indenture. dated as 4.60 Arneren Illinois September 30, 2019 lO-Q, Exhibit 4 2, File No 1-3672 Arneren -vf S 14, 2006, r the 6.7t)° Senior ne 2036 (including 4 61 Ameren Illinois Ihe global note) June 19, 2006 Form 8-K, Exhibit 4 6, File No 1-2732 General Mortgage Indenture and Deed of Trust. dated as of November 1, 1992 between Ameren Illinois (successor in interest Ameren to Illinois Power Company) and The Bank of New York Mellon Trust Company, NA., as successor trustee (Ameren Illinois .
4.62 Ameren Illinois Mortgage) 1992 Fonsi 10-K, Exhibit 4(cc), file No. 1-3004 Ameren Supplemental Imlenture amending the Ameren Illinois Morteage 4.63 Ameren Illinois datetl a ofDeceissber 15, 2002 December 23, 2002 Fonn 8-K, Exhibit 4.1, File No 1-3004 Ameren SsIp)le1nental Indentut e. dated as of October 1 20 1 0. to i\iiieren 4.64 Ameren Illinois Illinois NEiteace for Series (IPS-AA and CIPS-tC October 7, 2010 Form 8-K, Exhibit 4 9, file No. 1-3672 Ameren ,
Supplemental Indenture, dated as of Januan l 201 1, to Ameren 4.65 Ameren Illinois Illinois Mortgage Exhibit 4.78, File No. 333-122258 Ameren ,- ,
clatedas ofAtigust 1. 2012. to t\melen 4.67 Ameren Illinois rtei El August 20, 2012 Form 8-K, Exhibil 4.5, file No. 1-3672 Ameren -
Supplemental Indenture, dated as of I)ecember 1, 2013. to 4.62 Ameren Illinois Ameren Illinois Mortgaee for Series ff Decensber 10, 2013 fonn 8-K. Exhibit 4.5, file No. 1-3672 Ameren Supplemental Indenture, dated as of June 1, 2014, to Ameren 4.69 Aineren Illinois illinois Mortgage for Series GG June 30, 2014 Form 8-K, Exhibit 4.5, File No. 1-3672 Ameren Suonlemental Indenture. dated as ofDecember 1. 2014. to 4.70 Ameren Illinois Ameren Illinois Morteace for Series HH December 10, 2014 Form 8-K, fxhibit4.5, File No. 1-3672 Aineren .---
- 1 1nnhr -- -j cember 1, 2015, to 4.71 Ameren Illinois December 14, 2015 fonn 8-K, Exhibit 4.5, file No. 1-3672 Ameren Supolernental Indenture, dated as ofOctober 25. 2017. to the Septenber 30, 2017 form lO-Q, Exhibit 4.1, File No 1-4.72 Ameren Illinois Ameren Illinois Mortgage 3672 Ameren Supplemental Indenttire, dated as ofNovember I, 201 7, to the Anseren Illmois Mortgage for .7() ,o lirst Mortgage Bonds due 4.73 Aineren Illinois 2047 November 22, 2017 Form 8-K, Exhibit 4.2, File No. 1-3672 Ameren ,
.,1 4.74 Ameren Illinois 7.Qza May 22, 2018 Form 8-K, Exhibit 4 2, File No. 1-3672 Ameren -
Illinois 4 75 Ameren Illinois May 22, 2018 Form 8-K, Exhibit 4 2, File No. 1-3672 Ameren upo1emtjta1 Indenture. dated as of November 1, 201 8, to
. . £ merest Uhiois Morteaae for 4.50 /o First Mortgage Bonds due 4 76 Ameren Illinois (49 . November 15, 2018 Form 2-K, Exhibit 4.2, File No 1-3672 ipplemental Indenture, dated as of November 1 2019, to the ,
Ameren Ameren Illinois Mortgage for 3.25% First Morlgace Bonds due 4.77 Aineren Illinois 050 November 26, 2019 Form 8-K, Exhibit 4.2, file No. 1-3672 snolernental Indenture. dated as ofOotober 15. 2019. to Ameren Ameren Winois Mortgage for first Mortaee Bonds, Senior Notes Series 4.78 Aineren Illinois 1LCO-AA September 30, 2019 10-Q, Exhibit 4.3, file No. 1-3672 Ameren 3ted as ofDecember 15, 2t)lO, to the 4.79 Ameren Illinois Ameren t.saisk C)t tee 4 80 Aineren Illinois eren Illinois Indenture) June 19, 2006 form 8-K, Exhibit 4 4, File No 1-3004 Ameren ..
irst Suoplemental Indenture, dated as ofOctober 1, 2010, to the 4.81 Ameren Illinois meren Illinois Indenltire for Series CIPS-AA and CIPS-CC October 7, 2010 fonn 2-K, Exhibit 4.5, file No. 1-14756 Ameren -
SecQnd Suonlemental Indenture to the Ameren Illinois Indenture -
September 30, 2011 Form l0-Q, Exhibit 4 2, File No. I-482 Ameren Illinois dated as ofJulv 21 201 1 ,
3672 Amerei Thii:_d -i I - - -
4.83 Ameren Illinois dtP(I Exhibit 4.83, File No. 333-182258 Ameren g,-,,,,.5, C,, +i iii,,i 4.84 Ameren Illinois Septeniber 30. 2019 l0-Q, Exhibit 4 4, file No. 1-3672 70 Ameren August 20, 2012 form 2-K, Exhibits 4.2 and 4.3, File No. 1-4.85 Ameren Illinois 3672 155
Table of Contents
\meren Illinois Indenture Compain Dider daie1 I rlf)
Arneren 2013. establishinis the 4.800o Senior eciiicd Note 4.86 December 10, 2013 form 8-K, Exhibits 4.2 and 43, file Ameren Illinois No. 1-3672 Ameren Illinois Indenture Company Order Arneren sstablishine the 4.30% Senior Secured Note ncludins June 30, 2014 Form 8-K, Exhibits 4.2 and 4.3, File No. 1-4.87 Ameren Illinois the alobal note 3672 4meren Illinois Indenture C I I)ecetnber 10.
Ameren 2014. establishine the 3.25%
4.88 December 10, 2014 Form 8-K, Exhibits 4.2 and 4,3, file Aineren Illinois ,Q25 (including the global m No. 1-3672 Ameien Illinois Indenture Coinuanv Order dated I Aineren 1 5. establishing the 4. 1 5% Senior Secured Note 4.89 2()
December 14, 2015 form 8-K, Exhibits 4.2 and 4.3, file Arneren Illinois t nctiiclin the (lnhal nnte No. 1-3672
\meren Illinois Indenture Company Order dated l)ece;ssber 6.
2016, requesting the authentication of an additioisal S2.1f),00t),OCBI Ameren igregate principal amount of4.l5% Senior Sectired Notes Itie 4.90 December 6, 20 16 fomi 8-K, Exhibits 4.2 and 4.3, file No.
Ameren Illinois 2046 (including the global note) 1-3672 Ameren Illinois Indenture tompanv Order tlated October 3t).
Ameren 2019. estaNislune Seisior Notes Senes CIICt)-AA (includins the 4.91 September 30, 2019 lO-Q, Exhibits 4.5 and 4.6, file No. 1-Ameren Illinois elohal note) 3672 4.92 Ameren T)escriptton ofAmeren Securities 4.93 Aineren Missouri L)escription of Anseren Missotin Securities 4.94 Aineren Illinois )escrition ofAmeren Illinois Sectinties Material Contracts nourth Amended Ameren Corporation System Utility Money PopI 10.1 Ameren Companies ereement. as amended January 30. 2014 June 30, 2015 Form lO-Q, Exhibit 10.1, File No. 1-14756
\mended and Restated Credit Agreement, dated as of 1)ecensber Ameren 0, 2019, by and among Ameren, Ameren Missouri and JPMoruan Deceniber 11, 2019 10.2 form 8-K, Exhibit 10.1, file No. 1-Ameren Missouri hase Bank, NA.. as agent. and the lenders party thereto 2967 mended and Restated Credit Agreement. dated as of 1)ecember Ameren 9, 2019. by and among Ameren Ameren Illinois and JPMorgan 10.3 December 1 1, 2019 form 8-K, Exhibit 10.2, file No. I-Ameren Illinois phase Bank, NA.. as apent. and the lenders party thereto. 3672 visit (.)it and Retention Bonus Agreement, effective March 1.
2018, between Bhavani Amirthalingam and Arneren Services 10.4 Ameren Illinois C,jan March 31, 2019 10-Q, Exhibit 10.1, file No. 1-3672 Forward Sale Agreement, çlated Aucust 5. 201 9. between Arneren 10.5 Ameren sod Goldman Sacks & Co. LLC. as the Forward Purchaser August 7, 2019 form 8-K, Exhibit 10 file No. 1-14756 Summary Sheet of Ameren Corooration Non-Manasement 1 0.6 Ameren irector Compensation effective as of January 1, 2020
- Amerens Deferred Comoensation Plan for Members of the Poard ofDirectprs amended and restated effective January 1, 10.7 Ameren 2009. datedJune 13. 2008 June 30, 2008 Form 10-Q, Exhibit 10 3, file No. 1-14756 i\mendment dated October 12, 2009. to Amerens I)eferred Compensation Plan for Menshers of the Board of I)irectors 10.8 Ameren effective January 1, 2010 2009 foms 10-K, Exhibit 10.15, file No. 1-14756
- Aissend;nent dated October 14, 2010. to Amerens Deferred 10.9 Ameren Comnensation Plan for Members ofthç Board ofDirectors 2010 Form 10-K, Exhibit 10,15, File No. 1-14756 5\inerens i)efened Compensation Plan as amended and restated 10.10 Ameren ffictive January 1, 2010 October 14, 2009 Fonts 8-K, Exhibit 10.1, file No. 1-14756 Amendment dated October 14. 2010 to Amerens Deferred 10.1 1 Ameren Compensation Plan 2010 form 10-K, Exhibit 10.17, file No. 1-14756 10.12 Ameren Companies *2015 Ameren Exectitive Incentive Plan 2014 fonn 10-K, Exhibit 10.13, file No. 1-14756 10.13 Ameren Companies *2016 Ameren Executive Incentive Plan 2015 Fonn 10-K. Exhibit 10.13, File No. 1-14756 10.14 Ameren Conspanies *2017 Arneren Executive Incentive Plan 2016 Fonts 10-K, Exhibit 10.13, file No. 1-14756 10.15 Ameren Companies *2018 Ameren Executive Incentive Plan 2t)17 Form 10-K, Exhibit 10.13, file No. 1-14756 10.16 Ameren Companies *2019 Ameren Executive Incentive Plan 2018 form 10-K, Exhibit 10.14, file No. 1-14756 10.17 Ameren Companies *2020 Ameren Short-Term Incentive Plan 10.18 Ameren Companies *2015 Base SalarvTablefirNamecl Executive Officers 2014 form 10-K, Exhibit 10.17, file No. 1-14756 10.19 Ameren Companies Table 2015 form 10-K, Exhibit 10.17, file No. 1-14756 156
Table of Contents 1020 Ameren Companies *2017 Th1 ffO 2016 Fonn 10-K, Exhibit 10.17, Ftle No. 1-14756 10.21 Ameren Companies 2017 Form 10-K, Exhibit 10.17, File No. 1-14756 10.22 Ameren Companies 201$ Form 10-K, Exhibit 10.19, file No. 1-14756 10.23 Arneren Companies *2020 Base Salary Table forNamedExecutive Officers (Th f 10.24 Arneren Companies Coiutijtrol 200$ Form 10-K, Exhibit 10.37, File No. 1-14756 itt 10.25 Ameren Companies October 14, 2009 Form 2-K, Exhibit 10.2, file No. 1-14756 Revised Schedtde I to S °tated Ameren 10.26 Arneren Companies September 30, 2019 lO-Q, Exhibit 10.2, File No. 1-14756 e Share Unit 10.27 Ameren Companies 2014 Form 10-K. Exhibit 10.24, File No. 1-14756 e Shate I Joit 10.2$ Ameren Companies 2015 Fonn 10-K, Exhibit 10.24, File No. 1-14756
+(,-
2017 Tartzet 0ee Share Unit 10.29 Ameren Companies 2016 Form 10-K, Exhibit 10.24, File No. 1-14756 r1 015 114Lt I eSliare1Jntt
. Shck \wards to be Issued to Named 10.30 Ameren Companies Executive Officers 2017 fonn 10-K, Exhibit 10.24, File No. 1-14756 r Prmining 2019 Target Performance Share Unit ok Unit Awards to be Issued to Named 10.31 Ameren Companies . I-s 201$ Fonn 10-K, Exhibit 10.27, File No. 1-14756 I Tcrct I e Unit 10.32 Ameren Companies I n 2014 Omnibus Incentive Compensation 10.33 Ameren Companies £in Exhibit 99, file No 333-196515 Unit Award Agreement for Mvards 10.34 Ameren Companies 2014 Form 10-K, Exhibit 10.31, File No. 1-14756
- for Awards 10.35 Ameren Companies Compensation Pln 2015 Fomi 10-K, Exhibit 10.31, file No. 1-14756 f niiance Share Unit AWard Agreement for Awards 7 pursuant to 2014 Omnibtis Incentive 10.36 Ameren Companies i Plan 2016 Form 10-K, Exhibit 10.31, file No. 1-14756 bare t1 I for Awards Issuedin December 13, 2017 form 8-K, Exhibit 10.1, file No. 1-10.37 Ameren Companies Compensation Plan 14756
- fona ofRestricted Stock Unit Award Agreement for Awards Issued in 201$ purstiant to 2014 Omnibus Incentive December 13, 2017 form 8-K, Exhibit 10 2, file No. 1-10.3$ Ameren Companies Compensation Plan 14756
..t for Awards 10.39 Ameren Companies 2018 Form 10-K, Exhibit 10.34, File No. 1-14756
- forio of Restricted Stock Unit Award %.r Awards Isstied in 2t)19 pursuant to 2014 OmnJi 10.40 Ameren Companies Compensation Plan 201$ form 10-K, Exhibit 10.35, file No. 1-14756 J
for Awards 10.41 Aineren Companies
, c3r Awards 10 .42 Ameren Companies Compensation Plan erance Plan for Ameren Officers, 10.43 Ameren Companies t 201$ Form 10-K, Exhibit 10.36, File No. 1-14756 i
ent Plan amended and restated 10.44 Ameren Companies I Jtme 13. 2008 June 30, 200$ form l0-Q, Exhibit 10.1, File No. 1-14756
- p+ A1f f, and restated Ameren 10.45 Ameren Companies dated October 24, 2008 2008 fomi 10-K, Exhibit 10.44, File No. 1-14756 nibus Incentive Compensation Febmary 16, 2006 fonn 8-K, Exhibit 10.3, file No. 1-10.46 Ameren Companies jj 14756 Subsidiaries of the Registrant 21 .1 lAmeren Companies I $tibsidianes of Ameren 157 I I
Table of Contents Consent of Experts and Counsel Consent of Independent Registered Public Accounting Finn with 23 .1 Arneren respect to Ameren Consent ofindependen t Recistered Public Accounting Finn with 23 .2 Ameren Missouri respect to Ameren Missouri (unsent of Independent Registered Public Accountintz Finn ;tls 23.3 Ameren Illinois respect to Arneren Uhinois Power of Attorney 24.1 Ameren Potvers of Attorney ith respect to Ameren 24.2 Ameren Missouri Powers of Attorney ith respect to Ameren Missouri 24.3 Arneren lihinois Poers ofAttome ith respect to Arneren Illinois Rule 13a-14(a)/15d-14(a) Certifications Rule 1 3a h-h a ) I Sd I-h a CertificatioIi of Principal I\ecuti\ e 31.1 Ameren Officet of Ame;en Rule 1 3a 14t a ) 1 SI I -h a ) Certification ofPrineipal finaiicial 3 1 .2 Arneren ()fticer of Ameren Rtile I 3a-l 1(a) I 5d-14t a) Certification of Princioal Executi e 3 1 .3 Arneren Missouri Officer of Ameren Nlisc)uri Rule I 3a-l 4ta 1 5d-14t a) Certification of Principal financial 3 1 .4 Ameren Missouri Officer of Arneren Missouri Rule l3a14(a)l 5d14ta) Certification of Principal Executive 31 .5 Aineren Illinois Officer ofAmeren Illinois Rule 13p=14(pVl5d-)4(a) Certification of Principal Financial 3 1 .6 Arneren Illinois Officer fAmeren Illinois Section 1350 Certifications Section 1350 Certification ofPrincipal Executive Officer and 32.1 Ameren Principal Financial Officer of Ameren Section 1350 Certification ofPrincipal Executive Officer and 32.2 Ameren Missouri principal financial Officer ofArneren Missouri Section 1 350 Certification of Principal Executive Officer and 32.3 Arneren Illinois 9rincipal financial Officer ofAmeren Illinois Additional Exhibits Amended and Restated I ax Allocatiois Agreement, dated as of 99.1 Ameren Companies November 21. 2013 2013 form 10-K, Exhibit 99.1, File No. 1-14756 Interactive Data Files Inline XBRL Instance Document the instance document does not appear in the Interactive I)ata File becatise its XBRL tags are 101 INS Arneren Conspanies embedded within the Inline XBRL document 1Ol.SCH Ameren Companies XBRL Taxonomy Extension Schema Document 101 CAL Ameren Companies XBRL Taxoisomy Extension Calculation Linkbase Document 101 LAB Ameren Companies XBRL Taxonomy Extension Label Linkbsse Document 10 l.PRE Ameren Companies XBRL Taxonomy Extension Presentation Lmkbase Document 101 .DEF Ameren Companies XBRL Taxonomy Extension Definition Document Cover Page Interactive Data file (formatted as Inline XBRL and 104 Ameren Companies contained in Exhibit 101)
The file number references for the Ameren Companies filings with the SEC are: Ameren, 1-14756; Ameren Missouri, 1-2967; and Ameren Illinois, 1-3672.
- Compensatoy plan or arrangement.
Each registrant hereby undertakes to furnish to the SEC upon request a copy of any long-term debt instrument not listed above that such registrant has not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) ofRegulation S-K.
158
Table of Contents SIGNATURES Pursuant to the requirements ofSection 13 or 15(d) ofthe Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized. The signatures for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.
AMEREN CORPORATION (registrant)
Date: February 28, 2020 By Is! Warner L. Baxter Warner L. Baxter Chairman, President and Chief Executive Officer Pursuant to the requirements ofthe Securities Exchange Act of 1934, this report has been signed below by the following persons on behalfofthe registrant and in the capacities and on the date indicated.
Chairman, President and ChiefExecutive Officer, and Director (Principal
/5/ Warner L. Baxter Executive Officer) February 28. 2020 WarnerL. Baxter Executive Vice President and Chieffinancial Officer
/5/ Michael L. Moehn (Principal Financial Officer) February 28, 2020 Michael L. Moehn Senior Vice President, Finance, and ChiefAccountrng Officer (Principal
/s/ Bruce A. Steinke Accounting officer) February 28, 2020 Bruce A. Steinke I)irector February 28, 2020 Cynthia I. Brinkley Director February 28, 202t)
Catherine S. Brune Director February 28, 2020 J. Edward Coleman Director February 28, 2020 Ward Fl. Dickson Director February 28. 2020 Noelle K. Eder I)irector February 28, 2020 Ellen M. Fitzsirnmons I)irector February 28, 2020 Rafael flores Director February 28, 2020 Richard J. Ilarshman I)irector February 2$. 2020 Craig S. Ivey I)irector February 28, 2020 James C. Johnson Director February 28, 2020 Steven II. Lipstein Director February 28. 2020 Stephen R. Wilson
- By Is! Michael L. Moehn February 28, 2020 Michael L. Moehn Attorney-in-fact
159 Table of Contents UNION ELECTRIC COMPANY (registrant)
Date: February 28, 2020 By /s/ Martin J. Lyons, Jr.
Martin J. Lyons, Jr.
Chairman and President Pursuant to the requirements ofthe Securities Exchange Act of 1934, this report has been signed below by the following persons on behalfofthe registrant and in the capacities and on the date indicated.
Chairman and President, and Director Is! Martin J. Lyons, Jr. (Principal Executive Officer) February 28, 2020 Martin J. Lyons, Jr.
Executive Vice President and ChiefFinancial Officer, and Director Is! Michael L. Moehn (Principal Financial Officer) February 28, 202t)
Michael L. Moehn Senior Vice President, Finance, and ChiefAccounting Officer
/s/ Bruce A. Steinke (Principal Accounting Officer) February 28, 2020 Bruce A. Sternke Director February 28, 2020 Mark C. Birk Director February 28, 2020 fadi M. Diya Director February 28, 2020 Chonda I. Nwamu
- By /s/ Michael L. Moehn February 28, 2020 Michael L. Moehn Attorney-rn-Fact 160
Table of Contents AMEREN ILLINOIS COMPANY (registrant)
Date: February 28, 2020 By /5/ Richard J. Mark Richard J. Mark Chairman and President Pursuant to the requirements ofthe Securities Exchange Act of 1934, this report has been signed below by the following persons on behalfofthe registrant and in the capacities and on the date indicated.
Chairman and President, and Director
/5/ Richard J. Mark (Principal Executive Officer) February 28, 2020 Richard I. Mark Executive Vice President and ChiefFrnancial Officer, and Director (Principal
/5/ Michael L. Moehn Financial Officer) February 28, 2t)20 Michael L. Moehn Senior Vice President, Finance, and ChiefAccounting Officer Is! Bruce A. Steinke (Principal Accounting Officer) February 28, 2020 Bruce A. Stemke I)irector February 28, 2t)20 Chonda J. Nwamu I)irector February 28, 2020 Theresa A. Shaw I)irector February 28, 2020 David N. Wakeman
- By Is! Michael L. Moehn February 28, 2020 Michael L. Moehn Attorney-in-Fact 161
Bureau County Exhibit 4.79 WREN RECORDED MAIL TO:
Ameren Illinois Company Craig W. Stensland One Arneren Plaza (MC 1310) 1901 Chouteau Avenue St. Louis, MO 63103 AMEREN ILLINOIS COMPANY (SUCCESSOR TO ILLINOIS POWER CoMPANY)
TO THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
AS SUCCESSOR TRUSTEE TO)
HARRIS TRUST AND SAVINGS BANK SUPPLEMENTAL INDENTURE DATED AS OF DECEMBER 15, 2019 TO GENERAL MORTGAGE INDENTURE AND DEED OF TRuST DATED AS OF NOVEMBER 1, 1992 This instrument was prepared by Chonda I. Nwamu, Esq., Senior Vice President, General Counsel and Secretary ofAmeren Illinois Company do Ameren Corporation, One Ameren Plaza, 190 1 Chouteau Avenue, St. Louis, Missouri 63 103.
SUPPLEMENTAL INI)ENTURE dated as ofl)ccember 15, 2019 (this Supplemental Indenture), made by and between AMEREN ILLINOIS COMPANY (formerly named Central Illinois Public Service Company (CIPS) and successor to Illinois Power Company (IP) pursuant to the Merger, as defined below), a corporation organized and existing under the laws ofthe State oflllinois (hereinafter sometimes called the Company), party ofthe first part, and THE BANK OF NEW YORK MELLON TRUST COMPANY, NA., a national banking association organized and existing under the laws ofthe United States, as successor trustee to Harris Trust and Savings Bank, as Trustee (the Trustee) under the General Mortgage Indenture and Deed ofTrust dated as of November 1, 1992, hereinafter mentioned, party ofthe second part tVHEREAS, the Company has heretofore executed and delivered its General Mortgage Indenture and Deed ofTrust dated as ofNovember 1, 1992 as from time to time amended and supplemented (the Indenture), to the Tnistee, for the security of the Bonds issued and to be issued thereunder (the Bonds) and WhEREAS, as of 12:01 am. Central Time (the Effective Time) on October 1, 2010, pursuant to the Agreement and Plan ofMerger dated as of April 13, 2010 among CIPS, IP and Central Illinois Light Company (CILCO), IP and CILCO were merged with and into the Company (the Merger) whereby the Company is the stirviving corporation; and WHEREAS, pursuant to Sections 13.01 and 14.01(a) ofthe Indenture, the Company and the Trustee executed the Supplemental Indenture dated as of October 1, 201 0 whereby, among other things, the Company (a) assumed the due and punctual payment of the principal of and premium, if any, and interest, if any.
on all of the Bonds then Outstanding and the performance and observance of every covenant and condition of the Indenttire to be performed or observed by IP and (b) subjected to the Lien ofthe Indenture all equipment and fixtures (other than Excepted Property, which is expressly excepted and excluded from the Lien of the Indenture) that were owned by CIPS immediately prior to the Effective Time and were of the same kmd and character as the Mortgaged Property immediately prior to the Effective Time; and WHEREAS, pursuant to Sections 13.02 and l4.Ol(a)(i) ofthe Indenture, the Company has succeeded to, and has been substituted for, and may exercise every right and power of IP under the Indenture with the same effect as ifthe Company had been named the Company in the Indenture and WHEREAS, pursuant to Section 14.01(a) ofthe Indenture, the Company and the Trustee executed 59 Supplemental Indentures dated as oflanuary 15, 201 1 subjecting to the Lien ofthe Indenture certain real property that was owned by CIPS immediately prior to the Merger; and WhEREAS, pursuant to the terms and provisions ofthe Indenture there were created and authorized by supplementa l indentures thereto bearing the following dates, respectively, the Bonds ofthe series issued thereunder and respectively identified opposite such dates:
DATE OF StIPPLEMENTAL INDENTURE IDENTIFICATION OF SERIES CALLED February 15, 1993 8% Series due 2023 (redeemed) Bonds ofthe 2023 Series March 15, 1993 6 1/8% Series due 2000 (paid at maturity) Bonds ofthe 2000 Series March 15, 1993 6 3/4% Series due 2005 (paid at maturity) Bonds ofthe 2005 Series July 15, 1993 7 1/2% Series due 2025 (redeemed) Bonds ofihe 2025 Series August 1, 1993 6 1/2% Series due 2003 (paid at maturity) Bonds ofthe 2003 Series 2
DATE OF SUPPLEMENTAL INDENTURE IDENTIFICATION OF SERIES CALLED October 15, 1993 5 5/8% Series due 2000 (paid at maturity) Bonds ofthe Second 2000 Series November 1, 1993 Pollution Control Series M (redeemed) Bonds ofthe Pollution Control Series M November 1, 1993 Pollution Control Series N (redeemed) Bonds ofthe Pollution Control Series N November 1, 1993 Pollution Control Series 0 (redeemed) Bonds ofthe Pollution Control Series 0 April 1, 1997 Pollution Control Series P (retired) Bonds ofthe Pollution Control Series P April 1, 1997 Pollution Control Series Q (retired) Bonds ofthe Pollution Control Series Q April 1, 1997 Pollution Control Series R (retired) Bonds ofthe Pollution Control Series R March 1, 1998 Polltition Control Series S (redeemed) Bonds ofthe Pollution Control Series S March 1, 1998 Polltition Control Series T (redeemed) Bonds ofthe Pollution Control Series T July 15, 1998 6 1/4% Series due 2002 (paid at maturity) Bonds ofthe 2002 Series September 15, 1998 6% Series due 2003 (paid at maturity) Bonds ofthe Second 2003 Series June 15, 1999 7.50% Series due 2009 (paid at maturity) Bonds ofthe 2009 Series July 15, 1999 Pollution Control Series U (redeemed) Bonds ofthe Pollution Control Series U July 15, 1999 Pollution Control Series V (redeemed) Bonds ofthe Pollution Control Series V May 1, 2001 Pollution Control Series W (retired) Bonds ofthe Pollution Control Series W May 1, 2001 Pollution Control Series X (retired) Bonds ofthe Pollution Control Series X July 1, 2002 10 5/8% Series due 2007 (not issued) Bonds ofthe 2007 Series July 1, 2002 10 5/8% Series due 2012 (not issued) Bonds ofthe 2012 Series December 15. 2002 1 1.50% Series due 2010 (redeemed) Bonds ofthe 2010 Series June 1, 2006 Mortgage Bonds, Senior Notes Series AA (retired) Bonds ofSeries AA August 1, 2006 Mortgage Bonds, 2006 Credit Agreement Series Bonds (retired) 2006 Credit Agreement Series Bonds 3
DATE OF SUPPLEMENTAL INDENTURE IDENTIFICATION OF SERIES CALLED March 1, 2007 Mortgage Bonds, 2007 Credit Agreement Series Bonds (retired) 2007 Credit Agreement Series Bonds November 15, 2007 Mortgage Bonds, Senior Notes Series BB (retired) Bonds of Series BB April 1, 2008 Mortgage Bonds, Senior Notes Series CC (retired) Bonds ofSeries CC October 1, 2008 Mortgage Bonds, Senior Notes Series DD (retired) Bonds ofSeries DD June 15, 2009 Mortgage Bonds, 2009 Credit Agreement Series Bonds (retired) 2009 Credit Agreement Series Bonds October 1, 2010 Mortgage Bonds, Senior Notes Series CIPS-AA Series CIPS-AA Mortgage Bonds October 1, 2010 Mortgage Bonds, Senior Notes Series CIPS-BB (retired) Series CIPS-BR Mortgage Bonds October 1, 2010 Mortgage Bonds, Senior Notes Series CIPS-CC Series CIPS-CC Mortgage Bonds August 1, 2012 First Mortgage Bonds, Senior Notes Series liE Bonds ofSeries hE December 1, 2013 First Mortgage Bonds, Senior Notes Series FE Bonds ofSeries FE June 1, 2014 First Mortgage Bonds, Senior Notes Series GG Bonds ofSeries GG December 1, 2014 First Mortgage Bonds, Senior Notes Series Hil Bonds ofSeries IIH December 1, 2015 First Mortgage Bonds, Senior Notes Series II Bonds ofSeries II November 1, 2017 3.70% First Mortgage Bonds due 2047 Bonds ofthe 2047 Series May 1, 2018 3.80% First Mortgage Bonds due 2028 Bonds ofthe 2028 Series November 1, 2018 4.50% First Mortgage Bonds due 2049 Bonds ofthe 2049 Series October 15, 2019 First Mortgage Bonds, Senior Notes Series CILCO-AA Series CILCO-AA Mortgage Bonds November 1, 2019 325% First Mortgage Bonds due 2050 Bonds ofthe 2050 Series and WhEREAS, a supplemental indenture with respect to the Bonds ofthe 20t)7 Series and the Bonds ofthe 2012 Series listed above was executed and filed but such Bonds ofthe 2007 Series and Bonds ofthe 20 12 Series were never issued and a release with respect to such supplemental indenture was subsequently executed and filed and WIIEREAS, pursuant to Section 14.01(a)(xi) ofthe Indenture, the Company and the Trustee executed a Supplementa l Indenture dated as ofOctober 25, 2017 amending the Indenture and reserving rights to amend the Indenture; and WHEREAS, pursuant to Section 14.01(a) of the Indenture, the Company and the Trustee executed the Supplementa l Indenture dated as of October 15, 2019 whereby, among other things, the Company subjected to the Lien ofthe Indenture (a) all equipment and fixtures (other than Excepted Property, which is expressly excepted and
4 excluded from the Lien of the Indenture) that were owned by CILCO immediately prior to the Merger and were of the same kind and character as the Mortgaged Property immediately prior to the Merger (the CILCO Equipment and Fixhtres), (b) all property, real, personal and mixed, acquired by the Company after the Merger (other than Excepted Property, which is expressly excepted and excluded from the Lien ofthe Indenture) which constitutes an mprovement, extension or addition to the CILCO Equipment and Fixtures or a renewal, replacement or substitution of or for any part thereof and (c) all franchises, permits, licenses, easements and rights ofway that are owned by the Company and are transferable and necessary for the operation and maintenance ofthe Mortgaged Property and WhEREAS, pursuant to Section 14.01(a) ofthe Indenture, the Company elects to subject to the Lien ofthe Indenture certain real property owned by CILCO immediately prior to the Effective Tirne and WhEREAS, the Company, in the exercise ofthe powers and authority conferred upon and reserved to it under the provisions ofthe Indenture, and pursuant to appropriate resolutions ofthe Board ofDirectors, has duly resolved and determined to make, execute and deliver to the Trustee this Supplemental Indenture in the form hereof for the purposes herein provided, and WHEREAS, all conditions and requirements necessary to make this Supplemental Indenttire a valid, binding and legal instrument have been done, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized NOW, THEREFORE, TillS SUPPLEMENTAL INDENTURE WITNESSETII:
THAT to secure the payment of the principal of premium, if any, and interest on all Bonds issued and Outstanding tinder the Indenture when payable in accordance with the provisions thereof and hereof and to secure the performance by the Company of and its compliance with, the covenants and conditions of the Indenture, and in consideration of the premises and of One Dollar paid to the Company by the Trustee, the Company does hereby grant, bargain, sell, release, convey, quitclaim, assign, transfer, mortgage, pledge, set over and confirm unto the Trustee, and to its sticcessors in trust and to its assigns, all ofthe property, rights and interests in property described in the attached Property Schedule (other than Excepted Property, which is expressly excepted and excluded from the Lien ofthe Indenture), the Company expressly reserves the right, at any time and from time to time, by one or more supplementa indentures, l to subject to the Lien and operation ofthe Indenture any part or all ofthe Excepted Property upon such tenns and conditions and subject to such restrictions, limitations and reservations as may be set forth in such supplemental indenture or indentures; together with all other property ofwhatever lund and nature stibjected to or intended to be subjected to the Lien ofthe Indenture by any of the terms and provisions thereof TO hAVE AND TO hOLD all such properties, rights and interests in property granted, bargained, sold, warranted, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed or in which a security interest has been granted by the Company in the Indenture or intended or agreed to be so granted, together with all the appurtenances thereto, unto the Trustee and its successors and assigns forever, SUBJECT, HOWEVER, to Permitted Liens and to Liens which have been granted by the Company to other Persons prior to the date of the execution and delivery ofthis Supplemental Indenture, and subject also, as to any property hereafter acquired by the Company, to vendors Liens, purchase money mortgages and other Liens thereon at the time ofthe acquisition thereof(including, but not limited to the Lien of any Prior Mortgage), it being understood that with respect to any of such property which is now or hereafter becomes subject to the Lien of any Prior Mortgage, the Lien of the Indenture shall at all times be junior and subordinate to the Lien ofsuch Prior Mortgage; BUT IN TRuST, NEVERTHELESS, for the equal and proportionate benefit and security of all present and future holders of the Bonds and any coupons issued and to be issued thereunder and secured by the Lien ofthe Indenture, and to secure the payment ofthe principal of premium, ifany, and interest on the Bonds issued and Outstanding under the Indenture when payable in accordance with the provisions thereof and hereof and to secure the performance of the Company, of and its compliance with, the covenants and conditions of the Indenture without 5
any preference, priority or distinction of any one Bond over any other Bond by reason ofpriority in the issue or negotiation thereofor otherwise; PRoVIDED, hOWEVER, that if after the right, title and interest ofthe Trustee in and to the Mortgaged Property shall have ceased and become void in accordance with Article Nine, then and in that case the Indenture and the estate and rights thereby granted shall cease, terminate and be void, and the Trustee shall cancel and discharge the Indenture and execute and deliver to the Company such instrtiments as the Company shall require to evidence the discharge thereof; otherwise the Indenttire shall be and remain in fill force and effect; and IT IS hEREBY COVENANTED AND AGREED, by and between the Company and the Trustee, that all Bonds and coupons, if any, are to be authenticated, delivered and issued, and that all Mortgaged Property is to be held, subject to the further covenants, conditions, uses and trusts in the Indenture set forth, and the Company, for itself and its successor and assigns, hereby covenants and agrees to and with the Trustee and its successors in trttst under the Indenture, for the benefit ofthose who shall hold Bonds, as follows:
ARTICLE I TIlE TRUSTEE The Trustee hereby accepts the trusts hereby declared and provided, and agrees to perform the same upon the terms and conditions in the Indenture set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or in respect ofthe validity or sufficiency of this Supplemental Indenture or the due execution hereofby the Company or for or in respect ofthe recitals contamed herein, all ofwhich recitals are made by the Company solely. In general, each and every term and condition contained in Article Eleven ofthe Indenture shall apply to this Supplemental Indenture with the same force and effect as ifthe same were herem set forth in full, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Supplemental Indenture.
ARTI(LE II MISCELLANEOUS PROVISIONS Except as otherwise defined herein, capitalized terms defined in the Indenture are used herein as therein defined. This Supplemental Indenture may be simultaneously executed in any number ofcounterparts, each ofwhich when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument.
The Indenture, as supplemented and amended by this Supplemental Indenture and all other indentures supplemental thereto, is in all respects ratified and confirmed, and the Indenture, this Stipplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.
6
IN WITNESS WHEREOF, said Ameren Illinois Company has caused this Supplemental Indenture to be executed on its behalf by an Authorized Executive Officer as defined in the Indenture, and its corporate seal to be hereto affixed and said seal and this Supplemental Indenture to be attested by an Authorized Executive Officer as defined in the Indenture: and said The Bank ofNew York Mellon Trust Company, NA., as successor trustee to Ilarris Trust and Savings Bank, in evidence ofits acceptance ofthe trust hereby created, has catised this Supplementa l Indenttire to be executed on its behalfby one of its Vice Presidents and this Supplemental Indenture to be attested by its Secretary or one ofits Vice Presidents, all as ofDecember 15, 2019.
AMEREN ILLINOIS COMPANY (CORPORATE SEAL)
By: /5/ Darryl I. Sage!
Name: Darryl T. Sage!
Title:
Vice President and Treasurer ATTEST:
By: /5/ Craig W. Stensland Name: Craig W. Stensland
Title:
Assistant Secretary 7
TIlE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
successor trustee to Harris Trust and Savings Bank, TRUSTEE, By: /s/M. Callahan Name: M. Callahan
Title:
Vice President ATTEST:
By: /s/ D.G. Donnovan Name: DG. Donovan
Title:
Vice President 8
STATE OF MISSOURI ss.
CITY OF ST. LOUIS BE IT REMEMBEREI), that on this 13th day ofDecembcr, 2019, before me, the undersigned, a Notary Public within and for the City and State aforesaid.
personally came Darryl T. Sagel, Vice President and Treasurer, and Craig W. Stensland, Assistant Secretary, ofAmeren Illinois Company, a corporation duly organized, incorporated and existing under the laws ofthe State oflllinois, who are personally known to me to be such officers, and who are personally known to me to be the same persons who executed as such officers the within instrument ofwnting, and such persons duly acknowledge d that they signed, sealed and delivered the said instrument as their free and voluntary act as such officers and as the free and voluntary act of said Ameren Illinois Company for the uses and purposes therein set forth.
IN WITNESS WIIEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year last above xiitten.
Kelly J. Roth NOTARY PUBLIC Kelly I Roth Notary Public Notary Seal State of Missotiri Commissioned for St. Charles County My Commission Expires: May 12, 2022 Commission Number: 14440245 9
STATE Of ILLINOIS ss.
COUNTY Of COOK BE IT REMEMBERED, that on this 12th day ofDecember, 2019, before me, the undersigned. a Notary Public within and fir the County and State aforesaid, personally came M. Callahan. Vice President and 1)0. Donovan, Vice President, ofThe Bank ofNew York Mellon Trust Company, NA., a national banking association duly organized, incorporated and existing under the laws ofthe United States, who are personally known to me or proved to me on the basis of satisfactory evidence to be the same persons who executed as such officers the within instrument ofwriting, and such persons duly acknowledge d that they signed and delivered the said instrument as their free and voluntary act as such Vice President and Vice President, and as the free and voluntary act ofsaid The Bank of New York Mellon Trust Company, NA. for the uses and purposes therein set forth.
IN WITNESS WHEREOf, I have hereunto subscribed my name and affixed my official seal on the day and year last above written.
/5/ Lawrence M. Kusch NOTARY PUBLIC official Seal Iawrence M Kusch Notary Public State of Illinois My Commission Expires 10/24/22 10
PRoPERTY SChEDULE BUREAU COUNTY, ILLINOIS The following described real estate ofthe Company situated in Bureau County, Illinois: PIN # 25-3 1-100-00 1
A part ofthe NW 1/4 ofthe NW 1/4 of Section 3 1, Township 14 North, Range 8 East ofthe 4th Principal Meridian, more particularly described as follows, to wit: Commencing at the Northwest corner ofthe NW 1/4 ofthe NW 1/4 ofSection 31 and the place ofbeginning ofthe tract to be described; thence North 89° 34 54 East, 250 feet; thence South 0° 01 00 West, 250 feet; thence South 89° 34 54 West, 250 feet; thence North 0° 01 00 East, 250 feet to the place ofbeginning, containing 1.435 acres.
The following described real estate ofthe Company situated in Bureau County, Illinois: PIN # 16-11-200-00 4
A parcel ofland located in the Northeast Quarter of Section 1 1, Princeton Township, Township 16 North.
Range 9 East ofthe 4th Principal Meridian, Bureau County, Illinois, being more particularly described as follows, to wit: Commencing at an iron rod marking the Northeast corner ofthe Northeast 1/4 of said Section, thence S-1°-lO-26-E along the West line ofsaid Section, 86.0 feet to an iron rod marking the Point ofBeginning ofthe tract ofland to be described thence continuing S-l°-1t)-26-E along the aforedescribed course 145.0 feet to an iron rod thence S-89°-53-56
-W, 230.0 feet to an iron rod; thence N-l°-l0 W, 231.0 feet to an iron rod on the North line ofsaid Section; thence N-89°-53-56-E along the North line ofsaid Section 95.0 feet to an iron rod; thence 5-1°-b-26-E, 86.0 feet to an iron rod: thence N-89°-53-56-E, 135.0 feet to the place ofbeginning. Containing 0.953 acre including 0. 167 acre within the right of way limits ofthe township roads.
The following described real estate ofthe Company situated in Bureau County, Illinois: PIN # 16-12-100-00 4
The North 261 feet ofthe West 350 feet ofthe North llalfofthe Northwest Quarter ofSection 12, Township 16 North, Range 9 East ofthe Fourth Principal Meridian, except coal and minerals and the right to mine and remove the same; Situated in Bureau County, Illinois.
Schedule The Company filed substantially similar supplemental indentures in various counties in the State of Illinois to subject to the Lien of the Indenture certain real property owned by CILCO immediately prior to the Merger. The only material difference among these supplemental indentures is the description of the real property set forth on the property schedule being subjected to the Lien ofthe Indenture, which, by necessity, differs from county to county.
2
Exhibit 4.92 Description of Securities Registered Pursuant to Section 12 ofthe Securities Exchange Act of 1934 As ofJanuary 31, 2020 (Description Date), Ameren Corporation (Ameren) had one class ofsecurities registered under Section 12 ofthe Securities Exchange Act of 1934its common stock, $01 par value per share (common stock). The common stock is listed on The New York Stock Exchange, under the symbol AEE.
The following description is as ofthe Description Date.
In this Description ofSecurities Registered Pursuant to Section 12 ofthe Securities Exchange Act of 1934, Ameren, we, us, our and similar terms refer to Ameren Corporation, unless the context requires otherwise.
DESCRIPTION OF COMMON STOCK General The following statements describing Amerens common stock are not intended to be a complete description but rather are a summary ofcertain rights and distinguislung characteristics relating to the common stock currently authorized by our Restated Articles ofincorporatron, as amended (articles of incorporation).
For additional information, please see our articles ofincorporation and by-laws. Each ofthese documents has been previously filed with the Securities and Exchange Commission (SEC) and each is an exhibit to our Annual Report on Form 1 0-K to which this I)escription of Securities Registered Pursuant to Section 12 ofthe Securities Exchange Act of 1934 is an exhibit. Reference is also made to the laws ofthe state of Missouri.
Under our articles ofincorporation, we are authorized to issue 400 million shares ofcommon stock,
$01 par value per share, and 100 million shares of preferred stock, $01 par value per share. As ofDescription Date, 246,231,712 shares ofcommon stock and no shares ofpreferred stock were outstanding.
Dividend Rights and Limitations The holders of our common stock are entitled to receive stich dividends as our board of directors may from time to time declare, subject to any rights of the holders of our preferred stock, if any is outstanding. Our ability to pay dividends depends primarily upon the ability of our subsidiaries to pay dividends or otherwise transfer funds to us. Various financing arrangements, corporate organizational documents and statutory and regulatory requirements may impose restrictions on the ability of our stibsidiaries to transfer funds to us in the form of cash dividends, loans or advances.
Voting Rights Except as otherwise provided by law and subject to the voting rights ofholders ofour preferred stock, ifany is issued, the holders ofour common stock have the exclusive right to vote for the election of directors and for all other purposes. Each holder of our common stock is entitled to one vote per share on all matters submitted to a vote at a meeting ofshareholders, including the election ofdirectors, which means that the holders ofmore than 50% ofthe shares voting for the election ofdirectors can elect 100% ofthe directors and the holders ofthe remaining shares voting for the election ofdirectors will not be able to elect any directors. The common stock shall vote together as a single class. The holders ofour common stock are not entitled to cumulate votes for the election of directors.
At annual and special meetings ofshareholders, a majority ofthe outstanding shares ofcommon stock constitutes a quorum.
Liquidation Rights In the event of any liquidation, dissolution or winding up of our affairs, voluntarily or involuntarily, the holders of our common stock will be entitled to receive the remainder, if any, of our assets after the payment of all our debts and liabilities and after the payment in full of any preferential amounts to which holders of any preferred stock may be entitled.
Uncertificated Shares and Certificates of Stock The interest ofeach shareholder ofany class ofour stock shall not be evidenced by certificates for shares and all shares ofall classes ofstock shall be uncertificated shares provided, however, that (a) any shares ofour stock represented by a certificate shall continue to be represented by such certificate until such certificate is surrendered to us and (b) we may, at our option but without obligation, issue certificates for some or all ofany shares ofsome or all ofany classes of stock as we determine from time to time.
Miscellaneous The outstanding shares of common stock are, and any shares of common stock sold hereunder will be, upon payment for them, fully paid and nonassessable. The holders of our common stock are not entitled to any preemptive or preferential rights to subscribe for or purchase any part of any new or additional issue of stock or securities convertible into stock. Our common stock does not contain any redemption provisions or conversion rights.
Transfer Agent and Registrar Ameren Services Company, a subsidiary of Ameren, serves as transfer agent and registrar for the common stock.
Certain Anti-Takeover Matters Our articles of incorporation and by-laws include a number of provisions that may have the effect of discouraging persons from acquiring large blocks of our stock or delaying or preventing a change in our control. The material provisions that may have such an effect include:
. authorization for our board of directors to issue our preferred stock in series and to fix rights and preferences ofthe series (including, an;ong other things, whether, and to what extent, the shares of any series will have voting rights and the extent of the preferences of the shares of any series with respect to dividends and other matters);
. advance notice procedures with respect to nominations of directors or proposals other than those adopted or recommended by our board of directors;
. the prohibition ofshareholder action by less than unanimous written consent without a meeting; and
. provisions specifying that only the chiefexecutive officer, the board ofdirectors (by a majority vote ofthe entire board ofdirectors) or, for certain purposes, shareholders owning 25% ofour outstanding common stock for certain purposes may call special meetings ofshareholders, and that the chairman ofthe meeting may adjourn a meeting of shareholders from time to time, whether or not a quorum is present.
In addition, the Missouri General and Business Corporation Law, or the MGBCL, contains certain provisions, including control share acquisition provisions and business combination provisions that would be applicable to certain mergers, share exchanges or sales of substantially all assets involving us or a subsidiary and a significant shareholder and which could have the effect of substantially increasing the cost to the acquiror and thus discouraging any such transaction. The MGBCL permits shareholders to adopt an amendment to the articles ofincorporation opting out ofthe control share acquisition provisions, and our articles ofincorporation opt out ofsuch provisions.
Under the Illinois Public Utilities Act, lilmois Commerce Commission approval is required for any transaction which, regardless of the means by which it is accomplished, results in a change in the ownership of a majority ofthe voting capital stock of an Illinois public utility or the ownership or control of any entity which owns or controls a majority ofthe voting capital stock ofa ptiblic utility. Because we control majority a ofthe voting stock ofAmeren Illinois, a public utility subject to Illinois utility regulation, any change in our osvnership or control, within the meaning ofthe Illinois Public Utilities Act, would require Illinois Commerce Commission approval. Certain acquisitions by any person of our outstanding voting shares would also require approval under the Federal Power Act and the Atomic Energy Act of 1954, as amended.
Exhibit 4.93 Description of Securities Registered Pursuant to Section 12 ofthe Securities Exchange Act of 1934 As oflanuary 3 1, 2020 (Description Date), Union Electric Company, doing business as Arneren Missouri, had one class of securities registered under Section 12 ofthe Securities Exchange Act of 1934its preferred stock, cumulative, no par value, stated value S 100 per share. As ofthe Description Date, the preferred stock is issued and outstanding in the following amounts: (i) 14,000 shares ofPreferred Stock, $5.50 Series A, (ii) 20,000 shares ofPreferred Stock, $4.75 Series; (iii) 200,000 shares ofPreferred Stock,
$4.56 Series; (iv) 213,595 shares ofPreferred Stock, $4.50 Series; (v) 40,000 shares ofPreferred Stock, $4.30 Series; (vi) 150,000 shares ofPreferred Stock, $4.00 Series; (vii) 40,000 shares ofPreferred Stock, $3.70 Series; and (viii) 130,000 shares of Preferred Stock, $3.50 Series. When used herein, the term Preferred Stock, unless the context indicates otherwise, means the outstanding shares of our preferred stock.
The following description is as ofthe Description Date.
In this Description ofSecurities Registered Pursuant to Section 12 ofthe Securities Exchange Act of 1934, Arneren Missouri, we, us, our and similar terms refer to Union Electric Company, doing business as Ameren Missouri.
DESCRIPTION OF PREFERRED STOCK General The following statements describing the preferred stock of Ameren Missouri are not intended to be a complete description but rather are a summary of certain preferences, privileges, restrictions and distinguishing characteristics of the preferred stock currently authorized by our Restated Articles oflncorporation (articles of incorporation). For additional information, please see our articles of incorporation and bylaws. Each ofthese documents has been previously filed with the Securities and Exchange Commission (SEC) and each is an exhibit to our Annual Report on form 10-K to which this Description of Securities Registered Pursuant to Section 12 ofthe Securities Exchange Act of 1934 is an exhibit. Reference is also made to the laws ofthe state of Missouri.
Our authorized preferred stock consists of25,000,000 shares ofpreferred stock without par value, issuable in series. When used herein, the term preferred stock, unless the context indicates otherwise, means all the authorized shares of our preferred stock, whether currently outstanding or hereafter issued, including the Preferred Stock.
Issuance in Series; Rank The authorized but unissued shares ofour preferred stock may be issued in one or more series from time to time upon such terms and in such manner, with such variations as to dividend rates, the cumulative dates, the prices at which shares may be redeemed, the liquidation prices, the prices at which, and the terms upon which, shares may be converted into or exchanged for shares of any other class, sinking fund or purchase fund provisions, if any, and any other characteristics or restrictive or other provisions as may be determined by our board of directors. Except for such characteristics, as to which our board of directors has discretion, all series of the preferred stock rank equally and are alike in all respects. Our articles of incorporation provide that the redemption price and the liquidation price ofour preferred stock shall not exceed $120 per share and the annual dividend rate shall not exceed $8 per share.
Our preferred stock ranks senior with respect to dividends and assets to our $ 1 par value preference stock (preference stock), ifany, and our $5 par value common stock (common stock).
Dividend Rights Holders of preferred stock are entitled to receive in respect of each share held, from the cumulative date applicable thereto, cumulative dividends at the rate applicable thereto, and no more, in preference to our common stock and to our preference stock, if any, payable quarterly on the fifteenth of February, May, August, and November in each year, when and as declared by our board of directors out of any funds legally available for such purpose.
Dividends and distributions on our common stock may be declared and paid, provided all dividends for past periods and the dividend for the current quarter on our outstanding preferred stock and preference stock have been paid or provided for.
The respective annual dividend rates per share for each series of Preferred Stock; the respective dates (hereinafter called
cumulative dates) from which dividends on all shares of such series issued prior to the record date for the first dividend payment date shall be cumulative; the respective redemption prices per share for such series (exclusive of accrued and unpaid dividends); and the respective amounts (hereinafter called liquidation prices) per share (exclusive of accrued and unpaid dividends) for such series payable to the holders thereofin case ofvoluntary or involuntary dissolution, liquidation or winding up ofour affairs; are as follows:
Series Dividend Rate Cumulative Date Redemption Voluntary Liqitidation Price Involuntary Liquidation Price Price (per share) (per share) (per share)
$5.50A 5.50 12/30/83 $110.00 $110.00 $100.00
$4.75 4.75 12/30/83 102.176 102.176 100.00
$4.56 4.56 11/15/63 102.47 1t)2.47 100.00
$4.50 4.50 5/15/41 110.00 105.50 100.00
$4.30 4.30 12/30/83 105.00 105.00 100.00
$4.0t) 4.00 8/15/49 105.625 105.625 100.00
$3.70 3.70 8/15/45 104.75 104.75 100.00
$3.50 3.50 5/15/46 110.00 11t).00 100.00 Optional Redemption Provisions Shares of Preferred Stock are redeemable, at our option, in whole at any time or in part from time to time, on not less than 30 days and not more than 60 days notice by paying the respective redemption prices specified above, together with a sum, in the case ofeach share so to be redeemed, computed at the annual dividend rate for the respective series from the date from which dividends on such share became cumulative to the date fixed for such redemption, less the aggregate of the dividends theretofore or on such redemption date paid thereon. Redemption notices will be published in a daily newspaper printed in the English language and published and ofgeneral circulation in Manhattan, New York, and in a similar newspaper published and ofgeneral circulation in St. Louis, Missouri. Redemption notices will also be mailed to holders of record at their addresses appearing on our books, but failure to mail redemption notices will not affect the validity of any redemption.
In case of the redemption of a part only of any series of the preferred stock, we shall select by lot or in such other manner as our board of directors may determine, the shares so to be redeemed.
Voting Rights Each share ofpreferred stock, common stock and preference stock, ifany, is entitled to one vote on each matter voted on at all meetings of shareholders, with the right of cumulative voting in the election of directors and the right to vote as a class on certain questions. Whenever four quarterly dividends on the preferred stock shall be in default, in whole or in part, and during the continuance ofsuch default, the common stock, as a class, will be entitled to elect the same number ofdirectors as was authorized by our articles of incorporation immediately prior to such default, and the preferred stock, as a class, will be entitled to elect two additional directors; and provided further, that whenever four quarterly dividends on the preference stock shall be in default, in whole or in part, and during the continuance of such default, the common stock and the preferred stock, voting together as a single class, will be entitled to elect the same number of directors as was authorized by our articles of incorporation immediately prior to such default, and the preference stock, as a class, will be entitled to elect two additional directors. The articles ofincorporati on give holders ofthe preferred stock certain special voting rights with respect to specified corporate actions, including certain amendments to the articles of incorporation, the issuance of preferred stock ranking senior to, or equally with, existing preferred shares, and certain distributions to holders ofjunior stock. See Restrictions on Certain Corporate Actions.
In addition, under Missouri law holders ofthe preferred stock have the right to vote as a class on any amendment to our articles of incorporation that would adversely affect such stock s preferences or special or relative rights, but if less than all series of a class are adversely affected, then the affected series have the right to vote as a class on such amendment.
Except as otherwise provided by law or by the articles of incorporation, the holders of record of a majority ofthe outstanding shares of our capital stock entitled to vote at any meeting of shareholders, present in person or represented by proxy, shall constitute a quorum at such meeting; provided, that in no event shall a quorum consist ofless than a majority ofthe outstanding shares entitled to vote.
Liquidation Rights In the event ofany liquidation, dissolution or winding up (voluntary or involuntary) ofus, holders ofpreferred stock are entitled to receive an amount equal to the aggregate applicable liquidation price oftheir shares and any unpaid accrued dividends thereon, before any payment or distribution is made to the holders of our common stock and our preference stock, if any.
Common Stock of Ameren Missouri Our board of directors may not declare or pay dividends or distributions on our common stock unless all accrued and unpaid dividends on all series ofpreferred stock have been paid or declared.
Restrictions on Certain Corporate Actions The articles of incorporation provide that no amendment to the articles of incorporation:
which would change the provisions thereof relating to cumulative voting, quorum requirements or preemptive rights, in any manner substantially prej udicial to the holders of any class of stock shall be made without the consent of the holders of at least two-thirds of all of our capital stock;
. providing for the creation or increase ofpreferred stock ofany class shall be made without the consent ofa majority of the holders of our common stock; or
. which would change the express terms ofthe preferred stock in any manner stibstantially prejudicial to the holders thereof, shall be made, except as referred to below and except for any change in the number of our board of directors, without the consent ofthe holders ofat least three-fourths ofthe preferred stock.
We may not, without the consent ofthe holders ofat least two-thirds ofthe preferred stock:
. sell any shares ofpreferred stock or any senior or parity stock, unless net earnings for a period of 12 consecutive calendar months within the 1 5 calendar months immediately preceding such action are at least two and one-half times the annual dividend requirements on the preferred stock and senior or parity stock to be outstanding immediately after such action;
. create any class ofsenior stock;
. increase the authorized number of shares of preferred stock;
. reclassify outstanding shares ofjunior stock into shares ofparity or senior stock;
. make any distribution out of capital or capital surplus (other than dividends payable in junior stock) to holders ofjunior stock; or issue any shares ofpreferred stock or parity or senior stock, ifthe stated capital to be represented by the preferred stock and such other stock outstanding immediately after such issue would exceed the stated capital to be represented by shares ofjunior stock, increased by the amount of any capital surplus or reduced by the amount of any deficit.
Preemptive Rights Holders ofthe preferred stock have no preemptive rights to subscribe for or purchase any securities issued by us.
Miscellaneous The preferred stock has no conversion rights. There is no restriction on the repurchase or redemption by us of our common
stock or preferred stock while there is any arrearage in the payment of dividends or sinking fund installments in respect of our preferred stock, except in circumstances when the repurchase or redemption ofour common stock or preferred stock is otherwise prohibited or restricted by statute or common law or, as summarized with respect to distributions in Restrictions on Certain Corporate Actions, by the articles of incorporation. There is a restriction on the redemption by us of our preference stock, if any, while there is any arrearage in the payment ofdividends or sinking fund installments in respect ofour preferred stock or preference stock.
We reserve the right to increase, decrease or reclassif, our authorized stock ofany class or series thereof and to amend or repeal any provision in the articles of incorporation or any amendment thereto, in the manner prescribed by law, subject to the conditions and limitations prescribed in the articles of incorporation; and all rights conferred on shareholders in the articles of incorporation are subject to this reservation.
Shares ofpreferred stock, when issued by us upon receipt ofthe consideration therefor, will be fully paid and non-assessab le.
Transfer Agent and Registrar Ameren Services Company, an affiliate ofus, serves as transfer agent and registrar for our preferred stock.
Exhibit 4.94 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 As ofJanuary 3 1, 2020 (Description Date), Ameren Illinois Company had two class of securities registered under Section 12 of the Securities Exchange Act of 1934(1) its cumulative preferred stock par value $100 per share (the
$100 par value preferred stock) and (2) its depositary shares (Depositary Shares), each representing one-fourth ofa share of6.625% $100 par value preferred stock. As of the Description Date, the $100 par value preferred stock is issued and outstanding in the following amounts: (i) 144,275 shares of4.00% Series, (ii) 45,224 shares of4.08% Series, (iii) 23,655 shares of4.20% Series, (iv) 50,000 shares of4.25% Series, (v) 16,621 shares of 4.26%
Series, (vi) 16,190 shares of4.42% Series, (vii) 18,429 shares of4.70% Series, (viii) 73,225 shares of4.90% Series, (ix) 49,289 shares of4.92% Series, (x) 50,000 shares of5.16% Series, (xi) 124,274 shares of6.625% Series and (xii) 4,542 shares of 7.75%
Series. The Depositary Shares represent ownership interests in the 6.625% $100 par value preferred stock (6.625% Preferred Stock) and are not a separate class of security from the $ 1 00 par value preferred stock. As of the Description Date, there are 497,095 Depositary Shares issued and outstanding. The Depositary Shares do not constitute a class of securities within the meaning of our Restated Articles oflncorporation (articles of incorporation) or the Illinois Business Corporation Act. When used herein, the term Preferred Stock, unless the context indicates otherwise, means the outstanding shares of our
$ 1 00 par value preferred stock.
The following description is as ofthe Description Date.
In this Description of Securities Registered Pursuant to Section 12 ofthe Securities Exchange Act of I 934, Ameren Illinois, we, us, our and similar terms refer to Ameren Illinois Company.
DESCRIPTION OF PREFERRED STOCK General The following statements describing the $ 1 00 par value preferred stock of Ameren Illinois are not intended to be a complete description but rather are a summary of certain preferences, privileges, restrictions and distinguishin g characteristics of $ 1 00 par value preferred stock currently authorized by our articles of incorporation. For additional information, please see our articles of incorporation and bylaws. Each ofthese documents has been previously filed with the Securities and Exchange Commission (SEC) and each is an exhibit to our Annual Report on Form 10-K to which this Description of Securities Registered Pursuant to Section 12 ofthe Securities Exchange Act of 1934 is an exhibit. Reference is also made to the laws ofthe state of Illinois.
Our authorized preferred stock is divided into two classes: 2,600,000 shares ofthe cumulative preferred stock without par value (the no par preferred stock), issuable in series, ofwhich no shares were outstanding on the Description Date; and 2,000,000 shares of$100 par value preferred stock, issuable in series. When used herein, the term preferred stock, unless the context indicates otherwise, means all the authorized shares of our $ 1 00 par value preferred
stock, whether currently outstanding or hereafter issued, including the Preferred Stock, and does not include the no par preferred stock.
Issuance in Series; Rank The authorized but unissued shares ofour preferred stock may be issued in one or more series from time to time upon such terms and in such manner, with such variations as to dividend rates (which may be fixed or variable),
dividend periods and payment dates, the prices at which, and the terms and conditions on which, shares may be redeemed or repurchased, and sinking fund provisions, ifany, as may be determined by our board ofdirectors. The aggregate stated value ofour issued and outstanding no par preferred stock shall not exceed $65,000,000 at any time.
Our preferred stock ranks senior with respect to dividends and liquidation rights to our common stock without par value (common stock). Our preferred stock is of equal rank and confers equal rights upon the holders thereof and ranks equally with the no par preferred stock, other than with respect to the rate or rates of dividends, the dividend periods, redemption prices and conditions and sinking fund provisions, if any.
Dividend Rights Holders of preferred stock are entitled to receive in respect of each share held, from (and including) the date of issue thereof, ctimulative dividends on the par value thereof at the rate or rates applicable thereto, and no more, in preference to our common stock, payable quarterly or for such other periods as may be fixed by our board ofdirectors, when and as declared by our board of directors out ofany surplus or net profits ofAmeren Illinois legally available for such purpose. No dividend may be paid on or set apart for any share ofpreferred stock in respect ofa dividend period unless, at the same time, there shall be paid on or set apart for all shares of such stock then outstanding and having a dividend period ending on the same date, dividends in such an amount that the holders of all such shares of such stock shall receive or have set apart for them a uniform percentage of the full dividend to which they are respectively entitled and unless all dividends on the preferred stock, for all preceding dividend periods, have been fully paid or declared and funds set apart for the payment thereof. Further, no dividend may be paid on or set apart for any share of preferred stock unless all amounts required to be paid and set aside for any sinking fund for the redemption or purchase of shares of any series ofpreferred stock outstanding, with respect to all preceding sinking fund dates, have been paid or set aside in accordance with the terms ofsuch series ofpreferred stock.
Optional Redemption Provisions Shares ofPreferred Stock are redeemable, at our option, in whole at any time or in part from time to time, on not less than 30 days notice at the prices indicated below, in each case plus accrued dividends to the date ofredemption
. A notice of redemption shall be mailed to each holder ofrecord ofthe shares to be redeemed at such shareholders address as it appears upon our records. In case ofthe redemption ofless than all the outstanding shares ofany series ofthe preferred stock, the shares ofsuch series to be redeemed shall be chosen by proration (as nearly 2
as may be without the issue of fractional shares), by lot, or in such other equitable manner as may be prescribed by the board of directors. We may deposit with a bank or trust company, which shall be named in the notice ofredemption, shall be located in the City ofChicago, Illinois, or in the City ofNew York, New York the aggregate redemption price ofthe shares to be redeemed, in a special account or in trust, as we may determine, for the payment on or before the redemption date to or upon the order of the holders ofsuch shares, upon surrender ofthe certificates for such shares.
The respective redemption prices (exclusive of accrued and unpaid dividends) for each series of Preferred Stock are as follows:
Series Redemption Price (per share) 4.00% Series $101.00 4.08% Series 103.00 4.20% Series 104.00 4.25% Series 102.00 4.26% Series 103.00 4.42% Series 103.00 4.70% Series 103.00 4.90% Series 102.00 4.92% Series 103.50 5.16% Series 102.00 6.625% Series 100.00 7.75% Series 100.00 Sinking fund or Purchase fund Provision No sinking fund redemptions or purchases in respect of shares of preferred stock may be made, or funds set aside for such purposes, unless dividends on all shares ofpreferred stock ofany series for all past dividend periods shall have been made in full or declared and funds set apart for their payment.
Voting Rights 3
Under Illinois law, each share of preferred stock and common stock is entitled to one vote on each matter voted on at all meetings of shareholders, with the right of cumulative voting in the election of directors and the right to vote as a class on certain questions. The articles ofincorporation give holders ofthe preferred stock certain special voting rights with respect to specified corporate actions, including certain amendments to the articles of incorporation, the issuance ofpreferred stock ranking senior to, or equally with, existing preferred shares, the issuance or assumption of certain unsecured indebtedness, and mergers, consolidation s or sales or leases of all or substantially all of our assets. See Restrictions on Certain Corporate Actions.
In addition, under Illinois law holders ofthe preferred stock have the right to vote as a class on any amendment to our articles ofincorporation that would change the privileges or special or relative rights ofsuch class, but ifless than all series ofa class are affected, then the affected series have the right to vote as a class on such amendment.
Liquidation Rights In the event of any liquidation, dissolution or winding up (voluntary or involuntary) of us, holders of preferred stock are entitled to receive an amount equal to the aggregate par value oftheir shares and any unpaid accrued dividends thereon, before any payment or distribution is made to the holders of our common stock.
Common Stock of Ameren Illinois Our board ofdirectors may not declare or pay dividends on our common stock unless all accrued and unpaid dividends on all series ofpreferred stock have been paid or declared.
Restrictions on Certain Corporate Actions The articles of incorporation provide that, so long as any preferred stock is outstanding, we shall not, without a two-thirds vote of each class of the preferred stock (the $ 1 00 par value preferred stock and the no par preferred stock each voting separately as a class), unless the retirement of such stock is provided for, (1) amend the articles of incorporation to create any prior ranking stock or security convertible into such stock, or issue any such stock or convertible security, (2) change the terms and provisions of the preferred stock so as to affect adversely the holders rights or preferences, except that the requisite vote ofholders ofat least two-thirds ofthe total number ofthe shares ofonly the class or series (ifless than all series) so affected shall be required or (3) issue any shares of preferred stock or of equal ranking stock, or any securities convertible into shares of such stock, except to redeem, retire or in exchange for an equal amount thereof, unless (a) the gross income ofAmeren Illinois available for interest for a 12-month period ending within the 1 5 months next preceding such issuance was at least 1 1/2 times the sum of (i) one year s interest (adjusted by provision for amortization of debt discount and expense or of premium, as the case may be) on all funded debt and notes of Ameren Illinois maturing more than 12 months after the date of issue of such shares or convertible securities that will be outstanding at such date and (ii) one year s dividends on the preferred stock and all equal or prior ranking stock to be outstanding after the issue of such shares or convertible securities 4
and (b) the sum of our common stock capital and our surplus accounts shall be not less than the total amount of the involuntary liquidation preference of all preferred stock and all equal or prior ranking stock to be outstanding after the issue of such shares or convertible securities.
The articles ofincorporation also provide that we shall not, without a majority vote ofeach class ofthe preferred stock (the
$ 1 00 par value preferred stock and the no par preferred stock each voting separately as a class), unless the retirement of such stock is provided for, (1) issue or assume any unsecured debt securities (as defined below), except to refund any of our secured or unsecured debt or to retire any preferred stock or equal or prior ranking stock, if immediately after such issuance or assumption the total amount ofall our unsecured debt securities to be outstanding would exceed 20% ofthe sum ofall ofour outstanding secured debt securities and capital and surplus as then recorded on our books, or (2) merge or consolidate with any other corporation, or sell or lease all or substantially all of our assets, unless the transaction has been ordered, approved or permitted by all regulatory bodies having jurisdiction. Unsecured debt securities means all unsecured notes, debentures or other securities representing unsecured indebtedness which have a final maturity, determined as of the date of issuance or assumption, of less than two years.
For purposes of making the calculations referred to above, the dividend requirement for one year applicable to any shares ofpreferred stock or such parity stock or convertible securities proposed to be issued, which will have dividends determined according to an adjustable, floating or variable rate, shall be determined on the basis ofthe dividend rate to be applicable to such series of preferred stock or such parity stock or convertible securities on the date of such issuance and the interest for one year on funded indebtedness or notes outstanding and the dividend requirement for one year on any outstanding shares of any series of preferred stock or shares of stock, if any, ranking prior to or on a parity with the preferred stock, or securities convertible into such stock, and having interest or dividends determined according to an adjustable, floating or variable rate shall be determined on the basis ofthe daily weighted average annual interest or dividend rate applicable to such security (a) during any consecutive 12-month period selected by us, which period ends within 90 days prior to the issuance ofthe shares or convertible securities proposed to be issued or (b) ifthe security has been outstanding for less than 12 full calendar months, during such shorter period beginning on the date of issuance of such security and ending on a date selected by us, which date shall not be more than 45 days prior to the issuance ofthe shares or convertible securities proposed to be issued; provided that if such security shall have been issued within 45 days prior to the issuance ofthe shares or convertible securities proposed to be issued, the interest or dividend rates shall be that applicable on the date of issuance of such security.
Preemptive Rights Holders ofthe preferred stock have no preemptive rights to subscribe for or purchase any securities issued by us.
Miscellaneous 5
The preferred stock has no conversion rights. There is no restriction on the repurchase or redemption by us of our common stock or preferred stock while there is any arrearage in the payment of dividends or sinking fund installments in respect of our preferred stock, except for payments into or set asides for a sinking fund for the redemption or payment ofpreferred stock, in circumstances when the repurchase or redemption of our common stock or preferred stock is otherwise prohibited or restricted by statute or common law or, as summarized in Restrictions on Certain Corporate Actions, by the articles of incorporation We reserve the right to increase, decrease or reclassify our authorized stock of any class or series thereof, and to amend or repeal any provision in the articles ofincorporation or any amendment thereto, in the manner prescribed by law, subject to the conditions and limitations prescribed in the articles of incorporation; and all rights conferred on shareholders in the articles of incorporation are subject to this reservation.
Shares ofpreferred stock, when issued by us upon receipt ofthe consideration therefor, will be frilly paid and non-assessab le.
Transfer Agent and Registrar Ameren Services Company, an affiliate ofus, serves as transfer agent and registrar for our preferred stock.
DESCRIPTION OF DEPOSITARY SHARES General The following description ofthe Depositary Shares, Depositary Receipts and the Depositary Agreement dated October 13, 1 993 (the Depositary Agreement), among Ameren Illinois, Arneren Services Company, as successor depositary (the Depositary
),
and the holders from time to time ofthe Depositary Shares, is not intended to be a complete description. For additional information, please see the depositary agreement (which contains the form of Depositary Receipt), which is available from the Depositary.
By purchasing Depositary Shares, holders of Depositary Receipts representing such Depositary Shares will be deemed to have consented to and to be bound by the Depositary Agreement.
Depositary Shares Each Depositary Share represents 1/4 ofa share of6.625% Preferred Stock deposited with the Depositary pursuant to the Depositary Agreement. Subject to the terms ofthe Depositary Agreement, each holder of a Depositary Share is entitled, through the Depositary, in proportion to the 1/4 of a share of 6.625% Preferred Stock represented by such Depositary Share, to all the rights, preferences and privileges ofthe 6.625% Preferred Stock represented thereby (including dividend, voting and liquidation rights) contained in the articles of incorporation. The proportion of each share of 6.625% Preferred Stock that is represented by each Depositary Share (i.e., 1/4) is subject to adjustment as described in the Depositary Agreement in certain events relating to the change in par value, split-up, combination or any other reclassification of the 6
6.625% Preferred Stock or upon any recapitalization, reorganization, merger, amalgamation or consolidation ofus or sale ofall or substantially all of our assets.
Holders ofDepositary Shares are not entitled to receive certificates representing 6.625% Preferred Stock except upon termination ofthe Depositary Agreement as described under Amendment and Termination ofthe Depositary Agreement and in certain other limited circumstances involving reclassifications ofthe 6.625% Preferred Stock or certain Company transactions as described in the preceding paragraph. We have the option to terminate the Depositary Agreement as described under Amendment and Termination ofthe Depositary Agreement.
Issuance of Depositary Receipts Following the issuance ofthe 6.625% Preferred Stock, we deposited the 6.625% Preferred Stock with the Depositary, which then issued and delivered depositary receipts (Depositary Receipts) pursuant to the Depositary Agreement.
Depositary Receipts will be issued evidencing only whole Depositary Shares. A Depositary Receipt may evidence any number ofwhole Depositary Shares.
Dividends and Other Distributions The Depositary will distribute all cash dividends or other cash distributions received in respect ofthe 6.625% Preferred Stock to record holders ofDepositary Shares in proportion to the number ofDepositary Shares owned by such holders. In the event of a distribution other than in cash, the Depositary will distribute property received by it to the record holders ofDepositary Shares entitled thereto, unless the Depositary determines that it is not feasible to make such distribution, in which case the Depositary may, with our approval, sell such property and distribute the net proceeds from such sale to such record holders.
The amount distributed in any ofthe foregoing cases will be reduced by any amounts required to be withheld by Ameren Illinois or the Depositary on account oftaxes or other governmental charges.
Voting Because each Depositary Share represents ownership of 1/4 ofa share of6.625% Preferred Stock, holders of Depositary Shares will be entitled to 1/4 ofa vote per Depositary Share (subject to adjustment ofsuch fraction as provided under the Depositary Agreement in the event ofreclassification ofthe 6.625% Preferred Stock or certain transactions as described under Depositary Shares above).
Upon receipt ofnotice ofany meeting at which the holders ofthe 6.625% Preferred Stock are entitled to vote, the Depositary will mail the information contained in such notice ofmeeting to the record holders ofthe Depositary Shares. Each record holder of such Depositary Shares on the record date (which will be the same date as the record date for the 6.625%
Preferred Stock unless otherwise specified) will be entitled to instruct the Depositary as to the exercise of the 7
voting rights (including the exercise ofany cumulative voting rights) pertaining to the 6.625% Preferred Stock represented by such holders Depositary Shares. The Depositary will endeavor, insofar as practicable, to vote the 6.625% Preferred Stock represented by such Depositary Shares in accordance with such instructions, and we will agree to take all action which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will take no action with respect to voting the 6.625%
Preferred Stock represented by Depositary Shares to the extent it does not receive appropriate instructions from the holder of Depositary Shares representing such shares.
Redemption The Depositary Shares may be redeemed at our option upon not less than 30 days notice, using the cash proceeds received by the Depositary resulting from any redemption of shares of 6.625% Preferred Stock held by the Depositary. Notice of redemption will be given by the Depositary by first class mail to the record holders of the Depositary Shares to be redeemed.
The redemption price will be equal to $25 per Depositary Share (subject to adjustment as provided under the Depositary Agreement in the event of reclassification ofthe 6.625% Preferred Stock or certain transactions as described under Depositary Shares above), together with an amount equal to accrued and unpaid dividends on the 6.625% Preferred Stock represented thereby to the date of redemption.
Ifwe redeem shares of6.625% Preferred Stock held by the Depositary, the Depositary will redeem as ofthe same redemption date that number ofthe Depositary Shares which represent the shares of6.625% Preferred Stock so redeemed. Iffewer than all the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will be selected by lot or in such substantially equivalent manner as specified by us.
The Depositary Agreement permits, subject to certain conditions, for all rights (other than the right to receive redemption moneys) ofthe holders ofthe Depositary Shares called for redemption to be terminated before the redemption date upon the deposit with a bank or trust company ofthe funds necessary for redemption.
Amendment and Termination of the Depositary Agreement The form ofDepositary Receipt evidencing the Depositary Shares and any provision ofthe Depositary Agreement may at any time be amended by agreement between us and the Depositary. However, any amendment which materially and adversely alters the rights ofthe holders ofDepositary Shares will not be effective unless such amendment has been approved by the holders of a majority ofthe Depositary Shares then outstanding. The Depositary Agreement may be amended in such manner as we shall deem necessary or desirable in order to conform with any amendment to the articles of incorporation which has been approved by the requisite vote ofholders ofour voting securities.
The Depositary Agreement may be terminated by us at any time upon not less than 60 days prior written notice to the Depositary, in which case, on a date that is not later than 30 days after the date of such notice the Depositary shall deliver or make available for delivery to holders ofsuch Depositary Shares, upon surrender ofthe Depositary Receipts evidencing such Depositary Shares, such number ofwhole shares ofthe 6.625% Preferred Stock as are 8
represented by such Depositary Shares, and cash in lieu ofeach fractional share ofthe 6.625% Preferred Stock in an amount equal to the amount (including premium, if any and accrued and unpaid dividends) that would have been paid for such fractional share if it had been redeemed on such date. The Depositary Agreement shall automatically terminate after (i) all outstanding Depositary Shares have been redeemed or (ii) there has been a final distribution in respect ofthe 6.625% Preferred Stock in connection with any liquidation, dissolution or winding up ofus and such distribution has been distributed to the holders ofDepositary Shares.
Upon termination ofthe Depositary Agreement, the Depositary will discontinue the transfer ofDepositary Receipts, will suspend the distribution of dividends to holders thereof and will not give further notices (other than notice of such termination) or perform any further acts under the Depositary Agreement other than the distributions ofshares ofthe 6.625% Preferred Stock (and cash for fractional amounts) as described above.
Charges of Depositary We will pay all transfer and other taxes and governmental charges arising solely from the existence ofthe depositary arrangements. We will pay charges ofthe Depositary in connection with any redemption ofthe 6.625% Preferred Stock.
Holders of Depositary Receipts will pay other transfer and other taxes and governmental charges and such other charges are expressly provided in the Depositary Agreement to be for their accounts.
Resignation and Removal of Depositary; Depositarys Agent The Depositary may resign at any time by delivering to us notice of its election to do so, and we may at any time remove the Depositary, any such resignation or removal to take effect upon the appointment ofa successor Depositary and its acceptance of such appointment. Such successor Depositary must be appointed within 60 days after delivery ofthe notice ofresignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least
$50,000,000 or a corporation registered as a transfer agent under the Securities Exchange Act of 1934. The Depositary may appoint one or more Depositarys Agents to perform any ofits duties under the Depositary Agreement.
Miscellaneous The Depositary will forward to holders ofDepositary Shares all reports and communications from us which are delivered to the Depositary and which we are required or otherwise determine to furnish to the holders ofthe 6.625% Preferred Stock.
Holders ofDepositary Shares shall be entitled to inspect the records ofthe Depositary and our shareholder records to the same extent that they would be entitled under applicable law to inspect similar records as holders ofthe proportionate amount of the 6.625% Preferred Stock represented by such Depositary Shares.
Neither the Depositary nor Ameren Illinois will be liable if it is prevented or delayed by law or any circumstance beyond its control in performing its obligations under the Depositary Agreement. The obligations of us and the Depositary under the Depositary Agreement will be 9
limited to performance in good faith oftheir duties thereunder and they will not be obligated to prosecute or defend any legal proceeding in respect of any Depositary Shares or 6.625% Preferred Stock represented by Depositary Shares unless satisfactory indemnity is furnished. They may rely upon written advice of counsel or accountants, or upon information provided by persons presenting 6.625% Preferred Stock for deposit, holders ofDepositary Receipts or other persons believed to be competent and on documents believed to be genuine.
Transfer Agent and Registrar Ameren Services Company, an affiliate ofus, serves as transfer agent and registrar for the Depositary Shares.
10
Exhibit 10.6 Summary Sheet of Ameren Corporation Non-Management Director Compensation Effective Date: January 1. 2020
$100,000 Base cash annual retainer payable in twelve equal installments Approximately $145,000 of Shares ofthe Companys common stock to be awarded to new Directors upon election on a pro-rata shares
- basis, and annually to all Directors on or about January 1 of each year
$30,000 Additional annual cash retainer for Lead Director
$20,000 Additional annual cash retainer for Audit and Risk Committee and Nuclear and Operations Committee Chair
$17,500 Additional annual cash retainer for Human Resources Committee Chair
$15,000 Additional annual cash retainer for all other Committee Chairs (currently Nominating and Corporate Governance Committee and Finance Committee)
$12,500 Additional annual cash retainer for Audit and Risk Committee and Nuclear and Operations Committee members
$10,000 Additional annual cash retainer for Human Resources Committee members
$7,500 Additional annual cash retainer for members of all other Committees Customary and usual travel expenses to be reimbursed and eligibility to participate in a nonqualified deferred compensation program.
The value of awards payable to new Directors is pro-rated based on the date of election for service through the end of the applicable calendar year.
Amerefl m *L___ - -----
Exhibit 10.17 2020 Ameren Short-Term Incentive Plan Plan Summary Effective January 1, 2020
Contents Page Summary 3 Eligibility 3 Award Opportunities 3 Plan Structure 3 Annual Performance Metrics 3 BaseAward 5 Individual Performance Modifier 5 Individual Short-Term Incentive Payout 5 ImpactofEvents 6 Confidentiality and Non-Solicitation Obligations 7 Confidential Information 7 Non-Solicitation 8 Impact on Incentive Award Payment 8 Ameren Relief 9 Administration 9 Governing Law, Jurisdiction and Agreement to Arbitrate 9 Miscellaneous JO Ameren 2
Summary The Ameren Short-Term Incentive Plan (STIP) is intended to reward eligible Officers for their contributions to Amerens success. The STIP rewards Officers for Amerens earnings per share (EPS) results, safety, customer operational performance, customer satisfaction results and individual performance during a plan year (January 1 December 31). The STIP is -
approved by the Human Resources Committee of Amerens Board of Directors (Committee). Ameren reserves the right at its sole discretion to revise, modify, suspend, continue or discontinue the STIP effective for a future plan year.
Eligibility All Officers The role ofAssistant Vice President is considered to be an Officer of the company and therefore, eligible for the Ameren Short-Term Incentive Plan. who are actively employed on the date the award is paid and who comply with the Confidentiality and Non-Solicitation obligations described below are eligible to participate in the STIP pursuant to the terms described herein and except as provided under Impact ofEvents (below).
Award Opportunities Award opportunity percentages are set by the Committee. Annually, you will receive a communication statement regarding your short-term incentive target opportunity, expressed as a percentage of your base salary. Base salary is defined, generally, as the salary at the end of the plan year or at the time of eligible termination of employment, if earlier. However, if your salary changes during the plan year, proration will apply as specified in Job changes during plan year under Impact of Events.
Plan Structure The STIP has four primary components: (1) annual performance metrics; (2) base award; (3) individual performance modifier; and (4) an individual short-term incentive payout. These components are described in more detail below.
I
[ PIafdis calculated Annual Performance Metrics The performance metrics in the plan are shown below:
Metric Weight Earnings Per Share (EPS) 75%
Safety Coaching c2c 5%
Safety c2c Participation Rate 5%
SAIFI 5%
CPI 5%
JD Power Customer Satisfaction Index 2.5%
Ameren Listens Customer Care After Call Survey 2.5%
1 The role of Assistant Vice President is considered to be an Officer of the company and therefore, eligible for the Ameren Short-Term Incentive Plan.
Ameren
Earnings Per Share (EPS) The EPS goal represents GAAP continuing dIuted EPS and is set generally consistent with earnings guidance and the proposed annual budget. EPS achievement levels may be adjusted to include or exclude specified items of an unusual nature or non-recurring or significant events not anticipated in the business plan when EPS achievement levels were established. Any such adjustment will be determined by the Committee at its sole discretion and only as permitted by theAmeren Corporation 2014 Omnibus Incentive Compensation Plan (Plan).
Safety c2c Participation Rate The safety co-worker to co-worker (c2c) Participation Rate measures the percent of co workers (unique observers) that have performed at least one c2c during a month. A c2c is a leading indicator for safety performance and represents a formal process for co-worker interactions with the goal of:
Reinforcing positive behaviors; Providing constructive feedback for at risk behaviors and conditions; Identifying and discussing corrective actions or continuous improvement opportunities; Gathering safety behavior data for trending, sharing and learning; and Proactively correcting behaviors to prevent injuries.
To calculate the c2c participation rate, the total number of co-workers who have performed one or more c2cs during the month is divided by the established baseline headcount to determine the participation rate for that month. Each month is mutually exclusive and each monthly participation rate is averaged to determine the annual participation rate.
Safety Coaching c2c A Safety Coaching c2c occurs when one experienced and trained leader observes a second co-worker performing a c2c and provides feedback on how to improve the quality of the observation of the observed co-worker. The target for this performance metric is based on the number of coaching c2cs that occur during the calendar year.
System Average Interruption Frequency Index (SAIFI) SAIFI is a standard customer reliability measure that assesses how often the average customer experiences a sustained interruption over a one-year period. The measure is calculated consistent with reporting standards of the Institute of Electrical and Electronics Engineers (IEEE), which excludes major events (e.g. major storms). A lower SAIFI result indicates higher performance.
Callaway Performance Index (CPI) CPI measures Callaway Energy Centers overall plant performance through an index of safety and reliability measures, consistent with the Institute of Nuclear Plant Operations (INPO) Index. CPI measures the same 12 performance measures as the INPO Index, but measures performance over a 12-month period, as compared to the INPO Indexs I 8-month performance period. A higher CPI score indicates higher performance.
JD Power Midwest Large Electric Utility Customer Satisfaction Index (JD Power) JD Power measures critical components driving overall residential customer satisfaction across six factors, including power quality/reliability, price, billing and payment, communications, corporate citizenship, and customer service.
Ameren
Ameren Listens Customer Care After Call Survey (Ameren Listens) Ameren Listens measures overall satisfaction with call center representatives on a 5-point rating scale. The target for this metric is based on the percentage of customers rating the call center representative as 5 on a 5-point scale.
Three levels of performance achievement are established for each performance metric Threshold, Target and Maximum. The three levels are defined as follows:
Ar Maximum 200% -
Payout 4 Target 100% Payout ihi:; cve will be very dfflcuIt to hit in yirs nf Exp cr J :.I 0 p rf; rHtIL (1in I i it O1ffl F Thrshok1 50% Payout rhi n ntfor ( n t 1 sIc fl Ariiiti s I Wlirrnuiti lv:I if tfornarc fl1:css2t-y fnr 4n short tm !flCFfltiVf r)3yEut Base Award Following the conclusion of the plan year, Amerens actual results for each of the performance metrics will be measured. Using these performance results, a formulaic Base Award will be determined for each Officer. Achievement between the established levels (threshold, target, and maximum) will be interpolated on a straight-line basis. As described below, this formulaic Base Award will then be subject to modification based on your individual contributions and performance.
Individual Performance Modifier Your Base Award may be adjusted up or down by as much as 25%, based on your individual contributions and performance during the plan year. Demonstrated leadership and the achievement of key operational goals (besides those specifically measured under the Plan) are also considered when further modifying the Base Award for each Officer. In the case of poor or non-performance, an award may be adjusted down to zero.
In the event that maximum results are achieved under the performance metrics and therefore, the Base Award is equal to 200%
of the short-term target incentive opportunity, the individual performance modifier may only apply as a reduction to the Base Award.
Individual Short-Term Incentive Payout The individual short-term incentive payout represents the actual short-term incentive award you will receive as a result of both Amerens performance and your own individual contributions. The maximum payout under the STIP is 200% of your short-term target incentive target opportunity.
Ameren
The following diagram shows how the final short-term incentive payment is calculated:
St inI lFP:) taii qi. C&rii1ate Awr:t Aiijtt IncIpjduel j td trxn (Wi p4.ifv ffIiI . Mui Yva (ti Sty [tP Foi Tarçt% x Year en Pi k ;i ncRntive .1y lIHtii Eid ReuIts (Ekie Aw.d 25%
+ .)p()Pd iI )
ElS I Wgh1d I%
Sy c rtqn L_r Cuskmi Sist*cdon 2020 SlIP awards will be paid no later than March 15, 2021. Except as described below under Impact ofEvents, in no event will you be eligible for, or entitled to, a payment of an award if you are not actively employed with Ameren on the date the award is paid.
The Committee will review and has the authority to approve the final amount of payment. All payments are within the complete and sole discretion of the Committee. The final payment amount awarded to each Officer is final and conclusive and not subject to review. In the event an award is mistakenly calculated and paid, the Company has the right to recover any overpayment of an award or to make an additional payment of an award that was underpaid.
Impact of Events The following table shows how the SlIP payout is impacted by various employment events.
Event Payout Hire during plan year The award pays out by March 15, 2021 based on 2020 base salary and final performance results, pro rata for the number of days worked in the plan year and subject to the individual performance modifier.
Job changes during plan year (salary The award pays out by March 15, 2021 based on 2020 base salary and final performance results, pro increase, new role, etc.) rata based on any changes in short-term incentive target opportunity, salary, performance metrics and/or plan eligibility for each respective time period during the plan year, and subject to the individual performance modifier.
Ameren 6
Event Payout Death, disability or retirement during The award pays out by March 15, 2021 based on 2020 base salary and final performance results, pro plan year or following plan year but rata for the number of days worked in the plan year, and subject to the individual performance modifier.
before award is paid In addition, any amounts payable under the Plan shall be offset by any amount owed by the Officer to Ameren or any subsidiary.
Paid, unpaid or military leave of Treated as a period of normal employment.
absence during plan year Involuntary termination resulting in The award pays out by March 15, 2021 based on 2020 base salary and final performance results, pro eligibility for payment under the rata for the number of days worked in the plan year, and subject to the individual performance modifier, Ameren Corporation Severance Plan assuming the eligible participant signed and returned the Companys approved general release and for Ameren Officers waiver within the appropriate deadlines and without timely revocation. In addition, any amounts payable under the Plan shall be offset by any amount owed by the Officer to Ameren or any subsidiary.
Other involuntary or voluntary No payout if termination occurs during the plan year or following the plan year but before any award is termination paid.
Violation of Confidentiality or Non- No payout if violation occurs before any award is paid. If violation occurs after the award is paid, the Solicitation Provision, or engaging in Officer will repay the award upon demand from Ameren.
conduct or activity that is detrimental to Ameren, as further described below Confidentiality and Non-Solicitation Obligations Confidential Information Officers, by virtue of their position with Ameren, have access to and/or receive trade secrets and other confidential and proprietary information about Amerens business that is not generally available to the public and which has been developed or acquired by Ameren at considerable effort and expense (hereinafter Confidential Information). Confidential Information includes, but is not limited to, information about Amerens business plans and strategy, environmental strategy, legal strategy, legislative strategy, finances, marketing, management, operations, and/or personnel. As an Officer, you agree that, both during and after your employment with Ameren, you:
- a. will only use Confidential Information in connection with the Officers duties and activities on behalf of or for the benefit of Ameren;
- b. will not use Confidential Information in any way that is detrimental to Ameren;
- c. will hold the Confidential Information in strictest confidence and take reasonable efforts to protect such Confidential Information from disclosure to any third party or person who is not authorized to receive, review or access the Confidential Information;
- d. will not use Confidential Information for the Officers own benefit or the benefit of others, without the prior written consent ofAmeren; and
- e. will return all Confidential Information to Ameren within two business days of the Officers termination of employment or immediately upon Amerens demand to return the Confidential Information to Ameren.
Notwithstanding the foregoing, in accordance with the Defend Trade Secrets Act of 2016, the Participant will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government Ameren
official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding.
If the Participant files a lawsuit for retaliation by the Ameren for reporting a suspected violation of law, the Participant may disclose the Amerens trade secrets to the Participants attorney and use the trade secret information in the court proceeding if the Participant (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
NonSolicitation In addition, in the event that you terminate employment with Ameren, you agree that, for one year from the end of your employment, you will not, directly or indirectly, on your behalf or on behalf of any other person, company or entity:
- a. market, sell, solicit, or provide products or services competitive with or similar to products or services offered by Ameren to any person, company or entity that:
I. is a customer or potential customer of Ameren during the twelve (1 2) months prior to your termination of employment and Ii. with which you had direct contact with during the twelve (12) months prior to your termination of employment or possessed, utilized or developed Confidential Information about during the twelve (1 2) months prior to your termination of employment;
- b. raid, hire, solicit, encourage or attempt to persuade any employee or independent contractor ofAmeren, or any person who was an employee or independent contractor of Ameren during the 24 months preceding your termination, to leave the employ of, terminate or reduce the persons employment or business relationship with Ameren; C. interfere with the performance of any Ameren employee or independent contractors duties for Ameren.
Impact on Incentive Award Payment If an Officer violates the Confidentiality and Non-Solicitation obligations or engages in conduct or activity that is detrimental to Ameren in the one year after employment with Ameren ends, then the Officer will not be eligible for the incentive award and the award will be rescinded. If an Officer violates the Confidentiality and Non-Solicitation obligations after the award is paid, or if Ameren learns of the violations after the award is paid, the Officer shall repay the award to Ameren within thirty (30) days of receiving a demand from Ameren for the repayment of the award.
Similarly, if an Officer engages in conduct or activity that is detrimental to Ameren after the award is paid, or if Ameren learns of the detrimental conduct or activity after the award is paid, and such conduct occurred less than one year after Officers employment with Ameren ended, Officer shall repay the award to Ameren within thirty (30) days of receiving a demand from Ameren for the repayment of the award and Ameren shall be entitled to an award of attorneys fees incurred in connection with securing such repayment.
Ameren Relief The Officer acknowledges and agrees that the Confidentiality and Non-Solicitation provisions set forth above are necessary to protect Amerens legitimate business interests, such as its Confidential Information, goodwill and customer relationships
. The Officer acknowledges and agrees that a breach by the Officer of either the Confidentiality or Non-Solicitation provision will cause irreparable damage to Ameren for which monetary damages alone will not constitute an adequate remedy.
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6
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Miscellaneous No Officer shall have any claim or right to receive an award under this SlIP. Neither this SlIP nor any action taken hereunder shall be construed as giving an employee any right to be retained by Ameren Corporation or any of its subsidiaries or to limit in any way the right ofAmeren Corporation or any of its subsidiaries to change such employees compensation or other benefits or to terminate the employment or service of such person with or without cause. For purposes of this SlIP, the transfer of employment by an employee between subsidiaries shall not be deemed a termination of the employees employment.
Contact Questions regarding this plan may be directed to the Director, Compensation & Performance at 314.206.0391.
J Affleflflio
Exhibit 10.23 2020 BASE SALARY TABLE FOR NAMED EXECUTIVE OFFICERS The 2020 annual base salaries ofthe following Named Executive Officers ofAmeren Corporation (Arneren), Union Electric Company (UE) and Arneren Illinois Company (CAJC) (which officers are employed by Ameren and/or an Aineren subsidiary as of February 14, 2020, and were determined to the extent applicable by reference to the Aineren Proxy Statement and the UE and AIC Information Statements for the 2020 annual meetings of shareholders and by reference to the defmition ofNarned Executive Officer in Item 402(a)(3) ofSEC Regttlation S-K) are as follows:
Name, Position and Entities for which Officer is a Named Executive Officer 2020 Base Salary Warner L. Baxter $1,300,000 Charnuan, President and ChtefExecutwe Officer Amcren -
(Ameren, UE, AK)
Martin I. Lyons, Jr.
$740,000 Chairman and President UE -
(Ameren, UE, AK)
Michael L. Moehn $700,000 Executive Vice President and ChiefFinancial Officer Ameren, JE and AIC (Ameren, lIE, AIC)
Richard J. Mark
$555,000 Chairman and President AIC -
(Arneren, AIC)
Fadi M. I)iya
$540,000 Senior Vice President and ChiefNuclear Officer -
(Ameren, UE)
Chonda J. Nwamu
$525,000 Senior Vice President, General Counsel and Secretary Ameren, UE and AIC (Ameren, UE, AIC)
Bhavani Amirthalingam $430,000 Senior Vice President & ChiefDigital Information Officer Ameren Services Company (AIC)
Exhibit 10.32 FORMULA FOR DETERMINING 2020 TARGET PERFORMANCE SHARE UNIT (PSU)
AND RESTRICTED STOCK UNIT (RSU) AWARDS TO BE ISSUED TO NAMED EXECUTIVE OFFICERS The target number ofPSUs and RSUs to be isstted to each Named Executive Officer listed below for 2020 will be detennined in accordance with the following fonnula:
Base Salary as of 1/1/2020 Long-Term Incentive Target X 60%
2020 Target Number PSU Awards tied to listed below Relative TSR Thirty-trading-day average closing price ofAmeren Corporation Common Stock on The New York Stock Exchange prior to the grant date Long-ferm Incentive Target Base Salary as of 1/1/2020 X 10%
2020 Target Number PSU Awards tied to listed below Renewable Generation & Energy Storage Thirty-trading-day average closing price ofArneren Corporation Common Stock on The New York Stock Exchange prior to the grant date Long-Term Incentive Target Base Salary as of 1/1/2020 X 30%
listed below 2020 Target Number RSU Awards .
Thirty-trading-day average closing price of Ameren Corporation Common Stock on The New York Stock Exchange prior to the grant date LoNG-TERM INCENTIVE TARGET AS PERCENT NAMED EXECUTIVE OFFICER OF BASE SALARY Baxter 400%
Moehn 300%
Lyons 300%
Mark 170%
Diya 160%
Nwamu 150%
Arnirthalingarn 100%
Exhibit 10.41 2020 Performance Share Unit Award Agreement January 1, 2020 Ameren Corporation 2020 Performance Share Unit Award Agreement THIS AGREEMENT, effective as of the Grant Date set forth in the Notice of 2020 Performance Share Unit Awards (Notice), represents the grant of Performance Share Units by Ameren Corporation ( Ameren), to the Participant set forth in the Notice, pursuant to the provisions of the Ameren Corporation 2014 Omnibus Incentive Compensation Plan, as it may be amended from time to time (the Plan). The Notice is included in and made part of this Agreement.
The Plan provides a description of the terms and conditions governing the Performance Share Units. If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plans terms will completely supersede and replace the conflicting terms of this Agreement. All capitalized terms will have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The parties hereto agree as follows:
I . Notice of Grant. The Notice, as attached hereto, sets forth the Target Number of Performance Share Units and the Performance Period.
- 2. Performance Criteria (a) TSR Performance Grid. The number of Performance Share Units tied to Relative TSR and payable to the Participant under this Agreement will be determined in accordance with the following grid based on Company performance during the Performance Period. If the actual performance results fall between two of the categories listed below, straight-line interpolation will be used to determine the amount earned. Notwithstanding anything in the Agreement to the contrary, payouts that otherwise would have been more than 1 00% of Target will be capped at 1 50% of Target if Amerens total shareholder return (TSR) is negative over the three-year period. TSR shall be calculated in the manner set forth in Exhibit I hereto and compared to the peer group identified in Exhibit I.
Ameren S Percentile n Total Shareholder Payout Percent of Target Performance Share Return vs Utility Peers During the Performance Period ut Granted 9Oth percentile + 200%
7Oth percentile 150%
5Oth percentile 100%
25th percentile 50%
<25th percentile 0% (no payout)
(b) Renewable Generation & Energy Storage Additions Performance Grid. The number of Performance Share Units tied to renewable generation & energy storage additions and payable to the Participant under this Agreement will be determined in accordance with the following grid based on final results at the end of the Performance Period. If the actual results fall between two of the categories listed below, straight-line interpolation will be used to determine the amount earned.
Total Renewable Generation & Energy Payout Percent of Target Storage Additions (in megawatts) Performance Share Units Granted 1,038mw 200%
738 mw 100%
438mw 50%
< 438 mw 0% (no payout)
- 3. Calculation of Performance Share Units. The Human Resources Committee (the Committee) will determine the number of Performance Share Units payable to the Participant based on the performance results during the Performance Period, calculated using the performance grids set forth in Section 2 of this Agreement. Subject to Sections 4 and 8, payment of any Performance Share Units determined pursuant to this Section is expressly conditioned upon continued employment from the first day of the Performance Period (or effective date of grant, if later) through the payment date (as determined in Section 5) (the Vesting Period). The Participant expressly agrees that no Performance Share Units shall be considered earned under applicable law until the last day of the Vesting Period.
- 4. Vesting of Performance Share Units. Subject to provisions set forth in Section 8 of this Agreement related to a Change of Control (as defined in the Second Amended and Restated Ameren Corporation Change of Control Severance Plan, as amended (the Change of Control Severance Plan)) of Ameren, Section 9 of this Agreement relating to termination for Cause (as defined in the Change of Control Severance Plan), and Section 1 0 of this Agreement relating to Participants obligations, the Performance Share Units will vest as set forth below:
(a) Provided the Participant has continued employment with Ameren or any Affiliate or Subsidiary (the Company) through such date, one hundred percent (1 00%) of the calculated Performance Share Units will vest on the payment date; or (b) Death. Provided the Participant has continued employment with the Company through the date of his death and such death occurs prior to the payment date, the Participant will be entitled to a prorated award based on the Target Number of Performance Share Units set forth in the Notice to this Agreement plus accrued dividend equivalents as of the date of death, with such prorated number based upon the total number of days the Participant worked during the Performance Period; or (c) Disability. Provided the Participant has continued employment with the Company through the date of his Disability (as defined in Code Section 409A) and such Disability occurs prior to the payment date, the Participant will be entitled to one hundred percent (1 00%) of the Performance Share Units plus any accrued dividend equivalents he would have received had he remained employed by the Company through the payment date, based on the actual performance ofthe Company during the entire Performance Period; or (U) Retirement. Provided the Participant has continued employment with the Company through the date of retirement (as described below) and such retirement occurs before the payment date if the Participant retires at an age of 55 or greater with five (5) or more years of service (as defined in the Ameren Retirement Plan, as supplemented and amended from time to time), the Participant is entitled to receive a prorated portion of the Performance Share Units plus any accrued dividend equivalents that would have been earned had the Participant remained employed by the Company for the entire Vesting Period, based on the actual performance of the Company during the entire Performance Period, with the prorated number based upon the total number of days the Participant worked during the Performance Period.
Notwithstanding anything in this Agreement to the contrary, no Performance Share Units will be paid to the Participant, nor shall the Participant be entitled to payment, if the Participants employment with the Company terminates during the Vesting Period for any reason other than death, Disability, retirement as described above, or on or after a Change of Control in accordance with Section 8.
- 5. Form and Timing of Payment. All payments of vested Performance Share Units pursuant to this Agreement will be made in the form of Shares. Except as otherwise provided in this Agreement, payment will be made upon the earlier to occur of the following:
(a) February of the calendar year immediately following the last day of the Performance Period or as soon as practicable thereafter (but in no event later than March 1 5 of the calendar year immediately following the last day of the Performance Period);
(b) The Participants death or as soon as practicable thereafter (but in no event later than March 1 5 of the calendar year following the year in which the Participants death occurred).
Fractional Performance Share Units that constitute less than a single share may be rounded to the nearest full Share or converted to cash, at the Companys option.
In the event the number of vested Performance Share Units is mistakenly calculated and paid, the Company has the right to recover any overpayment of any Shares or to make an additional payment of Shares that were underpaid.
- 6. Rights as Shareholder. The Participant shall not have voting or any other rights as a shareholder of the Company with respect to Performance Share Units. The Participant will obtain full voting and other rights as a shareholder of the Company upon the payment of the Performance Share Units in Shares as provided in Section or of this Agreement.
- 7. Dividends Equivalents. The Participant shall be entitled to receive dividend equivalents, which represent the right to receive Shares measured by the dividend payable with respect to the corresponding number of unvested Performance Share Units. Dividend equivalents on Performance Share Units will accrue and be reinvested into additional Performance Share Units throughout the three-year Performance Period. Subject to continued employment with the Company, the dividend equivalents shall vest and be settled at the same time and in the same proportion as the Performance Share Units to which they relate. Participants will not be entitled to any dividend equivalent amount on Performance Share Units covered by this Agreement which are not ultimately earned.
- 8. Change of Control.
(a) Company No Longer Exists. Upon a Change of Control which occurs on or before the last day of the Performance Period in which the Company ceases to exist or is no longer publicly traded on the New York Stock Exchange or the NASDAQ Stock Market, Sections 2, (b), 4 and 5 of this Agreement, unless otherwise provided, shall no longer apply and instead, the amount distributed under this award shall be based on the Target Number of Performance Share Units awarded as set forth in the Notice to this Agreement plus any accrued dividend equivalents and interest as follows:
(i) The amount underlying this award as of the date of the Change of Control shall equal the value of one Share based on the closing price on the New York Stock Exchange on the last trading day prior to the date of the Change of Control multiplied by the sum of the Target Number of Performance Share Units awarded as set forth in the Notice to this Agreement plus the additional Performance Share Units attributable to accrued dividend equivalents as of the date of the Change of Control; (ii) Interest on this award shall accrue based on the prime rate (adjusted on the first day of each calendar quarter) as published in the Money Rates section in the Wall Street Journal from the date of the Change of Control until this award is distributed or forfeited; (iii) If the Participant remains employed with the Company or its successor until the payment date, this award, including interest, shall be paid to the Participant in an immediate lump sum in January of the calendar year immediately following the last day of the Performance Period, or as soon as practicable thereafter (but in no event later than March 1 5 of the calendar year immediately following the last day of the Performance Period);
(iv) lithe Participant retired (as described in Section 4(d) of this Agreement) or terminated employment due to Disability prior to the Change of Control under Section 8(a) of this Agreement, the Participant shall immediately receive payment under this award upon such Change of Control; (v) If the Participant remains employed with the Company or its successor until his death or Disability which occurs after the Change of Control and before the last day of the Vesting Period, the Participant (or his estate or designated beneficiary) shall immediately receive payment under this award, including interest (if any), upon such death or Disability; (vi) If the Participant has a qualifying termination (as defined in Section 8(c) of this Agreement) before the last day of the Vesting Period or retires (as described in Section 4(d) of this Agreement) after the Change of Control, the Participant shall immediately receive payment under this award, including interest (if any), upon such termination; and (vii) In the event the Participant terminates employment before the end of the Vesting Period for any reason other than as described in Sections (iv), (v) or (vi) above, the Participant shall not receive payment of this award, including interest (if any), nor be entitled to payment for, any Performance Share Units.
(b) Company Continues to Exist. If there is a Change of Control of the Company but the Company continues in existence and remains a publicly traded company on the New York Stock Exchange or the NASDAQ Stock Market, the Performance Share Units will pay out upon the earliest to occur of the following:
(i) As set forth in Section 5 ofthis Agreement in accordance with the vesting provisions of Sections 4(a), (b), (c) and (d) of this Agreement; or (ii) If the Participant experiences a qualifying termination (as defined in Section 8(c) of this Agreement) during the two-year period following the Change of Control and the termination occurs during the Performance Period, the Participant will be entitled to one hundred percent (1 00%) of the Performance Share Units he would have received had he remained employed by the Company for the entire Vesting Period based on the actual performance of the Company during the entire Performance Period. Such Performance Share Units will vest on the last day of the Performance Period and the vested Performance Share Units will be paid in Shares in January of the calendar year immediately following the last day of the Performance Period or as soon as practicable thereafter (but in no event later than March 1 5 of the calendar year immediately following the last day of the Performance Period).
(c) Qualifying Termination. For purposes of Sections 8(a)(vi) and 8(b)(ii) of this Agreement, a qualifying termination means (i) an involuntary termination without Cause, (ii) for Change of Control Severance Plan participants, a voluntary termination of employment for Good Reason (as defined in the Change of Control Severance Plan) or (iii) an involuntary termination that qualifies for severance under the Ameren Corporation Severance Plan for Ameren Employees or the Ameren Corporation Severance Plan for Ameren Officers (as in effect immediately prior to the Change of Control).
(d) Termination in Anticipation of Change of Control. If a Participant qualifies for benefits as provided in the last sentence of Section 4.1 ofthe Change of Control Severance Plan, or if a Participant is not a Participant in the Change of Control Severance Plan but is terminated within six (6) months prior to the Change of Control and qualifies for severance benefits under the Ameren Corporation Severance Plan for Ameren Employees or the Ameren Corporation Severance Plan for Ameren Officers and the Participants termination of employment occurs before the calculated Performance Share Units are paid, then the Participant shall receive (i) upon a Change of Control described in Section 8(a) of this Agreement, an immediate cash payout equal to the value of one Share based on the closing price on the New York Stock Exchange on the last trading day prior to the date of the Change of Control multiplied by the sum of the Target Number of Performance Share Units awarded as set forth in the Notice to this Agreement plus the additional Performance Share Units attributable to accrued dividend equivalents or (ii) upon a Change of Control described in Section 8(b) of this Agreement, the payout provided for in Section 8(b) of this Agreement.
- 9. All Other Terminations. No distribution of any Shares will be made in the event of a termination of employment for any reason not otherwise described in Section 4 or 9, including a voluntary resignation (other than for Retirement), a termination for Cause or a termination without Cause (other than a qualifying termination), at any time prior to payout of the Shares.
I 0. Participant Obligations.
(a) Detrimental Conduct or Activity. If the Participant engages in conduct or activity that is detrimental to the Company, including but not limited to violating Sections 1 1 (b) and I 1 (c) of this Agreement, after the Performance Share Units are paid, or if the Company learns of the detrimental conduct or activity after the Performance Share Units are paid, and such conduct occurred less than one year after the Participants employment with the Company ended, the following shall apply.
(i) If the Participant retired, the Participant shall not be entitled to receive payment of any Shares that would otherwise be payable to the Participant with respect to the last award of Performance Share Units granted to the Participant before his termination of employment due to retirement.
(ii) In all other cases, the Participant shall repay to the Company the equivalent of the value of Shares received as of the payment date determined under Section 6 of this Agreement within thirty (30) days of receiving a demand from the Company for the repayment of the award.
(b) Confidentiality. Participants, by virtue of their position with the Company, have access to and/or receive trade secrets and other confidential and proprietary information about the Companys business that is not generally available to the public and which has been developed or acquired by the Company at considerable effort and expense (hereinafter Confidential Information). Confidential Information includes, but is notlimited to, information aboutthe Companys business plans and strategy, environmental strategy, legal strategy, legislative strategy, finances, marketing, management, operations, and/or personnel. The Participant agrees that, both during and after the Participants employment with the Company, the Participant:
(i) will only use Confidential Information in connection with the Participants duties and activities on behalf of or for the benefit of the Company; (ii) will not use Confidential Information in any way that is detrimental to the Company; (iii) will hold the Confidential Information in strictest confidence and take reasonable efforts to protect such Confidential Information from disclosure to any third party or person who is not authorized to receive, review or access the Confidential Information; (iv) will not use Confidential Information for the Participants own benefit or the benefit of others, without the prior written consent of the Company; and (v) will return all Confidential Information to the Company within two business days of the Participants termination of employment or immediately upon the Companys demand to return the Confidential Information to the Company.
Notwithstanding the foregoing, in accordance with the Defend Trade Secrets Act of 2016, the Participant will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If the Participant files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Participant may disclose the Companys trade secrets to the Participants attorney and use the trade secret information in the court proceeding if the Participant (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
(c) Non-Solicitation. The Participant agrees that, for one year from the end of the Participants employment, the Participant will not, directly or indirectly, on behalf of the Participant or any other person, company or entity:
(i) market, sell, solicit, or provide products or services competitive with or similar to products or services offered by the Company to any person, company or entity that: (i) is a customer or potential customer of the Company during the twelve (1 2) months prior to the Participants termination of employment and (ii) with which the Participant (A) had direct contact with during the twelve (12) months prior to the Participants termination of employment or (B) possessed, utilized or developed Confidential Information about during the twelve (1 2) months prior to the Participants termination of employment; (ii) raid, hire, solicit, encourage or attempt to persuade any employee or independent contractor of the Company, or any person who was an employee or independent contractor of the Company during the 24 months preceding the Participants termination, to leave the employ of, terminate or reduce the persons employment or business relationship with the Company; or (iii) interfere with the performance of any Company employee or independent contractors duties for the Company.
(d) Acknowledgments and Remedies. The Participant acknowledges and agrees that the Confidentiality and Non-Solicitation provisions set forth above are necessary to protect the Companys legitimate business interests, such as its Confidential Information, goodwill and customer relationships. The Participant acknowledges and agrees that a breach by the Participant of either the Confidentiality or Non- Solicitation provision will cause irreparable damage to the Company for which monetary damages alone will not constitute an adequate remedy. In the event of such breach or threatened breach, the Company shall be entitled as a matter of right (without being required to prove damages or furnish any bond or other security) to obtain a restraining order, an injunction, or other equitable or extraordinary relief that restrains any further violation or threatened violation of either the Confidentiality or Non-Solicitation provision, as well as an order requiring the Participant to comply with the Confidentiality and/or Non-Solicitation provisions. The Companys right to a restraining order, an injunction, or other equitable or extraordinary relief shall be in addition to all other rights and remedies to which the Company may be entitled to in law or in equity, including, without limitation, the right to recover monetary damages for the Participants violation or threatened violation of the Confidentiality and/or Non- Solicitation provisions. Finally, the Company shall be entitled to an award of attorneys fees incurred in connection with securing any relief hereunder and/or pursuant to a breach or threatened breach ofthe Confidentiality and/or Non- Solicitation provisions.
II . Nontransferability. Performance Share Units awarded pursuant to this Agreement may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated (a Transfer) other than by will or by the laws of descent and distribution, except as provided in the Plan. If any Transfer, whether voluntary or involuntary, of Performance Share Units is made, or if any attachment, execution, garnishment, or lien will be issued against or placed upon the Performance Share Units, the Participants right to such Performance Share Units will be immediately forfeited to the Company, and this Agreement will lapse.
I 2. Requirements of Law. The granting of Performance Share Units under the Plan and this Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
I 3. Tax Withholding. The Company will have the power and the right to deduct or withhold, or require the Participant or the Participants beneficiary to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Agreement.
- 14. Stock Withholding. With respect to withholding required upon any taxable event arising as a result of Performance Share Units granted hereunder, the Company, unless notified by the Participant in writing within thirty (30) days prior to the taxable event that the Participant will satisfy the entire minimum tax withholding requirement by means of personal check or other cash equivalent, will satisfy the tax withholding requirement by withholding Shares having a Fair Market Value equal to (i) the total minimum statutory
amount required to be withheld on the transaction, or (ii) such other amount as may be withheld pursuant to the Plan and such withholding would not cause adverse accounting consequences or costs. The Participant agrees to pay to the Company, its Affiliates and/or its Subsidiaries any amount of tax that the Company, its Affiliates and/or its Subsidiaries may be required to withhold as a result of the Participants participation in the Plan that cannot be satisfied by the means previously described.
- 15. Administration. This Agreement and the Participants rights hereunder are subjectto all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which will be binding upon the Participant.
- 16. Continuation of Employment. This Agreement does not confer upon the Participant any right to continuation of employment by the Company, its Affiliates, and/or its Subsidiaries, nor will this Agreement interfere in any way with the Companys, its Affiliates, and/or its Subsidiaries right to terminate the Participants employment at any time.
- 17. Amendment to the Plan. The Plan is discretionary in nature and the Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect in any material way the Participants rights under this Agreement, without the Participants written approval.
- 18. Amendment to this Agreement. The Company may amend this Agreement in any manner, provided that no such amendment may adversely affect in any material way the Participants rights hereunder without the Participants written approval except as otherwise permitted by the Plan.
I 9. Successor. All obligations of the Company under the Plan and this Agreement, with respect to the Performance Share Units, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
- 20. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding and enforceable.
21 . Applicable Laws and Consent to Jurisdiction. The validity, construction, interpretation and enforceability of this Agreement will be determined and governed by the laws of the State of Missouri without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction and agree that such litigation will be conducted in the federal or state courts of the State of Missouri.
- 22. Section 409A of the Code. This Agreement shall be interpreted in a manner that satisfies the requirements of Code Section 409A. The Committee may make changes in the terms or operation of the Plan and/or this Agreement (including changes that may have retroactive effect) deemed necessary or desirable to comply with Code Section 409A. The Company makes no representations or covenants that this award will comply with Section 409A of the Code.
EXHIBIT I Total Shareholder Return Total Shareholder Return shall be calculated as follows:
I 3O-ttng-OMckntls (tratd a.c dayaterage
_K to 1/1/2022
+ reinvestedori ex-dMdend date I,
I.
r*g pflar to1f1ot9]
Peer Group The criteria used to develop the peer group for 2020 2022 are shown below*:
Classified as a NYSE investor-owned utility within SNLs SEC/Public Companies Power Database
. Minimum S&P credit rating of BBB- (investment grade)
Not an announced acquisition target Not undergoing a major restructuring including, but not limited to, a major spin-off or sale of a significant asset Market capitalization greater than $2 billion Dividends flat or growing over the past 12 month period
- The peer group guidelines were developed to provide objective guidance regarding the appropriate peer group for the Performance Share Units related to TSR. The Human Resources Committee of the Board of Directors may choose to include additional companies or exclude companies based upon their relevance.
Based on the above, the following are the peer group companies.
1rti Ittr . /.
Alliant Energy Corporation LNT IDACORP, Inc. IDA American Electric Power Company, Inc. AEP NiSource Inc. NI CMS Energy Corporation CMS Northwestern Corporation NWE Consolidated Edison, Inc. ED Pinnacle West Capital Corporation PNW Duke Energy Corporation DUK PNM Resources, Inc. PNM Edison International EIX Portland General Electric Company POR Entergy Corporation ETR Southern Company SO Evergy, Inc. EVRG WEC Energy Group WEC Eversource Energy ES Xcel Energy, Inc. XEL FirstEnergy Corporation FE 10-
M&A Activity The following guidelines will be used by the Committee to determine treatment of peer companies engaged in M&A transactions that have impacted the relative peer company TSR performance. These guidelines will apply upon the public announcement, or reputable media or analyst report of:
. A potential or actual takeover attempt, or definitive agreement to be acquired
. Discussions or a tender offer that if consummated would lead to Change In Control
. Receipt of a bear hug letter
. An exploration of company-wide strategic alternatives, or a major restructuring The guidelines, outlined in the following table, give consideration to the timing of the public announcement or report (based on objective evidence) in order to anticipate and avoid run-ups from leaks of deals prior to a public announcement.
Timing of Announcement or Report Treatment in Percentile Calculation Within I st I 8 months of performance period Peer will be eliminated from the peer group and ignored for calculation purposes Within 2a I 8 months of performance period -
The peer will be fixed above or below Ameren using TSR for both companies before the announcement or report TSR calculation will be based on the beginning of performance period through 90 calendar days before the announcement or report Will use 30-trading-day average prices on each end 11
Exhibit 10A2 2020 Restricted Stock Unit Award Agreement January 1, 2020 59961 097v.2
Ameren Corporation 2020 Restricted Stock Unit Award Agreement THIS AGREEMENT, effective as of the Grant Date set forth in the Notice of 2020 Restricted Stock Unit Award (Notice),
represents the grant of Restricted Stock Units by Ameren Corporation (Ameren) to the Participant set forth in the Notice, pursuant to the provisions of the Ameren Corporation 2014 Omnibus Incentive Compensation Plan, as it may be amended from time to time (the Plan). The Notice is included in and made part of this Agreement.
The Plan provides a description of the terms and conditions governing the Restricted Stock Units. If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plans terms will completely supersede and replace the conflicting terms of this Agreement. All capitalized terms will have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The parties hereto agree as follows:
I . Notice of Grant. The Notice, as attached hereto, sets forth the number of Restricted Stock Units (the RSU5) granted to the Participant and the Vesting Period.
Each RSU represents the right to receive one Share (as defined in the Plan) as of the Payment Date (defined in Section 2), to the extent the Participant is vested in such RSUs as of the Payment Date and subject to the terms of this Agreement and the Plan.
- 2. Vesting of RSUs. Subject to provisions set forth in Section 6 of this Agreement related to a Change of Control (as defined in the Second Amended and Restated Ameren Corporation Change of Control Severance Plan, as amended (the Change of Control Severance Plan)) of Ameren, Section 7 of this Agreement relating to termination for Cause (as defined in the Change of Control Severance Plan), and Section 8 of this Agreement relating to Participants obligations, the RSUs will vest as set forth below.
(a) Vesting Period. Provided the Participant has continued employment with Ameren or any Affiliate or Subsidiary (the Company) through the Vesting Period, one hundred percent (100%) ofthe Shares relating to all RSUs set forth in the Notice plus any accrued dividend equivalents will vest on the date on which Shares are delivered pursuant to this Section (the Payment Date). The restrictions set forth in this Agreement with respect to the RSU5 shall lapse when the Shares are delivered to the Participant on the Payment Date, unless forfeited as described in this Section or as may be provided in accordance with Sections 8; or (b) Death. Provided the Participant has continued employment with the Company through the date of his death and such death occurs prior to the Payment Date, the Participant will be entitled to a prorated award based on the number of RSUs set forth in the Notice to this Agreement plus accrued dividend equivalents as of the date of death, with such prorated number based upon the total number of days the Participant worked during the Award Period, as defined in the Notice; or (c) Disability. Provided the Participant has continued employment with the Company through the date of his Disability (as defined in Code Section 409A) and such Disability occurs prior to the Payment Date, the Vesting Period shall continue to lapse and the Participant shall receive one hundred percent (100%) of the Shares relating to all RSUs set forth in the Notice plus any accrued dividend equivalents he would have received had he remained employed by the Company through the Payment Date; or (d) Retirement. Provided the Participant has continued employment with the Company through the date of retirement (as described below) and such retirement occurs before the Payment Date if the Participant retires at an age of 55 or greater with five (5) or more years of service (as defined in the Ameren Retirement Plan, as supplemented and amended from time to time), the Vesting Period shall continue to lapse and the Participant is entitled to receive a prorated award based on the number of RSUs set forth in the Notice to this Agreement plus accrued dividend equivalents as of the Payment Date, with the prorated number based upon the total number of days the Participant worked during the Award Period, as defined in the Notice. The pro-rata number of Shares shall be delivered to the Participant on the Payment Date.
(e) Notwithstanding anything in this Agreement to the contrary, no Restricted Stock Units will be paid to the Participant, nor shall the Participant be entitled to payment, if the Participants employment with the Company terminates during the Vesting Period for any reason other than death, Disability, retirement as described above, or on or after a Change of Control in accordance with Section 6.
For purposes of this Agreement, any reference to a termination of employment shall be interpreted to comply with Section 409A of the Internal Revenue Code (Section 409A). To the extent payments are made during the periods permitted under Section 409A
(including any applicable periods before or after the specified payment dates set forth in this Section), the Company shall be deemed to have satisfied its obligations under the Plan and shall be deemed not to be in breach of its payments obligations hereunder.
- 3. Form and Timing of Payment. All payments of vested RSUs pursuant to this Agreement will be made in the form of Shares. Except as otherwise provided in this Agreement, payment will be made upon the earlier to occur of the following:
(a) As soon as practicable after the expiration of the Award Period, as defined in the Notice; (b) The Participants death or as soon as practicable thereafter (but in no event later than March 1 5 of the calendar year following the year in which the Participants death occurred).
Fractional RSUs that constitute less than a single share may be rounded to the nearest full Share or converted to cash, at the Companys option.
In the event the number of vested RSUs is mistakenly paid, the Company has the right to recover any overpayment of any Shares or to make an additional payment of Shares that were underpaid.
- 4. Rights as Shareholder. The Participant shall not have voting or any other rights as a shareholder of the Company with respect to any RSUs. The Participant will obtain full voting and other rights as a shareholder of the Company upon the delivery of Shares as provided in Section 3 and 6 of this Agreement.
- 5. Dividend Equivalents. The Participant shall be entitled to receive dividend equivalents, which represent the right to receive Shares measured by the dividend payable with respect to the corresponding number of unvested RSUs.
Dividend equivalents on RSUs will accrue and be reinvested into additional RSUs throughout the Vesting Period.
Subject to continued employment with the Company, the dividend equivalents shall vest and be settled at the same time and in the same proportion as the RSUs to which they relate. Participants will not be entitled to any dividend equivalent amount on RSUs covered by this Agreement which are not ultimately earned.
- 6. Change of Control.
(a) Company No Longer Exists. Upon a Change of Control which occurs on or before the last day of the Vesting Period in which the Company ceases to exist or is no longer publicly traded on the New York Stock Exchange or the NASDAQ Stock Market, Sections 2 and 3 of this Agreement, unless otherwise provided, shall no longer apply and instead, the amount distributed under this award shall be based on the number of RSUs awarded as set forth in the Notice to this Agreement plus any accrued dividend equivalents and interest as follows:
(i) The amount underlying this award as of the date of the Change of Control shall equal the value of one Share based on the closing price on the New York Stock Exchange on the last trading day prior to the date of the Change of Control multiplied by the sum of the number of RSUs awarded as set forth in the Notice to this Agreement plus the additional RSUs attributable to accrued dividend equivalents as of the date of the Change of Control;
(ii) Interest on this award shall accrue based on the prime rate (adjusted on the first day of each calendar quarter) as published in the Money Rates section in the Wall Street Journal from the date of the Change of Control until this award is distributed or forfeited; (iii) If the Participant remains employed with the Company or its successor until the Payment Date, this award, including interest, shall be paid to the Participant in an immediate lump sum in January of the third calendar year following the calendar year that includes the Grant Date, or as soon as practicable thereafter (but in no event later than March 1 5 of such calendar year);
(iv) If the Participant retired (as described in Section 2(d) of this Agreement) or terminated employment due to Disability prior to the Change of Control under Section 6(a) of this Agreement, the Participant shall immediately receive payment under this award upon such Change of Control; (v) If the Participant remains employed with the Company or its successor until his death or Disability which occurs after the Change of Control and before the last day of the Vesting Period, the Participant (or his estate or designated beneficiary) shall immediately receive payment under this award, including interest (if any), upon such death or Disability; (vi) If the Participant has a qualifying termination (as defined in Section 6(c) of this Agreement) before the last day of the Vesting Period or retires (as described in Section 2(d) of this Agreement) after the Change of Control, the Participant shall immediately receive payment under this award, including interest (if any), upon such termination; and (vii) In the event the Participant terminates employment before the end of the Vesting Period for any reason other than as described in Sections (iv), (v) or (vi) above, the Participant shall not receive payment of this award, including interest (if any), nor be entitled to payment for, any RSUs.
(b) Company Continues to Exist. If there is a Change of Control of the Company but the Company continues in existence and remains a publicly traded company on the New York Stock Exchange or the NASDAQ Stock Market, the RSUs will pay out upon the earliest to occur of the following:
(i) In accordance with the vesting provisions of Sections 2 of this Agreement; or (ii) If the Participant experiences a qualifying termination (as defined in Section 6(c) of this Agreement) during the two-year period following the Change of Control and the termination occurs during the Vesting Period, the Participant will be entitled to one hundred percent (100%) of the RSUs he would have received had he remained employed by the Company for the entire Period. Such RSUs will vest on the last day of the Vesting Period and the vested RSUs will be paid in Shares in January of the calendar year immediately following the last day of the Vesting Period or as soon as practicable thereafter (but in no event later than March 1 5 of the third calendar year following the calendar year that includes the Grant Date).
(c) Qualifying Termination. For purposes of Sections 6(a)(vi) and 6(b)(ii) of this Agreement, a qualifying termination means (i) an involuntary termination without Cause, (ii) for Change of Control Severance Plan participants, a voluntary termination of employment for Good Reason (as defined in the Change of Control Severance Plan) or (iii) an involuntary termination that qualifies for severance under the Ameren Corporation Severance Plan for Ameren Employees or the Ameren Corporation Severance Plan for Ameren Officers (as in effect immediately prior to the Change of Control).
(d) Termination in Anticipation of Change of Control. If a Participant qualifies for benefits as provided in the last sentence of Section 4.1 of the Change of Control Severance Plan, or if a Participant is not a Participant in the Change of Control Severance Plan but is terminated within six (6) months prior to the Change of Control and qualifies for severance benefits under the Ameren Corporation Severance Plan for Ameren Employees or the Ameren Corporation Severance Plan for Ameren Officers and the Participants termination of employment occurs before the calculated RSUs are paid, then the Participant shall receive (i) upon a Change of Control described in Section 6(a) of this Agreement, an immediate cash payout equal to the value of one Share based on the closing price on the New York Stock Exchange on the last trading day prior to the date of the Change of Control multiplied by the sum of the number of RSUs awarded as set forth in the Notice to this Agreement plus the additional RSUs attributable to accrued dividend equivalents or (ii) upon a Change of Control described in Section 6(b) of this Agreement, the payout provided for in Section 6(b) of this Agreement.
- 7. All Other Terminations. No distribution of any Shares will be made in the event of a termination of employment for any reason not otherwise described in Section 2 or 6, including a voluntary resignation (other than for Retirement), a termination for Cause or a termination without Cause (other than a qualifying termination), at any time prior to payout of the Shares.
- 8. Participant Obligations.
(a) Detrimental Conduct or Activity. If the Participant engages in conduct or activity that is detrimental to the Company, including but not limited to violating Sections 8(b) and 8(c) of this Agreement, after the RSUs are paid, or if the Company learns of the detrimental conduct or activity after the RSUs are paid, and such conduct occurred less than one year after the Participants employment with the Company ended, the following shall apply.
(i) If the Participant retired, the Participant shall not be entitled to receive payment of any Shares that would otherwise be payable to the Participant with respect to the last award of Restricted Stock Units granted to the Participant before his termination of employment due to retirement.
(ii) In all other cases, the Participant shall repay to the Company the equivalent of the value of Shares received as of the payment date determined under Section 3 of this Agreement within thirty (30) days of receiving a
demand from the Company for the repayment of the award.
(b) Confidentiality. Participants, by virtue of their position with the Company, have access to and/or receive trade secrets and other confidential and proprietary information about the Companys business that is not generally available to the public and which has been developed or acquired by the Company at considerable effort and expense (hereinafter Confidential Information). Confidential Information includes, but is not limited to, information about the Companys business plans and strategy, environmental strategy, legal strategy, legislative strategy, finances, marketing, management, operations, and/or personnel. The Participant agrees that, both during and after the Participants employment with the Company, the Participant:
(i) will only use Confidential Information in connection with the Participants duties and activities on behalf of or for the benefit of the Company; (ii) will not use Confidential Information in any way that is detrimental to the Company; (iii) will hold the Confidential Information in strictest confidence and take reasonable efforts to protect such Confidential Information from disclosure to any third party or person who is not authorized to receive, review or access the Confidential Information; (iv) will not use Confidential Information for the Participants own benefit or the benefit of others, without the prior written consent of the Company; and
(v) will return all Confidential Information to the Company within two business days of the Participants termination of employment or immediately upon the Companys demand to return the Confidential Information to the Company.
Notwithstanding the foregoing, in accordance with the Defend Trade Secrets Act of 201 6, the Participant will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If the Participant files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Participant may disclose the Companys trade secrets to the Participants attorney and use the trade secret information in the court proceeding if the Participant (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
(c) Non-Solicitation. The Participant agrees that, for one year from the end of the Participants employment, the Participant will not, directly or indirectly, on behalf of the Participant or any other person, company or entity:
(i) market, sell, solicit, or provide products or services competitive with or similar to products or services offered by the Company to any person, company or entity that: (i) is a customer or potential customer of the Company during the twelve (12) months prior to the Participants termination of employment and (ii) with which the Participant (A) had direct contact with during the twelve (12) months prior to the Participants termination of employment or (B) possessed, utilized or developed Confidential Information about during the twelve (1 2) months prior to the Participants termination of employment; (ii) raid, hire, solicit, encourage or attempt to persuade any employee or independent contractor of the Company, or any person who was an employee or independent contractor of the Company during the 24 months preceding the Participants termination, to leave the employ of, terminate or reduce the persons employment or business relationship with the Company; or (iii) interfere with the performance of any Company employee or independent contractors duties for the Company.
(d) Acknowledgments and Remedies. The Participant acknowledges and agrees that the Confidentiality and Non-Solicitation provisions set forth above are necessary to protect the Companys legitimate business interests, such as its Confidential Information, goodwill and customer relationships. The Participant acknowledges and agrees that a breach by the Participant of either the Confidentiality or Non- Solicitation provision will cause irreparable damage to the Company for which monetary damages alone will not constitute an adequate remedy. In the event of such breach or threatened breach, the Company shall be entitled as a matter of right (without being required to prove damages or furnish any bond or other security) to obtain a restraining order, an injunction, or other equitable or extraordinary relief that restrains any further violation or threatened violation of either the Confidentiality or Non-Solicitation provision, as well as an order requiring
the Participant to comply with the Confidentiality and/or Non-Solicitation provisions. The Companys right to a
restraining order, an injunction, or other equitable or extraordinary relief shall be in addition to all other rights and remedies to which the Company may be entitled to in law or in equity, including, without limitation, the right to recover monetary damages for the Participants violation or threatened violation of the Confidentiality and/or Non-Solicitation provisions. Finally, the Company shall be entitled to an award of attorneys fees incurred in connection with securing any relief hereunder and/or pursuant to a breach or threatened breach of the Confidentiality and/or Non-Solicitation provisions.
- 9. Nontransferability. RSUs awarded pursuant to this Agreement may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated (a Transfer) other than by will or by the laws of descent and distribution, except as provided in the Plan. If any Transfer, whether voluntary or involuntary, of RSUs is made, or if any attachment, execution, garnishment, or lien will be issued against or placed upon the RSUs, the Participants right to such RSUs will be immediately forfeited to the Company, and this Agreement will lapse.
Jo. Requirements of Law. The granting of RSUs under the Plan and this Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
- 11. Tax Withholding. The Company will have the power and the right to deduct or withhold, or require the Participant or the Participants beneficiary to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as result a of this Agreement.
- 12. Stock Withholding. With respect to withholding required upon any taxable event arising as a result of RSUs granted hereunder, the Company, unless notified by the Participant in writing within thirty (30) days prior to the taxable event that the Participant will satisfy the entire minimum tax withholding requirement by means of personal check or other cash equivalent, will satisfy the tax withholding requirement by withholding Shares having a Fair Market Value equal to (i) the total minimum statutory amount required to be withheld on the transaction, or (ii) such other amount as may be withheld pursuant to the Plan and such withholding would not cause adverse accounting consequences or costs. The Participant agrees to pay to the Company, its Affiliates and/or its Subsidiaries any amount of tax that the Company, its Affiliates and/or its Subsidiaries may be required to withhold as a result of the Participants participation in the Plan that cannot be satisfied by the means previously described.
- 13. Administration. This Agreement and the Participants rights hereunder are subjectto all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which will be binding upon the Participant.
- 14. Continuation of Employment. This Agreement does not confer upon the Participant any right to continuation of employment by the Company, its Affiliates, and/or its Subsidiaries,
nor will this Agreement interfere in any way with the Companys, its Affiliates, and/or its Subsidiaries right to terminate the Participants employment at any time.
- 15. Amendment to the Plan. The Plan is discretionary in nature and the Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect in any material way the Participants rights under this Agreement without the Participants written approval.
- 16. Amendment to this Agreement. The Company may amend this Agreement in any manner, provided that no such amendment may adversely affect in any material way the Participants rights hereunder without the Participants written approval except as otherwise permitted by the Plan.
- 17. Successor. All obligations of the Company under the Plan and this Agreement, with respect to the award will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
- 18. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding and enforceable.
- 19. Applicable Laws and Consent to Jurisdiction. The validity, construction, interpretation, and enforceability of this Agreement will be determined and governed by the laws of the State of Missouri without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction and agree that such litigation will be conducted in the federal or state courts of the State of Missouri.
- 20. Section 409A of the Code. This Agreement shall be interpreted in a manner that satisfies the requirements of Code Section 409A. The Committee may make changes in the terms or operation of the Plan and/or this Agreement (including changes that may have retroactive effect) deemed necessary or desirable to comply with Code Section 409A. The Company makes no representations or covenants that this award will comply with Section 409A of the Code.
Exhibit 21.1 SUBSIDIARIES OF AMEREN CORPORATION AT DECEMBER 31, 2019 State or Jurisdiction of Name Organization Ameren Corporation Missouri Ameren Development Company Missouri Missouri Central Railroad Company Delaware QST Enterprises Inc. Illinois Ameren EIP Investment, LLC Delaware Ameren Accelerator Investments, LLC Delaware AmerenEnergy Medina Valley Cogen, L.L.C. Illinois Ameren Transmission Company, LLC Delaware ATX East, LLC Delaware ATX Southwest, LLC Delaware Ameren Transmission Company of Illinois Illinois Ameren Services Company Missouri Ameren Illinois Company Illinois Union Electric Company (U/b/a Ameren Missouri) Missouri Fuelco LLC (50% interest) Delaware STARS Alliance, LLC (25% interest) Delaware Subsidiaries not included on this list, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of December 31, 2019.
Exhibit 23.1 CONSENT Of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form 5-3 (Nos. 333-218296 and 333-222108) and Form 5-8 (Nos.
333-133998, 333-191786, 333-196515, and 333-228019) ofAmeren Corporation ofour report dated February 28, 2020, relating to the financial statements financial statement schedules, and the effectiveness ofintemal control over financial reporting, which appears in this Form 10-K.
i/ PricewaterhouseCoopers LLP St. Louis, Missouri Febmary 2$, 2020
Exhibit 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on form S-3 (No. 333-222108-
- 02) ofUnion Electric Company ofour report dated February 28, 2020, relating to the financial statements and financial statement schedule, which appears in this Form 10-K.
/5/ PricewaterhouseCoopers LLP St. Louis, Missouri February 28, 2020
Exhibit 23.3 CONSENT Of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-222108-01) ofArneren Illinois Company of otir report dated Febrtiary 28, 2020, relating to the financial statements and financial statement schedule, which appears in this Form 10-K.
15/ PricewaterhotiseCoopers LLP St. Louis, I\lissouri February 28, 2020
Exhibit 24.1 POWER OF ATTORNEY WHEREAS, AMEREN CORPORATION, a Missouri corporation (herein referred to as the Company ). is required to file with the Securities and Exchange Commission, under the provisions ofthe Securities Exchange Act of 1934, as amended, its annual report on Form 10-K for the year ended December 31, 2019; and WHEREAS, each ofthe individuals identified below is a director ofthe Company.
NOW, THEREFORE, each ofthe undersigned hereby constitutes and appoints Warner L. Baxter and/or Michael L. Moehn and/or Chonda J. Nwamu the true and lawful attorneys-in-fact ofthe undersigned, for and in the name, place and stead ofthe undersigned, to affix the name ofthe undersigned to said Form 10-K and any amendments thereto, and, for the performance of the same acts, each with power to appoint in their place and stead and as their substitute, one or more attorneys-in-fact for the undersigned, with full power of revocation; hereby ratifying and confirming all that said attorneys-in-fact may do by virtue hereof IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 14th day ofFebruary, 2020 Cynthia J. Brinkley, Director /s/ Cynthia J. Brinkley Catherine S. Brune, Director /s/ Catherine S. Brune J. Edward Coleman, Director /s/ I. Edward Coleman Ward H. Dickson, Director /s/ Ward II Dickson Noelle K. Eder, Director /s/ Noelle K. Eder Ellen M. Fitzsimmons, Director /s/ Ellen M. Fitzsimmons Rafael Flores, Director /s/ Rafael Flores Richard J. ilarshman, Director /s/ Richard J. Ilarshman Craig S. Ivey, Director /s/ Craig S. Ivey James C. Johnson, Director /s/ James C. Johnson Steven H. Lipstein, Director /s/ Steven H. Lipstein Stephen R. Wilson, Director /s/ Stephen R. Wilson
Exhibit 24.2 POWER OF ATTORNEY WHEREAS, UNION ELECTRIC COMPANY, a Missouri corporation (herein referred to as the Company), is required to file with the Securities and Exchange Commission, under the provisions ofthe Securities Exchange Act of 1934. as amended, its annual report on Form 10-K for the year ended December 31, 2019; and WHEREAS, each ofthe individuals identified below is a director ofthe Company.
NOW, THEREFORE, each ofthe undersigned hereby constitutes and appoints Martin I. Lyons, Jr. and/or Michael L. Moehn and/or Chonda J. Nwamu the true and lawful attorneys-in-fact ofthe undersigned, for and in the name, place and stead ofthe undersigned, to affix the name ofthe undersigned to said Form 1 0-K and any amendments thereto, and, for the performance ofthe same acts, each with power to appoint in their place and stead and as their substitute, one or more attorneys-in-fact for the undersigned, with full power ofrevocatiom hereby ratifying and confinriing all that said attorneys-in-fact may do by virtue hereof TN WITNESS WHEREOF, the undersigned have hereunto set their hands this 14th day ofFebruaiy, 2020:
Mark C. Birk, Director /s/ Mark C. Birk Fadi M. Diya, Director /s/ Fadi M. Diya Chonda J. Nwamu, Director /s/ Chonda J. Nwamu
Exhibit 24.3 POWER OF ATTORNEY WHEREAS, AMEREN ILLINOIS COMPANY, an Illinois corporation (herein referred to as the Company), is required to file with the Securities and Exchange Commission, under the provisions ofthe Securities Exchange Act of 1934, as amended, its annual report on Form 1 0-K for the year ended December 3 ,
2019; and WFIEREAS, each ofthe individuals identified below is a director ofthe Company.
NOW, THEREFORE, each ofthe undersigned hereby constitutes and appoints Richard J. Mark and/or Michael L. Moehn and/or Chonda J. Nwamu the true and lawful aftoaneys-in-fact ofthe undersigned, for and in the name, place and stead ofthe undersigned, to affix the name ofthe undersigned to said Form 10-K and any amendments thereto, and, for the performance ofthe same acts, each with power to appoint in their place and stead and as their substitute, one or more attorneys-in-fact for the undersigned, with full power ofrevocation, hereby ratifying and confirming all that said attorneys-in-fact may do by virtue hereof N WITNESS WHEREOF, the undersigned have hereunto set their hands this 14th day ofFebruary, 2020:
Chonda J. Nwamu, Director /s/ Chonda J. Nwamu Theresa A. Shaw, Director /s/ Theresa A. Shaw David N. Wakeman, Director /s/ David N. Wakernan
Exhibit3l.1 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF AMEREN CORPORATION (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Warner L. Baxter, certify that:
- 1. I have reviewed this report on Form 10-K for the fiscal year ended December 3 1, 2019, ofArneren Corporation
- 2. Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report, 3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows ofthe registrant as of and for, the periods presented in this report:
- 4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-l5(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material infonnation relating to the registrant, includmg its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for extenial purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
- 5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over fmancial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a sigmficant role in the registrants internal control over financial reporting.
Date: February 28, 2020
/5/ Warner L. Baxter WarnerL. Baxter Chairman, President and ChiefExecutive Officer (Principal Executive Officer)
Exhibit 31.2 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF AMEREN CORPORATION (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
1 . I have reviewed this report on Form 10-K for the fiscal year ended December 3 1, 2019, ofAmeren Corporation:
- 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made. not misleading with respect to the period covered by this report,
- 3. Based on my knowledge, the financial statements, and other financial information included in this report. fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented this in report:
- 4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-l5(f) and l5d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls arid procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared:
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountmg principles:
c) Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation: and d) Disclosed in this report any change m the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting: and
- 5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over fmancial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial infonnation: and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 22, 2020
/5/ Michael L. Moehn Michael I. Moelm Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Exhibit 31.3 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF UNION ELECTRIC COMPANY (required by Section 302 ofthe Sarbanes-Oxicy Act of 2002)
I, Martin J. Lyons, Jr., certify that:
- 1. I have reviewed this report on Form 10-K for the fiscal year ended December 31, 2019, ofUnion Electric Company,
- 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report;
- 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of, and for, the periods presented in this report;
- 4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defmed in Exchange Act Rules 13a-l5(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and l5d-l5(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over fmancial reporting. or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for external purposes m accordance with generally accepted accounting prmciples; c) Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrant s fourth fiscal quarter in the case of an aimtial report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
- 5. The registrants other certifymg officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reportmg.
Date: February 28, 2020 Is! Martin I. Lyons, Jr.
Martin I. Lyons, Jr.
Chairman and President (Principal Executive Officer)
Exhibit 31.4 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF UNION ELECTRIC COMPANY (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
- 1. I have reviewed this report on Form 10-K for the fiscal year ended December 31, 2019, ofUnion Electric Company;
- 2. Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report
- 3. Based on my knowledge, the financial statements, and other financial infonnation included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of and for, the periods presented in this report;
- 4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-l5(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an aimual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
- 5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation ofinternal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 28, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chieffinancial Officer (Principal Financial Officer)
Exhibit 31.5 RULE 13a-14(a)/15d-14(a) CERTIFICATK)N OF PRINCIPAL EXECUTIVE OFFICER OF AIvifiREN ILLINOIS COMPANY (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Richard I. Mark, certify that:
- 1. I have reviewed this report on form 10-K for the fiscal year ended I)ecember 31, 2019, ofArneren Illinois Company,
- 2. Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of and for, the periods presented in this report;
- 4. The registrants other certifying officer and I are responsible for establishing and maintaining disciostire controls and procedures (as defined in Exchange Act Rules l3a-15(e) and l5d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and lsd-15(O) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material mformation relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in winch this report is being prepared:
b) Designed such internal control over financial reportmg, or caused such internal control over financial reporting to be designed under our stipervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles:
c) Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures. as ofthe end ofthc period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrants internal control over fmancial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected.
or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
- 5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofintemal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, sunnnarize and report financial information:
and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reportmg.
Date: February 28, 2020
/5/ Richard J. Mark Richard J. Mark Chairman and President (Principal Executive Officer)
Exhibit 31.6 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF AMEREN ILLINOIS COMPANY (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
- 1. I have reviewed this report on Form 10-K for the fiscal year ended December 3 1, 2019, ofAineren Illinois Company,
- 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report,
- 3. Based on my knowledge, the financial statements, and other financial infonnation included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of and for, the periods presented in this report;
- 4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and l5d-l5(e)) and internal control over financial reporting (as defmed in Exchange Act Rules 13a-15(f) and l5d-I5(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is bemg prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
- 5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 28, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and ChiefFinancial Officer (Principal Financial Officer)
Exhibit 32.1 SECTION 1350 CERTIFICATION OF AMEREN CORPORATION (required by Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the report on Form 10-K for the fiscal year ended December 31, 2019, ofAineren Corporation (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof(the form 10-K), each undersigned officer ofthe Registrant does hereby certif, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 ofthe Sarbanes-Oxley Act of2002, that:
(1) The Form 10-K fully complies with the requirements ofSection 13(a) or 15(d) ofthe Securities Exchange Act of 1934 15 U.S.C. 78m or 78o(d));
( and (2) The information contained in the Form I 0-K fairly presents, in all material respects, the financial condition and results of operations ofthe Registrant.
Date: February 28, 2020
/5/ Warner L. Baxter Warner L. Baxter Chairman, President and Chief Executive Officer (Principal Executive Officer)
Is! Michael L. Moehn Michael L. Moehn Executive Vice President and ChiefFinancial Officer (Principal Financial Officer)
Exhibit 32.2 SECTION 1350 CERTIFICATION OF UNION ELECTRIC COMPANY (required by Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the report on Form 10-K for the fiscal year ended December 31, 2019. ofUnion Electric Company (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof(the Form 10-K), each undersigned officer ofthe Registrant does hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 ofthe Sarbanes-Oxley Act of2002, that:
(1) The Form 10-K ftilly complies with the requirements ofSection 13(a) or 15(d) ofthe Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) The infonnation contained in the form 10-K fairly presents, in all material respects, the financial condition and results ofoperations ofthe Registrant.
Date: February 28, 2020
/5/ Martin I. Lyons, Jr.
Martin J. Lyons, Jr.
Chairman and President (Principal Executive Officer)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and ChiefFmancial Officer (Principal Financial Officer)
Exhibit 32.3 SECTION 1350 CERTIFICATION OF AMEREN ILLINOIS COMPANY (required by Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the report on Fonu 10-K for the fiscal year ended December 31, 2019, ofArneren Illinois Company (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof(the form 10-K), each undersigned officer ofthe Registrant does hereby certify, pursuant to 1$ U.S.C. §1350, as adopted pursuant to §906 ofthe Sarbanes-Oxley Act of2002, that:
(1) The Form 10-K fully complies with the requirements ofSection 13(a) or 15(d) ofthe Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d))
and (2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results ofoperations ofthe Registrant.
Date: February 28, 2020
/5/ Richard J. Mark Richard J. Mark Chairman and President (Principal Executive Officer)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chieffinancial Officer (Principal Financial Officer)