ML20353A368
| ML20353A368 | |
| Person / Time | |
|---|---|
| Site: | Callaway  |
| Issue date: | 06/30/2020 |
| From: | Ameren Missouri |
| To: | Office of Nuclear Security and Incident Response |
| Shared Package | |
| ML20353A355 | List: |
| References | |
| ULNRC-06624 | |
| Download: ML20353A368 (90) | |
Text
Enclosure 10 to ULNRC-06624 1O-Q FILED PERIOD 06/30/2020
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM I 0-Q Quarterly report pursuantto Section 13 or 15(d) ofthe Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2020 OR D Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to v_
1meren MISSOURI Ameren ILLINOIS Exact name of registrant as specified in its charter; Commission State of Incorporation; IRS Employer File Number Address and Telephone Number Identification No.
I -1 4756 Ameren Corporation 43-1723446 (Missouri Corporation)
I 901 Chouteau Avenue St Louis, Missouri 63103 (314) 621-3222 1-2967 Union Electric Company 43-0559760 (Missouri Corporation) 1901 Chouteau Avenue St. Louis, Missouri 63103 (314) 621-3222 1-3672 Ameren Illinois Company 37-0211380 (Illinois Corporation) 1 0 Executive Drive Collinsville, Illinois 62234 (618) 343-8150 Securities Registered Pursuant to Section 1 2(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 par value per share AEE New York Stock Exchange
Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 1 5(d) of the Securities Exchange Act of 1 934 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 LI Ameren Illinois Company Yes N No LI Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-I ( 232.405 of this 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 Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 1 2b-2 of the Exchange Act.
Ameren Corporation Large accelerated filer Accelerated filer LI Non-accelerated filer LI Smaller reporting company LI Emerging growth company LI Union Electric Company Large accelerated filer LI Accelerated filer LI Non-accelerated filer Smaller reporting company LI Emerging growth company LI Ameren Illinois Company Large accelerated filer LI Accelerated filer LI Non-accelerated filer Smaller reporting company LI Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 1 3(a) of the Exchange Act.
Ameren Corporation Union Electric Company Ameren Illinois Company LI Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Ameren Corporation Yes No Union Electric Company Yes No Ameren Illinois Company Yes No The number of shares outstanding of each registrants classes of common stock as of July 31 2020, was as follows:
Registrant Title of each class of common stock Shares outstanding Ameren Corporation Common stock, $0.01 par value per share 247,079,529 Union Electric Company Common stock, $5 par value per share, held by Ameren Corporation 102,123,834 Ameren Illinois Company Common stock, no par value, held by Ameren Corporation 25,452,373 This combined Form 10-Q is separately filed by Ameren Corporation, Union Electric Company, and Ameren Illinois Company. Each registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information.
TABLE OF CONTENTS Page Glossary of Terms and Abbreviations Forward-looking Statements 1 PART I. Financial Information Item 1. Financial Statements (Unaudited) 4 Ameren Corporation 4 Consolidated Statement of Income and Comprehensive Income 4 Consolidated Balance Sheet 5 Consolidated Statement of Cash Flows Consolidated Statement of Shareholders Equity Union Electric Company (dibla Ameren Missouri)
Statement of Income BalanceSheet Statement of Cash Flows 10 Statement of Shareholders Equity 11 Ameren Illinois Company (dlbla Ameren Illinois) 12 Statement of Income 12 Balance Sheet 13 Statement of Cash Flows 14 Statement of Shareholders Equity Note I Summary of Significant Accounting Policies Note 2. Rate and Regulatory Matters Note 3. Short-term Debt and Liquidity Note 4. Long-term Debt and Equity Financings 22 Note 5. Other Income, Net 22 Note 6. Derivative Financial Instruments 22 Note 7. Fair Value Measurements 22 Note 8. Related-party Transactions 21 Note 9. Commitments and Contingencies 22 Note 10. Callaway Energy Center Note I I Retirement Benefits 22 Note 12. Income Taxes 22 Note 13. Supplemental Information Note 14. Segment Information 22 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures 70 PART II. Other Information Item 1. Legal Proceedings Item IA. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 72 Item 6. Exhibits 72 Signatures 74
GLOSSARY OF TERMS AND ABBREVIATIONS We use the words our, we or us with respect to certain information that relates to Ameren, Ameren Missouri, and Ameren Illinois, collectively. When appropriate, subsidiaries of Ameren Corporation are named specifically as their various business activities are discussed. Refer to the Form 1 0-K for a complete listing of glossary terms and abbreviations. Only new or significantly changed terms and abbreviations are included below.
COVID-19 pandemic the global pandemic resulting from the outbreak of the 201 9 novel coronavirus, which causes coronavirus disease 2019 (COVID-1 9).
Deferredpaymentarrangement a payment option that allows certain Ameren Missouri and Ameren Illinois retail customers to pay a utility bill balance over a period oftime, generally over a period of up to 12 months. On a temporary basis through January 31, 2021, Ameren Illinois residential retail customers may electto pay for a utility bill balance over a period of up to 18 months, while certain residential retail customers may elect to pay over a period of up to 24 months.
Form 10-K The combined Annual Report on Form 10-K forthe year ended December 31, 2019, filed by the Ameren Companies with the SEC.
Net energy costs Net energy costs, as defined in the FAC, which include fuel, certain fuel additives, ash disposal costs and revenues, emission allowances, and purchased power costs, including transportation, net of off-system sales and capacity revenues. Substantially all transmission revenues and charges are excluded from net energy costs. The MoPSCs March 2020 electric rate order changed the FAC to include certain fuel additives and ash disposal costs and revenues, as of April 1 2020.,
QTD three months ended June 30.
QTD YoY three months ended June 30, 2020, compared with the year-ago period.
YTD six months ended June 30.
YTD YoY six months ended June 30, 2020, compared with the year-ago period.
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, projections, strategies, objectives, events, conditions, and financial performance. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of I 995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed within Risk Factors in the Form 1 0-K and in this report, and elsewhere in this report and in our other filings 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 potential rehearing of the May 2020 FERC order determining the allowed base ROE under the MISO tariff, the Notice of Inquiry issued by the FERC in March 2019 regarding its allowed base ROE policy, the Notice of Proposed Rulemaking issued by the FERC in March 2020, the July 2020 appeal filed by Ameren Missouri, Ameren Illinois, and ATXI challenging the FERCs rehearing denials in the transmission formula rate revision cases, Ameren Illinois May 2020 annual electric energy-efficiency formula rate update, Ameren Illinois April 2020 annual electric distribution formula rate update filing, and Ameren Illinois natural gas delivery service regulatory rate review filed with the ICC in February 2020;
. the length and severity ofthe COVID-19 pandemic, and its impacts on our business continuity plans and our results ofoperations, financial position, and liquidity, including but not limited to changes in customer demand resulting in changes to sales volumes, customers payment for our services and their use of deferred payment arrangements, future regulatory or legislative actions that could require suspension of customer disconnections and/or late fees, among other things, for an extended period of time, the health and welfare of our workforce and contractors, supplier disruptions, delays in the completion of capital or other construction projects, which could impact our planned capital expenditures and expected planned rate base growth, Ameren Missouris ability to recover any lost revenues or incremental costs, our ability to meet customer energy-efficiency program goals and earn performance incentives related to those programs, increased data security risks as a result of the transition to remote working arrangements for a significant portion of our workforce, and our ability to access the capital markets on reasonable terms and when needed;
. the effect and duration 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 of any customer rate caps pursuant to Ameren Missouris election to use the PISA, including an extension of use beyond 2023, if requested by Ameren Missouri and approved by the M0PSC;
. the effects of changes 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, electric vehicles, electrification of various industries, energy storage, and private generation sources, which generate electricity at the site of consumption and are becoming more cost-competitive;
. the effectiveness of Ameren Missouris customer energy-efficiency programs and the related revenues and performance incentives earned under its MEEIA programs;
. Ameren Illinois ability to achieve the performance standards applicable to its electric distribution business and the FEJA electric customer energy-efficiency 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 of fuel, 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 natural 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 fuel, or lack of adequate inventories of fuel, including nuclear fuel assemblies from the one NRC-licensed supplier of Ameren Missouris Callaway Energy Center assemblies;
. the cost and availability of transmission 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; business and economic conditions, which have been affected by, and will be affected by the length and severity of, the COVID-19 pandemic, including the impact of such conditions on interest rates; disruptions of the capital markets, deterioration in credit metrics of the Ameren Companies, or other events that may have an adverse effect on the cost or availability of capital, including short-term credit and liquidity;
. the actions of credit rating agencies and the effects of such actions, including any impacts on our credit ratings that may result from the economic conditions of the COVID-1 9 pandemic;
. the inability of our counterparties to meet their obligations with respect to contracts, credit agreements, and financial instruments;
. the impact of weather conditions and other natural phenomena on us and our customers, including the impact of system outages;
. the construction, installation, performance, and cost recovery of generation, 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 ofAmeren Missouris Callaway Energy Center, including planned and unplanned outages, and decommissioning costs;
. Ameren 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, C02 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 of certain of Ameren Missouris energy centers, increase our operating costs or investment requirements, result in an impairment of our assets, cause us to sell our assets, reduce our customers demand for electricity or natural gas, or otherwise have a negative financial effect; the impact of complying with renewable energy standards in Missouri and Illinois and with the zero emission standard in Illinois; Ameren Missouris ability to acquire wind and other renewable energy generation facilities and recover its cost of investment and related return in a timely manner, which is affected by the ability to obtain all necessary project approvals; the ability of developers to meet contractual commitments and timely complete projects, which is dependent upon the availability of necessary materials and equipment, including those that are affected by the disruptions in the global supply chain caused by the COVID-1 9 pandemic, 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 of wind 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; 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 of negative opinions of us or our utility services that our customers, investors, legislators, or regulators may have or develop, which could result from a variety of factors, including failures in system reliability, failure to implement our investment plans or to protect 2
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 of factors, 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.
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PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS.
AMEREN CORPORATION CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (Unaudited) (In millions, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating Revenues:
Electric $ 1,237 $ 1,218 $ 2,357 $ 2400 Natural gas 161 161 481 535 Total operating revenues 1,398 1,379 2,838 2,935 Operating Expenses:
Fuel 119 102 259 262 Purchased power 109 136 243 292 Natural gas purchased for resale 42 44 149 205 Other operations and maintenance 384 450 822 867 Depreciation and amortization 271 249 526 497 Taxes other than income taxes 119 118 244 244 Total operating expenses 1,044 1,099 2,243 2,367 Operating Income 354 280 595 568 Other Income, Net 48 36 69 65 Interest Charges 108 97 201 194 Income Before Income Taxes 294 219 463 439 Income Taxes 50 39 71 66 Net Income 244 180 392 373 Less: Net Income Attributable to Noncontrolling Interests I 1 3 3 Net Income Attributable to Ameren Common Shareholders $ 243 $ 179 $ 389 $ 370 Netlncome $ 244 $ 180 $ 392 $ 373 Other Comprehensive Income, Net of Taxes Pension and other postretirement benefit plan activity, net of income taxes of
$, $, $, and $, respectively I 1 Comprehensive Income 244 180 393 374 Less: Comprehensive Income Attributable to Noncontrolling Interests I I 3 3 Comprehensive Income Attributable to Ameren Common Shareholders $ 243 $ 179 $ 390 $ 371 Earnings per Common Share Basic $ 0.99 $ 0.73 $ 1.58 $ I .51 Earnings per Common Share Diluted $ 0.9$ $ 0.72 $ 1.57 $ 1.50 Weighted-average Common Shares Outstanding Basic 246.9 245.6 246.7 245.3 Weighted-average Common Shares Outstanding Diluted 247.9 247.2 248.0 246.8 The accompanying notes are an integral part of these consolidated financial statements.
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AMEREN CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) (In millions, except per share amounts)
June 30, December 31, 2020 2019 ASSETS Current Assets:
Cash and cash equivalents $ 8 $ 16 Accounts receivable trade (less allowance for doubtful accounts of $25 and $1 7, respectively) 486 393 Unbilled revenue 323 278 Miscellaneous accounts receivable 76 63 Inventories 514 494 Current regulatory assets 82 69 Other current assets 131 118 Total current assets 1,620 1,431 Property, Plant, and Equipment, Net 25,081 24,376 Investments and Other Assets:
Nuclear decommissioning trust fund 854 847 Goodwill 411 411 Regulatory assets 1,133 992 Other assets 917 876 Total investments and other assets 3,315 3,126 TOTAL ASSETS $ 30,016 $ 28,933 LIABILITIES AND EQUITY Current Liabilities:
Current maturities of long-term debt $ 357 $ 442 Short-term debt 120 440 Accounts and wages payable 616 874 Taxes accrued 142 37 Interest accrued 118 94 Customer deposits 126 111 Current regulatory liabilities 147 164 Other current liabilities 374 343 Total current liabilities 2,000 2,505 Long-term Debt, Net 10,171 8,915 Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net 3,034 2,919 Regulatory liabilities 4,933 4,887 Asset retirement obligations 639 638 Pension and other postretirement benefits 414 401 Other deferred credits and liabilities 456 467 Total deferred credits and other liabilities 9,476 9,312 Commitments and Contingencies (Notes 2, 9, and 10)
Ameren Corporation Shareholders Equity:
Common stock, $01 par value, 400.0 shares authorized shares outstanding of 247.1 and 246.2, respectively 2 2 Other paid-in capital, principally premium on common stock 5,716 5,694 Retained earnings 2,525 2,380 Accumulated other comprehensive loss (16) (17)
Total Ameren Corporation shareholders equity 8,227 8,059 Noncontrolling Interests 142 142 Total equity 8,369 8,201 TOTAL LIABILITIES AND EQUITY $ 30,016 $ 28,933 The accompanying notes are an integral part of these consolidated financial statements.
5 AMEREN CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In millions)
Six Months Ended June 30, 2020 2019 Cash Flows From Operating Activities:
Net income $ 392 $ 373 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 532 494 Amortization of nuclear fuel 45 33 Amortization of debt issuance costs and premium/discounts 11 9 Deferred income taxes and investment tax credits, net 68 54 Allowance for equity funds used during construction (13) (13)
Stock-based compensation costs 11 10 Other 5 (5)
Changes in assets and liabilities:
Receivables (161) (46)
Inventories (19) 50 Accounts and wages payable (193) (199)
Taxes accrued 108 77 Regulatory assets and liabilities (87) 4 Assets, other (9) (11)
Liabilities, other 9 63 Pension and other postretirement benefits (5) (14)
Net cash provided by operating activities 694 879 Cash Flows From Investing Activities:
Capital expenditures (1,228) (1,125)
Nuclear fuel expenditures (56) (25)
Purchases of securities nuclear decommissioning trust fund (153) (96)
Sales and maturities of securities nuclear decommissioning trust fund 121 95 Purchase of bonds (97)
Proceeds from sale of remarketed bonds 97 Other I (3)
Net cash used in investing activities (1,315) (1,154)
Cash Flows From Financing Activities:
Dividends on common stock (244) (233)
Dividends paid to noncontrolling interest holders (3) (3)
Short-term debt, net (320) 401 Maturities of long-term debt (85) (329)
Issuances of long-term debt 1,263 450 Issuances of common stock 27 37 Employee payroll taxes related to stock-based compensation (20) (29)
Debt issuance costs (10) (4)
Net cash provided by financing activities 608 290 Net change in cash, cash equivalents, and restricted cash (13) 15 Cash, cash equivalents, and restricted cash at beginning of year 176 107 Cash, cash equivalents, and restricted cash at end of period $ 163 $ 122 The accompanying notes are an integral part of these consolidated financial statements.
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AMEREN CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (Unaudited) (In millions, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Common Stock $ 2$ 2$ 2 $ 2 Other Paid-in Capital:
Beginning of period 5,695 5,625 5,694 5,627 Shares issued under the DRPIus and 401(k) plan 14 18 27 37 Stock-based compensation activity 7 6 (5) (15)
Other paid-in capital, end of period 5,716 5,649 5,716 5,649 Retained Earnings:
Beginning of period 2,404 2,099 2,380 2,024 Net income attributable to Ameren common shareholders 243 179 389 370 Dividends (122) (117) (244) (233)
Retained earnings, end of period 2,525 2,161 2,525 2,161 Accumulated Other Comprehensive Income (Loss):
Deferred retirement benefit costs, beginning of period (16) (21) (17) (22)
Change in deferred retirement benefit costs I I Deferred retirement benefit costs, end of period (16) (21) (16) (21)
Total accumulated other comprehensive loss, end of period (16) (21) (16) (21)
Total Ameren Corporation Shareholders Equity $ 8,227 $ 7,791 $ 8,227 $ 7,791 Noncontrolling Interests:
Beginning of period 142 142 142 I 42 Net income attributable to noncontrolling interest holders I 1 3 3 Dividends paid to noncontrolling interest holders (1) (1) (3) (3)
Noncontrolling interests, end of period 142 142 142 142 Total Equity $ 8,369 $ 7,933 $ 8,369 $ 7,933 Common stock shares outstanding at beginning of period 246.9 245.6 246.2 244.5 Shares issued under the DRPlus and 401 (k) plan 0.2 0.2 0.4 0.5 Shares issued for stock-based compensation 0.5 0.8 Common stock shares outstanding at end of period 247.1 245.8 247.1 245.8 Dividends per common share $ 0.4950 $ 0.4750 $ 0.9900 $ 0.9500 The accompanying notes are an integral part of these consolidated financial statements.
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UNION ELECTRIC COMPANY (d/bla AMEREN MISSOURI)
STATEMENT OF INCOME (Unaudited) (In millions)
Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating Revenues; Electric $ 771 $ 773 $ 1,402 $ 1,477 Natural gas 21 25 70 79 Total operating revenues 792 798 1,472 1,556 Operating Expenses:
Fuel 119 102 259 262 Purchased power 37 60 76 111 Natural gas purchased for resale 6 8 24 35 Other operations and maintenance 202 254 441 478 Depreciation and amortization 155 139 294 279 Taxes other than income taxes 83 83 162 160 Total operating expenses 602 646 1,256 1,325 Operating Income 190 152 216 231 Other Income, Net 25 16 29 28 Interest Charges 50 45 90 92 Income Before Income Taxes 165 123 155 167 Income Taxes 12 15 11 19 Net Income 153 108 144 148 Preferred Stock Dividends I 1 2 2 Net Income Available to Common Shareholder $ 152 $ 107 $ 142 $ 146 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
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UNION ELECTRIC COMPANY (dibla AMEREN MISSOURI)
BALANCE SHEET (Unaudited) (In millions, except per share amounts)
June 30, December 31, 2020 2019 ASSETS Current Assets:
Cash and cash equivalents $ 9 Accounts receivable trade (less allowance for doubtful accounts of $9 and $7, respectively) 216 164 Accounts receivable affiliates 16 30 Unbilled revenue 213 139 Miscellaneous accounts receivable 51 33 Inventories 406 373 Other current assets 91 66 Total current assets 993 814 Property, Plant, and Equipment, Net 12,844 12,635 Investments and Other Assets:
Nuclear decommissioning trust fund $54 847 Regulatory assets 304 285 Otherassets 352 356 Total investments and other assets I ,51 0 1,488 TOTAL ASSETS $ 15,347 $ 14,937 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities:
Current maturities of long-term debt $ 7 $ 92 Short-term debt 79 234 Borrowings from money pool 65 Accounts and wages payable 246 465 Accounts payable affiliates 69 52 Taxes accrued 121 24 Interest accrued 63 48 Current asset retirement obligations 53 53 Current regulatory liabilities 64 62 Other current liabilities 120 96 Total current liabilities $87 I 126 Long-term Debt, Net 4,560 4,098 Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net 1,673 1,612 Regulatory liabilities 2,922 2,937 Asset retirement obligations 635 634 Pension and other postretirement benefits 141 141 Other deferred credits and liabilities 38 40 Total deferred credits and other liabilities 5,409 5,364 Commitments and Contingencies (Notes 2, 8, 9, and 10)
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 2,027 Preferred stock $0 80 Retained earnings 1,873 1,731 Total shareholders equity 4,491 4,349 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 15,347 $ 14,937 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
9 UNION ELECTRIC COMPANY (dlbla AMEREN MISSOURI)
STATEMENT OF CASH FLOWS (Unaudited) (In millions)
Six Months Ended June 30, 2020 2019 Cash Flows From Operating Activities:
Net income $ 144 $ 148 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 300 277 Amortization of nuclear fuel 45 33 Amortization of debt issuance costs and premium/discounts 3 2 Deferred income taxes and investment tax credits, net 14 (10)
Allowance for equity funds used during construction (8) (8)
Other 6 5 Changes in assets and liabilities:
Receivables (149) (83)
Inventories (32) 22 Accounts and wages payable (175) (158)
Taxes accrued 151 I 09 Regulatory assets and liabilities (13) 7 Assets, other 15 (9)
Liabilities, other (10) 28 Pension and other postretirement benefits I (2)
Net cash provided by operating activities 292 361 Cash Flows From Investing Activities:
Capital expenditures (516) (495)
Nuclear fuel expenditures (56) (25)
Purchases of securities nuclear decommissioning trust fund (153) (96)
Sales and maturities of securities nuclear decommissioning trust fund 121 95 Purchase of bonds (97)
Proceeds from sale of remarketed bonds 97 Net cash used in investing activities (604) (521)
Cash Flows From Financing Activities:
Dividends on common stock (100)
Dividends on preferred stock (2) (2)
Short-term debt, net (155) 150 Money pool borrowings, net 65 Maturities of long-term debt (85) (329)
Issuances of long-term debt 465 450 Debt issuance costs (4) (4)
Net cash provided by financing activities 284 165 Net change in cash, cash equivalents, and restricted cash (28) 5 Cash, cash equivalents, and restricted cash at beginning of year 39 8 Cash, cash equivalents, and restricted cash at end of period $ 11 $ 13 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
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UNION ELECTRIC COMPANY (dibla AMEREN MISSOURI)
STATEMENT OF SHAREHOLDERS EQUITY (Unaudited) (In millions)
Three Months Ended Six Months Ended June30, June30, 2020 2019 2020 2019 CommonStock $ 511 $ 511 $ 511 $ 511 Other Paid-in Capital 2,027 1 903 2,027 1,903 Preferred Stock 80 80 80 80 Retained Earnings:
Beginning ofperiod 1,721 1,774 1,731 1,735 Netincome 153 108 144 148 Common stock dividends (100) (100)
Preferred stock dividends (1)- (1) (2) (2)
Retained earnings, end ofperiod 1,873 1,781 1,873 1,781 Total Shareholders Equity $ 4,491 $ 4,275 $ 4,491 $ 4,275 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
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AMEREN ILLINOIS COMPANY (dlb/a AMEREN ILLINOIS)
STATEMENT OF INCOME (Unaudited) (In millions)
Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating Revenues:
Electric $ 427 $ 411 $ 879 $ 853 Natural gas 140 136 411 456 Total operating revenues 567 547 1,290 1,309 Operating Expenses:
Purchased power 76 78 174 183 Natural gas purchased for resale 36 36 125 170 Other operations and maintenance I 82 196 381 387 Depreciation and amortization I 07 101 214 202 Taxes other than income taxes 32 32 74 77 Total operating expenses 433 443 968 1,019 Operating Income I 34 I 04 322 290 Other Income, Net 17 15 28 26 Interest Charges 38 36 77 73 Income Before Income Taxes I 13 83 273 243 Income Taxes 29 20 68 59 Net Income 84 63 205 184 Preferred Stock Dividends 2 2 Net Income Available to Common Shareholder $ 83 $ 62 $ 203 $ 182 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
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AMEREN ILLINOIS COMPANY (dibla AMEREN ILLINOIS)
BALANCE SHEET (Unaudited) (In millions)
June 30, December 31, 2020 2019 ASSETS Current Assets:
Cash and cash equivalents $ 2 $
Accounts receivable trade (less allowance for doubtful accounts of $16 and $1 0, respectively) 256 215 Accounts receivable affiliates 22 28 Unbilledrevenue 110 139 Miscellaneous accounts receivable 21 25 Inventories 108 121 Current regulatory assets 50 57 Other current assets 35 29 Total current assets 604 614 Property and Plant, Net 10,559 10,083 Investments and Other Assets:
Goodwill 411 411 Regulatory assets 809 694 Otherassets 419 383 Total investments and other assets I ,639 1,488 TOTALASSETS $ 12,802 $ 12,185 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities:
Short-term debt $ 41 $ 53 Accounts and wages payable 293 299 Accounts payable affiliates 41 82 Customer deposits 94 77 Current environmental remediation 48 42 Current regulatory liabilities 70 84 Other current liabilities 209 207 Total current liabilities 796 844 Long-term Debt, Net 3,576 3,575 Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net I ,277 1,224 Regulatory liabilities 1,906 1,849 Pension and other postretirement benefits 225 214 Environmental remediation 73 87 Other deferred credits and liabilities 264 260 Total deferred credits and other liabilities 3,745 3,634 Commitments and Contingencies (Notes 2, 8 and 9)
Shareholders Equity:
Common stock, no par value, 45.0 shares authorized 25.5 shares outstanding Other paid-in capital 2,538 2,188 Preferred stock 62 62 Retained earnings 2,085 1,882 Total shareholders equity 4,685 4,132 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 12,802 $ 12,185 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
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AMEREN ILLINOIS COMPANY (dibla AMEREN ILLINOIS)
STATEMENT OF CASH FLOWS (Unaudited) (In millions)
Six Months Ended June 30, 2020 2019 Cash Flows From Operating Activities:
Netincome $ 205 $ 184 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 214 201 Amortization of debt issuance costs and premium/discounts 6 6 Deferred income taxes and investment tax credits, net 40 43 Other (5)
Changes in assets and liabilities:
Receivables (13) 35 Inventories 13 28 Accounts and wages payable (12) (38)
Taxes accrued (32) (22)
Regulatory assets and liabilities (65) 1 Assets, other (15) 1 Liabilities, other 12 24 Pension and other postretirement benefits (8) (11)
Net cash provided by operating activities 340 452 Cash Flows From Investing Activities:
Capital expenditures (661) (556)
Other 2 (2)
Net cash used in investing activities (659) (558)
Cash Flows From Financing Activities:
Dividends on preferred stock (2) (2)
Short-term debt, net (12) 127 Capital contribution from parent 350 Net cash provided by financing activities 336 125 Net change in cash, cash equivalents, and restricted cash 17 19 Cash, cash equivalents and restricted cash at beginning ofyear 125 80 Cash, cash equivalents, and restricted cash at end of period $ 142 $ 99 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
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AMEREN ILLINOIS COMPANY (dibla AMEREN ILLINOIS)
STATEMENT OF SHAREHOLDERS EQUITY (Unaudited) (In millions)
Three Months Ended Six Months Ended June30, June30, 2020 2019 2020 2019 Common Stock $ $ $ $
Other Paid-in Capital:
Beginning ofperiod 2,288 2,173 2,188 2,173 Capital contribution from parent 250 350 Other paid-in capital, end of period 2,538 2,173 2,538 2,173 Preferred Stock 62 62 62 62 Retained Earnings:
Beginning ofperiod 2,002 1,659 1,882 1,539 Netincome 84 63 205 184 Preferred stock dividends (1) (1) (2) (2)
Retainedearnings,endofperiod 2,085 1,721 2,085 1,721 Total Shareholders Equity $ 4,685 $ 3,956 $ 4,685 $ 3,956 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
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AMEREN CORPORATION (Consolidated)
UNION ELECTRIC COMPANY (dlbla Ameren Missouri)
AMEREN ILLINOIS COMPANY (dlbla Ameren Illinois)
COMBINED NOTES TO FINANCIAL STATEMENTS (Unaudited)
June 30, 2020 NOTE I -
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.
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. Amerens principal subsidiaries are listed below. Ameren 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 Illinois Company, doing business as Ameren Illinois, operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois.
. AIXI operates a FERC rate-regulated electric transmission business in the MISO.
The COVID-19 pandemic continues to be a rapidly evolving situation. In the first six months of 2020, we experienced a net decrease in our sales volumes, an increase in our accounts receivable balances that were past due or that were a part of a deferred payment arrangement, and a decline in our cash collections from customers. The continued effect of the COVID-1 9 pandemic on our results of operations, financial position, and liquidity in subsequent periods will depend on its severity and longevity, future regulatory or legislative actions with respect thereto, and the resulting impact on business, economic, and capital market conditions. Shelter-in-place orders began taking effect in our service territories in mid-March 2020.
These orders generally required individuals to remain at home and precluded or limited the operation of businesses that were deemed nonessential.
While our business operations were deemed essential and were not directly impacted by the shelter-in-place orders, approximately 65% of our workforce transitioned to remote working arrangements in mid-March. In early June, a small portion of our workforce began the process of returning to our work locations under a phased approach. In mid-May 2020, shelter-in-place orders effective in our service territories began to be relaxed, with fewer restrictions on social activities and nonessential businesses beginning to reopen. However, certain restrictions remain in place that limit individual activities and the operation of nonessential businesses. Additional restrictions may be imposed in the future. We continue to monitor the impacts the pandemic is having on our businesses, including but not limited to potential impacts on our liquidity and financing plans; demand for residential, commercial, and industrial electric and natural gas services; more flexible payment plans for customers; the timing and extent to which recovery of incremental costs and forgone late fee revenues at Ameren Missouri is allowed by the MoPSC; changes in our ability to disconnect customers for nonpayment; bad debt expense; supply chain operations; the availability of our employees and contractors; counterparty credit; capital construction; infrastructure operations and maintenance; energy-efficiency programs; and pension valuations. While the revenues from Ameren Illinois electric distribution business, residential and small nonresidential customers of Ameren Illinois natural gas distribution business, and Ameren Illinois and ATXIs electric transmission businesses are decoupled from changes in sales volumes, earnings at Ameren Missouri and, with respect to large nonresidential natural gas customers, at Ameren Illinois, are exposed to such changes. Regarding bad debt expense, Ameren Illinois electric distribution and natural gas distribution businesses have bad debt riders, which provide for recovery of bad debt write-offs, net of any subsequent recoveries. In 2020, Ameren Illinois electric bad debt rider provides for the recovery of bad debt expense. However, Ameren Missouri does not have a bad debt rider or regulatory tracking mechanism and its earnings are exposed to increases in bad debt expense, which could result in higher bad debt write-offs. Our customers payment for our services has been adversely affected by the COVID-19 pandemic, resulting in a decrease to our cash flow from operations. As of June 30, 2020, accounts receivable balances that were 30 days or greater past due or that were a part of a deferred payment arrangement represented 26%, 1 9%, and 33%, or $132 million, $42 million, and $90 million, of Amerens, Ameren Missouris, and Ameren Illinois Accounts receivable trade before allowance for doubtful accounts, respectively. As of June 30, 2019, these percentages were I 7%, 1 1%, and 25%, or $83 million, $24 million, and $59 million, for Ameren, Ameren Missouri, and Ameren Illinois, respectively.
For information regarding Ameren Missouris and Ameren Illinois suspension and subsequent reinstatement of customer disconnections and late fee charges for nonpayment, see Note 2 Rate and Regulatory Mailers below.
The Coronavirus Aid, Relief, and Economic Security Act is a federal law enacted in March 2020. Provisions in the act include temporary changes to the utilization of net operating losses, deferral of the payment ofthe employer portion of Social Security taxes, and additional funding for customer energy assistance, among other things. Ameren has implemented certain provisions of the act, and is currently 16
evaluating other provisions of the act. As of June 30, 2020, there was no material impact to Amerens, Ameren Missouris, and Ameren Illinois financial statements as a result of the act.
Amerens financial statements are prepared on a consolidated basis and therefore include the accounts of its majority-owned subsidiaries. All intercompany transactions have been eliminated. 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 statement of our results. The preparation of financial statements in conformity with GAAP requires 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 of financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The results of operations of an interim period may not give a true indication of results that may be expected for a full year. These financial statements should be read in conjunction with the financial statements and accompanying notes included in the Form 10-K.
Variable Interest Entities As of June 30, 2020, Ameren and Ameren 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 have not been consolidated. As of June 30, 2020, the maximum exposure to loss related to these variable interest entities was approximately $17 million, which primarily represents due diligence and legal costs incurred by Ameren Missouri associated with the acquisitions. 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 of the maximum exposure to loss. See Note 2 Rate and Regulatory Matters for additional information on the agreements to acquire these wind generation facilities.
As of June 30, 2020, and December 31 2019, Ameren had unconsolidated variable interests as a limited partner in various equity method investments, totaling $33 million and $28 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 of these variable interest entities. As of June 30, 2020, the maximum exposure to loss related to these variable interests is limited to the investment in these partnerships of $33 million plus associated outstanding funding commitments of $38 million.
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 of June 30, 2020, the cash surrender value of company-owned life insurance at Ameren and Ameren Illinois was $257 million (December 31 201 9 $264 million) and $1 I 7 million (December 31, 2019 $123 million), respectively, while total borrowings against the policies were $1 10 million (December 31 201 9 $1 14 million) at both Ameren and Ameren Illinois. Ameren and Ameren Illinois have the right to offset the borrowings against the cash surrender value of the policies and, consequently, present the net asset in Other assets on their respective balance sheets.
Accounting and Reporting Developments See Note I Summary of Significant Accounting Policies under Part II, Item 8, of the Form I 0-K for additional information about recently issued authoritative accounting guidance relating to defined benefit plan disclosures.
Measurement of Credit Losses on Financial Instruments On January 1 2020, the Ameren Companies adopted authoritative accounting guidance that requires credit losses on most financial assets carried at amortized cost and off-balance sheet credit exposures, such as financial guarantees or loan commitments, to be measured using a current expected credit loss (CECL) model. 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. In addition, the guidance made certain changes to the impairment model applicable to available-for-sale debt securities, such as requiring credit losses to be presented as an allowance rather than a write-down on impaired debt securities for which there is neither an intent nor a more-likely-than-not requirement to sell. Our adoption of this guidance did not have a material impact on the Ameren Companies financial statements and did not result in a cumulative effect adjustment to retained earnings as of the adoption date. See Note 1 3 Supplemental Information for additional information regarding credit losses on accounts receivable.
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NOTE 2 - RATE AND REGULATORY MATTERS Below is a summary of updates to significant regulatory proceedings and related legal proceedings. See Note 2 Rate and Regulatory Matters under Part II, Item 8, of the Form 1 0-K for additional information and a summary of our regulatory frameworks. We are unable to predict the ultimate outcome of these matters, the timing of the final decisions of the various agencies and courts, or the impact on our results of operations, financial position, or liquidity.
Missouri 2079 Electric Seivice Regulator, Rate Review In March 2020, the MoPSC issued an order in Ameren Missouris July 2019 electric service regulatory rate review, approving nonunanimous stipulation and agreements. The order resulted in a decrease of $32 million to Ameren Missouris annual revenue requirement for electric retail service. The order also provided for the continued use of the FAC and trackers for pension and postretirement benefits, uncertain income tax positions, and certain excess deferred income taxes that the MoPSC previously authorized in earlier electric rate orders. The order reduced the annualized base level of net energy costs pursuant to the FAC by approximately $1 I 5 million from the base level established in the MoPSCs March 201 7 electric rate order. The order also changed the annualized regulatory asset and liability amortization amounts and the base level of expenses for regulatory tracking mechanisms. On an annualized basis, these changes reflect approximately $20 million of increased revenues and approximate decreases in purchased power expenses of $1 5 million, other operating and maintenance expenses of $60 million, and income tax expenses of $20 million. Additionally, the annual revenue requirement incorporated increases of approximately $50 million for the reduction in sales volumes resulting from MEEIA programs and approximately $50 million of depreciation and amortization expense for amounts previously deferred under PISA. The increase in the annual revenue requirement related to the MEEIA programs is seasonally weighted to the summer. One of the stipulation and agreements approved by the MoPSCs March 2020 order states that the net impact of the revenue and expense changes noted above reflects a 9.4% to 9.8% ROE on an unspecified percent of common equity applicable to rate base. In addition, the order required Ameren Missouri to donate $8 million to low-income assistance programs, which was reflected in results of operations in the first quarter of 2020. The new rates, base level of expenses, and amortizations became effective on April 1 2020. In April 2020, the MoPSC issued another order in Ameren Missouris July 2019 electric service regulatory rate review, reaffirming the existing percentage of net energy cost variances allowed to be recovered or refunded under the FAC.
Wind Generation Facilities In 201 9, 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 agreementto 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 of capital expenditures 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 are under construction.
In 2020, the developers of the wind generation facilities received notices from the wind turbine supplier to each facility, and the developer of the up-to 300-megawatt project received a notice from the construction contractor, of changes in supply and/or construction activities resulting from the COVID-19 pandemic. There have been changes to the schedules for both projects, particularly with regard to wind turbine deliveries. Ameren Missouri and the developers continue to monitor the impact to each project schedule. Ameren Missouri expects the up-to 400-megawatt project and a majority of the up-to 300 megawatt project to be placed in-service by the end of 2020. However, at this time, due to manufacturing, shipping, and other supply chain issues, and based on an updated schedule from the developer, Ameren Missouri expects a portion of the up-to 300-megawatt project, representing approximately $100 million of investment, to be placed in-service in the first quarter of 2021. In May 2020, the IRS issued guidance that extended the in-service date criteria to December 31 2021 for qualifying for federal production tax credits. As a result of this extension, Ameren does not anticipate that delays in the completion of the wind generation facilities will affect Amerens ability to realize anticipated federal production tax credits.
MEEIA In August 2020, the MoPSC issued an order approving a unanimous stipulation and agreement with respect to the 2022 program year of Ameren Missouris MEEIA 2019 program. The order establishes performance incentives that would provide Ameren Missouri an opportunity to earn additional revenues, including $1 1 million if Ameren Missouri achieves certain energy-efficiency goals during the 2022 program year and an additional $1 million ifAmeren Missouri exceeds its targeted energy-efficiency goals. Ameren Missouri intends to invest $70 million in energy-efficiency programs during the 2022 program year. The August 2020 order also approved Ameren Missouris energy savings results for the first year of the MEEIA 201 9 program. As a result of this order and in accordance with revenue recognition guidance, Ameren Missouri will recognize revenues of $6 million in the third quarter of 2020. Ameren Missouri did not recognize revenues related to MEEIA performance incentives during the first half of 2020. As a result of MoPSC orders issued in September 2017, October 201 8, and January 201 9 related to 18
performance incentives for the MEEIA 2013 and MEEIA 2016 programs, and in accordance with revenue recognition guidance, Ameren Missouri recognized revenues of $20 million during the first quarter and first half of 2019.
Customer Disconnections and Late Fees Ameren Missouri resumed charging late fees to commercial and industrial customers and disconnecting those customers for nonpayment in mid-July 2020, while it resumed those activities for residential customers in early August 2020, following the suspension of both disconnections and late fees for all customers in mid-March 2020. Ameren Missouri does not have a regulatory mechanism to recover forgone late fees.
Illinois Electric Distribution Service Rates In April 2020, Ameren Illinois filed its annual electric distribution service formula rate update to reduce its rates by $45 million with the ICC. This update reflects a decrease to the annual formula rate based on 2019 actual costs, a decrease to include the 2019 revenue requirement reconciliation adjustment, and a decrease for the conclusion of the 201 8 revenue requirement reconciliation adjustment, which will be fully collected from customers in 2020, consistent with the ICCs December 201 9 annual update filing order. It also reflects an increase based on expected net plant additions for 2020. In June 2020, the ICC staff submitted its calculation of the revenue requirement included in Ameren Illinois update filing, recommending a $53 million decrease in Ameren Illinois electric distribution service rates. An ICC decision in this proceeding is expected by December 2020, with new rates effective January 2021.
Electric Customer Energy-Efficiency Investments In May 2020, Ameren Illinois filed its annual electric customer energy-efficiency formula rate update to increase its rates by $7 million with the ICC. An ICC decision in this proceeding is expected by December 2020, with new rates effective January 2021.
2020 Natural Gas Deliver, Seniice Regulator,. 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.
In July 2020, Ameren Illinois filed a revised request seeking to increase its annual revenues for natural gas delivery service by $96 million, which includes 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 of 54.1% common equity, and a rate base of $2.1 billion. Ameren Illinois used a 2021 future test year in this proceeding. In June 2020, the ICC staff recommended an increase to annual revenues for natural gas delivery service of $67 million, based on a 9.3% ROE, a capital structure composed of 50.4% common equity, and a rate base of $2.1 billion. A decision by the ICC in this proceeding is required by January 2021 with new rates expected to be effective in February 2021 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 earn a reasonable return on investments when the rate changes go into effect.
QIP Reconciliation Hearing In March 2019, Ameren Illinois filed a request with the ICC for a reconciliation hearing to determine the accuracy and prudence of natural gas capital investments recovered under the QIP rider during 2018. In November 2019, the Illinois Attorney Generals office challenged the recovery of capital 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 project imprudence or that the investments do not qualify for recovery. In March 2020, the ICC staff filed testimony that supports the prudence and reasonableness ofthe capital investments made during 2018.
Ameren Illinois 201 8 QIP rate recovery request under review by the ICC is within the rate increase limitations allowed by law. The ICC is under no deadline to issue an order in this proceeding.
Service Disconnection Moratorium Proceeding In March 2020, the ICC issued an order requiring all Illinois electric distribution and natural gas utilities to suspend disconnections and late fees for customer nonpayment, on an interim basis, effective March 18, 2020. Pursuant to an ICC order issued in June 2020 and a voluntary extension of the suspension of residential disconnections, Ameren Illinois expects to resume disconnecting commercial and industrial customers and residential customers for nonpayment in mid-August 2020 and early September 2020, respectively, while it resumed charging late fees to all customers in late July 2020.The June 2020 order requires Ameren Illinois to implement more flexible credit and collection practices, on a temporary basis, including longer deferred payment arrangements, extending to 24 months in certain cases, and programs to provide financial assistance to customers. In addition, the order allows Ameren Illinois to recover costs incurred related to the financial assistance programs. These costs will be deferred as regulatory assets and the portion associated with Ameren Illinois electric 19
distribution business will be recovered through its bad debt rider and the portion associated with its natural gas distribution business will be recovered through a special purpose rider established by the order. The order also allows Ameren Illinois to recover forgone customer late fees and costs incurred related to the COVID-19 pandemic. The portion ofthese forgone late fees and costs associated with Ameren Illinois electric distribution business will be recovered through formula rates and the portion associated with its natural gas distribution business will be recovered through the special purpose rider. In addition, the order allows Ameren Illinois electric distribution business to recover bad debt expense, instead of write-offs, net of subsequent recoveries, through its bad debt riders until the end of 2020.
Federal Transmission Formula Rate Revisions In February 2020, MISO, on behalf of Ameren Missouri, Ameren Illinois, and ATXI, filed requests with the FERC to revise each companys transmission formula rate calculations with respect to calculation inputs for materials and supplies. In May 2020, the FERC issued orders approving the revisions prospectively. In addition, the FERC declined to order refunds for earlier periods, as requested by intervenors in Ameren Illinois filing, but directed its audit staff to review historical rate recovery in connection with an ongoing FERC audit. This review could lead the FERC to ultimately require refunds for periods prior to 201 9. In June 2020, Ameren Missouri, Ameren Illinois, and ATXI filed requests for rehearing arguing, among other things, the revisions should be applied retrospectively to include the period January 1 201 9, to June 1 2020, and that the FERC should not require refunds for periods prior to 201 9. In July 2020, the FERC denied the rehearing requests without addressing the issues raised, and indicated it will issue future orders. The FERC is under no deadline to issue orders, nor is it required to address the issues raised in the rehearing requests. In July 2020, Ameren Missouri, Ameren Illinois, and ATXI filed an appeal of the July 2020 rehearing denials to the United States Court of Appeals for the District of Columbia Circuit, which is under no deadline to address the appeal. Regardless of the outcome of the appeal, the impacts of the May 2020 orders are not expected to be material to Amerens, Ameren Missouris, or Ameren Illinois results of operations, financial position, or liquidity.
FERC Complaint Cases In November 2013, a customer group filed a complaint case with the FERC seeking a reduction in the allowed base ROE for FERC-regulated transmission rate base underthe 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 I 0.32%, or a 1 0.82% total allowed ROE with the inclusion of a 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 ending in February 2015, another customer complaint case was filed in February 2015, seeking a further reduction in the allowed base ROE for the period of February 2015 to May 2016. In November 2019, the FERC issued an order addressing the November 2013 complaint case, which setthe allowed base ROE at 9.88%, superseding the 10.32% previously ordered, 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. In December 2019, 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. In May 2020, the FERC issued an order addressing the requests for rehearing, which setthe allowed base ROE at 10.02%, superseding the 9.88% previously ordered, and required refunds, with interest, for the periods November 201 3 to February 2015 and from late September 2016 forward. The May 2020 order also denied rehearing ofthe FERCs dismissal ofthe February 2015 complaint case. In June 2020, various parties filed requests for rehearing with the FERC, challenging the new ROE methodology established by the May 2020 order. The FERC has not ruled on the rehearing requests and is under no deadline to do so. In July 2020, Ameren Missouri, Ameren Illinois, and ATXI filed an appeal of the May 2020 order to the United States Court of Appeals for the District of Columbia Circuit challenging the refunds required for the period from September 2016 to May 2020. The court is under no deadline to address the appeal.
As a result ofthe May 2020 order, which increased the FERC-allowed base ROE from 9.88% to 10.02%, Ameren and Ameren Illinois recognized income of $13 million and $7 million, respectively, during the second quarter of 2020. As of June 30, 2020, Ameren and Ameren Illinois had recorded current regulatory liabilities of $23 million and $1 1 million, respectively, to reflect the expected refunds, including interest, associated with the allowed base ROE set by the May 2020 order in the November 2013 complaint case. The increase in the FERC-allowed base ROE resulting from the May 2020 order is not material to Ameren Missouris results of operations, financial position, or liquidity.
In March 2019, the FERC issued separate Notices of Inquiry regarding its allowed base ROE policy and its transmission incentives policy. The Notice of Inquiry 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 of Inquiry was open for comment on the FERCs transmission incentive policy, including incentive adders to the base ROE. In March 2020, the FERC issued a Notice of Proposed Rulemaking on its transmission incentives policy, which addressed many of the issues in the Notice of Inquiry on transmission incentives, and included an increased incentive in the allowed base ROE for participation in an RTO to 100 basis points from the current 50 basis points and improved parameters for awarding incentives, while limiting the overall incentives to a cap of 250 basis points, 20
among other things. Initial comments were due by July 2020. While the FERC has not formally terminated the Notice of Inquiry regarding its transmission incentives policy, Ameren does not expect further actions relating to it. Ameren is unable to predict the ultimate impact of the Notice of Inquiry regarding its allowed base ROE policy or the Notice of Proposed Rulemaking at this time.
NOTE 3 SHORT-TERM DEBT AND LIQUIDITY The liquidity needs of the Ameren Companies are typically supported through the use of available cash, drawings under committed credit agreements, commercial paper issuances, and, in the case ofAmeren Missouri and Ameren Illinois, short-term affiliate borrowings. See Note 4 Short-term Debt and Liquidity under Part II, Item 8, in the Form 10-K for a description of our indebtedness provisions and other covenants as well as a description of money pool arrangements.
Short-Term Borrowings The Missouri Credit Agreement and the Illinois Credit Agreement are available to support issuances under Ameren (parent)s, Ameren Missouris, and Ameren Illinois commercial paper programs, respectively, subject to borrowing sublimits, and the issuance of letters of credit. As of June 30, 2020, 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 $2.2 billion. The Ameren Companies were in compliance with the covenants in their Credit Agreements as of June 30, 2020. As of June 30, 2020, the ratios of consolidated indebtedness to consolidated total capitalization, calculated in accordance with the provisions of the Credit Agreements, were 56%, 50%, and 44%
for Ameren, Ameren Missouri, and Ameren Illinois, respectively.
The following table presents commercial paper outstanding, net of issuance discounts, as of June 30, 2020, and December 31 201 9. There ,
were no borrowings outstanding under the Credit Agreements as of June 30, 2020, or December 31 2019. ,
June 30, 2020 December 31 2019 Ameren (parent) $ $ 153 Ameren Missouri 79 234 Ameren Illinois 41 53 Ameren consolidated $ 120 $ 440 The following table summarizes the activity and relevant interest rates for Ameren (parent)s, Ameren Missouris, and Ameren Illinois commercial paper issuances and borrowings under the Credit Agreements in the aggregate for the six months ended June 30, 2020 and 2019:
Ameren Ameren Ameren Ameren (parent) Missouri Illinois Consolidated 2020 Average daily amount outstanding $ 93 $ 202 $ 40 $ 335 Weighted-average interest rate 2.05 % 1.86 % 1.98 % 1.92 %
Peak amount outstanding during period(a) $ 425 $ 573 $ 150 $ 908 Peak interest rate 330 % 5.05 % (b) 340 % 5.05 % (b) 2019 Average daily amount outstanding $ 542 $ 174 $ 106 $ 822 Weighted-average interest rate 2.80 % 2.79 % 2.72 % 2.79 %
Peak amount outstanding during period(a) $ 636 $ 549 S 202 $ I ,1 I 3 Peak interest rate 3.10 % 2.97 % 2.90 % 3.10 %
(a) The timing of peak outstanding commercial paper issuances and borrowings under the credit Agreements varies by company. Therefore, the sum of individual company peak amounts may not equal the Ameren consolidated peak for the period.
(b) Ameren Missouris peak interest rate was affected by temporary disruptions in the commercial paper market in the first quarter of 2020.
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. The average interest rate for borrowings under the utility money pool for the three and six months ended June 30, 2020, was 0.42%
and 1.18%, respectively (2019 2.75% and 2.81%, respectively). See Note 8 Related-party Transactions forthe amount of interest income and expense from the utility money pool arrangements recorded by Ameren Missouri and Ameren Illinois for the three and six months ended June 30, 2020 and 2019.
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NOTE 4 - LONG-TERM DEBT AND EQUITY FINANCINGS Ameren For the three and six months ended June 30, 2020, Ameren issued a total of 0.2 million and 0.4 million shares of common stock, respectively, under its DRPlus and 401(k) plan, and received proceeds of $14 million and $27 million, respectively. In addition, in the first quarter of 2020, Ameren issued 0.5 million shares of common stock valued at $38 million upon the vesting of stock-based compensation.
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 will be physically settled unless Ameren elects to settle in cash or to net share settle. At June 30, 2020, Ameren could have settled the forward sale agreement with physical delivery of 7.5 million shares of common stock to the counterparty in exchange for $547 million. The forward sale agreement could also have been settled at June 30, 2020, with delivery of approximately $16 million or 0.2 million shares of common stock to the counterparty, if Ameren had elected to net cash or net share settle, respectively. For additional information about the forward sale agreement, see Note 5 Long-Term Debt and Equity Financings under Part II, Item 8, in the Form 10-K.
In April 2020, Ameren (parent) issued $800 million of 3.50% senior unsecured notes due January 2031 with interest payable semiannually on January 1 5 and July 15, beginning July 15, 2020. Ameren received net proceeds of $793 million, which were used for general corporate purposes, including to repay outstanding short-term debt, and will be used to fund the repayment ofAmerens 2.70% senior unsecured notes due November 2020.
Ameren Missouri In March 2020, Ameren Missouri issued $465 million of 2.95% first mortgage bonds due March 2030, with interest payable semiannually on March 15 and September 15 ofeach year, beginning September 15, 2020. Ameren Missouri received net proceeds of$462 million, which were used to repay outstanding short-term debt, including short-term debt that Ameren Missouri incurred in connection with the repayment of $85 million of its 5.00% senior secured notes that matured in February 2020.
Ameren Illinois Ameren Illinois received cash capital contributions totaling $350 million from Ameren (parent) during the six months ended June 30, 2020.
Indenture Provisions and Other Covenants See Note 5 Long-Term Debt and Equity Financings under Part II, Item 8, in the Form 1 0-K for a description of our indenture provisions and other covenants, as well as restrictions on the payment of dividends. At June 30, 2020, 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.
Off-balance-sheet Arrangements At June 30, 2020, none of the 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 5 - OTHER INCOME, NET The following table presents the components of Other Income, Net in the Ameren Companies statements of income for the three and six months ended June 30, 2020 and 2019:
Three Months Six Months 2020 2019 2020 2019 Ameren:
AIowance for equity funds used during construcUon $ 9 $ 8 $ I3 $ I3 Interest income on industrial development revenue bonds 6 6 12 13 Otherinterestincome I 3 2 4 Non-service cost components of net periodic benefit incomefa) 30 22 53 44 Miscellaneous income i 9 4 Donations (1) (1) (14) (b) (7)
Miscellaneous expense (4) (3) (6) (6)
Total Other Income, Net $ 4 $ 36 $ 69 $ 65 22
Three Months Six Months 2020 2019 2020 2019 Ameren Missouri:
Allowance for equity funds used during construction $ 6 $ 5 $ 8 $ 8 Interest income on industrial development revenue bonds 7 6 12 13 Non-service cost components of net periodic benefit incomefa) f4 4 J9 9 Miscellaneous income I 2 2 2 Donations (1 )
(9) (b) (2)
Miscellaneous expense (2) (1) (3) (2)
Total Other Income, Net $ 25 $ 16 $ 29 $ 28 Ameren Illinois:
Allowance for equity funds used during construction $ 3 $ 3 $ 5 $ 5 Interestincome I 2 2 4 Non-service cost components of net periodic benefit income II 12 24 24 Miscellaneous income 4 1 5 2 Donations (1) (1) (5) (5)
Miscellaneous expense (1) (2) (3) (4)
Total Other Income, Net $ 17 $ 15 $ 28 $ 26 (a) For the three and six months ended June 30, 2020, the non-service cost components of net periodic benefit income were partially offset by amounts deferred of $(3) million and $3 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. The deferral was $8 million and $1 5 million for three and six months ended June 30, 201 9, respectively.
(b) Includes $8 million pursuant to Ameren Missouris March 2020 electric rate order. See Note 2 Rate and Regulatory Mailers for additional information.
NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS We use 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 surcharges 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 purchase or sale prices under the commitments are compared with current commodity prices;
. market values of natural gas and uranium inventories that differ from the cost of those commodities in inventory; actual cash outlays for the purchase of these commodities that differ from anticipated cash outlays; and actual 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 forward contracts, futures, 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 of the 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. 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 disclosures exclude NPNS contracts and other non-derivative 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 of recovery, or refund, through future 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 June 30, 2020, and December 31 2019, 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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The following table presents open gross commodity contract volumes by commodity type for derivative assets and liabilities as of June 30, 2020, and December 31 201 9. As of June 30, 2020, these contracts extended through October 2023, March 2024, May 2032 and March 2023 for fuel oils, natural gas, power and uranium, respectively.
Quantity (in miNions. except as indicated)
June 30, 2020 December 31, 2019 Ameren Ameren Commodity Missouri Ameren Illinois Ameren Missouri Ameren Illinois Ameren Fuel oils (in gallons) 53 53 58 58 Natural gas (in mmbtu) 25 137 162 20 136 156 Power (in megawatthours) 6 7 13 5 7 12 Uranium (pounds in thousands) 365 365 565 565 The following table presents the carrying value and balance sheet location of all derivative commodity contracts, none of which were designated as hedging instruments, as of June 30, 2020, and December 31 2019: ,
June 30, 2020 December 31, 2019 Ameren Ameren Ameren Ameren Balance Sheet Location Missouri Illinois Ameren Missouri Illinois Ameren Fuel oils Other current assets $ 2 $ $ 2 $ 4 $ $ 4 Otherassets I I 2 2 Natural gas Other current assets 3 3 3 3 Other assets I 2 3 I 1 Power Other current assets 17 17 14 14 Other assets 2 2 2 2 Uranium Other assets 1 I Total assets $ 24 $ 5 $ 29 $ 22 $ 4 S 26 Fuel oils Other current liabilities $ 15 $ $ 15 $ 4 $ $ 4 Other deferred credits and liabilities 8 8 3 3 Natural gas Other current liabilities 2 10 12 1 12 13 Other deferred credits and liabilities 3 3 1 6 7 Power Other current liabilities 2 18 20 2 17 19 Other deferred credits and liabilities 2 211 213 1 207 208 Uranium Other deferred credits and liabilities 1 1 Total liabilities $ 29 $ 242 $ 271 $ 13 $ 242 $ 255 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, if the 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 June 30, 2020, and December 31, 2019.
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 of June 30, 2020, if counterparty groups were to fail completely to perform on contracts, the Ameren Companies maximum exposure related to derivative assets would have been immaterial with or without consideration of the application of master netting arrangements or similar agreements and collateral held.
Certain of our derivative instruments contain collateral provisions tied to the Ameren Companies credit ratings. If our 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 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 of June 30, 2020, 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.
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NOTE 7 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 measurement date. Fair value measurements are classified in three levels based on the fair value hierarchy as defined by GAAP. See Note 8 Fair Value Measurements under Part II, Item 8, ofthe Form 10-K for information related to hierarchy levels and valuation techniques.
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 the three and six months ended June 30, 2020 or 201 9. At June 30, 2020, and December 31 201 9, the counterparty default risk valuation adjustment related to derivative contracts was immaterial for Ameren, Ameren Missouri, and Ameren Illinois.
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 June 30, 2020, and December 31 2019: ,
June 30, 2020 December 31, 2019 Level I Level 2 Level 3 Total Level I Level 2 Level 3 Total Assets:
Ameren Missouri Derivative assets commodity contracts:
Fueloils $ $ $ 3 $ 3 $ $ $ 6 $ 6 Natural gas I I Power 2 17 19 2 14 16 Uranium I I Total derivative assets commodity contracts
$ 2 $ I $ 21 $ 24 $ $ 2 $ 20 $ 22 Nuclear decommissioning trust fund:
Equity securities:
U.S. large capitalization $ 556 $ $ $ 556 $ 569 $ $ $ 569 Debt securities:
U.S.Treasuryandagencysecurities 106 106 107 107 Corporatebonds 116 116 93 93 Other 72 72 73 73 Total nuclear decommissioning trust fund $ 556 $ 294 $ $ 850 (a) $ 569 $ 273 $ $ 842 (a)
Total Ameren Missouri $ 558 $ 295 $ 21 $ 874 $ 569 $ 275 $ 20 $ 864 Ameren Illinois Derivative assets commodity contracts:
Natural gas $ $ 2 $ 3 $ 5 $ $ I $ 3 $ 4 Ameren Derivative assets commodity contracts(b)
$ 2 $ 3 $ 24 $ 29 $ $ 3 $ 23 $ 26 Nuclear decommissioning trust fund(c) 556 294 850 (a) 569 273 842 (a)
Total Ameren $ 558 $ 297 $ 24 $ 879 $ 569 $ 276 $ 23 $ 868 Liabilities:
Ameren Missouri Derivative liabilities commodity contracts:
Fuel oils $ 14 $ $ 9 $ 23 $ 1 $ $ 6 $ 7 Natural gas 2 2 2 2 Power 3 I 4 2 1 3 Uranium I I Total Ameren Missouri $ 17 $ 2 $ 10 $ 29 $ 1 $ 4 $ 8 $ 13 Ameren Illinois Derivative liabilities commodity contracts:
Natural gas $ I $ 9 $ 3 $ 13 $ 3 $ 12 $ 3 $ 18 Power 229 229 224 224 Total Ameren Illinois $ I $ 9 $ 232 $ 242 $ 3 $ 12 $ 227 $ 242 Ameren Derivative liabilities commodity contractsfb) $ I8 $ II $ 242 $ 271 $ 4 $ 16 $ 235 $ 255 25
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The following table sets forth the carrying amount and, by level within the fair value hierarchy, the fair value of financial assets and liabilities disclosed, but not recorded, at fair value as of June 30, 2020, and December 31 2019: ,
Carrying Fair Value Amount Level I Level 2 Level 3 Total June 30, 2020 Ameren:
Cash, cash equivalents, and restricted cash $ 163 $ 163 $ $ $ 163 Investments in industrial development revenue bonds(a) 263 263 263 Short-term debt 120 120 120 Long-term debt (including current portion)(a) 10528 (b) 11,747 510 (C) 12,257 Ameren Missouri:
Cash, cash equivalents, and restricted cash $ 11 $ 11 $ $ $ 11 Investments in industrial development revenue bondsfa) 263 263 263 Short-term debt 79 79 79 Long-term debt (including current portion)(a) 4,567 (b) 5,258 5,258 Ameren Illinois:
Cash, cash equivalents, and restricted cash $ 142 $ 142 $ $ $ 142 Short-term debt 41 41 41 Long-term debt (including current portion) 3,576 (b) 4,369 4,369 December 31, 2019 Ameren:
Cash, cash equivalents, and restricted cash $ 176 S 176 $ $ $ 176 Investments in industrial development revenue bonds(a) 263 263 263 Short-term debt 440 440 440 Long-term debt (including current portion)(a) 9,357 (b) 9,957 484 (c) 10,441 Ameren Missouri:
Cash, cash equivalents, and restricted cash $ 39 $ 39 $ $ $ 39 Investments in industrial development revenue bonds(a) 263 263 263 Short-term debt 234 234 234 Long-term debt (including current portion)(a) 4,190 (b) 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) 3,575 (b) 4,019 4,019 (a) Ameren and Ameren Missouri have investments in industrial development revenue bonds, classified as held-to-maturity and recorded in Other Assets, that are equal to the finance obligations for the Peno Creek and Audrain CT energy centers. As of June 30, 2020, and December 31 201 9, the carrying amount of both the investments in industrial development revenue bonds and the finance obligations approximated fair value.
(b) Included unamortized debt issuance costs, which were excluded from the fair value measurement, of $78 million, $32 million, and $33 million for Ameren, Ameren Missouri, and Ameren Illinois, respectively, as of June 30, 2020. Included unamortized debt issuance costs, which were excluded from the fair value measurement, of $72 million, $30 million, and $34 million for Ameren, Ameren Missouri, and Ameren Illinois, respectively, as of December 31 2019.
(c) The Level 3 fair value amount consists of ATXIs senior unsecured notes.
NOTE 8 - RELATED-PARTY TRANSACTIONS In the normal course of business, Ameren Missouri and Ameren Illinois have engaged in, and may in the future engage in, affiliate transactions.
These transactions primarily consist of natural gas and power purchases and sales, services received or rendered, and borrowings and endings.
Transactions between Amerens subsidiaries are reported as affiliate transactions on their individual financial statements, but those transactions are eliminated in consolidation for Amerens consolidated financial statements. For a discussion of material related-party agreements and money pool arrangements, see Note 13 Related-party Transactions and Note 4 Short-term Debt and Liquidity under Part II, Item 8, ofthe Form 10-K.
Capacity Supply Agreement In April 2020, Ameren Illinois conducted a procurement event, administered by the IPA, to acquire capacity. Ameren Missouri was among the winning suppliers in this event. As a result, in April 2020, Ameren Missouri contracted to supply a portion ofAmeren Illinois capacity requirements for $2 million from June 2021 through May 2023.
27
Tax Allocation Agreement See Note 1 Summary of Significant Accounting Policies under Part II, Item 8, of the Form 1 0-K for a dscusson of the tax allocation agreement. The following table presents the affiliate balances related to income taxes for Ameren Missouri and Ameren Illinois as of June 30, 2020, and December 31 2019: ,
June 30, 2020 December 31, 2019 Ameren Missouri Ameren Illinois Ameren Missouri Ameren Illinois Income taxes payable to parent(a) $ 39 $ 6 $ 15 $ 43 Income taxes receivable from parentfb) Jf 15 17 (a) Included in Accounts payable affiliates on the balance sheet.
(b) Included in Accounts receivable affiliates on the balance sheet.
Capital Contributions Ameren Illinois received cash capital contributions totaling $350 million from Ameren (parent) during the six months ended June 30, 2020.
Effects of Related-party Transactions on the Statement of Income The following table presents the effect on Ameren Missouri and Ameren Illinois of related-party transactions for the three and six months ended June 30, 2020 and 2019:
Three Months Six Months Income Statement Ameren Ameren Ameren Ameren Agreement Line Item Missouri Illinois Missouri Illinois Ameren Missouri power supply Operating Revenues 2020 $ 3 $ (a) $ 6 $ (a) agreements with Ameren Illinois 201 9 2 (a) 2 (a)
Ameren Missouri and Ameren Illinois Operating Revenues 2020 $ 6 $ (b) $ 13 $ I rent and facility services 2019 6 (b) 13 1 Ameren Missouri and Ameren Illinois Operating Revenues 2020 $ I $ (b) $ I $ (b) miscellaneous support services 2019 (b) I (b) I Total Operating Revenues 2020 $ 10 $ (b) $ 20 $ I 2019 8 I 15 2 Ameren Illinois power supply Purchased Power 2020 $ (a) $ 3 $ (a) $ 6 agreements with Ameren Missouri 201 9 (a) 2 (a) 2 Ameren Illinois transmission Purchased Power 2020 $ (a) $ I $ (a) $ I services with AIXI 201 9 (a) (b) (a) (b)
Total Purchased Power 2020 $ (a) $ 4 $ (a) $ 7 2019 (a) 2 (a) 2 Ameren Missouri and Ameren Illinois Other Operations and Maintenance 2020 $ (b) $ I $ (b) $ 2 rent and facility services 2019 1 2 1 3 Ameren Services support services Other Operations and Maintenance 2020 $ 32 $ 31 $ 67 $ 64 agreement 2019 32 31 64 61 Total Other Operations and 2020 $ 32 $ 32 $ 67 $ 66 Maintenance 2019 33 33 65 64 Money pool borrowings (advances) (Interest Charges)/Other Income, Net 2020 $ (b) $ (b) $ (b) $ (b) 2019 (b) (b) (b) (b)
(a) Not applicable.
(b) Amount less than $1 million.
NOTE 9 - 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 of business, some of which involve substantial amounts of money. We believe that the final disposition of these proceedings, except as otherwise disclosed in the notes to our financial statements in this report and in the Form I 0-K, will not have a material adverse effect on our results of operations, financial position, or liquidity.
Reference is made to Note I Summary of Significant Accounting Policies, Note 2 Rate and Regulatory Matters, Note I 3 Related-party Transactions, and Note 14 Commitments and Contingencies under Part II, Item 8, ofthe Form 10-K. See also Note I Summary of 28
Significant Accounting Policies, Note 2 Rate and Regulatory Matters, Note 8 Related-party Transactions, and Note 10 Callaway Energy Center ofthis report.
Other Obligations To supply a portion of the fuel requirements of Ameren 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 June 30, 2020. Amerens and Ameren Illinois purchased power commitments include the Ameren Illinois agreements entered into as part of the PA-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 June 30, 2020.
Natural Nuclear Purchased Methane Coal Gas(a) Fuel Powerb)(G) Gas Other Total Ameren:
2020 $ 172 $ 102 $ 7 $ 115 (d) $ I $ 59 $ 456 2021 235 148 57 113 (d) 3 57 613 2022 193 89 11 37 3 26 359 2023 113 52 45 12 3 24 249 2024 94 21 15 2 3 23 158 Thereafter 55 72 16 21 63 227 Total $ 862 $ 484 $ 151 $ 279 $ 34 $ 252 $ 2,062 Ameren Missouri:
2020 $ 172 $ 22 $ 7 $ $ I $ 44 $ 246 2021 235 33 57 3 40 368 2022 193 20 11 3 26 253 2023 113 16 45 3 24 201 2024 94 6 15 3 23 141 Thereafter 55 21 16 21 26 139 Total $ 862 $ 118 $ 151 $ $ 34 $ 183 $ 1,348 Ameren Illinois:
2020 $ $ 80 $ $ 1 15 (d) $ $ 10 $ 205 2021 115 113 (d) 12 240 2022 69 37 106 2023 36 12 48 2024 15 2 17 Thereafter 51 51 Total $ $ 366 $ $ 279 S $ 22 $ 667 (a) Includes amounts for generation and for distribution.
(b) The purchased power amounts for Ameren and Ameren Illinois exclude agreements for renewable energy credits through 2035 with various renewable energy suppliers due to the contingent nature of the payment amounts, with the exception of expected payments of $33 million through 2024.
(c) The purchased power amounts for Ameren and Ameren Missouri exclude a 1 02-megawatt power purchase agreement with a wind farm operator, which expires in 2024, due to the contingent nature of the payment amounts.
(d) In January 2018, 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 PA each May prior to the start of the subsequent planning year, which begins each June. The amounts above reflect Ameren Illinois commitment to acquire $58 million of zero emission credits through May 2021.
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 surface and groundwater, water consumption; impacts to air, land, and water; and chemical and waste storage, handling and disposal. 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 of various chemicals or hazardous materials require release prevention plans and emergency response procedures.
Environmental regulations have a significant impact on the electric utility industry and our operations. 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 29
certain pollutants. Collectively, these regulations cover a variety of pollutants, such as S02, particulate matter, NOR, mercury, toxic metals, and acid gases, and C02 emissions from new power plants. Water intake and discharges from power plants are regulated under the Clean Water Act. Such regulations could require modifications to water intake structures or more stringent limitations on wastewater discharges at Ameren Missouris energy centers, either of which could result in significant capital expenditures. The management and disposal of coal ash is regulated as a solid waste under the Resource Conservation Act and a regulation known as the CCR rule, which will require the closure of our surface impoundments and the installations of dry ash handling systems at several of Ameren Missouris energy centers. The individual or combined effects of existing and new environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration of operations at some of Ameren Missouris energy centers. Ameren and Ameren Missouri expect that such compliance costs would be recoverable through rates, subject to MoPSC prudence review, but the timing of costs and their recovery could be subject to regulatory lag.
Ameren 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 2024 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 of which are discussed below. This estimate does not include capital expenditures that may be required as a result of the 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 regulations and proposed amendments to regulations and guidelines, including to the effluent limitation guidelines and the CCR Rule, which could ultimately result in the revision of all or part of such rules.
Clean Air Act Federal and state laws, including CSAPR, regulate emissions of 502 and NO through the reduction of emissions at their source and the use and retirement of emission allowances. The first phase of the CSAPR emission reduction requirements became effective in 201 5. 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 burns 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 future years. These higher costs are expected to be recovered from customers through the FAC or higher base rates.
C02 Emissions Standards In September 2019, the EPAs Affordable Clean Energy Rule, which establishes emission guidelines for states to follow in developing plans to limit C02 emissions from coal-fired electric generating units, became effective. The EPA has identified certain efficiency measures as the best system of emission reduction for coal-fired electric generating units. The rule requires the state of Missouri to develop a compliance plan and submit it to the EPA for approval by July 2022. The plan is expected to include a standard of performance for each affected generating unit. We are evaluating the impact of the adoption and implementation of the Affordable Clean Energy Rule and, along with other stakeholders, are working with the state of Missouri to develop the compliance plan submitted to the EPA. At this time, we cannot predict the outcome of Missouris 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 of any potential legal challenges to the rule.
NSR and Clean Air Litigation In January 201 1 the Department of Justice, on behalf of the EPA, filed a complaint against Ameren Missouri in the United States District Court for the Eastern District of Missouri 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. 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 201 9, Ameren Missouri appealed the district courts ruling to the United States Court of Appeals for the Eighth Circuit. The district court has stayed implementation of the majority of the requirements of its order while the case is under appeal. Ameren Missouri believes the district court both misinterpreted and misapplied the law in its ruling. We are unable to predict the ultimate resolution of this mailer. Briefing in this case has been completed, and the appellate court is expected to hear oral arguments in 2020; however, it is under no deadline to issue a ruling in this case.
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The ultimate resolution of this matter could have a material adverse effect on the results of operations, financial position, and liquidity of Ameren and Ameren Missouri. Among other things and subject to economic and regulatory considerations, resolution of this 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 of a 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 of the 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 of the 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 201 8, the United States Court of Appeals 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 of aquatic organisms impinged on a power plants cooling water intake screens or entrained through the plants cooling water system. All of Ameren Missouris coal-fired and nuclear energy centers are subject to the cooling water intake structures rule. Requirements of the rule are being implemented by Ameren Missouri during the permit renewal process of each energy centers water discharge permit, which is expected to be completed by 2023.
In 2015, 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 of available control technology. The EPAs 201 5 rule prohibits effluent discharges of certain waste streams and imposes more stringent limitations on certain water discharges from power plants. In September 201 7, 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 could potentially revise those standards. To meet the requirements of the guidelines, Ameren 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 201 5, the EPA issued the CCR rule, which established requirements for the management and disposal of CCR from coal-fired power plants.
These regulations affect CCR disposal and handling costs at Ameren Missouris energy centers. Ameren Missouri is in the process of closing surface impoundments at three facilities, and is scheduled to complete the last of such closures in 2023. The EPA has issued a series of revisions to the CCR rule and is proposing additional revisions. None of those revisions or proposals is expected to materially impact our closure schedule.
Ameren and Ameren Missouri have AROs of $1 39 million recorded on their respective balance sheets as of June 30, 2020, 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 of dry 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 of materials containing hazardous substances. Federal and state laws can require responsible parties to fund remediation regardless of their degree of fault, the legality of original disposal, or the ownership of a disposal site.
As of June 30, 2020, Ameren Illinois has remediated the majority of the 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 of June 30, 2020, Ameren Illinois estimated the remaining obligation related to these former MGP sites at $121 million to $190 million. Ameren and Ameren Illinois recorded a liability of $121 million to representthe 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.
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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 historical practices will result in future environmental commitments or will affect our results of operations, financial position, or liquidity.
NOTE 10 - CALLAWAY ENERGY CENTER See Note 9 Callaway Energy Center under Part II, Item 8, of the Form 1 0-K for information regarding spent nuclear fuel recovery, recovery of decommissioning costs, and the nuclear decommissioning trust fund. The fair value of the trust fund for Ameren Missouris Callaway Energy Center is reported as Nuclear decommissioning trust fund in Amerens and Ameren Missouris balance sheets. This amount is legally restricted and may be used only to fund the costs of nuclear decommissioning. Changes in the fair value of the trust fund are recorded as an increase or decrease to the nuclear decommissioning trust fund, with an offsetting adjustment to the related regulatory liability.
Insurance The following table presents insurance coverage at Ameren Missouris Callaway Energy Center at June 30, 2020:
Most Recent Maximum Assessments Type and Source of Coverage Renewal Date Maximum Coverages for Single Incidents Public liability and nuclear worker liabiBty:
American Nuclear Insurers January 1 2020
, $ 450 $
Pool participation (a) 13,348 (a) 138 (b)
$ 13,798 (c) 138 Property damage:
NEIL and EMANI April 1 2020
, $ 3,200 (U) $ 25 (e)
Replacement power:
NEIL April 1, 2020 $ 490 (0 $ 7 (e)
(a) Provided through mandatory participation in an industrywide retrospective premium assessment program. The maximum coverage available is dependent on the number of United 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 in excess of $450 million in the event of an incident at any licensed United States commercial reactor, payable at $21 million per year.
(c) Limit of liability for each incident under the Price-Anderson liability provisions of the Atomic Energy Act of 1 954, 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 insurance for radiation events and $2.3 billion in 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 from NEIL.
(f) 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 million 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 of liability 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 2018. 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 of the 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 not involving radiation contamination, resulting from terrorist attacks. The EMANI policies are not subject to industrywide aggregates in the event of terrorist attacks on nuclear facilities.
If losses from a nuclear incident at the Callaway Energy Center exceed the limits of, or are not covered by insurance, or if coverage is unavailable, Ameren Missouri is at risk for any uninsured losses. If a serious nuclear incident were to occur, it could have a material adverse effect on Amerens and Ameren Missouris results of operations, financial position, or liquidity.
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NOTE 11 RETIREMENT BENEFITS The following table presents the components of the net periodic benefit cost (income) incurred for Amerens pension and postretirement benefit plans for the three and six months ended June 30, 2020 and 2019:
Pension Benefits Postretirement Benefits Three Months Six Months Three Months Six Months 2020 2019 2020 2079 2020 2019 2020 2019 Service cost(a) 28 $ 22 $ 55 $ 44 $ 6 $ 5 $ 10 $ 9 Non-service cost components:
Interestcost 44 46 87 93 9 10 19 21 Expected return on plan assets (72) (69) (145) (138) (20) (19) (40) (38)
Amortization of:
Priorservice benefit (1) (1) (1) (2) (2) (3)
Actuarial loss (gain) 16 7 30 13 (2) (3) (4) (7)
Total non-service cost componentsfb) $ (13) $ (16) $ (29) $ (32) $ (14) $ (14) $ (27) $ (27)
Net periodic benefit cost (income) $ 15 S 6 $ 26 S 12 $ (8) $ (9) $ (17) $ (18)
(a) Service cost, net of capitalization, is reflected in Operating Expenses Other operations and maintenance on Amerens statement of income.
(b) Non-service cost components are reflected in Other Income, Net on Amerens statement of income. See Note 5 Other Income, Net for additional information.
Ameren Missouri and Ameren Illinois are responsible for their respective share of Amerens pension and other postretirement costs. The following table presents the respective share of net periodic pension and other postretirement benefit costs (income) incurred for the three and six months ended June 30, 2020 and 2019:
Pension Benefits Postretirement Benefits Three Months Six Months Three Months Six Months 2020 2019 2020 2019 2020 2019 2020 2019 Ameren Missouri(a) $ 7 $ I $ 11 $ 2 $ (1) $ (1) $ (2) $ (3)
Ameren Illinois 9 5 16 10 (8) (8) (16) (15)
Other (1) (1) I I Ameren(a) $ 15 6 $
$ 26 $ 12 $ (8) $ (9) $ (17) $ (18)
(a) Does not include the impact of the regulatory tracking mechanism for the difference between the level of pension and postretirement benefit costs incurred by Ameren Missouri under GAAP and the level of such costs included in rates.
Funding Based on its assumptions at June 30, 2020, its investment performance in 2020, and its pension funding policy, Ameren expects to make estimated aggregate contributions of approximately $80 million through 2024. This is an increase from the estimated aggregate contributions of $70 million at December 31 201 9, due to year-to-date performance of Amerens pension and other postretirement benefit plan assets in 2020.
NOTE 12 - INCOME TAXES The following table presents a reconciliation of the federal statutory corporate income tax rate to the effective income tax rate for the three and six months ended June 30, 2020 and 2019:
Ameren Ameren Missouri Ameren Illinois 2020 2019 2020 2019 2020 2019 Three Months Federalstatutorycorporateincometaxrate: 21% 21% 21% 21% 21% 21%
Increases (decreases) from:
Amortization of excess deferred taxes (9) (9) (16) (12) (3) (4)
Depreciation differences I (1)
Amortization of deferred investment tax credit (1 ) (1 )
Statetax 5 6 3 4 7 7 Effective income tax rate 17% 18% 7% 12% 26% 23%
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Ameren Ameren Missouri Ameren Illinois 2020 2019 2020 2019 2020 2019 Six Months Federalstatutorycorporateincometaxrate: 21% 21% 21% 21% 21% 21%
Increases (decreases) from:
Amortization of excess deferred taxes (9) (8) (16) (12) (3) (4)
Depreciation differences 1 Amortization of deferred investment tax credit (1 ) (1 )
Statetax 5 6 3 4 7 7 Stock-based compensation (2) (3)
Other permanent items (1) (1)
Effective income tax rate 15% 15% 7% 12% 25% 24%
NOTE 13 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 of June 30, 2020, and December 31 2019: ,
June 30, 2020 December 31, 2019 Ameren Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Cash and cash equivalents $ 8 $ $ 2 $ 16 $ 9 $
Restricted cash included in Other current assets 14 5 5 14 4 5 Restricted cash included in Other assets I 35 I 35 1 20 120 Restricted cash included in Nuclear decommissioning trust fund 6 6 26 26 Total cash, cash equivalents, and restricted cash $ I 63 $ II $ 142 $ 176 $ 39 $ 125 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 restricted for use in the procurement of renewable 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 June 30, 2020, and December 31 2019, ,
Other current liabilities on Amerens and Ameren Illinois balance sheets included payables for purchased receivables of $34 million and $32 million, respectively.
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The following table provides a reconciliation of the beginning and ending amount of the allowance for doubtful accounts for the three and six months ended June 30, 2020 and 2019:
Three Months Six Months 2020 2019 2020 2019 Ameren:
Beginning olperiod $ 19 $ i $ 17 $ 18 Baddebtexpense 7 5 10 8 Netwrite-ofts (1) (5) (2) (7)
Endolperiod $ 25 $ 19 $ 25 $ 19 Ameren Missouri:
Beginning of period $ 8 $ 7 $ 7 $ 7 Baddebtexpense 2 2 4 3 Net write-offs (1) (2) (2) (3)
Endofperiod $ 9 $ 7 $ 9 $ 7 Ameren Ulinois:(a)
Beginning of Period $ II $ 12 $ 10 $ II Baddebtexpense 5 3 6 5 Net write-offs (3) (4)
EndofPeriod $ 16 $ 12 $ 16 $ 12 (a) Ameren Illinois has rate-adjustment mechanisms that allow it to recover the difference between its actual net bad debt write-offs under GAAP, including those associated with receivables purchased from alternative retail electric suppliers, and the amount of net bad debt write-offs included in its base rates. In 2020, the rate-adjustment mechanism for electric distribution allows for recovery of bad debt expense recognized under GAAP. See Note 2 Rate and Regulatory Mailers for additional information.
Net write-offs decreased for the three and six months ended June 30, 2020, compared with the year-ago periods, due to the temporary suspension of disconnecting customers for nonpayment. See Note 2 Rate and Regulatory Matters for additional information.
Supplemental Cash Flow Information The following table provides noncash financing and investing activity excluded from the statements of cash flows for the six months ended June 30, 2020 and 2019:
June 30, 2020 June 30, 2019 Ameren Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Investing Accrued capital expenditures $ 287 $ 111 $ 165 $ 263 $ 101 $ 143 Net realized and unrealized gain (loss) nuclear decommissioning trust fund (4) (4) 90 90 Financing Issuance of common stock for stock-based compensation $ 38 $ $ $ 54 $ $
Asset Retirement Obligations The following table provides a reconciliation of the beginning and ending carrying amount of AROs for the six months ended June 30, 2020:
Ameren Ameren Missouri Illinois Ameren Balanceat December31, 2019 $ 687 (a) $ 4 (b) $ 691 (a)
Liabilities settled (28) (28)
Accretion 1 5 (c) 1 5 (c)
Change in estimates 14 (d) 14 (d)
Balance at June 30, 2020 $ 688 (a) $ 4 (b) $ 692 (a)
(a) Balance included $53 million in Other current liabilities on the balance sheet as of both December 31 201 9, and June 30, 2020.
(b) Included in Other deferred credits and liabilities on the balance sheet.
(c) Accretion expense attributable to Ameren Missouri was recorded 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.
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Stock-based Compensation on January 1 2020, Ameren granted 294,320 performance share units with a grant date fair value of $24 million and 132,307 restricted share units with a grant date fair value of $1 0 million. Awards vest approximately 38 months after the grant date or on a pro-rata basis upon death or eligible retirement. The performance share units vest based on the achievement of certain specified market performance measures (252,370 performance share units) or based on the achievement of renewable generation and energy storage installation targets (41 950 performance share units). The exact number of shares issued pursuant to a performance share unit varies from 0% to 200% of the target award, depending on actual company performance relative to the performance goals.
For the six months ended June 30, 2020 and 2019, excess tax benefits associated with the settlement of stock-based compensation awards reduced income tax expense by $8 million and $14 million, respectively.
Deferred Compensation As of June 30, 2020, and December 31 201 9, Other current liabilities and Other deferred credits and liabilities on Amerens balance sheet included deferred compensation obligations of $87 million and $86 million, respectively, recorded at the present value of future benefits to be paid.
Operating Revenues As of June 30, 2020 and 201 9, our remaining performance obligations for contracts with a term greater than one year were immaterial. The Ameren Companies elected not to disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied as of the end of the reporting period for contracts with an initial expected term of one year or less.
See Note 14 Segment Information for disaggregated revenue information.
Excise Taxes Ameren 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 of natural 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 three and six months ended June 30, 2020 and 2019:
Three Months Six Months 2020 2019 2020 2019 Ameren Missouri $ 36 $ 38 $ 66 $ 69 Ameren Illinois 26 25 61 64 Ameren $ 62 $ 63 s 127 $ 133 Earnings per Share The following table reconciles the basic weighted-average number of common shares outstanding to the diluted weighted-average number of common shares outstanding for the three and six months ended June 30, 2020 and 2019:
Three Months Six Months 2020 2019 2020 2019 Weighted-average Common Shares Outstanding Basic 246.9 245.6 246.7 245.3 Assumed settlement of performance share units and restricted stock units I .0 1 .6 1 .0 1.5 Dilutive effect of forward sale agreement 0.3 Weighted-average Common Shares Outstanding Diluted(a) 247.9 247.2 248.0 246.8 (a) There were no potentially dilutive securities excluded from the earnings per diluted share calculations for the three and six months ended June 30, 2020 and 2019.
NOTE 14 - SEGMENT INFORMATION The following tables present revenues, net income (loss) attributable to common shareholders, and capital expenditures by segment at Ameren and Ameren Illinois for the three and six months ended June 30, 2020 and 2019. Ameren, Ameren Missouri, and Ameren Illinois management review segment capital expenditure information rather than any individual or total asset amount. For additional information about our segments, see Note 16 Segment Information under Part II, Item 8, ofthe Form 10-K.
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Ameren Ameren Ameren Illinois Illinois Ameren Electric Natural Ameren Intersegment Missouri Distribution Gas Transmission Other Eliminations Ameren Three Months 2020:
External revenues $ 782 $ 352 $ 140 $ 124 $ $ $ 1,398 Intersegment revenues 10 12 (22)
Net income (loss) attributable to Ameren common shareholders 152 36 9 59 (b) (13) 243 Capital expenditures 238 139 79 135 (1) 2 592 Three Months 2019:
Externairevenues $ 790 $ 358 $ 136 $ 95 $ $ $ 1,379 Intersegment revenues 8 1 14 (a) (23)
Net income (loss) attributable to Ameren common shareholders 107 37 1 42 )b) (8) 179 Capital expenditures 255 127 77 127 (5) 581 Six Months 2020:
External revenues $ 1,452 $ 741 $ 411 $ 234 $ $ $ 2,838 Intersegment revenues 20 1 25 (a) (46)
Net income attributable to Ameren common shareholders 142 73 64 106 (b) 4 389 Capital expenditures 516 262 140 305 2 3 1,228 Six Months 2019:
Externairevenues $ 1,541 S 744 $ 456 $ 194 $ $ $ 2,935 Intersegment revenues I5 2 29 (a) (46)
Net income attributable to Ameren common shareholders 146 73 58 86 )b( 7 370 Capital expenditures 495 251 128 248 10 (7) 1,125 (a) Ameren Transmission earns revenue from transmission service provided to Ameren Illinois Electric Distribution.
(b) Ameren Transmission earnings reflect an allocation of financing costs from Ameren (parent).
Ameren Illinois Ameren Illinois Ameren Electric Illinois Ameren Illinois Intersegment Distribution Natural Gas Transmission Eliminations Ameren Illinois Three Months 2020:
External revenues $ 352 $ 140 $ 75 $ $ 567 Intersegment revenues 12 (12)
Net income available to common shareholder 36 9 38 83 Capital expenditures 139 79 119 337 Three Months 2019:
External revenues $ 359 $ 136 $ 52 $ $ 547 Intersegment revenues 14 (a) (14)
Net income available to common shareholder 37 1 24 62 Capital expenditures 127 77 85 289 Six Months 2020:
External revenues $ 742 $ 411 $ 137 $ $ 1,290 Intersegment revenues 24 (a) (24)
Net income available to common shareholder 73 64 66 203 Capital expenditures 262 140 259 661 Six Months 2019:
Externalrevenues $ 746 $ 456 $ 107 $ $ 1,309 Intersegment revenues 29 (a) (29)
Net income available to common shareholder 73 58 51 182 Capital expenditures 251 128 177 556 (a) Ameren Illinois Transmission earns revenue from transmission service provided to Ameren Illinois Electric Distribution.
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The following tables present disaggregated revenues by segment at Ameren and Ameren Illinois for the three and six months ended June 30, 2020 and 201 9. Economic factors affect the nature, timing, amount, and uncertainty of revenues 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 Illinois Ameren Electric Ameren Illinois Ameren Intersegment Missouri Distribution Natural Gas Transmission Eliminations Ameren Three Months 2020:
Residential $ 359 $ 210 $ $ $ $ 569 Commercial 264 112 376 Industrial 67 30 97 Other 81 136 (22) 195 Total electric revenues $ 771 $ 352 $ $ 136 $ (22) $ 1,237 Residential $ II $ $ 94 $ $ $ I 05 Commercial 4 22 26 Industrial I 3 4 Other 5 21 26 Totalgasrevenues $ 21 $ $ 140 $ $ $ 161 Total revenuesfa) $ 792 $ 352 $ 140 $ 136 $ (22) $ 1,398 Three Months 2019:
Residential $ 333 $ 199 $ $ $ $ 532 Commercial 310 124 434 Industrial 77 33 110 Other 53 3 109 (23) 142 Total electric revenues $ 773 $ 359 $ $ 1 09 $ (23) $ I 218 Residential $ 10 $ $ 88 $ $ $ 98 Commercial 4 23 27 Industrial 3 3 Other 11 22 33 Totalgasrevenues $ 25 $ $ 136 $ $ $ 161 Total revenuesfa) $ 798 $ 359 $ 1 36 $ I 09 $ (23) $ I 379 Six Months 2020:
Residential $ 656 $ 430 $ $ $ $ I 086 Commercial 485 238 723 Industrial 120 65 185 Other 141 9 259 (46) 363 Totalelectricrevenues $ 1,402 $ 742 $ $ 259 $ (46) $ 2,357 Residential $ 44 $ $ 307 $ $ $ 351 Commercial 17 76 93 Industrial 2 6 8 Other 7 22 29 Totalnaturalgasrevenues $ 70 $ $ 411 $ $ $ 481 Total revenues(a) $ 1,472 $ 742 $ 411 $ 259 $ (46) $ 2,838 38
Ameren illinois Ameren Electric Ameren Illinois Ameren Intersegment Missouri Distribution Natural Gas Transmission Eliminations Ameren Six Months 2019:
Residential $ 645 $ 416 $ $ $ $ 1,061 Commercial 549 247 796 Industrial 132 67 199 Other 151 16 223 (46) 344 Total electric revenues $ 1 477 $ 746 $ $ 223 $ (46) $ 2,400 Residential $ 48 $ $ 334 $ $ $ 382 Commercial 20 88 108 Industrial 2 7 9 Other 9 27 36 Total natural gas revenues $ 79 $ $ 456 $ $ $ 535 Total revenues(a) $ 1 556 $ 746 $ 456 $ 223 $ (46) $ 2,935 (a) The following table presents increases/(decreases) in revenues from alternative revenue programs and other revenues not from contracts with customers for the three and six months ended June 30, 2020 and 2019:
Ameren Illinois Ameren Ameren Electric Illinois Ameren Missouri Distribution Natural Gas Transmission Ameren Three Months 2020:
Revenues from alternative revenue programs $ (6) $ 5 $ 3 $ 18 $ 20 Other revenues not from contracts with customers 7 7 Three Months 2019:
Revenues from alternative revenue programs $ $ 12 $ 4 $ (8) $ 8 Other revenues not from contracts with customers 4 1 5 Six Months 2020:
Revenues from alternative revenue programs $ (9) $ 51 $ 14 $ 30 $ 86 Other revenues not from contracts with customers 15 1 1 17 Six Months 2019:
Revenues from alternative revenue programs $ 15 $ 34 $ I $ (1 3) $ 37 Other revenues not from contracts with customers 9 4 1 14 39
Ameren Illinois Ameren Illinois Ameren Electric Illinois Ameren Illinois Intersegment Ameren Distribution Natural Gas Transmission Eliminations Illinois Three Months 2020:
Residential $ 210 $ 94 $ $ $ 304 Commercial 112 22 134 Industrial 30 3 33 Other 21 87 (12) 96 Total revenues(a) $ 352 $ 140 $ 87 $ (12) $ 567 Three Months 2019:
Residential $ 199 $ 88 $ $ $ 287 Commercial 124 23 147 Industrial 33 3 36 Other 3 22 66 (14) 77 Totalrevenuesfa) $ 359 $ 136 $ 66 $ (14) 547 Six Months 2020:
Residential $ 430 $ 307 $ $ $ 737 Commercial 238 76 314 Industrial 65 6 71 Other 9 22 161 (24) 168 Total revenues(a) $ 742 $ 411 $ 161 $ (24) $ 1,290 Six Months 2019:
Residential $ 416 $ 334 $ $ $ 750 Commercial 247 88 335 Industrial 67 7 74 Other 16 27 136 (29) 150 Total revenues(a) $ 746 $ 456 $ 136 $ (29) $ 1309 (a) The following table presents increases/(decreases) in revenues from alternative revenue programs and other revenues not from contracts with customers for the Ameren Illinois segments for the three and six months ended June 30, 2020 and 2019:
Ameren Illinois Electric Ameren Illinois Ameren Illinois Distribution Natural Gas Transmission Ameren Illinois Three Months 2020:
Revenues from alternative revenue programs $ 5 $ 3 $ 14 $ 22 Other revenues not from contracts with customers Three Months 2019:
Revenues from alternative revenue programs $ 12 $ 4 $ (9) $ 7 Other revenues not from contracts with customers I I Six Months 2020:
Revenues from alternative revenue programs $ 51 $ 14 $ 24 $ 89 Other revenues not from contracts with customers I I 2 Six Months 2019:
Revenues from alternative revenue programs $ 34 $ 1 $ (14) $ 21 Other revenues not from contracts with customers 4 1 5 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the financial statements and Risk Factors contained in this Form 1O-Q, as well as Managements Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors contained in the Form 10-K. We intend for this discussion to provide the reader with information 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 of Ameren as a whole. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 1 0-K.
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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. Amerens principal subsidiaries are listed below. Ameren 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 Illinois Company, doing business as Ameren Illinois, operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois.
. ATXI operates a FERC rate-regulated electric transmission business in the MISO.
Amerens financial statements are prepared on a consolidated basis and therefore include the accounts of its majority-owned subsidiaries. All intercompany transactions have been eliminated. Ameren Missouri and Ameren Illinois have no subsidiaries. All tabular dollar amounts are in millions, unless otherwise indicated.
In addition to presenting results of operations 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 of these factors on Amerens earnings per share.
OVERVIEW Net income attributable to Ameren common shareholders in the three months ended June 30, 2020, was $243 million, or $0.98 per diluted share, compared with $179 million, or $0.72 per diluted share, in the year-ago period. Net income attributable to Ameren common shareholders in the six months ended June 30, 2020, was $389 million, or $1 .57 per diluted share, compared with $370 million, or $1 .50 per diluted share, in the year-ago period. Net income for the three and six months ended June 30, 2020, compared to the year-ago periods, was favorably affected by the absence in 2020 of expenses related to the Callaway Energy Centers 201 9 scheduled refueling and maintenance outage; infrastructure investments that drove higher earnings at Ameren Transmission and Ameren Illinois Electric Distribution, each of which utilizes formula ratemaking; a lower base level of expenses, partially offset by lower base rates, at Ameren Missouri pursuant to the MoPSCs March 2020 electric rate order; and increased Ameren Transmission earnings resulting from the May 2020 FERC order addressing the allowed base ROE. Net income for the three and six months ended June 30, 2020, compared to the year-ago periods, was unfavorably affected by a lower recognized ROE at Ameren Illinois Electric Distribution. Excluding the absence of the Callaway Energy Centers scheduled refueling and maintenance outage costs, earnings for the three months ended June 30, 2020, compared to the year-ago period, were favorably affected by lower other operations and maintenance expenses not subject to riders or regulatory tracking mechanisms, primarily due to lower electric system infrastructure maintenance expenses as a result of decreased system load, disciplined cost management, and the deferral of projects to future periods. Earnings for the three months ended June 30, 2020, were also favorably affected by weather, which was offset by decreased electric retail sales not attributable to weather due, in part, to the COVID-1 9 pandemic. Earnings for the six months ended June 30, 2020, compared to the year-ago period, were unfavorably affected by lower revenues due to the absence of MEEIA performance incentives recognition in 2020, decreased electric retail sales at Ameren Missouri due, in part, to the COVID-1 9 pandemic, and decreased income tax benefits at Ameren (parent) related to stock-based compensation.
Amerens strategic plan includes investing and operating its utilities in a manner consistent with existing regulatory frameworks, enhancing those frameworks, and advocating for responsible energy and economic policies, as well as creating and capitalizing on opportunities for investment for the benefit of its customers and shareholders. Ameren remains focused on disciplined cost management and strategic capital allocation. Ameren believes it has constructive regulatory frameworks for investment at all of its utility businesses and invested $1 .2 billion in those businesses in the six months ended June 30, 2020.
The COVID-19 pandemic continues to be a rapidly evolving situation. In the first six months of 2020, we experienced a net decrease in our sales volumes, an increase in our accounts receivable balances that were past due or that were a part of a deferred payment arrangement, and a decline in our cash collections from customers. The continued effect ofthe COVID-19 pandemic on our results of operations, financial position, and liquidity in subsequent periods will depend on its severity and longevity, future regulatory or legislative actions with respect thereto, and the resulting impact on business, economic, and capital market conditions. Shelter-in-place orders began taking effect in our service territories in mid-March 2020.
These orders generally required individuals to remain at home and precluded or limited the operation of businesses that were deemed nonessential.
In early 2020, Ameren began implementing its business continuity plans, and continues to implement measures to mitigate the risk of COVID-1 9 transmission. Actions included restricting travel for employees, implementing work-from-home policies, securing and supplying personal protective equipment, and implementing work practices to ensure the safety of our employees and customers, while maintaining social distancing. While our business operations were deemed essential and were not directly impacted by the shelter-in-place orders, approximately 65% of our workforce transitioned to remote working arrangements in mid-March. In early June, a small portion of our workforce began the process of returning to our work locations under a phased approach. In mid-May 2020, shelter-in-place orders effective in our service territories began to be relaxed, with fewer restrictions on social activities and 41
nonessential businesses beginning to reopen. However, certain restrictions remain in place that limit individual activities and the operation of nonessential businesses. Additional restrictions may be imposed in the future. We continue to monitor the impacts the pandemic is having on our businesses, including impacts on electric and natural gas sales volumes, liquidity, bad debt expense, and supply chain operations. For further discussion of these and other matters, see Note 2 Rate and Regulatory Matters under Part I, Item I of this report, and Managements Discussion and Analysis of Results of Operations, Liquidity and Capital Resources, and Outlook sections below. In addition, for information regarding Ameren Missouris and Ameren Illinois suspension and subsequent reinstatement of customer disconnections and late fee charges for nonpayment, see Note 2 Rate and Regulatory Matters under Part I, Item 1 of this report.
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 included in the five-year range above are based on the assumption that Ameren Missouri requests and receives MoPSC approval of an extension of the PISA through December 2028.
In March 2020, the MoPSC issued an order in Ameren Missouris July 2019 electric service regulatory rate review, approving nonunanimous stipulation and agreements. The order resulted in a decrease of $32 million to Ameren Missouris annual revenue requirement for electric retail service. The order also provided for the continued use of the FAC and trackers for pension and postretirement benefits, uncertain income tax positions, and certain excess deferred income taxes that the MoPSC previously authorized in earlier electric rate orders. In addition, the order required Ameren Missouri to donate $8 million to low-income assistance programs, which was reflected in results of operations in the first quarter of 2020. The new rates became effective on April 1 2020. In April 2020, the MoPSC issued another order in Ameren Missouris July 2019 electric service regulatory rate review, reaffirming the existing percentage of net energy cost variances allowed to be recovered or refunded under the FAC.
See Note 2 Rate and Regulatory Matters under Part I, Item 1 of this report for more information regarding Ameren Missouris March and April 2020 electric service regulatory rate orders.
Construction on the new wind generation facilities continues to progress. Delays to the original construction schedule have occurred in 2020 as a result of changes in supply and construction activities. Ameren Missouri and the developers continue to monitor the impact to each project schedule. Ameren Missouri expects the up-to 400-megawatt project and a majority of the up-to 300 megawatt project to be placed in-service by the end of 2020. Based on an updated schedule from the developer, Ameren Missouri expects a portion of the up-to 300-megawatt project, representing approximately $100 million of investment, to be placed in-service in the first quarter of 2021 In May 2020, the IRS issued guidance that extended the in-service date criteria to December 31 2021 for qualifying for production tax credits. As a result of this extension, Ameren does not anticipate that delays in the completion of the wind generation facilities will affect Amerens ability to realize anticipated federal production tax credits. See Note 2 Rate and Regulatory Matters under Part I, Item I of this report for information regarding Ameren Missouri wind generation facilities.
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. Maintenance expenses associated with the fall 2020 refueling and maintenance outage are being deferred, as incurred, as a regulatory asset, and will be amortized after completion of the outage. Maintenance expenses will be amortized over the period between refueling and maintenance outages, which is approximately 18 months. Deferring and amortizing these 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 February 2020, Ameren Illinois filed a request with the ICC seeking approval to increase its annual revenues for natural gas delivery service.
In July 2020, Ameren Illinois filed a revised request seeking to increase its annual revenues for natural gas delivery service by $96 million, which includes 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 of 54.1% common equity, and a rate base of $2.1 billion. Ameren Illinois used a 2021 future test year in this proceeding. In June 2020, the ICC staff recommended an increase to annual revenues for natural gas delivery service of $67 million, based on a 9.3% ROE, a capital structure composed of 50.4% common equity, and a rate base of $2.1 billion. A decision by the ICC in this proceeding is required by January 2021 with new rates expected to be effective in February 2021 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 earn a reasonable return on investments when the rate changes go into effect.
In April 2020, Ameren Illinois filed its annual electric distribution service formula rate update to reduce its rates by $45 million with the ICC. This update reflects a decrease to the annual formula rate based on 2019 actual costs, a decrease to include the 2019 revenue requirement reconciliation adjustment, and a decrease for the conclusion of the 201 8 revenue requirement reconciliation adjustment, which will be fully collected from customers in 2020, consistent with the ICCs December 201 9 annual update filing order. It also reflects an increase based on expected net plant additions for 2020. In June 2020, the ICC staff submitted its calculation of the revenue requirement included in 42
Ameren Illinois update filing, recommending a $53 million decrease in Ameren Illinois electric distribution service rates. An ICC decision in this proceeding is expected by December 2020, with new rates effective January 2021.
RESULTS OF OPERATIONS Our results of operations and financial position are affected by many factors. Economic conditions, including those resulting from the COVID-19 pandemic discussed below, energy-efficiency investments by our customers and by us, technological advances, distributed generation, and the actions of key 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 of borrowing, and our pension and postretirement benefits costs. Almost all of Amerens revenues are subject to state or federal regulation. This regulation has a material impact on the rates we charge customers for our services. Our results of operations, financial position, and liquidity are affected by our ability to align our overall spending, both operating and capital, with the frameworks established by our regulators. See Note 2 Rate and Regulatory Mailers, under Part I, Item 1 of this report and the Business Section under Part I, Item I of the Form 10-K for additional information regarding Ameren Missouris, Ameren Illinois, and ATXIs regulatory mechanisms.
We continue to monitor the impacts of the COVID-1 9 pandemic on our businesses, including impacts on electric and natural gas sales volumes, supply chain operations, and bad debt expense. Ameren Missouri and Ameren Illinois suspended customer disconnections and late fee charges for nonpayment in mid-March 2020 and began to resume these activities in the third quarter of 2020. For additional information, see Note 2 Rate and Regulatory Matters under Part I, Item 1 of this report. Regarding bad debt expense, Ameren Illinois electric distribution and natural gas distribution businesses have bad debt riders, which provide for recovery of bad debt write-offs, net of any subsequent recoveries. In 2020, Ameren Illinois electric bad debt rider provides for the recovery of bad debt expense. However, Ameren Missouri does not have a bad debt rider or regulatory tracking mechanism and its earnings are exposed to increases in bad debt expense, which could result in higher bad debt write-offs. As of June 30, 2020, accounts receivable balances that were 30 days or greater past due or that were a part of a deferred payment arrangement represented 26%,
19%, and 33%, or $132 million, $42 million, and $90 million, ofAmerens, Ameren Missouris, and Ameren Illinois Accounts receivable trade before allowance for doubtful accounts, respectively. As of June 30, 201 9, these percentages were 1 7%, 1 1 %, and 25%, or $83 million, $24 million, and $59 million, for Ameren, Ameren Missouri, and Ameren Illinois, respectively. Ameren Missouris electric sales volumes have been, and continue to be, affected by the COVID-19 pandemic. In the three and six months ended June 30, 2020, compared to the same periods in 2019, Ameren Missouri experienced a reduction in commercial and industrial electric sales volumes, partially offset by increased electric sales volumes to higher margin residential customers, excluding the estimated effects of weather and customer energy-efficiency programs. While the impacts of the COVID-1 9 pandemic are difficult to predict, Ameren Missouri expects the net reduction in sales volumes, excluding the estimated effects of weather and customer energy-efficiency programs, to continue in the July through December 2020 period, compared to the same period in 201 9. The COVID-19 pandemic may continue to affect Ameren Missouris total electric sales volumes and sales volumes by customer class beyond 2020.
Assuming a ratable change in Ameren Missouris electric sales volumes by month, a I % change for the calendar year 2020 to residential, commercial, and industrial customers would affect earnings per diluted share by approximately 3 cents, 2 cents, and a half-cent, respectively. The actual change in earnings per diluted share will be affected by the timing of sales volume changes due to seasonal customer rates. Based on Ameren Missouris current projections, the net decline in electric sales volumes for July 1 through December 31 , 2020, compared to the same period in 201 9, excluding the estimated effects of weather and customer energy-efficiency programs, is expected to result in a decline in earnings per diluted share of approximately 5 cents. The following table provides the increases and (decreases) in Ameren Missouri electric sales volumes by customer class for the three and six months ended June 30, 2020, and the estimated changes for the calendar year 2020, compared to the same periods in 2019, excluding the estimated effects ofweather and customer energy-efficiency programs:
QTDYoY YTDYoY Calendar Year (a)
Residential 7.0 % 4.5 % 4.0 %
Commercial (13.1)% (7.3)% (7.5) %
Industrial (9.O)% (5.8)% (4.5) %
Total (4.9)% (22)% (25) %
(a) Based on actual results from January 1 through June 30, 2020, and Ameren Missouris projection for July 1 through December 31 2020, compared to the same period in 2019.
Ameren Illinois also experienced decreases in electric and natural gas sales volumes in the three and six months ended June 30, 2020.
However, Ameren Illinois electric distribution and transmission businesses have formula ratemaking frameworks, which provide for recovery of their revenue requirements independent of sales volumes, and Ameren Illinois natural gas distribution business has a VBA, which provides for recovery of the natural gas distribution service revenue requirement associated with sales volumes for residential and small nonresidential customers.
Additionally, ATXIs electric transmission business has a formula ratemaking framework, which provides for recovery of its revenue requirement independent of sales volumes. None of Amerens businesses have experienced significant disruptions to their supply 43
chain operations. However, see Note 2 Rate and Regulatory Mailers under Part I, Item 1 of this report for information regarding the impact of supply chain disruptions related to Ameren Missouris acquisition of an up-to 300-megawatt wind generation facility.
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 of the global economic and political environment, weather, supply, demand, and many other factors. We have natural gas cost 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 of operations 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 of Amerens earnings for the three and six months ended June 30, 2020 and 2019:
Three Months Six Months 2020 2019 2020 2019 Net income attributable to Ameren common shareholders $ 243 $ 179 $ 389 $ 370 Earnings per cornmon share diluted 098 0.72 1 .57 1.50 Net income attributable to Ameren common shareholders increased $64 million, or 26 cents per diluted share, in the three months ended June 30, 2020, compared with the year-ago period. The increase was due to net income increases of $45 million, $1 7 million and $8 million at Ameren Missouri, Ameren Transmission, and Ameren Illinois Natural Gas, respectively. These increases were partially offset by a $5 million increase in the net loss for activity not reported as part of a segment, primarily at Ameren (parent), and a $1 million decrease in net income at Ameren Illinois Electric Distribution.
Net income attributable to Ameren common shareholders increased $19 million, or 7 cents per diluted share, in the six months ended June 30, 2020, compared with the year-ago period. The increase was due to net income increases of $20 million and $6 million at Ameren Transmission and Ameren Illinois Natural Gas, respectively. These increases were partially offset by net income decreases of $4 million and $3 million at Ameren Missouri and from activity not reported as part of a segment, primarily at Arneren (parent), respectively.
Earnings per diluted share were favorably affected in the three and six months ended June 30, 2020, compared to the year-ago periods (except where a specific period is referenced), by:
decreased other operations and maintenance expenses related to the absence of a scheduled refueling and maintenance outage at the Callaway Energy Center, which last occurred in the second quarter of2019 and which costs previously were expensed as incurred, as compared with the deferral of expenses for the fall 2020 refueling and maintenance outage under the February 2020 MoPSC order (8 cents and 10 cents per share, respectively);
lower base level of expenses, partially offset by lower base rates, net of recovery for amounts associated with the reduction in sales volumes resulting from MEEIA programs and recoverable depreciation under the PISA, at Ameren Missouri pursuant to the MoPSCs March 2020 electric rate order as discussed in Note 2 Rate and Regulatory Matters under Part I, Item 1 of this report (7 cents per share for both periods);
increased Ameren Transmission and Ameren Illinois Electric Distribution earnings under formula ratemaking because of additional rate base investments (4 cents and 7 cents per share, respectively);
increased electric retail sales at Ameren Missouri for the three months ended June 30, 2020, due to weather resulting from warmer early summer temperatures experienced in 2020 (estimated at 5 cents per share for the three months ended June 30, 2020);
increased Ameren Transmission earnings resulting from the May 2020 FERC order addressing the allowed base ROE for FERC regulated transmission rate base under the MISO tariff (4 cents per share for both periods);
increased Ameren Illinois Natural Gas earnings from investments in qualifying infrastructure recovered under the QIP rider (1 cent and 2 cents per share, respectively); and decreased other operations and maintenance expenses not subject to riders or regulatory tracking mechanisms, excluding decreased costs associated with the Callaway Energy Centers scheduled refueling and maintenance outage, primarily due to lower electric system infrastructure maintenance expenses as a result of decreased system load, disciplined cost management, and the deferral of projects to future periods, and changes in the cash surrender value of company-owned life insurance, which increased in the three months ended June 30, 2020, but decreased in the six months ended June 30, 2020 (9 cents and 1 cent per share, respectively).
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Earnings per diluted share were unfavorably affected in the three and six months ended June 30, 2020, compared to the year-ago periods (except where a specific period is referenced), by:
. the absence in 2020 of MEEIA 2013 and MEEIA 2016 performance incentives at Ameren Missouri recognized in the first quarter of 2019 (6 cents per share for the six months ended June 30, 2020);
. decreased electric retail sales, excluding the estimated effects of weather, at Ameren Missouri due to decreased demand from commercial and industrial customers, partially offset by increased demand from higher margin residential customers. Demand was affected, in part, by the COVID-19 pandemic (estimated at 5 cents per share for both periods);
. decreased Ameren Illinois Electric Distribution earnings under formula ratemaking because of a lower recognized ROE (2 cents and 4 cents per share, respectively);
. decreased income tax benefits at Ameren (parent) related to stock-based compensation (3 cents per share for the six months ended June 30, 2020);
. increased net financing costs primarily at Ameren (parent), because of its April 2020 debt issuance (3 cents and 2 cents per share, respectively);
. increased charitable donations at Ameren Missouri pursuant to its March 2020 electric rate order (2 cents per share for the six months ended June 30, 2020);
. decreased electric sales at Ameren Missouri, primarily due to milder winter temperatures experienced in 2020 (1 cent per share for the six months ended June 30, 2020); and
. increased weighted-average basic common shares outstanding (1 cent per share for both periods).
The cents per share information presented is based on the weighted-average basic common shares outstanding in the three and six months ended June 30, 2019, 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 2020 statutory tax rate of 26%. For additional details regarding the Ameren Companies results of operations, including explanations of Electric 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.
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Below is Amerens table of income statement components by segment for the three and six months ended June 30, 2020 and 2019:
Ameren Illinois Ameren Other!
Ameren Electric Illinois Ameren Intersegment Missouri Distribution Natural Gas Transmission Eliminations Ameren Three Months 2020:
Electric margins $ 615 $ 264 $ $ 136 $ (6) $ 1,009 Naturalgasmargins 15 104 119 Other operations and maintenance expenses (202) (118) (52) (15) 3 (384)
Depreciation and amortization expenses (155) (71) (20) (23) (2) (271)
Taxes other than income taxes (83) (1 9) (1 3) (2) (2) (119)
Other income, net 25 9 5 3 6 48 lnterestcharges (50) (18) (10) (18) (12) (108)
Income taxes (12) (11) (4) (22) (1) (50)
Net income (loss) 153 36 10 59 (14) 244 Noncontrolling interests preferred stock dividends (1) (1) I (1)
Net income (loss) attributable to Ameren common shareholders $ 152 $ 36 $ 9 $ 59 $ (13) $ 243 Three Months 2019:
Electricmargins $ 611 $ 267 $ $ 109 $ (7) $ 980 Natural gas margins 17 100 117 Otheroperations and maintenance expenses (254) (126) (59) (14) 3 (450)
Depreciation and amortization expenses (139) (68) (19) (21) (2) (249)
Taxes other than income taxes (83) (1 9) (1 3) (1 ) (2) (118)
Other income, net 16 10 3 3 4 36 Interestcharges (45) (17) (9) (19) (7) (97)
Income (taxes) benefit (15) (10) (1) (15) 2 (39)
Net income (loss) 108 37 2 42 (9) 180 Noncontrolling interests preferred stock dividends (1) (1) I (1)
Net income (loss) attributable to Ameren common shareholders $ 107 $ 37 $ 1 $ 42 $ (8) $ 179 Six Months 2020:
Electric margins $ 1,067 $ 544 $ $ 259 $ (15) $ 1,855 Natural gas margins 46 286 332 Other operations and maintenance expenses (441) (248) (109) (29) 5 (822)
Depreciation and amortization expenses (294) (142) (41) (47) (2) (526)
Taxes other than income taxes (162) (38) (35) (4) (5) (244)
Other income, net 29 16 7 5 12 69 Interest charges (90) (36) (20) (39) (16) (201)
Income (taxes) benefit (11) (22) (23) (39) 24 (71)
Net income 144 74 65 106 3 392 Noncontrolling interests preferred stock dividends (2) (1) (1) I (3)
Net income attributable to Ameren common shareholders $ 142 $ 73 $ 64 $ 106 $ 4 $ 389 Six Months 2019:
Electric margins $ 1,104 $ 534 $ $ 223 $ (15) $ 1,846 Natural gas margins 44 286 330 Other operations and maintenance expenses (478) (245) (1 1 8) (29) 3 (867)
Depreciation and amortization expenses (279) (136) (39) (41) (2) (497)
Taxes otherthan income taxes (160) (39) (37) (2) (6) (244)
Otherincome, net 28 16 6 4 11 65 Interest charges (92) (35) (19) (38) (10) (194)
Income (taxes) benefit (19) (21) (20) (31) 25 (66)
Net income 148 74 59 86 6 373 Noncontrolling interests preferred stock dividends (2) (1) (1) I (3)
Net income attributable to Ameren common shareholders $ 146 $ 73 $ 58 $ 86 $ 7 $ 370 46
Below is Ameren Illinois table of income statement components by segment for the three and six months ended June 30, 2020 and 2019:
Ameren Illinois Ameren Ameren Electric Illinois Illinois Distribution Natural Gas Transmission Ameren Illinois Three Months 2020:
Electric and natural gas margins $ 264 $ 104 $ 87 $ 455 Other operations and maintenance expenses (118) (52) (12) (182)
Depreciation and amortization expenses (71) (20) (16) (107)
Taxes other than income taxes (19) (1 3) (32)
Other income, net 9 5 3 f7 Interest charges (18) (10) (10) (38)
Income taxes (11) (4) (14) (29)
Netincome 36 10 38 84 Preferred stock dividends (1) (1)
Net income attributable to common shareholder $ 36 $ 9 $ 38 $ 83 Three Months 2019:
Electric and natural gas margins $ 267 $ 100 $ 66 $ 433 Other operations and maintenance expenses (1 26) (59) (1 1) (196)
Depreciation and amortization expenses (68) (19) (14) (101)
Taxes other than income taxes (1 9) (1 3) (32)
Other income, net 10 3 2 15 Interest charges (17) (9) (10) (36)
Income taxes (10) (1) (9) (20)
Net income 37 2 24 63 Preferred stock dividends (1) (1)
Net income attributable to common shareholder $ 37 $ 1 $ 24 $ 62 Six Months 2020:
Electric and natural gas margins $ 544 $ 286 $ 161 $ 991 Other operations and maintenance expenses (248) (109) (24) (381)
Depreciation and amortization expenses (142) (41) (31) (214)
Taxes other than income taxes (38) (35) (1) (74)
Other income, net 16 7 5 28 Interest charges (36) (20) (21) (77) income taxes (22) (23) (23) (68)
Netincome 74 65 66 205 Preferred stock dividends (1) (1) (2)
Net income attributable to common shareholder $ 73 $ 64 $ 66 $ 203 Six Months 2019:
Electric and natural gas margins $ 534 $ 286 $ 136 $ 956 Other operations and maintenance expenses (245) (1 1 8) (24) (387)
Depreciation and amortization expenses (1 36) (39) (27) (202)
Taxes other than income taxes (39) (37) (1) (77)
Other income, net 16 6 4 26 lnterestcharges (35) (19) (19) (73)
Income taxes (21) (20) (18) (59)
Netincome 74 59 51 184 Preferred stock dividends (1) (1) (2)
Net income attributable to common shareholder $ 73 $ 58 $ 51 $ 182 Electric and Natural Gas Margins Electric margins are defined as electric revenues less fuel and purchased power costs. Natural gas margins are defined as natural gas revenues less natural gas purchased for resale. We consider electric and natural gas margins useful measures to analyze the change in profitability of our electric and natural gas operations between periods. We have included the analysis below to complement 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 comparable to other companies presentations or more useful than the GAAP information we provide elsewhere in this report.
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Electric Margins Total by Segment(a) Increase (Decrease) by Segment Overall Ameren Increase of $29 Million Overall Ameren Increase (QID YoY) of $9 Million (YTD Y0Y)
$2000 $30 $40 $36
$27
$150*0
$20 $20 Sb I $10 I
$4
$500 so <:
$0 $13)
QTD QTD rID YTD 2020 2019 2020 2019 1(10) $(40) $437)
(a) Includes other/intersegment eliminations of$(6) million and $(7) million in the three months ended June 30, 2020, and 2019, respectively. Also includes other/intersegment eliminations of $(1 5) million and $(1 5) million in the six months ended June 30, 2020, and 201 9, respectively.
lAmeren Missouri I Ameren Illinois Electric Distribution %Ameren Transmission Other/Intersegment Eliminations Natural Gas Margins Total by Segment Increase (Decrease) by Segment Overall Ameren Increase of $2 Million Overall Ameren Increase (QID YoY) of $2 Million (YTD YoY)
$350 $332 $330 $ $5
$250-0
$150-
$200 -
5119 soil
- E 11 QTD 2020 OTO 2019 YrD 2020 YTD 2019 1(5)
S{2 1(5)
Ameren Missouri Ameren Illinois Natural Gas 48
The following tables present the favorable (unfavorable) variations by Ameren segment for electric and natural gas margins for the three and six months ended June 30, 2020, compared with the year-ago periods.
Ameren Ameren Illinois Illinois Other Ameren Electric Natural Ameren Ilntersegment Three Months Missouri Distribution Gas Transmission(a) Eliminations Ameren Electric revenue change:
Effect of weather (estimate)tb) $ 21 $ $ $ $ $ 21 Base rates (estimate)(c) (18) (7) 27 2 Sales volumes and changes in customer usage patterns (excluding the estimated effects of weather and MEEIA) (25) (25) 0ff-system sales 21 21 Energy-efficiency program investments 3 3 Other (5) 1 (4) cost recovery mechanisms offset in fuel and purchased powertd) 2 (3) (1)
Other cost recovery mechanisms(e) 2 2 Total electric revenue change $ (2) S (7) $ $ 27 $ 1 $ 19 Fuel and purchased power change:
Energy costs (excluding the estimated effect ofweather) $ (15) $ $ $ $ $ (15)
Effect of weather (estimate)tb) (4) (4)
Effect of lower net energy costs included in base rates 29 29 Transmission services charges (1) (1)
Other (1) 1 cost recovery mechanisms offset in electric revenuefa)
(2) 3 I Total fuel and purchased power change $ 6 $ 4 $ $ $ $ 10 Net change in electric margins $ 4 $ (3) $ $ 27 $ I $ 29 Natural gas revenue change:
Effect of weather (estimate)(b) $ $ $ $ $ $
change in rate design (I) (I)
QiPrider 5 5 Other (I) (I) (2)
Cost recovery mechanisms offset in natural gas purchased for resaletd) (2) (2)
Other cost recovery mechanisms(e)
Total natural gas revenue change $ (4) $ $ 4 $ $ $
Natural gas purchased for resale change:
Effect of weather (estimate)(b) $ $ $ $ $ $
Cost recovery mechanisms offset in natural gas revenue(d) 2 2 Total natural gas purchased for resale change $ 2 $ $ $ $ $ 2 Net change in natural gas margins $ (2) $ $ 4 $ $ $ 2 49
Ameren Ameren Illinois Illinois Other Ameren Electric Natural Ameren Ilntersegment Six Months Missouri Distribution Gas Transmission(a) Eliminations Ameren Electric revenue change:
Effect of weather (estimate)(b) $ (6) $ $ $ $ $ (6)
Base rates (estimate)(c) ( 8) 4 36 22 Sales volumes and changes in customer usage patterns (excluding the estimated effects ofweather and MEEIA) (24) (24)
MEEIA 2013 and MEEIA 2016 performance incentives (20) (20)
Off-system sales (1) (1)
Energy-efficiency program investments 6 6 Other (4) (1) (5)
Cost recovery mechanisms offset in fuel and purchased powertd)
(1) (12) (13)
Other cost recovery mechanisms (1) (1) (2)
Total electric revenue change $ (75) $ (4) $ $ 36 $ $ (43)
Fuel and purchased power change:
Energy costs (excluding the estimated effect of weather) $ 9 $ S S $ $ 9 Effect of weather (estimate)(b) 4 4 Effect of lower net energy costs included in base rates 29 29 Transmission services charges (3) (3)
Other (2) 2 Costrecoverymechanisms_offsetinelectricrevenuefd) 1 12 13 Total fuel and purchased power change $ 38 $ 14 $ $ $ $ 52 Net change in electric margins $ (37) $ 10 $ $ 36 $ $ 9 Natural gas revenue change:
Effect of weather (estimate)(b) $ (1 ) $ $ $ $ $ (1)
Change in rate design 3 3 QiPrider 10 10 Other (2) (2)
Cost recovery mechanisms offset in natural gas purchased for resale(d) (1 1 )
(45) (56)
Other cost recovery mechanisms(e) (8) (8)
Total natural gas revenue change $ (9) $ $ (45) $ $ $ (54)
Natural gas purchased for resale change:
Effect of weather (estimate)tb) $ $ $ $ $ $
Cost recovery mechanisms offset in natural gas revenue(d) 11 45 56 Total natural gas purchased for resale change $ II $ $ 45 $ $ $ 56 Netchangeinnaturalgasmargins $ 2 $ $ $ $ $ 2 (a) Includes an increase in transmission margins of $21 million and $25 million at Ameren Illinois for the three and six months ended June 30, 2020, compared with the year-ago periods.
(b) Represents the estimated variation resulting primarily from changes in cooling and heating degree-days on electric and natural gas demand compared with the year-ago periods; 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 revenue requirement reconciliation adjustment under formula rates. For Ameren Missouri, base rates exclude an increase of $1 2 million for the recovery of lost electric margins for the three and six months ended June 30, 2020, compared with the year-ago periods, resulting from the MEEIA 2016 and 2019 customer energy-efficiency programs. This amount is included in the sales volumes and changes in customer usage patterns (excluding the estimated effects of weather and MEEIA) line item.
(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.
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Ameren Amerens electric margins increased $29 million, or 3%, for the three months ended June 30, 2020, compared with the year-ago period, primarily because of increased margins at Ameren Transmission. Amerens electric margins increased $9 million, or less than 1 %, for the six months ended June 30, 2020, compared with the year-ago period, primarily because of increased margins at Ameren Transmission and Ameren Illinois Electric Distribution, partially offset by decreased margins at Ameren Missouri, as discussed below.
Amerens natural gas margins were comparable between periods, as discussed below.
Ameren Transmission Ameren Transmissions margins increased $27 million, or 25%, and $36 million, or 16%, for the three and six months ended June 30, 2020, respectively, compared with the year-ago periods. Margins were favorably affected by increased capital investment, as evidenced by a 13%
increase in rate base used to calculate the revenue requirement, and the result of a May 2020 FERC order, which increased the ROE related to the November 201 3 complaint case, compared with the ROE set by a November 2019 FERC order, and dismissed the February 201 5 complaint case.
See Note 2 Rate and Regulatory Matters under Part I, Item 1 , of this report for additional information regarding the FERC complaint cases.
Ameren Missouri Ameren Missouris electric margins increased $4 million, or I %, and decreased $37 million, or 3%, for the three and six months ended June 30, 2020, respectively, compared with the year-ago periods.
The following items had an unfavorable effect on Ameren Missouris electric margins for the three and six months ended June 30, 2020, compared with the year-ago periods (except when a specific period is referenced):
. Excluding the estimated effects ofweather and the MEEIA 2016 and 2019 customer energy-efficiency programs, electric revenues decreased an estimated $25 million and $24 million, respectively. The decrease was primarily due to a decrease in sales volumes (-$17 million and -$18 million, respectively), which were unfavorably affected by the COVID-19 pandemic, and a decrease in the average retail price per kilowatthour due to changes in customer usage patterns and shifts in commercial and industrial usage between rate classes (-$8 million and -$6 million, respectively). While the MEEIA 2016 and 2019 customer energy-efficiency programs reduced retail sales volumes, the recovery of lost electric margins under the MEEIA ensured that electric margins were not affected.
. The absence of revenues associated with MEEIA 2013 and 2016 performance incentives in 2020, which were recognized in the first quarter of 201 9, decreased revenues $20 million for the six months ended June 30, 2020. See Note 2 Rate and Regulatory Matters under Part I, Item I ofthis report for information regarding the MEEIA 2013 and MEEIA 2016 performance incentives.
The following items had a favorable effect on Ameren Missouris electric margins for the three and six months ended June 30, 2020, compared with the year-ago periods (except when a specific period is referenced):
. Summer temperatures were warmer as cooling degree days increased 5% and spring temperatures were colder as heating degree days increased 48% for the three months ended June 30, 2020. The aggregate effect of weather increased margins an estimated $1 7 million. The change in margins due to weather is the sum of the effect of weather (estimate) on electric revenues (+$21 million) and the effect of weather (estimate) on fuel and purchased power (-$4 million) in the table above.
. Lower net energy costs included in base rates partially offset by lower electric base rates as a result of the March 2020 electric rate order (effective April 1st) increased margins $1 I million for the three months ended June 30, 2020. The change in electric base rates is the sum of the change in base rates (estimate) (-$18 million) and the effect of lower net energy costs included in base rates (+$29 million) in the table above.
. Net energy costs increased margins $6 million and $8 million, respectively, as a result of decreased sales volumes, which were reduced by the COVID-19 pandemic. The change in net energy costs is the sum ofthe effect of revenue change in off-system sales (+$21 million and -$1 million, respectively), and the effect ofthe change in energy costs (-$15 million and $9 million, respectively) in the table above.
Ameren Missouris natural gas margins were comparable between periods.
Ameren Illinois Ameren Illinois electric margins increased $18 million, or 5%, and $35 million, or 5%, for the three and six months ended June 30, 2020, respectively, compared with the year-ago periods, driven by increased margins at Ameren Illinois Transmission in both periods and increased margins at Ameren Illinois Electric Distribution in the six months ended June 30, 2020. Ameren Illinois Natural Gas margins increased $4 million, or 4%, for the three months ended June 30, 2020, compared with the year-ago period. Ameren Illinois Natural Gas margins were comparable between the six months ended June 30, 2020 and 2019.
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Ameren Illinois Electric Distribution Ameren Illinois Electric Distributions margins decreased $3 million, or 1 %, and increased $1 0 million, or 2%, for the three and six months ended June 30, 2020, respectively, compared with the year-ago periods.
The following items had a favorable effect on Ameren Illinois Electric Distributions margins for the three and six months ended June 30, 2020, compared with the year-ago periods (except when a specific period is referenced):
. Margins increased due to higher recoverable non-purchased power expenses (+$9 million) and increased capital investment (+$5 million), as evidenced by a 7% increase in rate base, partially offset by a lower recognized ROE (-$1 0 million), as evidenced by a decrease of 1 1 8 basis points in the estimated annual average of the monthly yields ofthe 30-year United States Treasury bonds under formula ratemaking for the six months ended June 30, 2020. The sum of these changes collectively increased margins $4 million for the six months ended June 30, 2020.
Revenues increased $3 million and $6 million, respectively, due to increased energy-efficiency program investments under formula ratemaking.
Ameren Illinois Electric Distributions margins decreased for the three months ended June 30, 2020, compared with the year-ago period due to lower recoverable non-purchased power expenses (-$5 million) and a lower recognized ROE (-$4 million), partially offset by increased capital investment (+$2 million) under performance-based formula ratemaking. The sum of these changes collectively decreased margins $7 million.
Ameren Illinois Natural Gas Ameren Illinois Natural Gas margins increased $4 million, or 4%, for the three months ended June 30, 2020, compared with the year-ago period. Revenues increased from QIP recoveries due to additional investment in qualified natural gas infrastructure. Ameren Illinois Natural Gas margins were comparable between the six months ended June 30, 2020 and 2019.
Ameren Illinois Transmission Ameren Illinois Transmissions margins increased $21 million, or 32%, and $25 million, or 18%, for the three and six months ended June 30, 2020, respectively, compared with the year-ago periods. Margins were favorably affected by increased capital investment, as evidenced by a 19%
increase in rate base used to calculate the revenue requirement, and the result of a May 2020 FERC order, which increased the ROE related to the November 201 3 complaint case, compared with the ROE set by a November 201 9 FERC order, and dismissed the February 2015 complaint case.
See Note 2 Rate and Regulatory Matters under Part I, Item 1 , of this report for additional information regarding the FERC complaint cases.
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Other Operations and Maintenance Expenses Total by Segment(a) Increase (Decrease) by Segment Overall Ameren Overall Ameren Decrease of $66 Million Decrease of $45 Million (QID YoY) (YTD YoY)
$900 $10 $10
$1 $5 $3
$700 $0
$600 $1o) $18) 47) $5)
$500 $450 S(J0)
S(20)
!$400 S(15
$(30)
$300 I -
$(20)
$200 S4O $25)
$30)
I0 1(50) -
$(35)
QTD 010 Y1D YTO 2020 2019 2020 2019
$(60) S40) s (a) Includes other/intersegment eliminations of $(3) million and $(3) million in the three months ended June 30, 2020, and 201 9, respectively. Also includes other/intersegment eliminations of $(5) million and $(3) million in the six months ended June 30, 2020, and 2019, respectively.
Ameren Missouri Ameren Illinois Natural Gas Other/Intersegment Eliminations I Ameren Illinois Electric Distribution I *.
Ameren Transmission Ameren Other operations and maintenance expenses decreased $66 million and $45 million in the three and six months ended June 30, 2020, respectively, compared with the year-ago periods, due to changes discussed below.
Ameren Transmission Other operations and maintenance expenses were comparable between periods.
Ameren Missouri Other operations and maintenance expenses decreased $52 million and $37 million in the three and six months ended June 30, 2020, respectively, compared with the year-ago periods. The following items decreased other operations and maintenance expenses in the three and six months ended June 30, 2020, compared with the year-ago periods (except where a specific period is referenced):
Callaway Energy Center refueling operations and maintenance costs decreased $25 million and $32 million, respectively, primarily because of the refueling and maintenance outage that was completed in May 201 9. The 201 9 outage costs were expensed as incurred. Costs for the current years fall refueling and maintenance outage are deferred as a regulatory asset pursuant to the February 2020 MoPSC order.
. Non-Callaway Energy Center maintenance costs decreased $13 million and $15 million, respectively, primarily due to lower electric system infrastructure maintenance expenses as a result of decreased system load, disciplined cost management, and the deferral of projects to future periods.
The cash surrender value of company-owned life insurance increased $6 million in the three months ended June 30, 2020, because of increased favorable market returns in the current-year period compared with the year-ago period.
. Transmission and distribution expenditures decreased $6 million and $5 million, respectively, primarily due to storms in the second quarter of 2019.
Amortization of solar rebate costs decreased $4 million in both periods as a result of the March 2020 MoPSC electric rate order.
53
The following items partially offset the above decreases in other operations and maintenance expenses in the three and six months ended June 30, 2020, compared with the year-ago periods (except where a specific period is referenced):
. The cash surrender value of company-owned life insurance decreased $9 million in the six months ended June 30, 2020, because of favorable market returns in the year-ago period.
. Customer energy-efficiency program costs increased $5 million in the three months ended June 30, 2020, because of lower participation in the MEEIA 2019 programs in the second quarter of 2019 as programs had just begun.
. Technology-related expenditures increased $5 million in the six months ended June 30, 2020, primarily due to costs associated with the implementation of cloud computing technology.
Ameren Illinois Other operations and maintenance expenses decreased $14 million and $6 million in the three and six months ended June 30, 2020, respectively, compared with the year-ago periods, as discussed below. Other operations and maintenance expenses were comparable between periods at Ameren Illinois Transmission.
Ameren Illinois Electric Distribution Other operations and maintenance expenses decreased $8 million in the three months ended June 30, 2020, compared with the year-ago period, primarily due to a $3 million increase in the cash surrender value of company-owned life insurance, resulting from increased favorable market returns in the current-year period compared with the year-ago period, and a $2 million decrease in labor and benefit costs, primarily due to lower medical costs. Additionally, meter reading costs decreased by $2 million due to increased automated meter deployment. Other operations and maintenance expenses increased $3 million in the six months ended June 30, 2020, compared with the year-ago period, primarily due to a $4 million decrease in the cash surrender value of company-owned life insurance because of favorable market returns in the year-ago period and a $4 million increase in amortization of regulatory assets associated with energy-efficiency program investments under performance-based formula ratemaking.
These increases were partially offset by a $3 million decrease in meter reading costs and a $2 million decrease in injury claims.
Ameren Illinois Natural Gas Other operations and maintenance expenses decreased $7 million in the three months ended June 30, 2020, compared with the year-ago period, primarily due to a $2 million increase in the cash surrender value of company-owned life insurance because of increased favorable market returns in the current-year period compared with the year-ago period, and insignificant decreases in various other operations and maintenance expenses, including reductions in medical benefit costs, meter reading costs, and energy-efficiency rider costs. Other operations and maintenance expenses decreased $9 million in the six months ended June 30, 2020, compared with the year-ago period, primarily due to a $5 million reduction in energy-efficiency and environmental remediation rider costs and a $3 million reduction in meter reading costs due to increased automated meter deployment.
54
Depreciation and Amortization Expenses Total by Segment(a) Increase (Decrease) by Segment Overall Ameren Increase of $22 Million Overall Ameren Increase (QTD YoY) of $29 Million (YTD YoY)
$600 $20 520 5526
=1 S497
$500 I 516
$15
______ $15 $15 C
0 5300 5271 510 $10
$200
£6
$100 I
55 $5 53 so (a)
QID 2020 QTD 2019 VTD 2020 YTO 2019 so ii so Includes other/intersegment eliminations of $2 million and $2 million in the three months ended June 30, 2020, and 2019, respectively. Also includes other/intersegment eliminations of $2 million and $2 million in the six months ended June 30, 2020, and 201 9, respectively.
4 Ameren Missouri Ameren Illinois Natural Gas Other/Intersegment Eliminations AmerenWinois Electric 4Ameren Transmission I
Depreciation and amortization expenses increased $22 mIIion, $16 miIIon, and $6 million in the three months ended June 30, 2020, and $29 million, $15 miIIon, and $12 million in the six months ended June 30, 2020 compared with the year-ago periods, atAmeren, Ameren Missouri, and Ameren Illinois, respectively, primarily because of additional property, plant, and equipment investments across their respective segments. Amerens and Ameren Missouris depreciation and amortization expenses include a deferral to a regulatory asset of depreciation and amortization expenses pursuant to the PISA. As a result of the March 2020 MoPSC electric rate order, the deferral to a regulatory asset of depreciation and amortization expenses related to PISA-eligible assets placed in-service through December 31 201 9, ceased as of April 1 2020, as the associated depreciation and amortization expenses were then reflected in customer rates. The PISA deferral of depreciation and amortization expenses was $1 million and
$4 million for the three months ended June 30, 2020 and 2019, respectively, and $14 million and $7 million for the six months ended June 30, 2020 and 2019, respectively.
55
Taxes Other Than Income Taxes Total by Segment(a) Increase (Decrease) by Segment Overall Ameren Overall Ameren Change Increase of $1 Million of (QTD Y0Y) $ Million (YTD YoY)
$3o 52 53
$25 $244 $244 52 52
- s1o
- 1h+/-Z_i :i s1)
Sf1)
$50 5(1)
S2) so QTD 010 YTD YTO 2020 2019 2020 2019 2 3 (a) Includes $2 million, $1 million, $4 million, and $2 million at Ameren Transmission in the three months ended June 30, 2020, the three months ended June 30, 201 9, the six months ended June 30, 2020, and the six months ended June 30, 201 9, respectively, and other/intersegment eliminations of $2 million, $2 million, $5 million, and $6 million, in the three months ended June 30, 2020, the three months ended June 30, 201 9, the six months ended June 30, 2020, and the six months ended June 30, 2019, respectively.
- Ameren Missouri Ameren Illinois Natural Gas Other/Intersegment Eliminations I -g1015 Electric Ameren Transmission Taxes other than income taxes were comparable between periods at Ameren, Ameren Missouri, Ameren Illinois, and their respective segments.
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Other Income, Net Total by Segment Increase (Decrease) by Segment Overall Ameren Increase of$12 Million Overall Ameren Increase (QTD YoY) of $4 Million (YTD Y0Y)
$80 510 $2
$70
$50
$40 530
$20 55
- jLuI
$10 $1)
Sf1) so QTD QTD YTD YTD 2020 2019 2020 2019
$(5) 5(2)
. Ameren Missouri Ameren Illinois Natural Gas *Other/lntersegment Eliminations I Ameren Illinois Electric Distribution Ameren Transmission Other income, net, increased $12 million in the three months ended June 30, 2020, compared with the year-ago period, primarily due to a $9 million increase in the non-service cost components of net periodic benefit income at Ameren Missouri, partially due to changes in the base level of pension and postretirement costs as a result of the March 2020 MoPSC electric rate order. Other income, net, increased $4 million in the six months ended June 30, 2020, compared with the year-ago period. An increase of $1 0 million in the non-service cost components of net periodic benefit income at Ameren Missouri was partially offset by a $7 million increase in donations, primarily due to charitable donations made pursuant to the March 2020 MoPSC electric rate order. Additionally, other income, net, increased due to insignificant activity across the other Ameren segments.
See Note 2 Rate and Regulatory Mailers under Part I, Item 1, ofthis report for additional information regarding the Ameren Missouri 2019 electric service regulatory rate review.
See Note 5 Other Income, Net under Part I, Item I of this report for additional information.
57
Interest Charges Total by Segment Increase (Decrease) by Segment Overall Ameren Increase of $1 1 Million Overall Ameren Increase (QTD YoY) of $7 Million (YTD YoY)
$10 $10
$291
$200 -1
$f5o !$5 $5
$5
- JLJ.
I $108 s9_
$10v
$50 S(2)
I0 QTD QTO YTD YTD 2020 2019 2020 2019 1(5)
Ameren Missouri SAmeren Illinois Natural Gas *Other/Intersegment Eliminations I AmerenHhnois Electric lAmeren Transmission Interest charges increased $1 I million and $7 million in the three and six months ended June 30, 2020, respectively, compared with the year-ago periods. Interest charges at Ameren and Ameren Missouri include a deferral to a regulatory asset of interest charges pursuant to the PISA. As a result of the March 2020 MoPSC electric rate order, the deferral to a regulatory asset of amounts related to PISA-eligible assets placed in-service through December 31 201 9, ceased as of April 1 2020, as the return on those PISA assets was then reflected in customer rates. The PISA deferral of interest charges was less than $1 million and $3 million for the three months ended June 30, 2020 and 201 9, respectively, and $9 million and $5 million for the six months ended June 30, 2020 and 201 9, respectively. The increase in interest charges in the three months ended June 30, 2020, was primarily due to a long-term debt issuance at Ameren (parent) in April 2020 and the lower PISA deferral at Ameren Missouri. The increase in interest charges in the six months ended June 30, 2020, was primarily due to increased interest charges at Ameren (parent), resulting from its April 2020 long-term debt issuance.
Income Taxes The following table presents effective income tax rates for the three and six months ended June 30, 2020 and 2019:
Three Months(a) Six Months(a) 2020 2019 2020 2019 Ameren 17 % 18 % 15 % 15 %
Ameren Missouri 7 % 12 % 7 % 12 %
Ameren Illinois 26 % 23 % 25 % 24 %
Ameren Illinois Electric Distribution 25 % 21 % 24 % 22 %
Ameren Illinois Natural Gas 29 % 22 % 26 % 25 %
Ameren Illinois Transmission 27 % 26 % 26 % 25 %
Ameren Transmission 27 % 27 % 27 % 27 %
(a) Estimate of the annual effective income tax rate adjusted to reflect the tax effect of items discrete to the three and six months ended June 30, 2020 and 2019.
See Note 12 Income Taxes under Part I, Item I of this report for a reconciliation of the federal statutory corporate income tax rate to the effective income tax rate for the Ameren Companies.
58
The effective income tax rate was higher at Ameren Illinois Electric Distribution and Ameren Illinois Natural Gas in the three months ended June 30, 2020, compared with the year-ago period, primarily because of lower amortization of excess deferred taxes and lower tax benefits from certain depreciation differences on property-related items largely attributable to the allowance for equity funds used during construction. The effective income tax rate was higher at Ameren Illinois Electric Distribution and Ameren Illinois Natural Gas in the six months ended June 30, 2020, compared with the year-ago period, primarily because of lower amortization of excess deferred taxes.
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-regulated residential, commercial, and industrial customers, 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 ofAmeren Missouri and Ameren Illinois, 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 ofAmeren Missouri and Ameren Illinois, with capital contributions from Ameren (parent). We expectto 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 modernization, 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 DRPlus and employee benefit plans and expects to continue to do so through at least 2024. Ameren expects these issuances to provide equity of about $100 million annually. Ameren also plans to issue incremental common equity to fund a portion ofAmeren Missouris wind generation investments through the physical settlement of the forward sale agreement entered into in August 201 9 relating to 7.5 million shares of common stock. Additionally, Ameren plans to issue incremental equity of about $150 million annually from 2021 to 2024. For additional information about the forward sale agreement, see Note 4 Long-Term Debt and Equity Financings under Part I, Item 1 of this report. 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.
The use of cash provided by operating activities and short-term borrowings to fund capital expenditures and other long-term investments at the Ameren Companies frequently results in a working capital deficit, defined as current liabilities exceeding current assets, as was the case at June 30, 2020, for Ameren and Ameren Illinois. With the credit capacity available under the Credit Agreements, and cash and cash equivalents, the Ameren Companies had net available liquidity of $2.2 billion at June 30, 2020. As a result of capital market volatility due, in part, to the COVID-19 pandemic, and to increase net available liquidity, Ameren (parent) accelerated a debt issuance to April 2020, which had been planned for later in 2020.
Additionally, Ameren expects to receive between $540 million and $550 million upon settlement of the forward sale agreement, which can be settled at Amerens discretion on or prior to March 31 2021 See Credit Facility Borrowings and Liquidity and Long-term Debt and Equity below for additional information.
The following table presents net cash provided by (used in) operating, investing, and financing activities for the six months ended June 30, 2020 and 2019:
Net Cash Provided By Net Cash Used In Net Cash Provided by Operating Activities Investing Activities Financing Activities 2020 2019 Variance 2020 2019 Variance 2020 2019 Variance Ameren $ 694 $ 879 $ (185) $ (1,315) $ (1,154) $ (161) $ 608 $ 290 $ 318 Ameren Missouri 292 361 (69) (604) (521) (83) 284 165 119 Ameren Illinois 340 452 (112) (659) (558) (101) 336 125 211 Cash Flows from Operating Activities Our cash provided by operating activities is affected by fluctuations of trade accounts receivable, inventories, and accounts and wages payable, among other things, as well as the unique regulatory environment for each of our 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 without a traditional rate proceeding. Similar regulatory mechanisms exist for certain other operating expenses that can also affect the timing of cash provided by operating activities. The timing of cash payments for costs recoverable under our regulatory mechanisms differs from the recovery period of those costs. Additionally, the seasonality of our electric and natural gas businesses, primarily caused by changes in customer demand due to weather, significantly affects the amount and timing of our cash provided by operating activities.
Our customers payment for our services has been adversely affected by the COVID-19 pandemic, resulting in a decrease to our cash flow from operations. For information regarding Ameren Missouris and Ameren Illinois suspension and subsequent reinstatement of customer disconnections and late fee charges for nonpayment, see Note 2 Rate and Regulatory Matters under Part I, Item 1 of this report. In addition, see Results of Operations above for more information on Amerens, Ameren Missouris, and Ameren Illinois accounts receivable balances that were 30 days or greater past due or that were a part of a deferred payment arrangement.
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Ameren Amerens cash provided by operating activities decreased $1 85 million in the first six months of 2020, compared with the year-ago period. The following items contributed to the decrease:
A $156 million decrease resulting from decreased customer collections, primarily due to an increase in accounts receivable balances, which was affected by an increase in amounts that were 30 days or greater past due or that were a part of a deferred payment arrangement, and a decrease in sales volumes at Ameren Missouri, partially offset by decreased fuel and purchased power costs at Ameren Missouri, decreased purchased power costs and volumes and natural gas costs at Ameren Illinois, and a net increase attributable to regulatory recovery mechanisms.
. A $32 million decrease, primarily resulting from increased coal inventory levels as less coal was purchased in 2019 due to delivery disruptions that occurred from flooding.
. A $21 million increase in payments to settle ARO liabilities, primarily related to Ameren Missouris CCR storage facilities.
. A net $20 million decrease in collateral received from counterparties, primarily resulting from changes in the market prices of power and natural gas, changes in contracted commodity volumes, and decreases resulting from Ameren Illinois renewable energy contracts entered into pursuant to the FEJA.
. A $14 million increase in property tax payments atAmeren Missouri due to higher property tax values in 2019, compared with 2018. Property tax payments in a given year are based on the preceding years property tax values.
The following items partially offset the decrease in Amerens cash from operating activities between periods:
. A $27 million decrease in payments for nuclear refueling and maintenance outages at Ameren Missouris Callaway Energy Center. There was no refueling and maintenance outage in the first half of 2020.
A $1 7 million decrease in non-Callaway Energy Center maintenance costs at Ameren Missouri, primarily due to lower electric system infrastructure maintenance expenses as a result of decreased system load, disciplined cost management, the deferral of projects to future periods, and lower storm costs.
. A $12 million decrease in payments for the employer portion of Social Security taxes as a result of a payment deferral allowed under the Coronavirus Aid, Relief, and Economic Security Act. The deferred amounts will be paid over two years beginning in 2021.
Ameren Missouri Ameren Missouris cash provided by operating activities decreased $69 million in the first six months of 2020, compared with the year-ago period. The following items contributed to the decrease:
. An $89 million decrease resulting from decreased customer collections, primarily due to an increase in accounts receivable balances and a decrease in sales volumes, partially offset by decreased fuel and purchased power costs and a net increase attributable to regulatory recovery mechanisms.
. A $32 million decrease, primarily resulting from increased coal inventory levels as less coal was purchased in 2019 due to delivery disruptions that occurred from flooding in 2019.
. A $21 million increase in payments to settle ARO liabilities, primarily related to CCR storage facilities.
. A net $14 million decrease in collateral received from counterparties, primarily resulting from changes in the market prices of power and natural gas and changes in contracted commodity volumes.
. A $14 million increase in property tax payments due to higher property tax values in 2019, compared with 2018. Property tax payments in a given year are based on the preceding years property tax values.
The following items partially offset the decrease in Ameren Missouris cash from operating activities between periods:
. A $57 million decrease in income tax payments to Ameren (parent) pursuant to the tax allocation agreement, primarily due to the timing of payments and lower taxable income in 2020.
. A $27 million decrease in payments for nuclear refueling and maintenance outages at the Callaway Energy Center. There was no refueling and maintenance outage in the first half of 2020.
. A $17 million decrease in non-Callaway Energy Center maintenance costs, primarily due to lower electric system infrastructure maintenance expenses as a result of decreased system load, disciplined cost management, the deferral of projects to future periods, and lower storm costs.
. A $6 million decrease in payments for the employer portion of Social Security taxes as a result of a payment deferral allowed under the Coronavirus Aid, Relief, and Economic Security Act. The deferred amounts will be paid over two years beginning in 2021.
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Ameren Illinois Ameren Illinois cash provided by operating activities decreased $112 million in the first six months of 2020, compared with the year-ago period.
The following items contributed to the decrease:
. A $67 million decrease resulting from decreased customer collections, primarily due to an increase in accounts receivable balances that were 30 days or greater past due or that were a part of a deferred payment arrangement and a net decrease attributable to regulatory recovery mechanisms, partially offset by decreased purchased power costs and volumes and natural gas costs.
. A $31 million increase in income tax payments to Ameren (parent) pursuant to the tax allocation agreement, primarily due to the timing.
. A net $6 million decrease in collateral received from counterparties, primarily resulting from changes in the market prices of power and natural gas, changes in contracted commodity volumes, and decreases resulting from renewable energy contracts entered into pursuant to the FEJA.
The decrease in Ameren Illinois cash from operating activities between periods was partially offset by a $5 million decrease in payments for the employer portion of Social Security taxes as a result of a payment deferral allowed under the Coronavirus Aid, Relief, and Economic Security Act.
The deferred amounts will be paid over two years beginning in 2021.
Cash Flows from Investing Activities Amerens cash used in investing activities increased $161 million in the first six months of2020, compared with the year-ago period, primarily as a result of a $1 03 million increase in capital expenditures. Partially offsetting capital expenditure increases at Ameren Missouri and Ameren Illinois discussed below, Amerens capital expenditures decreased due to a $25 million decrease at ATXI. ATXIs capital expenditures decreased as a result of decreased expenditures on the Mark Twain project compared to the year-ago period. Cash used in investing activities also increased $31 million due to the timing of nuclear fuel expenditures and $31 million due to net investment activity in the nuclear decommissioning trust fund at Ameren Missouri in the first six months of 2020, compared with the year-ago period.
Ameren Missouris cash used in investing activities increased $83 million in the first six months of 2020, compared with the year-ago period, primarily as a result of a $31 million increase due to the timing of nuclear fuel expenditures and a $31 million net increase in investment activity in the nuclear decommissioning trust fund. Ameren Missouri also had a $21 million increase in capital expenditures compared with the year-ago period, primarily related to electric delivery infrastructure upgrades and electric transmission system reliability projects.
Ameren Illinois cash used in investing activities increased $1 01 million in the first six months of 2020, compared with the year-ago period, primarily due to a $1 05 million increase in capital expenditures primarily related to electric transmission system reliability projects and upgrades to electric delivery and natural gas infrastructure.
Cash Flows from Financing Activities Cash provided by, or used in, financing activities is a result of our financing needs, which depend on the level of cash provided by operating activities, the level of cash used in investing activities, the level of dividends, and our long-term debt maturities, among other things.
Amerens cash provided by financing activities increased $318 million during the first six months of 2020, compared with the year-ago period.
During the first six months of 2020, Ameren utilized proceeds from the issuance of $1 263 million of long-term debt for general corporate purposes, including to repay then-outstanding short-term debt, including short-term debt incurred in connection with the repayment at maturity of long-term debt of $85 million, and to fund, in part, investing activities. During the first six months of 2020, Ameren repaid net short-term debt of $320 million. In comparison, during the first six months of 2019, Ameren utilized proceeds of $851 million from a long-term debt issuance and net commercial paper issuances to repay $329 million of higher-cost long-term debt and to fund, in part, investing activities. During the first six months of 2020, Ameren paid common stock dividends of $244 million, compared with $233 million in dividend payments in the year-ago period.
Ameren Missouris cash provided by financing activities increased $1 1 9 million during the first six months of 2020, compared with the year-ago period. During the first six months of 2020, Ameren Missouri utilized net proceeds from the issuance of $465 million of long-term debt to repay then-outstanding short-term debt, including short-term debt incurred in connection with the repayment at maturity of long-term debt of $85 million. During the first six months of 2020, Ameren Missouri repaid net short-term debt of $155 million, borrowed $65 million from the money pool, and used cash provided by financing activities to fund, in part, investing activities. In comparison, during the first six months of 2019, Ameren Missouri utilized net proceeds from the issuance of $450 million in long-term debt to repay then-outstanding commercial paper issuances, including short-term debt incurred in connection with the repayment at maturity of long-term debt of $329 million, and net commercial paper issuances of $150 million to fund, in part, investing activities. During the first six months of 2020, Ameren Missouri did not pay common stock dividends, compared with $100 million in dividend payments in the year-ago period.
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Ameren Illinois cash provided by financing activities increased $21 I million during the first six months of 2020, compared with the year-ago period. During the first six months of 2020, Ameren Illinois received $350 million in capital contributions from Ameren (parent), repaid net short-term debt of $12 million, and used cash provided by financing activities to fund, in part, investing activities. In comparison, during the first six months of 2019, Ameren Illinois utilized net proceeds from commercial paper issuances of $127 million to fund, in part, investing activities.
See Long-term Debt and Equity in this section for additional information on maturities and issuances of long-term debt.
Credit Facility Borrowings and Liquidity The liquidity needs of the Ameren Companies are typically supported through the use of available cash, drawings under committed credit agreements, commercial paper issuances, and/or, in the case ofAmeren Missouri and Ameren Illinois, short-term affiliate borrowings. See Note 3 Short-term Debt and Liquidity under Part I, Item 1, ofthis report for additional information on credit agreements, commercial paper issuances, Amerens money pool arrangements and related borrowings, and relevant interest rates.
The following table presents Amerens consolidated liquidity as of June 30, 2020:
Ameren (parent) and Ameren Missouri:
Missouri Credit Agreement borrowing capacity
$ I 200 Less: Ameren Missouri commercial paper outstanding 79 Less: Ameren Missouri letters of credit 3 Missouri Credit Agreement subtotal I ,1 I 8 Ameren (parent) and Ameren Illinois:
Illinois Credit Agreement borrowing capacity I 100 Less: Ameren Illinois commercial paper outstanding 41 Less: Ameren Illinois letters of credit 2 Illinois Credit Agreement subtotal 1,057 Subtotal $ 2,175 Add: Cash and cash equivalents 8 NetAvailable Liquidity $ 2,183 The Credit Agreements, among other things, provide $2.3 billion of credit until maturity in December 2024. See Note 3 Short-term Debt and Liquidity under Part I, Item 1 of this report for additional information on the Credit Agreements. During the six months ended June 30, 2020, Ameren (parent), Ameren Missouri, and Ameren Illinois each borrowed under the Credit Agreements and issued commercial paper. Borrowings under the Credit Agreements and commercial paper issuances are based upon available interest rates at that time of the borrowing or issuance. As a result of volatility in the capital markets, the Ameren Companies borrowed under the Credit Agreements in certain instances in the first quarter of 2020 rather than issuing commercial paper.
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 March 2020, the FERC issued an order authorizing Ameren Missouri to issue up to $1 billion of short-term debt securities, which expires in March 2022. In 201 8, the FERC issued an order authorizing Ameren Illinois to issue up to $1 billion of short-term debt securities, which expires in September 2020.
In July 201 9, the FERC issued an order authorizing ATXI to issue up to $300 million of short-term debt securities, which expires in 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 borrowing arrangements, or other arrangements may be made.
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Long-term Debt and Equity The following table presents Amerens issuances (net of any issuance premiums or discounts) of long-term debt and equity, as well as redemptions and maturities of long-term debt for the six months ended June 30, 2020 and 2019:
Month Issued, Redeemed, or Matured 2020 2019 Issuances of Long-term Debt Ameren:
3.50% Senior unsecured notes due 2031 April $ 798 $
Ameren Missouri:
2.95% First mortgage bonds due 2030 March $ 465 $
3.50% First mortgage bonds due 2029 March 450 Total Ameren long-term debt issuances $ I 263 $ 450 Issuances of Common Stock Ameren:
DRPIus and 401(k) Various $ 27 (a)(b) $ 37 (a)(b)
Total common stock issuances $ 27 $ 37 Total Ameren long-term debt and common stock issuances $ 1,290 $ 487 Redemptions and Maturities of Long-term Debt Ameren Missouri:
5.00% Senior secured notes due 2020 February $ 85 $
6.70% Senior secured notes due 2019 February 329 Total Ameren long-term debt redemptions and maturities $ 85 $ 329 (a) Ameren issued a total of 0.4 million and 0.5 million shares of common stock under its DRPIus and 401 (k) plan in the six months ended June 30, 2020 and 2019, respectively.
(b) Excludes 0.5 million and 0.8 million shares of common stock valued at $38 million and $54 million issued for no cash consideration in connection with stock-based compensation for the six months ended June 30, 2020 and 2019, respectively.
See Note 4 Long-Term Debt and Equity Financings under Part I, Item 1 of this report for additional information, including proceeds from issuances of long-term debt, the use of those proceeds, Amerens forward equity sale agreement relating to 7.5 million shares of common stock, and Ameren (parent)s capital contributions to Ameren Illinois.
Indebtedness Provisions and Other Covenants See Note 3 Short-term Debt and Liquidity under Part I, Item I of this report and Note 4 Short-term Debt and Liquidity and Note 5 Long-term Debt and Equity Financings under Part II, Item 8, of the Form 1 0-K for a discussion of provisions (and applicable cross-default provisions) and covenants contained in our credit agreements, in ATXIs note purchase agreement, and in certain of the Ameren Companies indentures and articles of incorporation.
At June 30, 2020, the Ameren Companies were in compliance with the provisions and covenants contained in 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.
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 of uncertainty 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), Ameren, Ameren Missouri, and Ameren Illinois each believes that it will continue to have access to the capital markets on reasonable terms. 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.
Dividends The amount and timing of dividends payable on Amerens common stock are within the sole discretion of Amerens board of directors. 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 of regulatory orders or legislation, and other key business considerations. Ameren expects its dividend payout ratio to be between 55% and 70% of annual earnings over the next few years.
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See Note 4 Short-term Debt and Liquidity and Note 5 Long-term Debt and Equity Financings under Part II, Item 8, of the Form 1 0-K for additional discussion of covenants and provisions contained in certain of the Ameren Companies financial agreements and articles of incorporation that would restrict the Ameren Companies payment of dividends in certain circumstances. At June 30, 2020, none of these circumstances existed at Ameren, Ameren Missouri, or Ameren Illinois and, as a result, these companies were not restricted from paying dividends.
The following table presents common stock dividends declared and paid by Ameren Corporation to its common shareholders and by Ameren subsidiaries to their parent, Ameren Corporation, for the six months ended June 30, 2020 and 2019:
Six Months 2020 2019 Ameren $ 244 $ 233 Ameren Missouri 100 ATXI 15 Commitments For a listing of our obligations and commitments, see Other Obligations in Note 9 Commitments and Contingencies under Part I, Item 1 of this report. See Note 10 Retirement Benefits under Part II, Item 8, of the Form 1 0-K for information regarding expected minimum funding levels for our pension plan.
Off-balance-sheet Arrangements At June 30, 2020, none of the 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 under Part I, Item 1 ofthis report for further detail concerning variable interest entities. See Note 5 Long-Term Debt and Equity under Part II, Item 8, ofthe Form 10-K 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.
The following table presents the principal credit ratings by Moodys and S&P, as applicable, effective on the date of this report:
Moodys S&P Ameren:
Issuer/corporate credit rating Baal BBB+
Senior unsecured debt Baal BBB Commercial paper P-2 A-2 Ameren Missouri:
Issuer/corporate credit rating Baal BBB+
Secured debt A2 A Senior unsecured debt Baal Not Rated Commercial paper P-2 A-2 Ameren Illinois:
Issuer/corporate credit rating A3 BBB+
Secured debt Al A Senior unsecured debt A3 BBB+
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.
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Collateral Postings Any weakening of our credit ratings may reduce access to capital and trigger additional collateral postings and prepayments. Such changes may also increase the cost of borrowing, 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 June 30, 2020. A sub-investment-grade issuer or senior unsecured debt rating (below Baa3 from Moodys or below BBB- from S&P) at June 30, 2020, could have resulted in Ameren, Ameren Missouri, or Ameren Illinois being required to post additional collateral or other assurances for certain trade obligations amounting to $170 million, $144 million, and $26 million, respectively.
Changes in commodity prices could trigger additional collateral postings and prepayments. Based on credit ratings at June 30, 2020, if market prices were 1 5% higher or lower than June 30, 2020 levels in the next 12 months and 20% higher or lower thereafter through the end of the term of the commodity contracts, then Ameren, Ameren Missouri, or Ameren Illinois could be required to post an immaterial amount, compared to each companys liquidity, of collateral or 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. The continued effect ofthe COVID-19 pandemic on our results of operations, financial position, and liquidity in subsequent periods will depend on its severity and longevity, future regulatory or legislative actions with respect thereto, and the resulting impact on business, economic, and capital market conditions. We continue to monitor the impacts the pandemic is having on our businesses, including but not limited to potential impacts on our liquidity and financing plans; demand for residential, commercial, and industrial electric and natural gas services; extended deferred payment arrangements and additional financial assistance programs for customers; bad debt expense; supply chain operations; the availability of our employees and contractors; counterparty credit; capital construction; infrastructure operations and maintenance; energy efficiency programs; and pension valuations. For additional information regarding recent rate orders, lawsuits, and pending requests filed with state and federal regulatory commissions, including those discussed below, see Note 2 Rate and Regulatory Matters under Part I, Item 1, ofthis report and Note 2 Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K.
Operations
. In the first six months of 2020, we have experienced a net decrease in our sales volumes, which have been, and continue to be, affected by the COVID-19 pandemic, among other things. Further, our customers payment for services has been adversely affected by the COVID-19 pandemic, which has led to an increase in our accounts receivable balances that are past due or that are a part of a deferred payment arrangement. Because ofAmeren Illinois and ATXIs regulatory frameworks, revenues are largely decoupled from changes in sales volumes.
Additionally, bad debt write-offs, net of any subsequent recoveries, at Ameren Illinois electric distribution and natural gas distribution businesses are recoverable through regulatory mechanisms. In 2020, Ameren Illinois electric bad debt rider provides for the recovery of bad debt expense.
However, earnings at Ameren Missouri are exposed to sales volume changes and increases in bad debt expense, which could result in higher bad debt write-offs. See the Results of Operations section above for additional information on our accounts receivable balances and changes in Ameren Missouris sales volumes in 2020, compared to 2019. Additionally, see Note 2 Rate and Regulatory Matters under Part I, Item 1, of this report for information on our reinstatement of customer disconnection and late fee charges for non-payment, as well as a June 2020 ICC order in a service disconnection moratorium proceeding, which required Ameren Illinois to implement more flexible credit and collection practices and allowed for recovery of costs incurred related to the COVID-19 pandemic and forgone late fees.
. The PISA permits Ameren Missouri to defer and recover 85% of the depreciation expense and a return at the applicable WACC on investments in certain property, plant, and equipment placed in service after September 1 201 8, 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 of 20 years following a regulatory rate review. Additionally, under the RESRAM, Ameren Missouri is permitted to recover the 1 5% 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 of regulatory lag between regulatory rate reviews. 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 of using the applicable WACC, with the difference recognized in revenues when recovery of such deferrals is reflected in customer rates. As a result of the PISA election, additional provisions of the law apply to Ameren Missouri, including limitations on electric customer rate increases. Both the rate increase limitation and the PISA are effective through December 2023, unless Ameren Missouri requests and the MoPSC approves an extension through December 2028.
. 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 65
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 included in the five-year range above are based on the assumption that Ameren Missouri requests and receives MoPSC approval of an extension of the PISA through December 2028. 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 with the MoPSC to build three solar-plus-storage facilities. In June 2020, Ameren Missouri withdrew its application for the certificates of convenience and necessity following intervenor feedback. Ameren Missouri is evaluating new solar generation facilities as a part of its integrated resource plan, which is expected to be filed in September 2020. Also in 2019, the MoPSC approved Ameren Missouris Charge Ahead program, which provides incentives for the development of over 1 000 electric vehicle charging stations along highways and at various locations in communities throughout Ameren Missouris service territory. The purpose of the 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.
In 2018, the MoPSC issued an order approving Ameren Missouris MEEIA 2019 plan. The initial plan included a portfolio of customer energy-efficiency programs through December 2021 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 of the plan, including $65 million per year through 2021 and
$70 million in 2022. The plan includes the continued use ofthe MEEIA rider, which allows Ameren 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. In August 2020, the MoPSC issued an order approving a unanimous stipulation and agreement establishing performance incentives for the 2022 program year. The order also approved Ameren Missouris energy savings results for the first year of the MEEIA 201 9 program. As a result of this order and in accordance with revenue recognition guidance, Ameren Missouri will recognize revenues of $6 million in the third quarter of 2020. If the target goals are achieved for 2020, 2021 and 2022, additional revenues of $1 0 million,
$13 million, and $11 million would be recognized in 2021, 2022, and 2023, respectively. Incremental additional revenues of$3 million, $3 million, and $1 million may be earned for 2020, 2021 and 2022, respectively, and would be recognized in the respective following year if Ameren Missouri exceeds its targeted energy savings goals. Ameren Missouris ability to achieve and/or exceed targeted energy savings goals could be affected by the COVID-19 pandemic. Ameren Missouri recognized $28 million, $11 million, and $37 million in revenues related to MEEIA performance incentives in 2016, 2018, and 2019, respectively.
In March 2020, the MoPSC issued an order in Ameren Missouris July 2019 electric service regulatory rate review, resulting in a decrease of
$32 million to Ameren Missouris annual revenue requirement for electric retail service. The order reduced the annualized base level of net energy costs pursuant to the FAC by approximately $1 I 5 million from the base level established in the MoPSCs March 201 7 electric rate order.
The order also changed the annualized regulatory asset and liability amortization amounts and the base level of expenses for regulatory tracking mechanisms. On an annualized basis, these changes reflect approximately $20 million of increased revenues and approximate decreases in purchased power expenses of $1 5 million, other operating and maintenance expenses of $60 million, and income tax expenses of
$20 million. Additionally, the annual revenue requirement incorporated increases of approximately $50 million for the reduction in sales volumes resulting from MEEIA programs and approximately $50 million of depreciation and amortization expense for amounts previously deferred under PISA. The increase in the annual revenue requirement related to the MEEIA programs is seasonally weighted to the summer. One of the stipulation and agreements approved by the MoPSCs March 2020 order states that the net impact of the revenue and expense changes noted above reflects a 9.4% to 9.8% ROE on an unspecified percent of common equity applicable to rate base. The new rates, base level of expenses, and amortizations became effective on April 1, 2020. In April 2020, the MoPSC issued another order in Ameren Missouris July 2019 electric service regulatory rate review, reaffirming the existing percentage of net energy cost variances allowed to be recovered or refunded under the FAC.
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 10.52% ROE, the revenue requirements included in 2020 rates forAmeren Illinois and ATXIs electrictransmission businesses are $313 million and $192 million, respectively. These revenue requirements represent an increase in Ameren Illinois and ATXIs revenue requirements of $16 million and $15 million, respectively, from the revenue requirements reflected in 2019 rates, primarily due to 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.
In May 2020, the FERC issued an order in a complaint case filed in November 201 3, which set the allowed base ROE for MISO transmission owners, including Ameren Illinois and ATXI, at 10.02%, superseding the 9.88% previously ordered, and required refunds, with interest, for the periods November 2013 to February 2015 and from late September 2016 forward. As a result ofthis order, Ameren and Ameren Illinois expect to pay total refunds of approximately $28 million and $16 million. In June 2020, various parties filed requests for rehearing with the FERC, challenging the new ROE methodology established by the May 2020 order. In July 2020, Ameren Missouri, 66
Ameren Illinois, and ATXI filed an appeal ofthe May 2020 order to the United States Court of Appeals for the District of Columbia Circuit challenging the refunds required for the period from September 2016 to May 2020. The court is under no deadline to address the appeal.
The allowed ROE may also be affected by the FERCs Notice of Inquiry regarding its allowed base ROE policy issued in 2019, or the FERCs Notice of Proposed Rulemaking on its transmission incentives policy issued in March 2020. A 50 basis point change in the FERC-allowed base ROE would affect Amerens and Ameren Illinois annual net income by an estimated $1 0 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 of actual sales volumes. The regulatory balance is then collected from, or refunded to, customers within two years from the end of the year. Unless extended, the formula ratemaking framework expires at the end of 2022. If not 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 of the formula ratemaking 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 2019, the ICC issued an order in Ameren Illinois annual 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 of the 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 distribution service revenues will be based on its 2020 actual recoverable costs, 2020 year-end rate base, and a return at the applicable WACC as calculated under the Illinois performance-based formula ratemaking framework. As of June 30, 2020, Ameren Illinois expects its 2020 year-end rate base to be
$3.4 billion. The 2020 revenue requirement reconciliation will be collected from, or refunded to, 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. Ameren Illinois allowed ROE for the first half of 2020 and 201 9 was based on an expected annual average of the monthly yields ofthe 30-year United States Treasury bonds of I .6% and 2.8%, respectively.
In April 2020, Ameren Illinois filed its annual electric distribution service formula rate update to reduce its rates by $45 million with the ICC. An ICC decision in this proceeding is expected by December 2020, with new rates effective January 2021 These rates will affect Ameren Illinois cash receipts during 2021 but will not affect electric distribution service revenues, which will be based on 2021 actual recoverable costs, 2021 year-end rate base, and a return at the applicable WACC as calculated under the Illinois performance-based formula ratemaking framework.
In July 2020, Ameren Illinois filed a revised request seeking to increase its annual revenues for natural gas delivery service by $96 million, which includes an estimated $46 million of annual revenues that would otherwise be recovered under the QIP and other riders. A decision by the ICC in this proceeding is required by January 2021 with new rates expected to be effective in February 2021 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 earn a reasonable return on investments when the rate changes go into effect.
Ameren Illinois 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 of the 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, which may be affected by the COVID-19 pandemic. Pursuantto 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 of electric energy-efficiency savings goals in future plan program years if there 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 service performance-based formula ratemaking framework.
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. Maintenance expenses associated with the fall 2020 refueling and maintenance outage are being deferred, as incurred, as a regulatory asset, and will be amortized after completion of the outage. Maintenance expenses will be amortized over the period between refueling and maintenance outages, which is approximately 18 months. Ameren Missouri expects to incur approximately $40 million in maintenance expenses related to the fall 2020 outage.
During a scheduled outage, depending on the availability of its other generation sources and the market 67
prices for power, Ameren Missouris purchased power costs may increase and the amount of excess power available for sale may decrease versus non-outage years. Changes in purchased power costs and excess 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 of their customers. Ameren Missouri and Ameren Illinois continue to face cost recovery pressures, including limited economic growth in their service territories, economic impacts of COVID-19, 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 of the economy for efficiencies and as a means to address economywide C02 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 financing costs.
Liquidity and Capital Resources Our customers payment for our services has been adversely affected by the COVID-19 pandemic, resulting in a decrease to our cash flow from operations. See the Results of Operations section above for additional information on our accounts receivable balances. Further, our liquidity and our capital expenditure plans could be adversely affected by other impacts resulting from the COVID-19 pandemic, including but not limited to potential impacts on our ability to access the capital markets on reasonable terms and when needed, Ameren Missouris expected wind generation acquisitions, and the timing of tax payments and the utilization of tax credits. We expect to make significant capital expenditures to improve our electric and natural gas utility infrastructure, however, disruptions to the capital markets and the ability of our suppliers and contractors to perform as required under their contracts could impact the execution of our capital investment strategy. For further discussion on the impacts to our ability to access the capital markets, Ameren Missouris expected wind generation acquisitions, and the timing of tax payments and the utilization of tax credits, see below.
Ameren Missouris 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 of wind generation by the end of 2020 in Missouri and adding I 00 megawatts of solar generation by 2027. These new renewable energy sources would support Ameren Missouris compliance with the state of Missouris requirement of achieving 1 5% of native load sales from renewable energy sources by 2021 subject to customer 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 of renewable resources could be affected by, among other factors: Ameren Missouris ability to obtain a certificate of convenience and necessity from the MoPSC, and any other required project approvals; the ability of developers to meet contractual commitments and timely complete projects, which is dependent upon the availability of necessary materials and equipment, including those that are affected by the disruptions in the global supply chain caused by the COVID-1 9 pandemic, 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 of wind and solar generation technologies; energy prices; and Ameren Missouris ability to obtain timely interconnection agreements with the MISO or other RTOs at an acceptable cost. 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 updated plan for its current generation portfolio and ongoing transition to cleaner sources of energy.
In connection with the 201 7 IRP filing, Ameren Missouri established a goal of reducing C02 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 of each energy centers useful life. As indicated in the 2017 IRP, the Meramec, Sioux, Labadie, and Rush Island energy centers are expected to be retired in 2022, 2033, 2042, and 2045, respectively. The next integrated resource plan is expected to be filed in September 2020.
Consistent with its 2017 IRP filing, Ameren Missouri entered into build-transfer agreements to acquire, after construction, an up-to 300-megawatt wind generation facility and an up-to 400-megawatt wind generation facility in 201 9 and 201 8, respectively. Delays to the original construction schedule have occurred in 2020 as a result of changes in supply and construction activities. Ameren Missouri and the developers continue to monitor the impact to each project schedule. Ameren Missouri and the developers continue to monitor the impact to each project schedule. Ameren Missouri expects the up-to 400-megawatt project and a majority of the up-to 300 megawatt project to be placed in-service by the end of 2020. However, at this time, due to manufacturing, shipping, and other supply chain issues, and based on an updated schedule from the developer, Ameren Missouri expects a portion of the up-to 300-megawatt project, 68
representing approximately $1 00 million of investment, to be placed in-service in the first quarter of 2021 See discussion below related to production tax credits.
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) of capital expenditures during the period from 2020 through 2024. Amerens and Ameren Missouris estimates exclude any capital expenditures related to pollution control equipment that may be required as a result of the NSR and Clean Air Act litigation discussed in Note 9 Commitments and Contingencies under Part I, Item I of this report.
Environmental regulations, including those related to C02 emissions, or other actions taken by the EPA, could result in significant increases in capital expenditures and operating costs. Certain of these 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 expenditures, increased operating costs, or the closure or alteration of some of Ameren 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 could increase. However, Ameren Illinois expects that these costs would be recovered from customers with no material adverse effect on its results of operations, financial position, or liquidity. Amerens and Ameren Missouris earnings could benefit from increased investment to comply with environmental regulations if those 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 of credit 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 cumulative credit provided to $2.7 billion. See Note 3 Short-term Debt and Liquidity under Part I, Item 1 of this report for additional information regarding the Credit Agreements. Ameren (parent)s $350 million of senior unsecured notes mature in November 2020, and are expected to be repaid using a portion of the proceeds from Ameren (parent)s April 2020 issuance of $800 million of senior unsecured notes. The Ameren Companies have no additional maturities of long-term debt until 2022. With the recently completed Ameren Missouri and Ameren (parent) debt issuances and availability under the Credit Agreements, as well as anticipated proceeds from the settlement of the forward sale agreement discussed below, Ameren, Ameren Missouri, and Ameren Illinois believe that their liquidity is adequate given their expected operating cash flows, capital expenditures, including the expected wind generation acquisitions, and financing plans. The Ameren Companies continue to monitor the effect of the COVID-1 9 pandemic on their liquidity, including as a result of decreased sales and increased customer nonpayment. To date, the Ameren Companies have been able to access the capital markets on reasonable terms when needed. 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 using newly issued shares of common stock, rather than market-purchased shares, to satisfy requirements under the DRPlus and employee benefit plans and expects to continue to do so through at least 2024. Ameren expects these issuances to provide equity of about $1 00 million annually. Ameren also plans to issue incremental common equity to fund a portion of Ameren Missouris wind generation investments through the physical settlement of the forward sale agreement discussed below. Additionally, Ameren plans to issue incremental equity of about $150 million annually from 2021 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 fund cash flow needs through debt issuances, adjustments of dividends to Ameren (parent), and/or capital contributions from Ameren (parent).
In August 201 9, 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, if Ameren 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. If physically settled, Ameren expects to receive between $540 million and $550 million upon settlement. See Note 5 Long-Term Debt and Equity Financings under Part II, Item 8, of the Form 10-K for additional information.
As of June 30, 2020, Ameren had $99 million in tax benefits related to federal and state income tax credit carryforwards and
$6 million in outstanding income tax refunds. Future expected income tax payments and refunds are based on expected taxable income, available income tax credits, and current tax law. Expected taxable income is affected by expected capital expenditures, when property, plant, and equipment is placed in-service or retired, and the timing of regulatory reviews, among other things. In the case of Ameren Missouri and Ameren Illinois, future expected income tax payments and refunds are consistent with the tax allocation agreement between Ameren 69
(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 $1 50 million to $200 million for the five-year period. Ameren Missouri expects to make income tax payments to Ameren (parent) between $20 million and $30 million in 2020. Additionally, Ameren Missouri expects to receive refunds from Ameren (parent) in each year from 2021 to 2024, totaling $60 million to $100 million for the four-year period, primarily due to the expected utilization of federal production tax credits to be generated from its wind generation acquisitions. 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 $310 million for the five-year period.
. Ameren Missouri expects its 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 of these federal production tax credits from 2021 to 2024. In May 2020, the IRS issued guidance that extended the in-service date criteria to December 31 2021 for qualifying for federal production tax credits.
As a result of this extension, Ameren does not anticipate that delays in the completion of the wind generation facilities will affect Amerens ability to realize anticipated federal production tax credits.
. The Coronavirus Aid, Relief, and Economic Security Act is a federal law enacted in March 2020. Provisions in the act include temporary changes to the utilization of net operating losses, deferral of the payment of the employer portion of Social Security taxes, and additional funding for customer energy assistance, among other things. Ameren has implemented certain provisions of the act, and is currently evaluating other provisions of the act. As of June 30, 2020, there was no material impact to Amerens, Ameren Missouris, and Ameren Illinois financial statements as a result of the act.
. 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. The effect of this tax decrease is reflected in Ameren Missouris electric service rates that became effective on April 1 2020.
Ameren and Ameren Missouri 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 of operations, financial position, and liquidity. Additionally, in the ordinary course of business, we evaluate strategies to enhance our results of operations, 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, of these initiatives will be executed. The execution of these initiatives may have a material impact on our future results of operations, financial position, or liquidity.
REGULATORY MATTERS See Note 2 Rate and Regulatory Matters under Part I, Item I of this report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes to the quantitative and qualitative disclosures about interest rate risk, credit risk, investment price risk, commodity price risk, and commodity supplier risk included in the Form 1 0-K. See Item 7A under Part II ofthe Form I 0-K for a more detailed discussion of our market risk.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures As of June 30, 2020, evaluations were performed under the supervision and with the participation of management, including the principal executive officer and the principal financial officer of each of the Ameren Companies, of the effectiveness of the design and operation of such registrants disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) ofthe ExchangeAct). Based on those evaluations, as of June 30, 2020, the principal executive officer and the principal financial officer of each of the Ameren Companies concluded that such disclosure controls and procedures are effective to provide assurance that information required to be disclosed in such registrants reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms and such information is accumulated and communicated to its management, including its principal executive officer and its principal financial officer, to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls over Financial Reporting There has been no change in any of the Ameren Companies internal control over financial reporting during their most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, each of their internal control over financial reporting.
PART II. OTHER INFORMATION 70
ITEM 1. 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 of which involve substantial amounts of money. We believe that the final disposition of these proceedings, except as otherwise disclosed in this report, will not have a material adverse effect on our results of operations, financial position, or liquidity. Risk of loss is mitigated, in some cases, by insurance or contractual or statutory indemnification. Material legal and administrative proceedings, which are discussed in Note 2 Rate and Regulatory Matters, Note 9 Commitments and Contingencies, and Note 10 Callaway Energy Center, under Part I, Item I ofthis report, include the following:
. Ameren Illinois annual electric distribution service formula rate update filed with the ICC in April 2020;
. Ameren Illinois natural gas delivery service regulatory rate review filed with the ICC in February 2020;
. Ameren Illinois annual electric energy-efficiency formula rate update filed with the ICC in May 2020;
. Ameren Illinois QIP reconciliation hearing with the ICC requested in March 2019;
. the July 2020 appeal filed by Ameren Missouri, Ameren Illinois, and ATXI challenging the FERCs rehearing denials in the transmission formula rate revision cases;
. various parties requests for a rehearing ofthe May 2020 FERC order related to the November 2013 complaint case;
. the July 2020 appeal filed by Ameren Missouri, Ameren Illinois, and ATXI challenging the May 2020 FERC order related to the November 2013 complaint case;
. the March 2019 FERC Notice of Inquiry regarding its allowed base ROE policy;
. the March 2020 FERC Notice of Proposed Rulemaking on its transmission incentives policy;
. litigation against Ameren Missouri with respect to NSR and the Clean Air Act; and
. remediation matters associated with former MGP sites ofAmeren Illinois.
ITEM IA. RISK FACTORS.
The Form 10-K includes a detailed discussion of our risk factors. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in the Form 10-K.
Our results of operations, financial position, and liquidity have been and are expected to continue to be adversely affected by the international public health emergency associated with the COVID-19 pandemic.
The COVID-19 pandemic continues to be a rapidly evolving situation. In the first six months of 2020, we experienced a net decrease in our sales volumes, an increase in our accounts receivable balances that were past due or that were a part of a deferred payment arrangement, and a decline in our cash collections from customers. The continued effect ofthe COVID-19 pandemic on our results of operations, financial position, and liquidity in subsequent periods will depend on its severity and longevity, future regulatory or legislative actions with respect thereto, and the resulting impact on business, economic, and capital market conditions. It may also affect Ameren Missouris ability to recover any lost revenues or incremental costs.
As a result ofthe COVID-19 pandemic, measures have been taken by local, state, and federal governments, such as travel bans, quarantines, and shelter-in place orders. Shelter-in-place orders began taking effect in our service territories in mid-March 2020. These orders generally required individuals to remain at home and precluded or limited the operation of businesses that were deemed nonessential. In mid-May 2020, shelter-in-place orders effective in our service territories began to be relaxed, with individuals allowed to leave their homes and nonessential businesses allowed to begin reopening. However, certain restrictions remain in place that limit individual activities and the operation of nonessential businesses.
Additional restrictions may be imposed in the future. Amerens business operations are deemed essential and are not directly impacted by the shelter-in-place orders. As a result ofthe COVID-19 pandemic, economic activity has been disrupted in the service territories ofAmeren Missouri and Ameren Illinois. It has also caused disruptions in the capital markets, which could adversely affect our ability to access these markets on reasonable terms and when needed. These disruptions could continue for a prolonged period of time or become more severe.
We rely on the issuance of short-term and long-term debt and equity as significant sources of liquidity and funding for capital requirements not satisfied by our operating cash flow, as well as to refinance existing long-term debt. Disruptions to the capital markets as a result of the COVID-1 9 pandemic could negatively affect our ability to maintain and to expand our businesses. In addition, our credit ratings may be impacted by the economic conditions ofthe COVID-19 pandemic. The COVID-19 pandemic could lead to events beyond our control, such as further depressed economic conditions or extreme volatility in the debt, equity, or credit markets, and might create uncertainty that could increase our cost of capital or impair or eliminate our ability to access the debt, equity, or credit markets, including our ability to draw on bank credit facilities or issue commercial paper.
As a result of the COVID-1 9 pandemic, we have experienced and expect to continue to experience changes to our sales volumes. In the three and six months ended June 30, 2020, compared to the same periods in 2019, Ameren Missouri experienced a reduction in commercial and industrial electric sales volumes, partially offset by increased electric sales volumes to higher margin residential customers, excluding the estimated effects of weather and customer energy-efficiency programs. While the impacts of the COVID-1 9 pandemic are difficult to predict, Ameren Missouri expects the net reduction in sales volumes, excluding the estimated effects of weather and customer energy-efficiency 71
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ITEM 6. EXHIBITS.
The documents listed below are being filed or have previously been filed on behalf of the Ameren Companies and are incorporated herein by reference from the documents indicated and made a part hereof. Exhibits not identified as previously filed are filed herewith.
Exhibit Designation Registrant(s) Nature of Exhibit Previously Filed as Exhibit to:
Rule 13a-14(a) I 15d-14(a) Certifications 31 I
. Ameren Rule I 3a-1 4(a)/i 5d-1 4(a) Certification of Prindpal Executive Officer of Ameren 31.2 Ameren Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of Ameren 31 .3 Ameren Missouri Rule 13a-14(a)115U-14(a) Certification of Princiøal Executive Officer of Ameren Missouri 31.4 Ameren Missouri Rule 13a-14(a)/15d-14(a) Certification of Princinal Financial Officer of Ameren Missouri 31 .5 Ameren Illinois Rule 13a-14(a)/15d-14(a) Certification of Princioal Executive Officer of Ameren Illinois 31.6 Ameren Illinois Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of Ameren Illinois Section 1350 Certifications
- 32. 1 Ameren Section 1 350 Certification of Principal Executive Officer and Principal Financial Officer of Ameren 32.2 Ameren Missouri Section 1350 Certification of Principal Executive Officer and Principal Financial Officer of Ameren Missouri 32.3 Ameren Illinois Section 1350 Certification of Principal Executive Officer and Principal Financial Officer of Ameren Illinois Interactive Data Files 1O1.INS Ameren Companies Inline XBRL Instance Document the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 1 01 .SCH Ameren Companies Inline XBRL Taxonomy Extension Schema Document 1O1.CAL Ameren Companies Inline XBRL Taxonomy Extension Calculation Linkbase Document 1O1.LAB Ameren Companies Inline XBRL Taxonomy Extension Label Linkbase Document 1O1.PRE Ameren Companies Inline XBRL Taxonomy Extension Presentation Linkbase Document I 01 .DEF Ameren Companies Inline XBRL Taxonomy Extension Definition Document 1 04 Ameren Companies Cover Page Interactive Data File (formatted as Inline XBRL and 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.
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) of Regulation S-K.
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SIGNATURES Pursuant to the requirements of the Exchange Act, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.
AMEREN CORPORATION (Registrant)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
UNION ELECTRIC COMPANY (Registrant)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
AMEREN ILLINOIS COMPANY (Registrant)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date: August 7, 2020 74
Exhibit 31.1 RULE 1 3a-1 4(a)/i 5d-i 4(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF AMEREN CORPORATION (required by Section 302 of the Sarbanes-Oxley Act of 2002)
I, Warner L. Baxter, certify that:
I I have reviewed this report on Form 1 0-Q for the quarterly period ended June 30, 2020 of Ameren 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 of the 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 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 I 3a-i 5(e) and i5d-i 5(e)) and internal control over financial reporting (as defined in Exchange Act Rules i3a-i 5(f) and 1 5d-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 financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the 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 of internal control over financial reporting, to the registrants auditors and the audit committee of the 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 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: August 7, 2020
/5/ Warner L. Baxter Warner L. Baxter Chairman, President and Chief Executive Officer (Principal Executive Officer)
Exhibit 31.2 RULE 1 3a-1 4(a)/i 5d-i 4(a) CERTI FICATION OF PRINCIPAL FINANCIAL OFFICER OF AMEREN CORPORATION (required by Section 302 of the Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
i I have reviewed this report on Form 1 0-Q for the quarterly period ended June 30, 2020 of Ameren 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 of the 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 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 i 3a-i5(e) and i5d-i 5(e)) and internal control over financial reporting (as defined in Exchange Act Rules i 3a-i 5(f) and i 5d-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 financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the 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 of internal control over financial reporting, to the registrants auditors and the audit committee of the 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 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: August 7, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Exhibit 31.3 RULE 1 3a-1 4(a)/i 5d-i 4(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF UNION ELECTRIC COMPANY (requited by Section 302 of the Sarbanes-Oxley Act of 2002)
I, Martin J. Lyons, Jr., certify that:
1 I have reviewed this report on Form I 0-Q for the quarterly period ended June 30, 2020 of Union 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 of the 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 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 overfinancial 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 financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the 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 of internal control over financial reporting, to the registrants auditors and the audit committee of the 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 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: August 7, 2020
/5/ Martin J. Lyons, Jr.
Martin J. Lyons, Jr.
Chairman and President (Principal Executive Officer)
Exhibit3l.4 RULE 1 3a-1 4(a)/i 5d-i 4(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF UNION ELECTRIC COMPANY (requited by Section 302 of the Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
i I have reviewed this report on Form i 0-Q for the quarterly period ended June 30, 2020 of Union 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 of the 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 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 i3a-i5(e) and i5d-i5(e)) and internal control overfinancial reporting (as defined in Exchange Act Rules i3a-i5(f) and i5d-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 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 accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the 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 of internal control over financial reporting, to the registrants auditors and the audit committee of the 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 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: August 7, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Exhibit 31.5 RULE I 3a-1 4(a)/i Sd-i 4(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF AMEREN ILLINOIS COMPANY (required by Section 302 of the Sarbanes-Oxley Act of 2002)
I, Richard ]. Mark, certify that:
i I have reviewed this report on Form I 0-Q for the quarterly period ended June 30, 2020 of Ameren 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 of the 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 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 i3a-iS(e) and iSd-iS(e)) and internal control over financial reporting (as defined in Exchange Act Rules i3a-i5(f) and iSd i 5(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 financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the 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 S. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the 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 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: August 7, 2020
/5/ Richard J. Mark Richard J. Mark Chairman and President (Principal Executive Officer)
Exhibit 31.6 RULE 1 3a-1 4(a)/i 5d-i 4(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF AMEREN ILLINOIS COMPANY (required by Section 302 of the Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
i I have reviewed this report on Form i 0-Q for the quarterly period ended June 30, 2020 of Ameren 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 of the 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 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-i5(e) and i5d-i5(e)) and internal control over financial reporting (as defined in Exchange Act Rules i3a-i5(f) and i5d-1 5(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 financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the 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 of internal control over financial reporting, to the registrants auditors and the audit committee of the 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 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: August 7, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Exhibit 32.1 SECTION 1350 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND THE PRINCIPAL FINANCIAL OFFICER OF AMEREN CORPORATION (required by Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the report on Form 1 0-Q for the quarterly period ended June 30, 2020 of Ameren Corporation (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof (the Form 1 0-Q), each undersigned officer of the Registrant does hereby certify, pursuant to I 8 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Form 1 0-Q fully complies with the requirements of Section 1 3(a) or 15(d) of the Securities Exchange Act of 1 934 (15 U.S.C. 78m or 780(d)); and (2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: August 7, 2020
/5/ Warner L. Baxter Warner L. Baxter Chairman, President and Chief Executive Officer (Principal Executive Officer)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Exhibit 32.2 SECTION 1350 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND THE PRINCIPAL FINANCIAL OFFICER OF UNION ELECTRIC COMPANY (required by Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the report on Form 1 0-Q for the quarterly period ended June 30, 2020 of Union Electric Company (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof (the Form I 0-Q), each undersigned officer of the Registrant does hereby certify, pursuant to 1 8 U.S.C. §1 350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Form 10-Q 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 1 0-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: August 7, 2020
/5? Martin J. Lyons, Jr.
Martin J. Lyons, Jr.
Chairman and President (Principal Executive Officer)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Exhibit 32.3 SECTION 1350 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND THE PRINCIPAL FINANCIAL OFFICER OF AMEREN ILLINOIS COMPANY (required by Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the report on Form 10-Q for the quarterly period ended June 30, 2020 of Ameren Illinois Company (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof (the Form 10Q), each undersigned officer of the Registrant does hereby certify, pursuant to 18 U.S.C. §1 350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Form 10-Q fully complies with the requirements ofSection 13(a) or 15(d) ofthe Securities Exchange Act of 1934 (15 U.S.C. 78m or 780(d)); and (2) The information contained in the Form 1 0-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: August 7, 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 Chief Financial Officer (Principal Financial Officer)