ML20353A367
| ML20353A367 | |
| Person / Time | |
|---|---|
| Site: | Callaway  |
| Issue date: | 03/31/2020 |
| From: | Ameren Missouri, Union Electric Co |
| To: | Office of Nuclear Security and Incident Response |
| Shared Package | |
| ML20353A355 | List: |
| References | |
| ULNRC-06624 | |
| Download: ML20353A367 (80) | |
Text
Enclosure 9 to ULNRC-06624 1O-Q FILED PERIOD 03/31/2020
UNITED STATES SECURITIES AND EXChANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2020 OR Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition periodfrom to Amerell Ameren MISSOURI ffI11 Liii Exact name of registrant as specified in its charter; Commission State of Incorporation; IRS Employer file Number Address and Telephone Number Identification No.
1-14756 Ameren Corporation 43-1723446 (Missouri Corporation) 1901 Chouteau Avenue St. Louis, Missouri 63103 (314) 621-3222 1-2967 tlnion 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 12(b) ofthe Act:
Title ofeach class Trading Symbol(s)
Name ofeach exchange on which registered Common Stock, $0.01 par value per share AEE New York Stock Exchange
Ameren Corporation Union Electric Company Ameren Illinois Company Ameren Corporation Union Electric Company Ameren Illinois Company Ameren Corporation Union Electric Company Ameren Illinois Company Ameren Corporation Union Electric Company Ameren Illinois Company U
Non-accelerated filer El Emerging growth company U
Non-accelerated filer U
Emerging growth company U
Non-accelerated filer U
Emerging growth company Registrant Ameren Corporation Union Electric Company Ameren Illinois Company Title ofeach class ofcommon stock Common stock, $001 par value per share Common stock, $5 par value per share, held by Ameren Corporation Common stock, no par value, held by Ameren Corporation Shares outstanding 246,891,031 102,123,834 25,452,373 This combined Form 1O-Q is separately filed by Ameren Corporation, Union Electric Company, and Ameren Illinois Company. Each registrant hereto is filing on its own behalfall ofthe 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.
Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
Yes Yes Yes No No No 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-T ( 232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
LI LI LI Yes No Yes No Yes No LI Ameren Corporation Union Electric Company Ameren Illinois Company 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 oflarge accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 ofthe Exchange Act.
Large accelerated filer Large accelerated filer Large accelerated filer Accelerated filer Smaller reporting company LI Accelerated filer Smaller reporting company LI Accelerated filer Smaller reporting company Ifan emerging growth company, indicate by check mark ifthe registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) ofthe Exchange Act.
LI LI LI LI LI Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 ofthe Exchange Act).
Yes Yes LI Yes The number ofshares outstanding ofeach registrants classes ofcommon stock as ofApril 30, 2020, was as follows:
No No No
TABLE Of CONTENTS Page Glossary ofTerms and Abbreviations I
forward-looking Statements I
PART I. financial Information Item 1 Financial Statements (Unaudited)
Ameren Corporation Consolidated Statement of Income and Comprehensive Income Consolidated Balance Sheet 4
Consolidated Statement ofCash Flows 5
Consolidated Statement of Shareho1ders Eguit Union Electric Company (dibla Ameren Missouri) 1 Statement ofincome (Loss) 1 Balance Sheet Statement of Cash Flows Statement ofShareholders Equity Ameren Illinois Company (d/bla Ameren Illinois)
Statement oflncome H
Balance Sheet Statement of Cash flows 13 Statement of Shareholders Equity 14 Note I
. Summary of Significant Accounting Policies 15 Note 2. Rate and Regulatory Matters Note 3. Short-term Debt and Liquidity Note 4. Long-term Debt and Equity Financings 20 Note 5. Other Income. Net 21 Note 6. Derivative Financial Instruments 21 Note 7. Fair Value Measurements 23 Note 8. Related-patty Transactions Note 9. Commitments and Contineencies 26 Note 10. Callaway Energy Center 30 Note I I
. Retirement Benefits 31 Note 12. Income Taxes 31 Note 13. Stipplemental Information Note 14. Segment Information 14 Item 2.
Managements Discussion and Analysis ofFinancial Condition and Results ofOperations Item 3.
Quantitative and Qualitative Disclosures About Market Risk Item 4.
Controls and Procedures PART II. Other Information Item 1.
Legal Proceedings Item 1A.
Risk Factors 61 Item 2.
Unregistered Sales ofEgtiitv Securities and Use ofProceeds Item 6.
Exhibits 64 Signatures 61.
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 ofAmeren Corporation are named specifically as their various business activities are discussed. Refer to the Form 10-K for a complete listing ofglossary terms and abbreviations. Only new or significantly changed terms and abbreviations are included below.
COVID-l9pandernic the global pandemic resulting from the outbreak ofthe 2019 novel coronavirus, which causes coronavirus disease 2019 (COVID-19).
Form 10-K The combined Annual Report on Form 10-K for the 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 ofoff-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.
FORWARD-LOOKING STATEMENTS Statements in this report not based on historical facts are considered forward-looking and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the safe harbor provisions ofthe Private Securities Litigation Reform Act of 1 995, 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 10-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 rehearing ofthe November 2019 FERC order determining the allowed base ROE under the MISO tariff the Notices oflnquiry issued by the FERC in March 2019, the Notice ofProposed Rulemaking issued by the FERC in March 2020, Ameren Illinois April 2020 annual electric distribution formula rate update filing, Ameren Illinois natural gas delivery service regulatory rate review filed with the ICC in February 2t)20, and the March 2020 ICC service disconnection moratorium proceeding; 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 ability to pay for our services, the health and welfare ofour workforce and that ofour contractors, supplier disruptions, delays in the completion ofcapital or other construction projects, which could impact our planned capital expenditures and expected planned rate base growth, our attempt to earn our allowed ROEs, the ability to meet customer energy-efficiency program goals and earn performance incentives related to those programs, increased data security risks as a result ofthe transition to remote working arrangements for a significant portion ofour workforcc, and our ability to access the capital markets on reasonable terms and when needed; the effect and continuation ofAmeren Illinois election to participate in performance-based formula ratemaking frameworks for its electric distribution service and its participation in electric energy-efficiency programs, including the direct relationship between Ameren Illinois ROE and the 30-year United States Treasury bond yields; the effect on Ameren Missouri ofany customer rate caps pursuant to Ameren Missouris election to use the PISA, including an extension ofuse beyond 2023, ifrequested by Ameren Missouri and approved by the MoPSC; the effects ofchanges in federal, state, or local laws and other governmental actions, including monetary, fiscal, and energy policies; the effects of changes in federal, state, or local tax laws, regulations, interpretations, or rates, including as a result of amendments or technical corrections to the TCJA, and challenges to the tax positions taken by the Ameren Companies, if any; the effects on demand for our services resulting from technological advances, including advances in customer energy efficiency, energy storage, and private generation sources, which generate electricity at the site of consumption and are becoming more cost-competitive; the effectiveness ofAmeren Missouris customer energy-efficiency programs and the related revenues and performance incentives earned under its MEBIA 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 offfiel, such as low-sulfur coal, natural gas, and enriched uranium used to produce electricity; the cost and availability ofpurchased 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 offtiel, failure ofour fuel suppliers to provide adequate quantities or quality offtiel, or lack ofadequate inventories of the!,
including nuclear the! assemblies from the one NRC-licensed supplier ofAmeren Missouris Callaway Energy Centers assemblies; the cost and availability oftransmission capacity for the energy generated by Ameren Missouris energy centers or required to satisfy Ameren Missouris energy sales; the effectiveness of our risk management strategies and our use of financial and derivative instruments; the ability to obtain sufficient insurance, including insurance for Ameren Missouris nuclear and coal-fired energy centers, or, in the absence ofinsurance, 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 ofsuch conditions on interest rates, collection ofour receivable balances, and demand for our products; disruptions ofthe capital markets, deterioration in credit metrics ofthe 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 ofcredit rating agencies and the effects ofsuch actions, including any impacts on our credit ratings that may result from the economic conditions of the COVID-19 pandemic; the inability ofour 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 ofgeneration. transmission, and distribution assets; the effects of failures of electric generation, electric and natural gas transmission or distribution, or natural gas storage facilities systems and equipment, which could result in unanticipated liabilities or unplanned outages; the operation ofAmeren Missouris Callaway Energy Center, including planned and unplanned outages, and decommissioning costs; Ameren Missouris ability to recover the remaining investment, ifany, and decommissioning costs associated with the retirement ofan energy center, as well as the ability to earn a return on that remaining investment and those decommissioning costs; the impact of current environmental laws and new, more stringent, or changing requirements, including those related to NSR, CO2 and the implementation of the Affordable Clean Energy Rule, other emissions and discharges, cooling water intake structures, CCR, and energy efficiency, that could limit or terminate the operation ofcertain ofAmeren Missouris energy centers, increase our operating costs or investment requirements, result in an impairment ofour assets, cause us to sell our assets, reduce our customers demand for electricity or natural gas, or 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 COVII)-19 pandemic, among other things; the availability offederal production and investment tax credits related to renewable energy and Ameren Missouris ability to use such credits; the cost ofwind and solar generation technologies; and Ameren Missouris ability to obtain timely interconnection agreements with the MISO or other RTOs at an acceptable cost for each facility; labor disputes, work force reductions, changes in future wage and employee benefits costs, including those resulting from changes in discount rates, mortality tables, returns on benefit plan assets, and other assumptions; the impact ofnegative opinions ofus or our utility services that our customers, investors, legislators, or regulators may have or develop, which could result from a variety of factors, including failures in system reliability, failure to implement our investment plans or to protect sensitive customer information, increases in rates, negative media coverage, or concerns about environmental, social, and/or governance practices; the impact of adopting new accounting guidance; the effects ofstrategic 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 ofsuch factors, nor can it assess the impact ofeach 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.
2
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 March 31, 2020 2019 Operating Revenues:
Electric 1,120 1,182 Natural gas 320 374 Total operating revenues 1,440 1,556 Operating Expenses:
Fuel 140 160 Purchased power 134 156 Natural gas purchased forresale 107 161 Other operations and maintenance 438 417 Depreciation and amortization 255 248 Taxes other than income taxes 125 126 Total operating expenses 1,199 1,268 Operating Income 241 288 Other Income, Net 21 29 Interest Charges 93 97 Income Before Income Taxes 169 220 Income Taxes 21 27 Netlncome 148 193 Less: Net Income Attributable to Noncontrolling Interests 2
2 Net Income Attributable to Ameren Common Shareholders 146 191 Netlncome 148 193 Other Comprehensive Income, Net of Taxes Pension and other postretirement benefit plan activity, net of income taxes of $- and $-, respectively 1
1 Comprehensive Income 149 194 Less: Comprehensive Income Attributable to Noncontrolling Interests 2
2 Comprehensive Income Attributable to Ameren Common Shareholders S
147 192 Earnings per Common Share Basic and Diluted 0.59 0.78 Weighted-average Common Shares Outstanding Basic 246.4 244.9 Veighted-average Common Shares Outstanding Diluted 248.1 246.4 The accompanying notes are an integral part of these consolidated financial statements.
3
AMEREN CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) (In millions, except per share amounts) 42 456 393 212 278 65 63 471 494 91 69 127 118 1,464 1,431 24,678 24,376 742 847 411 411 1,092 992 885 876 3,130 3,126 S
29,272 28,933 357 615 440 544 874 189 164 662 585 2,367 2,505 9,378 8,915 2,948 2,919 4,842 4,887 631 638 397 401 482 467 9,300 9,312 (16)
(17) 8,085 8,059 142 142 8,227 8,201 29,272 28,933 The accompanying notes are an integral part ofthese consolidated financial statements.
December 31, March3l,2020 2019 16 ASSETS Current Assets:
Cash and cash equivalents Accounts receivable trade (less allowance for doubtful accounts of $ 1 9 and $ 1 7, respectively)
Unbilled revenue Miscellaneous accounts receivable Inventories Current regulatory assets Other current assets Total current assets Property, Plant, and Equipment, Net Investments and Other Assets:
Nuclear decommissioning trust fund Goodwill Regulatory assets Other assets Total investments and other assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities:
Current maturities of long-term debt Short-term debt Accounts and wages payable Current regulatory liabilities Other current liabilities Total current liabilities Long-term Debt, Net Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net Regulatory liabilities Asset retirement obligations Pension and other postretirement benefits Other deferred credits and liabilities Total deferred credits and other liabilities Commitments and Contingencies (Notes 2, 9, and 10)
Ameren Corporation Shareholders Equity:
Common stock, $01 par value, 400.0 shares authorized shares outstanding of246.9 and 246.2, respectively Other paid-in capital, principally premium on common stock Retained earnings Accumulated other comprehensive loss Total Ameren Corporation shareholders equity Noncontrolling Interests Total equity TOTAL LIABILITIES AND EQtIITY S
442 5,695 2,404 2
2 5,694 2,380 4
AMEREN CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In millions)
Cash Flows From Operating Activities:
Net mcome Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization Amortization of nuclear fuel Amortization of debt issuance costs and premium/discounts Deferred income taxes and investment tax credits, net Allowance for equity funds used during construction Stock-based compensation costs Changes in assets and liabilities:
Receivables Inventories Accounts and wages payable Taxes accrued Regulatory assets and liabilities Assets, other Liabilities, other Pension and other postretirement benefits Net cash provided by operating activities Cash Flows From Investing Activities:
Capital expenditures Nuclear fuel expenditures Purchases ofsecurities nuclear decommissioning trust fund Sales and maturities of securities nuclear decommissioning trust fund Other Net cash used in investing activities Cash Flows From Financing Activities:
Dividends on common stock Dividends paid to noncontrolling interest holders Short-term debt, net Maturities oflong-term debt Issuances oflong-term debt Issuances ofcomrnon stock Employee payroll taxes related to stock-based compensation I)ebt issuance costs Net cash provided by financing activities Net change in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of year Cash, cash equivalents, and restricted cash at end of period Three Months Ended March 31, 2020 2019 14$
263 245 23 23 5
5 6
6 17 (8)
(5) 4 23 81 (221)
(213) 47 28 (14) 26 (3)
(14)
(1$)
(11)
(4) 290 387 (636)
(544)
(35)
(21)
(96)
(39) 81 36 2
1 (684)
(567)
(122)
(116)
(2)
(2) 175 202
($5)
(329) 465 450 13 19 (20)
(29)
(3)
(4) 421 191 27 11 176 107 203 118 The accompanying notes are an integral part ofthese consolidated financial statements.
Other I 93 23 (4) 32 (6) 5
Common Stock AMEREN CORPORATION CONSOLIDATED STATEMENT Of SHAREHOLDERS EQUITY (Unaudited) (In millions, except per share amounts)
Three Months Ended March 31, 2020 2019 2$
2 Common stock shares outstanding at beginning of year Shares issued under the DRP1us and 401(k) plan Shares issued for stock-based compensation Common stock shares outstanding at end of period Dividends per common share 5,694 13 (12) 5,695 2,380 146 (122) 2,404 5,627 19 (21) 5,625 2,024 191 (116) 2,099 (17)
(22) 1 1
(16)
(21)
(16)
(21) 8,085 7,705 142 142 2
2 (2)
(2) 142 142 S
8,227 7,847 Other Paid-in Capital:
Beginning of year Shares issued under the DRP1us and 401(k) plan Stock-based compensation activity Other paid-in capital, end ofperiod Retained Earnings:
Beginning of year Net income attributable to Ameren common shareholders Dividends Retained earnings, end ofperiod Accumulated Other Comprehensive Income (Loss):
Deferred retirement benefit costs, beginning of year Change in deferred retirement benefit costs Deferred retirement benefit costs, end of period Total accumulated other comprehensive loss, end of period Total Ameren Corporation Shareholders Equity Noncontrolling Interests:
Beginning of year Net income attributable to noncontrolling interest holders Dividends paid to noncontrolling interest holders Noncontrolling interests, end of period Total Equity 246.2 0.2 244.5 0.3 0.5 0.8 246.9 245.6 0.4950 The accompanying notes are an integral part ofthese consolidated financial statements.
0.4750 6
UNION ELECTRIC COMPANY (dlbla AMEREN MISSOURI)
STATEMENT Of INCOME (LOSS)
(tlnaudited) (In millions)
Three Months Ended March 31, 2020 2019 Operating Revenues:
Electric 631 704 Natural gas 49 54 Total operating revenues 680 758 Operating Expenses:
fuel 140 160 Purchased power 39 51 Natural gas purchased for resale 18 27 other operations and maintenance 239 224 Depreciation and amortization 139 140 Taxes other than income taxes 79 77 Total operating expenses 654 679 Operating Income 26 79 Other Income, Net 4
12 Interest Charges 40 47 Income (Loss) Before Income Taxes (10) 44 Income Taxes (Benefit)
(1) 4 Net Income (Loss)
(9) 40 Preferred Stock Dividends 1
1 Net Income (Loss) Available to Common Shareholder (10) 39 The accompanying notes as they relate to Ameren Missouri are an integral part ofthese financial statements.
7
UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
BALANCE ShEET (Unaudited) (In millions, except per share amounts)
ASSETS December 31, March3l,2020 2019 Current Assets:
Cash and cash equivalents Accounts receivable trade (less allowance for doubtful accounts of $8 and $7, respectively)
Accounts receivable affiliates Unbilled revenue Miscellaneous accounts receivable Inventories Other current assets Total current assets Property, Plant, and Equipment, Net Investments and Other Assets:
Nuclear decommissioning trust fund Regulatory assets other assets Total investments and other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities:
Current maturities oflong-term debt Short-term debt Accounts and wages payable Accounts payable affiliates Taxes accrued Interest accrued Current asset retirement obligations Current regulatory liabilities Other current liabilities Total current liabilities Long-term Debt, Net Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net Regulatory liabilities Asset retirement obligations Pension and other postretirement benefits Other deferred credits and liabilities Total deferred credits and other liabilities Commitments and Contingencies (Notes 2, 8, 9, and 10)
Shareholders Equity:
Common stock, $5 par value, 150.0 shares authorized 102.1 shares outstanding Other paid-in capital, principally premium on common stock Preferred stock Retained earnings Total shareholders equity TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 3$
174 164 34 30 117 139 43 33 391 373 96 66 858 814 12,731 12,635 742 847 305 285 357 356 1,404 1,488 S
14,993 14,937 7$
130 234 238 465 48 52 64 24 46 48 53 53 80 62 128 96 794 1,126 4,560 4,098 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
9 S
92 1,627 2,855 1,612 2,937 627 634 139 141 52 40 5,300 5,364 511 511 2,027 2,027 80 80 1,721 1,731 4,339 4,349 14,993 14,937 8
UNION ELECTRIC COMPANY (dlb/a AMEREN MISSOURI)
STATEMENT OF CASH FLOWS (Unaudited) (In millions)
Cash Flows From Operating Activities:
Net income (loss)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization Amortization ofnuclear fuel Amortization of debt issuance costs and premium/discounts Deferred income taxes and investment tax credits, net Allowance for equity funds used during construction Changes in assets and liabilities:
Receivables Inventories Accounts and wages payable Taxes accrued Regulatory assets and liabilities Assets, other Liabilities, other Pension and other postretirement benefits Net cash provided by operating activities Cash Flows From Investing Activities:
Capital expenditures Nuclear fuel expenditures Purchases of securities nuclear decommissioning trust fund Sales and maturities of securities nuclear decommissioning trust fund Net cash used in investing activities Cash Flows From Financing Activities:
I)ividends on preferred stock Short-term debt, net Maturities oflong-term debt Issuances oflong-term debt Debt issuance costs Net cash provided by financing activities Net change in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of year Cash, cash equivalents, and restricted cash at end of period 148 138 23 23 2
2 2
2 (3) 56 (18) 29 (172)
(167) 55 44 16 11 2
(16)
(4) 2 (1) 41 152 (240)
(21)
(39) 81 36 (32$)
(264)
(1)
(1)
(104)
($5)
(329) 465 450 (3)
(4) 272 116 (15) 4 39 8
24 12 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
Other Three Months Ended March 31, 2020 2019 (9) 40 (5)
(2)
(1)
(4)
(278)
(35)
(96) 9
Common Stock UNION ELECTRIC COMPANY (dlbla AMEREN MISSOURI)
STATEMENT OF SHAREHOLDERS EQUITY (Ijnaudited) (In millions)
Three Months Ended March 31, 2020 2019 511 511 Other Paid-in Capital Preferred Stock Retained Earnings:
Beginning of year Net income (loss)
Preferred stock dividends Retained earnings, end of period 2,027 L903 80 80 (1)
(1) 1,721 1,774 Total Shareholders Equity S
4,339 4,268 The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
1,731 (9) 1,735 40 10
AMEREN ILLINOIS COMPANY (d/bla AMEREN ILLINOIS)
STATEMENT Of INCOME (Ijnaudited) (In millions)
Three Months Ended March 31, 2020 2019 452 271 32t) 723 762 9$
105 89 134 199 191 107 101 42 45 535 576 1$$
186 11 11 39 37 160 16t) 39 39 121 121 1
1 S
120 120 The accompanying notes as they relate to Ameren Illinois are an integral part ofthese financial statements.
S Operating Revenues:
Electric Natural gas Total operating revenues Operating Expenses:
Purchased power Natural gas purchased for resale Other operations and maintenance I)epreciation and amortization Taxes other than income taxes Total operating expenses Operating Income Other Income, Net Interest Charges Income Before Income Taxes Income Taxes Net Income Preferred Stock Dividends Net Income Available to Common Shareholder 442 11
AMEREN ILLINOIS COMPANY (d/bla AMEREN ILLINOIS)
BALANCE SHEET (Unaudited) (In millions)
ASSETS Current Assets:
Cash and cash equivalents Accounts receivable trade (less allowance for doubtful accounts of $ 1 1 and $ 1 0, respectively)
Accounts receivable affiliates Unbilled revenue Miscellaneous accounts receivable Inventories Current regulatory assets Other current assets Total current assets Property and Plant, Net Investments and Other Assets:
Goodwill Regulatory assets Other assets Total investments and other assets TOTAL ASSETS LIABILITIES AND SHAREIIOLDERS EQUITY December 31, March3l,2020 2019 S
6$
268 15 95 19 80 57 215 28 139 25 121 57 31 29 571 614 10,280 10,083 411 771 411 694 400 383 1,582 1,488 S
12,433 12,185 Current Liabilities:
Short-term debt Accounts and wages payable Accounts payable affiliates Customer deposits Current environmental remediation Current regulatory liabilities Other current liabilities Total current liabilities Long-term Debt, Net Deferred Credits and Other Liabilities:
Accumulated deferred income taxes and investment tax credits, net Regulatory liabilities Pension and other postretirement benefits Environmental remediation Other deferred credits and liabilities Total deferred credits and other liabilities 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 Preferred stock Retained earnings Total shareholders equity TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 60 S
246 299 84 82 80 77 52 42 90 84 195 207 807 844 3,575 3,575 1,251 1,224 1,884 1,849 212 214 75 87 277 260 3,699 3,634 2,288 2,188 62 62 2,002 1,882 4,352 4,132 S
12,433 12,185 The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
S 53 12
AMEREN ILLINOIS COMPANY (dlbla AMEREN ILLINOIS)
STATEMENT OF CASH FLOWS (Unaudited) (In millions)
Three Months Ended March 31, 2020 2019 Cash Flows From Operating Activities:
Netincome 121 121 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 106 100 Amortization of debt issuance costs and premium/discounts 2
3 Deferred income taxes and investment tax credits, net 22 24 Other (2)
(1)
Changes in assets and liabilities:
Receivables (6)
(56)
Inventories 41 52 Accounts and wages payable (20)
(34)
Taxes accrued 16 12 Regulatory assets and liabilities (28) 18 Assets. other (4) 3 Liabilities, other (14)
(12)
Pension and other postretirement benefits (2)
(3)
Net cash provided by operating activities 232 227 Cash Flows From Investing Activities:
Capital expenditures (324)
(267)
Other 1
Net cash used in investing activities (323)
(267)
Cash Flows From Financing Activities:
Dividends on preferred stock (1)
(1)
Short-term debt, net 7
54 Capital contribution from parent 100
Net cash provided by financing activities 106 53 Net change in cash, cash equivalents, and restricted cash 15 13 Cash, cash equivalents and restricted cash at beginning ofyear 125 80 Cash, cash equivalents, and restricted cash at end ofperiod 140 93 The accompanying notes as they relate to Ameren Illinois are an integral part ofthese financial statements.
13
Common Stock AMEREN ILLINOIS COMPANY (dlbla AMEREN ILLINOIS)
STATEMENT OF SHAREHOLDERS EQUITY (Unaudited) (In millions)
Three Months Ended March 31, 2020 2019 S
100
2,288 2,173 Preferred Stock Retained Earnings:
Beginning of year Net income Preferred stock dividends Retained earnhigs, end of period 62 62 1,882 1,539 121 121 (1)
(1) 2,002 1,659 Total Shareholders Equity S
4,352 3,894 The accompanying notes as they relate to Ameren Illinois are an integral part ofthese financial statements.
Other Paid-in Capital:
Beginning of year Capital contribution from parent Other paid-in capital, end of period 2,188 2,173 14
AMEREN CORPORATION (Consolidated)
UNION ELECTRIC COMPANY (dlb/a Ameren Missouri)
AMEREN ILLINOIS COMPANY (d/bla Ameren Illinois)
COMBINED NOTES TO FINANCIAL STATEMENTS (Unaudited)
March 31, 2020 NOTE 1 -
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES General Ameren, headquartered in St. Louis, Missouri, is a public utility holding company whose primary assets are its equity interests in its subsidiaries. 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.
The COVID-l9 pandemic is a rapidly evolving situation. While the COVID-19 pandemic did not have a material impact on our results ofoperations, financial position, or liquidity for the three months ended March 3 1, 2020, it may adversely affect our results of operations, financial position, or liquidity in subsequent periods. The effect will depend on the severity and longevity ofthe COVID-19 pandemic and the resulting impact on business, economic, and capital market conditions. 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. On March 21, 2020, a shelter-rn-place order for the state oflllinois became effective and will remain in effect until at least May 30, 2020.
Similar orders became effective for Saint Louis City and County on March 23, 2020, and the state ofMissouri on April 6, 2020. The state ofMissouri order was effective through May 3, 2020, while Saint Louis City and County are expected to begin easing restrictions on May 18, 2020. These orders generally preclude or limit the operation ofbusinesses that are deemed nonessential. 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 oftime or become more severe. On March 13, 2020, and March 16, 2020, Ameren Illinois and Ameren Missouri, respectively, suspended customer disconnections for non-payment and began to waive late fees. Regarding bad debt expense, Ameren Illinois electric distribution and natural gas distribution businesses have bad debt riders, which would provide for recovery ofincreased bad debt expense. However, Ameren Missouris earnings are exposed to potential increases in future bad debt expense, which could result in incremental accounts receivable write-offs in future periods as Ameren Missouri does not have a bad debt rider or regulatory tracking mechanism. Our customers ability to pay for our services may be adversely affected by the COVID I 9 pandemic. A reduction in collections from our tariff-based revenues could reduce our cash from operations and cause an adverse impact to our liquidity.
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 ofnet operating losses, temporary suspension ofthe payment ofthe employer portion ofSocial Security taxes, and additional funding for customer energy assistance, among other things. Ameren has implemented certain provisions ofthe act, and is currently evaluating other provisions ofthe act. As of March 3 1, 2020. there was no material impact to Amerens, Ameren Missouris, and Ameren Illinois financial statements.
Amerens financial statements are prepared on a consolidated basis and therefore include the accounts ofits 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 fmancial statements in conformity with GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect reported amounts ofassets and liabilities, the disclosure ofcontingent assets and liabilities at the dates of fmancial statements, and the reported amounts ofrevenues and expenses during the reported periods. Actual results could differ from those estimates. The results ofoperations ofan interim period may not give a true indication ofresults that may be expected for a full year. These financial statements should be read in conjunction with the financial statements and accompanying notes included m the Form 1 0-K.
15
Variable Interest Entities As ofMarch 31, 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 ofMarch 3 1, 2020, the maximum exposure to loss related to these variable interest entities was approximately $ 1 5 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 ofthe maximum exposure to loss. See Note 2 Rate and Regulatory Matters for additional information on the agreements to acquire these wind generation facilities.
As of March 3 1, 2020, and December 3 1, 2019, Ameren had unconsolidated variable interests as a limited partner in various equity method investments, totaling $3 1 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 ofthese variable interest entities. As ofMarch 31, 2020, the maximum exposure to loss related to these variable interests is limited to the investment in these partnerships of $3 1 million plus associated outstanding funding commitments of $34 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 ofMarch 31, 2020, the cash surrender value ofcompany-owned life insurance at Ameren and Ameren Illinois was $245 million (December 3 1, 2019
$264 million) and $1 18 million (December 31, 2019
$123 million),
respectively, while total borrowings against the policies were $109 million (December 3 1, 2019
$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 ofthe policies and, consequently, present the net asset in Other assets on their respective balance sheets. The cash surrender value decreased during the three months ended March 3 1, 2020, primarily because of a decrease in the market value of underlying investments.
Accounting and Reporting Developments See Note 1 Summary ofSignificant Accounting Policies under Part II, Item 8, ofthe Form 10-K for additional information about recently issued authoritative accounting guidance relating to defined benefit plan disclosures.
Measurement ofCretht 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 ofthe 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 ofthis 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.
NOTE 2 - RATE AND REGULATORY MATTERS Below is a summary ofupdates 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 ofthe final decisions ofthe various agencies and courts, or the impact on our results ofoperations, financial position, or liquidity.
Missouri 2019 Electric Service Regulatory 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 ofthe FAC and trackers for pension and postretirement benefits, uncertain income tax 16
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 15 million from the base level established in the MoPSCs March 2017 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. These changes will result in approximately $20 million of increased revenues and approximate decreases in purchased power expenses of $15 million, other operating and maintenance expenses of $60 million, and income tax expenses of $20 million. An estimated $70 million would have otherwise been deferred under the PISA.
A stipulation and agreement approved by the MoPSCs March 2020 order states that the net impact ofthe revenue and expense changes noted above reflect 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 for the three months ended March 3 1, 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 ofnet energy cost variances allowed to be recovered or refunded under the FAC.
Wind Generation facilities In 20 1 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 agreement to acquire, after construction, an up-to 400-megawatt wind generation facility. These two agreements are subject to customary contract terms and conditions. The two build-transfer acquisitions collectively represent $ 1.2 billion 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 have begun construction activities.
In 2020, the developers ofthe wind generation facilities received notices from the wind turbine supplier, and the developer ofthe up-to 300-megawatt project received a notice from the construction contractor, of changes in supply and/or construction activities resulting from the COVID-1 9 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. To date, neither developer has reported to Ameren Missouri that the projects will not be completed in 2020. Ameren Missouri expects the up-to 400-megawatt project to be placed in-service by the end of2020. However, at this time, due to manufacturing, shipping, and other supply chain issues, and based on Ameren Missouris discussions with the developer, Ameren Missouri expects that a portion ofthe up-to 300-megawatt project, representing approximately $ 100 million of investment, could be placed in-service in the first quarter of 2021
. The build-transfer agreements include provisions for the event in which any portion ofeither project is completed after 2020. In such an event, according to the terms ofthe agreements, Ameren Missouri would pay a reduced contract price on the portion ofthe project completed after 2020, to account for risks associated with qualifying for production tax credits, subject to an obligation to later pay such price differential should Ameren Missouri be entitled to receive production tax credits.
MEEIA As a result ofMoPSC orders issued in September 2017, October 2018, and January 2019 related to 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 of 2019.
Ameren Missouri did not recognize revenues related to MEEIA performance incentives during the first quarter of 2020.
Illinois Electric Distribution Service Rates In April 2020, Ameren Illinois filed its annual electric distribution service formula rate update to establish the revenue requirement to be used for 202 1 rates with the ICC. Pending ICC approval, this update filing will result in a $45 million decrease in Ameren Illinois electric distribution service rates, beginning in January 2021. 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 ofthe 2018 revenue requirement reconciliation adjustment, which will be ftilly collected from customers in 2020, consistent with the ICCs December 2019 annual update filing order. It also reflects an increase based on expected net plant additions for 2020.
An ICC decision in this proceeding is expected by December 2020.
2020 Natural Gas Delivery Service Regulatory Rate Review In February 2020, Ameren Illinois filed a request with the ICC seeking approval to increase its annual revenues for natural gas delivery service by $102 million, which includes an estimated $46 million ofannual revenues that would otherwise be recovered under the QIP and other riders. The request is based on a 10.5% allowed ROE, a capital structure composed of54.l% common equity, and a rate base of$2.l billion. Ameren Illinois used a 2021 future test year in this proceeding. A decision by the ICC in this proceeding is required by January 2021, 17
with new rates expected to be effective in February 202L Ameren Illinois cannot predict the level ofany 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.
QJP Reconciliation Hearing In March 20 1 9, Ameren Illinois filed a request with the ICC for a reconciliation hearing to determine the accuracy and prudence of natural gas infrastructure investments recovered under the QIP rider during 2018. In November 2019, the Illinois Attorney Generals office challenged the recovery ofcapital investments, among other things, that were made during 20 1 8, 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 ofcapital investments made during 2018. Ameren Illinois 2018 QIP rate recovery 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, natural gas, water, and sewer utilities to suspend disconnections for customer non-payment and waive late fees, on an interim basis, effective March 18, 2020, and for as long as the public health emergency related to the COVID-19 pandemic remains in effect for the state oflllinois. At this time, the state oflllinois public health emergency remains in effect until May 30, 2020. The order also requires utilities to design and implement, upon ICC approval and on a temporary basis, more flexible credit and collection practices. In March 2020, Ameren Illinois filed a response to the ICC order stating their compliance with the suspension of disconnections and late fees for electric distribution and natural gas customers, and proposing more flexible credit and collection practices, including longer deferred payment arrangements for customers that fall behind on bill payments. In April 2020, similar to other utilities in Illinois, Ameren Illinois also requested approval to recover forgone late fees related to natural gas service through its existing bad debt rider and the ability to defer, as a regulatory asset, costs incurred related to the COVID-19 pandemic. Recovery ofelectric distribution forgone late fees and costs incurred related to the COVID-19 pandemic are included in Ameren Illinois electric distribution formula rates. In April 2020, the ICC staff recommended extending the suspension ofdisconnections and late fees for 60 days beyond when the state oflllinois public health emergency has ended. The ICC is under no deadline to issue an order in this proceeding.
Federal Aineren Illinois Transmission formula Rate Revisions In February 2020, MISO, on behalfofAmeren Illinois, filed a request with the fhRC to revise Ameren Illinois transmission formula rate calculation with respect to calculation inputs for materials and supplies. In May 2020, the fERC issued an order approving the revisions prospectively. In addition, the FERC noted that the FERC staffshould review historical rate recovery in connection with an ongoing FERC audit. At this time, Ameren and Ameren Illinois are evaluating this order, but do not expect the impact to be material on their results ofoperations, 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 under the MISO tarifffrom 12.38% to 9.15%. In September 2016, the FERC issued an order in the November 2013 complaint case, which lowered the allowed base ROE to 10.32%, or a 10.82% total allowed ROE with the inclusion ofa 50 basis point incentive adder for participation in an RTO, that was effective from late September 2016 forward. The September 2016 order also required refunds for the period November 2013 to February 2015, which were paid in 2017.
With the maximum fERC-allowed refund period for the November 2013 complaint case 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 ofFebruary 2015 to May 2016. In November 2019, the FERC issued an order addressing the November 2013 complaint case, which set the allowed base ROE at 9.88% and required refunds, with interest, for the periods November 2013 to February 2015 and from late September 2016 forward. The order also dismissed the February 2015 complaint case.
As ofMarch 3 1, 2020, Ameren and Ameren Illinois had recorded current regulatory liabilities of$40 million and $23 million, respectively, to reflect the expected refunds, including interest, associated with the reduced ROEs in the November 20 1 9 order in the November 2t)1 3 complaint case. The reduction in the FERC-allowed base ROE from 10.32% to 9.88% is not material to Ameren Missouris results ofoperations, financial position, or liquidity.
In December 2019, Ameren and the MISO transmission owners, including Ameren Missouri, Ameren Illinois, and ATXI, filed requests for rehearing with the FERC. Additionally, in December 2019, various parties filed requests for rehearing with the FERC, challenging the dismissal ofthe February 2015 complaint case.
The FERC has not ruled on the merits ofthe rehearing requests and is under no deadline to do so. The allowed base ROE for the 15-month period related to the February 2015 complaint case was 12.38%. Each 50 basis point 18
reduction in the allowed base ROE for this I 5-month period would reduce Amerens and Ameren Illinois net income by an estimated $ 1 1 million and $6 million, respectively.
In March 2019, the FERC issued separate Notices oflnquiry regarding its allowed base ROE policy and its transmission incentives policy. Initial comments were due by June 2019, and reply comments were due by late August 2019. The Notice oflnquiry addressing the FERCs base ROE policy, among other things, broadened the ability to comment on the new methodology beyond electric utilities that are participants in the complaint cases. The transmission incentives Notice oflnquiry was open for comment on the FERCs transmission incentive policy, including incentive adders to the base ROE. In March 2020, the fERC issued a Notice ofProposed Rulemaking on its transmission incentives policy, which 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 of250 basis points, among other things. Initial comments are due by July 2020. Ameren is unable to predict the ultimate impact ofthe Notices oflnquiry or the Notice of Proposed Rulemaking at this time.
NOTE 3 - SHORT-TERM DEBT AND LIQtIIDITY 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 ofour indebtedness provisions and other covenants as well as a description ofmoney pool arrangements.
Credit Agreements 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 issue letters of credit. As ofMarch 3 1, 2020, based on credit facility borrowings, commercial paper outstanding, and letters of credit issued under the Credit Agreements, along with cash and cash equivalents, the net liquidity available to Ameren (parent), Ameren Missouri, and Ameren Illinois, collectively, was $1.7 billion. The Ameren Companies were in compliance with the covenants in their Credit Agreements as of March 3 1, 2020. As of March 3 1, 2020, the ratios of consolidated indebtedness to consolidated total capitalization, calculated in accordance with the provisions ofthe Credit Agreements, were 55%, 51%, and 46% for Ameren, Ameren Missouri, and Ameren Illinois, respectively.
The following table presents the credit facility borrowings and commercial paper outstanding, net ofissuance discounts, as ofMarch 31, 2020, and December 31, 2019:
March 31, 2020 December 31, 2019 Credit Facility Total Short-term Credit facility Total Short-term Borrowings Commercial Paper Debt Borrowings Commercial Paper Debt Ameren(parent) 275 150 425 S
153 153 Arneren Missouri 130
130
234 234 Ameren Illinois 60
60
53 53 Ameren consolidated 465 s
150 615
440 440 The following table summarizes the borrowing activity and relevant interest rates under the Credit Agreements for the three months ended March 31, 2t)20.
There were no borrowings under the Credit Agreements for the three months ended March 3 1, 2019.
Ameren Ameren Ameren (parent)
Missouri Illinois Total Missouri Credit Agreement Average daily credit facility borrowings outstanding during the period 1
12
13 Weighted-average interest rate 2.06%
2.36%
2.33%
Peak credit facility borrowings during the period 100 S
130
230 Peakinterestrate 2.06%
3.33%
3.33%
Illinois Credit Agreement Average daily credit facility borrowings outstanding during the period 2
5 7
Weighted-average interest rate 2.06%
2.05%
2.06%
Peak credit facility borrowings during the period S
175
60 235 Peak interest rate 2.06°A 2.05%
2.06%
(a)
The timing of peak credit facility borrowings varies by company. Therefore, the sum of individual company peak amounts may not equal the Ameren consolidated peak credit facility borrowings for the period.
19
Commercial Paper The following table summarizes the borrowing activity and relevant interest rates under Ameren (parent)s, Ameren Missouris, and Ameren Illinois commercial paper programs for the three months ended March 31, 2020 and 2019:
Ameren Ameren Ameren Ameren (parent)
Missouri Illinois Consolidated 2020 Average daily commercial paper outstanding at par value 154 383 71 608 Weighted-average interest rate 1.94%
1.84%
1.99%
1.88%
Peak commercial paper during period at par value° 225 S
521 S
137 S
854 Peak interest rate 3.30%
5.05%
3.40%
5.05%
2019 Average daily commercial paper outstanding at par value 480 246 89 815 Weighted-average interest rate 2.87%
2.84%
2.76%
2.85%
Peak commercial paper during period at par value 618 S
549 130 1,113 Peakinterestrate 3.10%
2.97%
2.90%
3.10%
(a)
The timing of peak outstanding commercial paper issuances varies by company. Therefore, the sum of individual company peak amounts may not equal the Ameren consolidated peak commercial paper issuances for the period.
(b)
In the first quarter of2020, Ameren Missouris peak interest rate was affected by temporary disruptions in the commercial paper market.
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 money pooi for the three months ended March 31, 2020, was 1.93% (2019 2.87%). See Note 8 Related-party Transactions for the amount of interest income and expense from the money pooi arrangements recorded by the Ameren Companies for the three months ended March 31, 2020 and 2019.
NOTE 4 - LONG-TERM DEBT AND EQUITY FINANCINGS Ameren for the three months ended March 3 1, 2020, Ameren issued a total of 0.2 million shares of common stock under its DRPlus and 40 1(k) plan, and received proceeds of$13 million. In addition, in the first quarter of2020, Ameren issued 0.5 million shares ofcommon stock valued at $38 million upon the vesting of stock-based compensation.
In August 20 1 9, 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 March 3 1, 2020, Ameren could have settled the forward sale agreement with physical delivery of7.5 million shares ofcommon stock to the counterparty in exchange for $552 million. The forward sale agreement could also have been settled at March 3 1, 2020, with delivery of approximately $2 million or less than 0. 1 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 of3.50% senior unsecured notes due January 203 1, with interest payable semiannually on January 15 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 of2.95% 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 ofits 5.00% senior secured notes that matured in February 2020.
Indenture Provisions and Other Covenants See Note 5 Long-Term Debt and Equity Financings under Part II, Item 8, in the form 10-K for a description ofour indenture provisions and other covenants, as well as restrictions on the payment ofdividends. At March 3 1, 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.
20
Off-balance-sheet Arrangements At March 3 1, 2020, none ofthe 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 (jarent) guarantee arrangements on behalfof 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 ofOther Income, Net in the Ameren Companies statements of income for the three months ended March 31, 2020 and 2019:
Three Months 2020 2019 Ameren:
Allowance for equity funds tised during construction 4
6 Interest income on industrial development revenue bonds 6
6 Other interest income i
2 Non-service cost components ofnet periodic benefit income 23 22 Miscellaneous income 2
2 Donatft)ns (13)
(b)
(6)
Miscellaneous expense (2)
(3)
Total Other Income, Net 21 s
29 Ameren Missouri:
Allowance for equity funds used during construction 2
4 Interest income on industrial development revenue bonds 6
6 Non-service cost components ofnet periodic benefit income 5
4 Miscellaneous income i
Donations (8)
(b)
(2)
Miscellaneous expense (2)
(1)
Total other Income, Net 4
12 Ameren Illinois:
Allowance for equity funds used during construction 2
2 Interest income i
2 Non-service cost components ofnet periodic benefit income 13 12 Miscellaneous income i
Donations (4)
(4)
Miscellaneous expense (2)
(2)
Total Other Income, Net i i s
ii (a) for the three months ended March 3 1, 2020 and 201 9, the non-service cost components of net periodic benefit income were partially offset by a deferral of $6 million and $7 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.
(b)
Includes $8 Inilbon pursuant to Ameren Missouris March 2020 electric rate order. See Note 2 Rate and Regulatory Matters 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 ofnatural gas and uranium inventories that differ from the cost ofthose conmiodities in inventory; actual cash outlays for the purchase ofthese 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 ofour risk management program may be settled financially, settled by physical delivery, or net settled with the counterparty.
21
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 ofrecovery, or reftind, 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 March 3 1, 2020, and December 3 1, 20 19, 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.
The following table presents open gross commodity contract volumes by commodity type for derivative assets and liabilities as ofMarch 3 1, 2020, and December 31, 2019. As ofMarch 31, 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 millions, except as indicated) 2020 2019 Ameren Ameren Commodity Missouri Ameren Illinois Ameren Missouri Ameren Illinois Ameren Fuel oils (in gallons) 62
62 58 58 Natural gas (in rnrnbtu) 20 147 167 20 136 156 Power (in megawatthours) 5 7
12 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 ofMarch 31, 2020, and December 31, 2019:
March 31, 2020 December 31, 2019 Ameren Ameren Ameren Ameren Balance Sheet Location Missouri Illinois Ameren Missouri Illinois Ameren Fuel oils Other current assets 3
3 4
4 Other assets 1
1 2
2 Natural gas Other current assets
2 2
3 3
Other assets
2 2
1 1
Power Other current assets 18
1$
14
14 other assets 4
4 2
2 Total assets 26 4
30 22 S
4 26 fuel oils Other current liabilities 19 s
s 19 S
4
S 4
Other deferred credits and liabilities 12
12 3
3 Natural gas Other current liabilities 3
17 20 1
12 13 Other deferred credits and liabilities 5
5 1
6 7
Power Other current liabilities 2
18 20 2
17 19 Other deferred credits and liabilities i
223 224 1
207 208 Uranium Other deferred credits and liabilities i
i I
1 Total liabilities 3$
263 s
301 13 242 255 The Ameren Companies elect to present the fair value amounts ofderivative assets and derivative liabilities subject to an enforceable master netting arrangement or similar agreement at the gross amounts on the balance sheet. However, ifthe gross amounts recognized on the balance sheet were netted with derivative instruments and cash collateral received or posted, the net amounts would not be materially different from the gross amounts at March 3 1, 2020, and I)ecember 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 ofMarch 31, 2020, ifcounterparty groups 22
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 ofthe application ofmaster 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 March 3 1, 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.
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 months ended March 3 1, 2020 or 2019. At March 31. 2020, and December 31, 2019, 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 March 3 1, 2020, and December 31, 2019:
Assets:
Ameren Missouri Derivative assets commodity contracts:
March 31, 2020 December 31, 2019 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 6$
6 2
14 16
()
Fuel oils S
4$
4 Power 4
18 22
Total derivative assets -- commodity contracts 4
22 26
2 20 S
22 Nuclear decommissioning trtist fund:
Equity securities:
U.S. large capitalization 47 457 569
569 Debt securities:
U.S. Treasury and agency securities 105
105
107
107 Corporate bonds 96
96
93
93 Other
68
68
73 73 569 273
842 (a)
Total nuclear decommissioning trust fund 457 269
726 Total Ameren Missouri 461 269 22 752 569 275 20 864 Arneren Illinois Derivative assets commodity contracts:
Natural gas 1
3 4
1 3
4 23
March 31, 2020 December 31, 2019 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Ameren Derivative assets commodity contracts 4
1 S
25 30
S 3
23 26 Nuclear decommissioning trust fund 457 269
726 569 273
842 Total Arneren 461 270 s
25 756 569 S
276 23 868 Liabilities:
Ameren Missouri Derivative liabilities commodity contracts:
fuel oils S
18
13 S
31 1
S 6
7 Natural gas
3
3
2
2 Power 2
1 3
2 1
3 Uranium
1 1
i Total Ameren Missouri 20 3
15 38 1
4 S
8 13 Arneren Illinois Derivative liabilities commodity contracts:
Natural gas 2
15 5
22 3
12 3
18 Power
241 241
224 224 Total Ameren Illinois 2
15 246 263 3
S 12 227 242 Arneren Derivative liabilities commodity contracts 22 18 261 S
301 4
16 235 255 (a)
Balance excludes $16 million and $5 million ofcash and cash equivalents, receivables, payables, and accrued income, net, for March 31, 2020, and December 31, 2019, respectively.
(b)
See the Ameren Missouri and Ameren Illinois sections ofthe table for a breakout ofthe fair value ofAmerens derivative assets and liabilities by type of commodity.
(c)
See the Ameren Missouri section ofthe table for a breakout ofthe fair value ofAmerens nuclear decommissioning trust fund by investment type.
Level 3 fuel oils, natural gas and uranium derivative contract assets and liabilities measured at fair value on a recurring basis were immaterial for all periods presented. The following table presents the fair value reconciliation ofLevel 3 power derivative contract assets and liabilities measured at fair value on a recurring basis for the three months ended March 31, 2020 and 2019:
2020 2019 Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Ameren For the three months ended March 31:
Beginning balance at January 1 13 (224)
(211)
(183)
(183)
Realized and unrealized gains/(losses) included in regulatory assets/liabilities ii (21)
(10)
(4)
(4)
Settlements (7) 4 (3)
3 3
Ending balance atMarch 31 17 (241)
(224)
(184)
S (184)
Change in unrealized gains/(losses) related to assets/liabilities held at March 31 io s
(21) s (it)
s (4)
(4)
All gains or losses related to our Level 3 derivative commodity contracts are expected to be recovered or returned through customer rates therefore, there is no impact to either net income or other comprehensive income resulting from changes in the fair value of these instruments.
The following table describes the valuation techniques and significant unobservable inputs utilized for the fair value ofour Level 3 power derivative contract assets and liabilities as ofMarch 31, 202t), and December 31, 2019:
Fair Value Weighted Commodity Assets Liabilities Valuation Technique(s)
Unobservable Inputt Range Average 2020 Power S
18 (242)
Discounted cash flow Average fonard peak and off-peak 16 33 25 pricing forwards/swaps ($/MWh)
Nodal basis ($/MWh)
(6) 0 (2)
Trendrate(°/o) 23 2
2019 Power 14 (225)
Discounted cash flow Average forward peak and off-peak pncing
22 34 25 forwards/swaps ($/MWh)
Nodal basis ($/MWh)
(6)O (2)
Trend rate (%)
(1) 0 0
(a)
Generally, significant increases (decreases) in these inputs in isolation would result in a significantly higher (lower) fair value measurement.
24
(b)
Unobservable inputs were weighted by relative fair value (c)
Valuations through 2029 use visible forward prices adjusted for nodal-to-hub basis differentials. Valuations beyond 2029 use a trend rate factor and are similarly adjusted for nodal-to-hub basis differentials.
(d)
Valuations through 202$ use visible forward prices adjusted for nodal-to-hub basis differentials. Valuations beyond 202$ use a trend rate factor and are similarly adjusted for nodal-to-hub basis differentials.
The following table sets forth, by level within the fair value hierarchy, the carrying amount and fair value of financial assets and liabilities disclosed, but not recorded, at fair value as ofMarch 3 1, 2020, and December 3 1, 2019:
March 31, 2020 Fair Value Carrying Amount Level 1 Level 2 Level 3 Total Ameren:
Cash, cash equivalents, and restricted cash 203 s
203
S 203 Investments in industrial development revenue bonds° 263
263
263 Short-termdebt 615
615
615 Long-term debt (including current portion) 9,735 (b) 10,189 449 10,638 Ameren Missouri:
Cash, cash equivalents, and restricted cash 24 s
24
24 Investments in industrial development revenue bonds 263
263
263 Short-term debt 130
130
t30 Long-term debt (including current portion) 4,567 b
5,098
5,098 Ameren Illinois:
Cash, cash equivalents, and restricted cash 140 s
140
S
140 Short-term debt 60
60
60 Long-term debt (including current portion)
(b) 3,945 3,945 December 31, 2019 Ameren:
Cash, cash equivalents, and restricted cash 176 s
176 S
F
s 176 Investments in industrial development revenue bonds 263 263
263 Short-term debt 440 440 440 Long-tems debt (including current portion (b) 9957 4$4 (0
10,441 Ameren Missouri:
Cash, cash equivalents, and restricted cash 39 39 39 Investments in industrial development revenue bonds° 263
263
263 Short-term debt 234
234 234
()
Long-term debt (including current portion) 4,190 h
4,772
4,772 Ameren Illinois:
Cash, cash equivalents, and restricted cash 125 s
125 s
s
s 125 Short-term debt 53 53 53 Long-term debt (including current portion) fb) 4019
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 ofMarch 3 1, 2020, and December 3 1, 2019, 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$73 million, $32 million, and $34 million for Ameren, Ameren Missouri, and Ameren Illinois, respectively, as ofMarch 31, 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 3 1, 2019.
(c)
The Level 3 fair value amount consists ofATXIs senior unsecured notes.
NOTE 8 - RELATED-PARTY TRANSACTIONS In the normal course ofbusiness, Ameren Missouri and Ameren Illinois have engaged in, and may in the future engage in, affiliate transactions. These transactions primarily consist ofnatural gas and power purchases and sales, services received or rendered, and borrowings and lendings. Transactions between Amerens subsidiaries are reported as affiliate transactions on their individual financial statements, but those transactions are eliminated in consolidation for Amerens consolidated financial statements. For a discussion ofmaterial 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.
25
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 $2 million from June 2021 through May 2023.
Tax Allocation Agreement See Note 1 Summary ofSigniftcant Accounting Policies under Part II, Item 8, ofthe Form 10-K for a discussion ofthe tax allocation agreement. The following table presents the affiliate balances related to income taxes for Ameren Missouri and Ameren Illinois as of March 3 1, 2020, and December 3 1, 2019:
March 31, 2020 December 31, 2019 Ameren Missouri Ameren Illinois Ameren Missouri Ameren Illinois 12$
48 15$
43 16 1
15 17 Income taxes payable to parent Income taxes receivable from parent (a)
Included in Accounts payable affiliates on the balance sheet.
(b)
Included in Accounts receivable affiliates on the balance sheet.
Effects of Related-party Transactions on the Statement of Income The following table presents the effect on Ameren Missouri and Ameren Illinois ofrelated-party transactions for the three months ended March 3 1, 2020 and 2019:
Three Months Income Statement Ameren Ameren Agreement Line Item Missouri Illinois Ameren Missouri power supply Operating Revenues 2020 3
(a) agreements with Ameren Illinois 2019 (b)
(a)
Ameren Missouri and Ameren Illinois Operating Revenues 2020 7
1 rent and facility services 2019 7
1 Ameren Missouri and Ameren Illinois Operating Revenues 2020 (b)
(b) miscellaneous support services 2019 (b)
(b)
Total Operating Revenues 2020 tO 1
2019 7
1 Ameren Illinois power supply Purchased Power 2020 (a) 3 agreements with Ameren Missouri 2019 (a)
(b)
Ameren Illinois transmission Purchased Power 2020 (a)
(b) services with ATXI 2019 (a)
(b)
Total Purchased Power 2020 (a) 3 2019 (a)
(b)
Ameren Missouri and Ameren Illinois Other Operations and Maintenance 2020 (b) 1 rent and facility services 2019 (b)
I Ameren Services support services Other Operations and Maintenance 2020 35 33 agreement 2019 32 30 Total Other Operations and 2020 35 34 Maintenance 2019 32 31 Money pool borrowings (advances)
(Interest Charges)/Other Income, Net 2020 (b)
(b) 2019
(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 ofbusiness, some ofwhich involve substantial amounts ofmoney. 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 1 0-K, will not have a material adverse effect on our results of operations, financial position, or liquidity.
26
Reference is made to Note 1 Summary ofSignificant Accounting Policies, Note 2 Rate and Regulatory Matters, Note 13 Related-party Transactions, and Note 14 Commitments and Contingencies under Part II, Item 8, ofthe Form 10-K. See also Note 1 Summary of Significant Accounting Policies, Note 2 Rate and Regulatory Matters, Note 8 Related-party Transactions, and Note 10 Callaway Energy Center of this report.
Other Obligations To supply a portion ofthe fuel requirements ofAmeren Missouris energy centers, Ameren Missouri has entered into various long-term commitments for the procurement of coal, natural gas, nuclear ftiel, 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 March 3 1, 2020. Amerens and Ameren Illinois purchased power commitments include the Ameren Illinois agreements entered into as part ofthe IPA-administered power procurement process. Included in the Other column are minimum purchase commitments under contracts for equipment, design and construction, and meter reading services, among other agreements, at March 31, 2020.
Natural Nuclear Purchased Methane Coal Gas Fuel Power Gas Other Total Ameren:
2020 242 150 35
$5 (d) 2 55 569 2021 219 129 57 51 3
40 499 2022 155 69 11 13 3
24 305 2023 105 39 44 3
3 24 21$
2024 94 13 15 3
23 14$
Thereafter 55 43 16
24 59 197 Total 900 443 17$
S 152 3$
225 1,936 Ameren Missouri:
2020 242 S
32 35 S
2 43 354 2021 219 26 57
3 31 336 2022 185 15 11 3
23 237 2023 105 13 44
3 24 1$9 2024 94 6
15 3
23 141 Thereafter 55 19 16
24 26 140 Total 900 111 17$
38 170 1,397 Ameren Illinois:
2020 11$
S
$5 (d) 20$
2021 103 51
4 158 2022
54
13
67 2023 26
3
29 2024
7
7 Mj3 Thereafter
24
24 Total S
332 S
152
9 5
493 (a)
Includes amounts for generation and for distribution.
(b)
The purchased power amounts for Arneren and Ameren Illinois exclude agreements for renewable energy credits through 2035 with various renewable energy suppliers due to the contingent nature ofthe payment amounts, with the exception ofexpected payments of$15 million through 2024.
(c)
The purchased power amounts for Ameren and Ameren Missouri exclude a 102-megawatt power purchase agreement with a wind farm operator, which expires in 2024, due to the contingent nature ofthe 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 IPA each May prior to the start ofthe subsequent planning year. The amounts above reflect Ameren Illinois commitment to acquire approximately $1 1 million of zero emission credits through May 2020.
In April 2020, Ameren Illinois conducted procurement events, administered by the IPA, to purchase energy products and capacity through May 2023. In the April 2020 procurement events, Ameren Illinois contracted to purchase 3,550,800 megawatthours ofenergy products for $92 million from June 2020 through May 2023 and 61 7 megawatts of capacity for $4 million from June 202 1 through May 2023. See Note 8 Related-party Transactions for additional information regarding the capacity agreement between Ameren Missouri and Ameren Illinois as a result of the April 2020 capacity procurement event.
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 27
water, water intake, impacts to air, land, and water, and chemical and waste handling. Complex and lengthy processes are required to obtain and renew approvals, permits, and licenses for new, existing or modified facilities. Additionally, the use and handling ofvarious chemicals or hazardous materials require release prevention plans and emergency response procedures.
The EPA has promulgated environmental regulations that have a significant impact on the electric utility industry. Over time, compliance with these regulations could be costly for Ameren Missouri, which operates coal-fired power plants. Regulations that apply to air emissions from the electric utility industry include the NSPS, the CSAPR, the MATS, and the National Ambient Air Quality Standards, which are subject to periodic review for certain pollutants.
Collectively, these regulations cover a variety ofpollutants, such as SO2, particulate matter, NON, mercury, toxic metals, and acid gases, and CO2 emissions from new power plants. Water intake and discharges from power plants are regulated under the Clean Water Act. Such regulation could require modifications to water intake structures or more stringent limitations on wastewater discharges at Ameren Missouris energy centers, either ofwhich could result in significant capital expenditures. The management and disposal ofcoal ash is regulated under the CCR rule, which will require the closure ofsurface impoundments and the installations of dry ash handling systems at several ofAmeren Missouris energy centers. The individual or combined effects of existing environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration ofoperations at some ofAmeren Missouris energy centers.
Ameren and Ameren Missouri expect that such compliance costs would be recoverable through rates, subject to MoPSC prudence review, but the 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 ofwhich are discussed below. This estimate does not include capital expenditures that may be required as a result ofthe NSR and Clean Air Act litigation discussed below. Ameren Missouris current plan for compliance with existing air emission regulations includes burning low-sulfur coal and installing new or optimizing existing air pollution control equipment. The actual amount of capital expenditures required to comply with existing environmental regulations may vary substantially from the above estimate because of uncertainty as to whether the EPA will substantially revise regulatory obligations, exactly which compliance strategies will be used and their ultimate cost, among other things.
The following sections describe the more significant environmental laws and rules and environmental enforcement and remediation matters that affect or could affect our operations. The EPA has initiated an administrative review of several 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 ofall or part ofsuch rules.
Clean Air Act Federal and state laws, including CSAPR, regulate emissions ofSO2 and NO through the reduction ofemissions at their source and the use and retirement of emission allowances. The first phase ofthe CSAPR emission reduction requirements became effective in 2015. The second phase ofemission reduction requirements, which were revised by the EPA in 2016, became effective in 2017; additional emission reduction requirements may apply in subsequent years. To achieve compliance with the CSAPR, Ameren Missouri burns low-sulftir 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.
Co2 Emissions Standards In September 2019, the EPAs Affordable Clean Energy Rule, which establishes emission guidelines for states to follow in developing plans to limit CO2 emissions from coal-fired electric generating units, became effective. The EPA has identified certain efficiency measures as the best system ofemission reduction for coal-fired electric generating units. The rule requires the state ofMissouri to develop a compliance plan and submit it to the EPA for approval by July 2022.
The plan is expected to include a standard ofperformancc for each affected generating unit. We are evaluating the impact ofthe adoption and implementation of the Affordable Clean Energy Rule and, along with other stakeholders, will be working with the state of Missouri to develop the compliance plan submitted to the EPA. At this time, we cannot predict the outcome ofMissouris compliance plan development process. As such, the impact on the results ofoperations, fmancial position, and liquidity ofAmeren and Ameren Missouri is uncertain. We also cannot predict the outcome ofany potential legal challenges to the rule.
NSR and Clean Air Litigation In January 201 1, the Department ofJustice, on behalfofthe EPA, filed a complaint against Ameren Missouri in the United States District Court for the Eastern District ofMissouri alleging that in performing projects at its coal-fired Rush Island Energy Center in 2007 and 2010, Ameren Missouri violated provisions ofthe Clean Air Act and Missouri law. In January 2017, the district court issued a liability ruling and, in September 2019, entered a 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 20 1 9, Ameren Missouri 28
appealed the district courts ruling to the United States Court ofAppeals for the Eighth Circuit. Additionally, in October 2019, following a request by Ameren Missouri, the district court stayed implementation ofthe majority ofits orders requirements while the case is appealed. Ameren Missouri believes the district court both misinterpreted and misapplied the law in its ruling. We are unable to predict the ultimate resolution ofthis matter. Ameren Missouri expects to file its brief in the appeal in late May 2020. Based on anticipated scheduling, the court is expected to hear oral arguments in 2020; however, it is under no deadline to issue a ruling in this case.
The ultimate resolution ofthis matter could have a material adverse effect on the results ofoperations, financial position, and liquidity ofAmeren and Ameren Missouri. Among other things and subject to economic and regulatory considerations, resolution of this matter could result in increased capital expenditures for the installation ofair pollution control equipment, as well as increased operations and maintenance expenses. Based upon engineering studies, capital expenditures to comply with the district courts order for installation ofa flue gas desulftirization system at the Rush Island Energy Center are estimated at approximately $1 billion. Further, the flue gas desulfurization system would result in additional operation and maintenance expenses of $30 million to $50 million annually for the life ofthe energy center. Engineering studies required to develop estimated capital expenditures and estimated additional operation and maintenance expenses for the Labadie Energy Center to comply with the district courts order will not be undertaken while the case is under appeal. As a result ofthe district courts stay, Ameren Missouri does not expect to make significant capital expenditures or incur operations and maintenance expenses related to the district court s order while the case is under appeal.
Clean Water Act In July 2018, the United States Court ofAppeals for the Second Circuit upheld the EPAs Section 316(b) Rule applicable to cooling water intake structures at existing power plants. The rule requires a case-by-case evaluation and plan for reducing the number ofaquatic organisms impinged on a power plants cooling water intake screens or entrained through the plants cooling water system. All ofAmeren Missouris coal-fired and nuclear energy centers are subject to the cooling water intake structures rule. Requirements ofthe rule are being implemented by Ameren Missouri during the permit renewal process ofeach energy centers water discharge permit, which is expected to be completed by 2023.
In 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 ofavailable control technology. The EPAs 2015 rule prohibits effluent discharges of certam waste streams and imposes more stringent limitations on certain water discharges from power plants. In September 2017, the EPA published a rule that postponed the compliance dates by two years for the limitations applicable to two specific waste streams so that it could potentially revise those standards. To meet the requirements ofthe guidelines, Ameren Missouri is constructing wastewater treatment facilities and dry ash handling systems at three ofits 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 20 1 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 ofclosing its surface impoundments.
with the last ofsuch closures scheduled for 2023. The EPA issued revisions to the CCR rule in July 2018, proposed additional revisions in July and November 20 19, and indicated that additional revisions to the CCR rule are likely. Ameren and Ameren Missouri have AROs of $1 37 million recorded on their respective balance sheets as of March 3 1, 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 ofdry ash handling systems, wastewater treatment facilities, and groundwater monitoring equipment.
Remediation The Ameren Companies are involved in a number ofremediation actions to clean up sites impacted by the use or disposal ofmaterials containing hazardous substances. federal and state laws can require responsible parties to fund remediation regardless oftheir degree offault, the legality oforiginal disposal. or the ownership of a disposal site.
As ofMarch 31, 2020, Ameren Illinois has remediated the majority ofthe 44 former MGP sites in Illinois it owned or for which it was otherwise responsible.
Ameren Illinois estimates it could substantially conclude remediation efforts at the remaining sites by 2023. The ICC allows Ameren Illinois to recover such remediation and related litigation costs from its electric and natural gas utility customers through environmental cost riders. Costs are subject to annual prudence review by the ICC. As ofMarch 31, 2020, Ameren Illinois estimated the remaining obligation related to these former MGP sites at $126 million to $213 million.
Ameren and Ameren Illinois recorded a liability of$126 million to represent the estimated minimum obligation for these sites, as no other amount within the range was a better estimate.
The scope ofthe 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 29
underground structures, the degree to which groundwater is encountered, regulatory changes, local ordinances, and site accessibility. The actual costs and timing of completion may vary substantially from these estimates.
Our operations or those ofour predecessor companies involve the use of disposal of, and, in appropriate circumstances, the cleanup ofsubstances regulated under environmental laws. We are unable to determine whether such practices will result in future environmental commitments or will affect our results of operations, financial position, or liquidity.
NOTE 10 - CALLAWAY ENERGY CENTER See Note 9 Callaway Energy Center under Part II, Item 8, ofthe form 10-K for information regarding spent nuclear fuel recovery, recovery of decommissioning costs, and the nuclear decommissioning trust fund. The fair value ofthe 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 ofnuclear decommissioning. Changes in the fair value ofthe 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 April 1, 2020:
Most Recent Maximum Assessments Type and Source ofCoverage Renewal Date Maximum Coverages for Single Incidents Public liability and nuclear worker liability:
American Nuclear Insurers January 1, 2020 S
450
Pool participation (a) 1 3,348 (a) i (b) 13,798
))
13$
Property damage:
NEIL and EMANI April 1, 2020 3,200 25 Replacement power:
NEIL April 1, 2020 490 7
(a)
(a)
Provided through mandatory participation in an ;ndtistiywide retrospective premium assessment program. The maximum coverage available is dependent on the number ofUnited States commercial reactors participating in the program.
(b)
Retrospective premium under the Price-Anderson Act. This is subject to retrospective assessment with respect to a covered loss in excess of5450 million in the event ofan incident at any licensed United States commercial reactor, payable at $21 million per year.
(c)
Limit ofliability for each incident under the Price-Anderson liability provisions ofthe Atomic Energy Act of 1954, as amended. This limit is subject to change to account for the effects of inflation and changes in the number oflicensed 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.
(0 Provides replacement power cost insurance in the event ofa 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 of7l weeks thereafter for a total not exceeding the policy limit of$490 million. Nonradiation events are limited to $325 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 oflicensed reactors. The limit ofliability and the maximum potential annual payments are adjusted at least every five years for inflation to reflect changes in the Consumer Price Index. The most recent five-year inflationary adjustment became effective in November 2018. Owners ofa nuclear reactor cover this exposure through a combination ofprivate insurance and mandatory participation in a financial protection pool, as established by the Price-Anderson Act.
Losses resulting from terrorist attacks on nuclear facilities insured by NEIL are subject to industrywide aggregates, such that terrorist acts against one or more commercial nuclear power plants within a stated time period would be treated as a single event, and the owners ofthe nuclear power plants would share the limit of liability. NEIL policies have an aggregate limit of$3.2 billion within a 12-month period for radiation events, or $1.8 billion for events not involving radiation contamination, resulting from terrorist attacks. The EMANI policies are not subject to industrywide aggregates in the event ofterrorist attacks on nuclear facilities.
Iflosses 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. Ifa serious nuclear incident were to occur, it could have a material adverse effect on Amerens and Ameren Missouris results ofoperations, financial position, or liquidity.
30
NOTE 11 - RETIREMENT BENEFITS The following table presents the components ofthe net periodic benefit cost (income) incurred for Amerens pension and postretirement benefit plans for the three months endedMarch 31, 2020 and 2019:
Pension Benefits Postretirement Benefits Three Months Three Months 2020 2019 2020 2019 Service CoSta) 27 22 4
S 4
Non-service cost components:
Interest cost 43 47 10 1 1 Expected return on plan assets (73)
(69)
(20)
(19)
Amortization of:
Priorsewicebenefit (1)
(1)
Actuarial loss (gain) 14 6
(2)
(4)
Total non-service cost components (16)
(16)
(13)
(13)
Net periodic benefit cost (income) 11 6
(9)
(9)
(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 ofincome. See Note 5 Other Income, Net for additional information.
Ameren Missouri and Ameren Illinois are responsible for their respective shares ofAmerens pension and postretirement costs. The following table presents the respective share ofnet periodic pension and other postretirement benefit costs (income) incurred for the three months ended March 31, 2020 and 2019:
Pension Benefits Postretirement Benefits Three Months Three Months 2020 2019 2020 2019 Ameren Missourit 4
1 (1)
(2)
Ameren Illinois 7
5 (8)
(7)
Ameren 11 6
(9)
(9)
(a)
Does not include the impact ofthe regulatory tracking mechanism for the difference between the level ofpension and postretirement benefit costs incurred by Ameren Missouri under GAAP and the level of such costs included in rates.
funding Ameren expects to make annual contributions of approximately $5 million to $45 million in each year through 2024, with aggregate estimated contributions of $1 15 million, based on its assumptions at March 3 1, 2020, its investment performance in 2020, and its pension Iuinding policy. This is an increase from the aggregate estimated contributions of$70 million at December 3 1, 2019, due to year-to-date performance ofAmerens pension and other postretirement benefit plan assets in 2020.
NOTE 12 - INCOME TAXES The following table presents a reconciliation ofthe federal statutory corporate income tax rate to the effective income tax rate for the three months ended March 31, 2020 and 2019:
Ameren Ameren Missouri Ameren Illinois 2020 2019 2020 2019 2020 2019 Three Months Federal statutory corporate income tax rate:
21%
210/n 21%
21%
21%
21%
Increases (decreases) from:
Amortization ofexcess deferred taxes (9)
(7)
(15)
(12)
(3)
(3)
Depreciation differences (1)
(1)
Amortization ofdeferred investment tax credit (1)
(1)
(1)
Statetax 6
6 3
4 7
7 Stock-based compensation (5)
(7)
Other permanent items (3)
Effective income tax rate 12%
12%
8%
9° 24%
25%
31
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 ofMarch 31, 2020, and December 31, 2019:
March 31, 2020 December 31, 2019 Ameren Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Cash and cash equivalents 42 3
6 16 9
Restricted cash included in Other current assets 16 4
6 14 4
5 Restricted cash included in Other assets t28
128 120 120 Restricted cash included in Nuclear decommissioning trust fund 17 t7
26 26 Total cash, cash equivalents, and restricted cash 203 24 140 176 39 S
125 Restricted cash included in )ther 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 Arnerens and Arneren Illinois balance sheets primarily represents amounts collected under a cost recovery rider restricted for use in the procurement ofrenewable energy credits and amounts in a trust fund restricted for the use offunding 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 March 3 1, 2020, and December 3 1, 2019, Other current liabilities on Amerens and Ameren Illinois balance sheets included payables for purchased receivables of$33 million and $32 million, respectively.
The following table provides a reconciliation ofthe beginning and ending amount ofthe allowance for doubtful accounts for the three months ended March 31, 2020 and 2019:
2020 2019 Ameren Ameren Ameren Ameren Ameren Missouri Illinoist Ameren Missouri Illinois Balsmce atJanuary 1 17 7
S 10 18 7
11 Bad debt expense 3
2 1
3 1
2 Netwrite-offs (1)
(1)
(2)
(1)
(1)
BalanceatMarch3l S
19 5
8 S
11 19 S
7 12 (a)
Ameren Illinois has a rate-adjustment mechanism that allows it to recover the difference between its actual net bad debt write-offs under GAAP and the amount ofnet bad debt write-offs included in its base rates.
Supplemental Cash Flow Information The following table provides noncash financing and investing activity excluded from the statements of cash flows for the three months ended March 3 1, 2020 and 2019:
March 31, 2020 March 31, 2019 Ameren Ameren Ameren Ameren Ameren Missouri Illinois Ameren Missouri Illinois Investing Accrued capital expenditures 235 S
97 S
127 S
20$
S 92 106 Accrued nuclear fuel expenditures 7
7
Net realized and unrealized gain (loss) nuclear decommissioning trust fund (1 1 1)
(1 1 1) 64 64 Financing Issuance ofcommon stock for stock-based compensation 3$
5
5
54
S
32
Asset Retirement Obligations The following table provides a reconciliation ofthe beginning and ending carrying amount ofAROs for the three months ended March 3 1, 2020:
Ameren Ameren Missouri Illinois Ameren Balance at December 3 1, 20 1 9 687 (a) 4 (b) 69 1 (a)
Liabilities settled (14)
(14)
Accretion 7
(a) 7 (a)
Balance at March 31, 2020 680 (a) 4 (b) 684 (a)
(a)
Balance included $53 million in Other current liabilities on the balance sheet as ofboth December 31, 2019, and March 31, 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.
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 $10 million. Awards vest approximately 3 8 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 ofrenewable generation and energy storage installation targets (41,950 performance share units). The exact number ofshares issued pursuant to a performance share unit varies from 0% to 200% ofthe target award, depending on actual company performance relative to the performance goals.
For the three months ended March 31, 2020 and 2019, excess tax benefits associated with the settlement ofstock-based compensation awards reduced income tax expense by $8 million and $14 million, respectively.
Deferred Compensation As ofMarch 31, 2020, and December 31, 2019, Other current liabilities and Other deferred credits and liabilities on Amerens balance sheet included deferred compensation obligations of $85 million and $86 million, respectively, recorded at the present value of future benefits to be paid.
Operating Revenues As of March 3 1, 2020 and 20 1 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 ofthe transaction price allocated to the performance obligations that are unsatisfied as ofthe end of the reporting period for contracts with an initial expected term ofone year or less.
See Note I 4 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 ofnatural gas and electricity. The following table presents the excise taxes recorded on a gross basis in Operating Revenues
Electric, Operating Revenues Natural gas and Operating Expenses Taxes other than income taxes on the statements of income for the three months ended March 31, 2020 and 2019:
Three Months 2020 2019 Ameren Missouri 30 31 Ameren Illinois 35 39 Ameren 65 70 33
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 months ended March 31, 2020 and 2019:
Three Months 2020 2019 Weighted-average Common Shares Outstanding Basic 246.4 244.9 Assumed settlement ofperformance share units and restricted stock units 1.1 1.5 Dilutive effect offorward sale agreement 0.6 Weighted-average Common Shares Outstanding Diluted 248.1 246.4 (a)
There were no potentially dilutive securities excluded from the eamings per diluted share calculations for the three months ended March 3 1, 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 months ended March 3 1, 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 Ameren Ameren Illinois Ameren Ameren Electric Illinois Ameren Intersegment Missouri Distribution Natural Gas Transmission Other Eliminations Ameren Three Months 2020:
External revenues 670 389 271 110
1,440 Intersegment revenues 10 1
13
(24)
Net income (loss) attributable to Ameren common shareholders (10) 37 55 47
()
17
146 Capital expenditures 278 123 61 170 3
1 636 Three Months 2019:
Externalrevenues 751 386 S
320 99
1,556 Intersegment revenues 7
1 1 5 (23)
Net income attributable to Ameren common shareholders 39 36 57 44
)
15
191 Capital expenditures 240 124 51 121 10 (2) 544 (a)
Ameren Transmission eamings reflect an allocation of financing costs from Ameren (parent).
Ameren Illinois Ameren Illinois Ameren Electric Illinois Natural Ameren Illinois Intersegment Distribution Gas Transmission Eliminations Ameren Illinois Three Months 2020:
External revenues 390 S
271 62
S 723 Intersegment revenues
12 t)
(12)
Net income available to common shareholder 37 55 28
120 Capital expenditures 123 61 140
324 Three Months 2019:
External revenues 387 S
320 55 V
762 Interseginent revenues
15 (a)
(15)
Net income available to common shareholder 36 57 27
120 Capital expenditures 124 51 92
267 (a)
Ameren Illinois Transmission earns revenue from transmission service provided to Ameren Illinois Electric Distribution.
34
The following tables present disaggregated revenues by segment at Ameren and Ameren Illinois for the three months ended March 3 1, 2020 and 20 19.
Economic factors affect the nature, timing, amount, and uncertainty ofrevenues and cash flows in a similar manner across customer classes. Revenues from alternative revenue programs have a similar distribution among customer classes as revenues from contracts with customers. Other revenues not associated with contracts with customers are presented in the Other customer classification, along with electric transmission and off-system revenues.
Ameren Ameren Illinois Electric Ameren Illinois Ameren Intersegment Ameren Missouri Distribution Natural Gas Transmission Eliminations Ameren Three Months 2020:
Residential 297 220 S
517 Commercial 221 126
347 Industrial 53 35
88 Other 60 9
123 (24) 168 Total electric revenues S
631 390
123 (24) 1,120 Residential 33
213
246 Commercial 13
54
67 Industrial 1
3
4 Other 2
1
3 Total natural gas revenues 49
271
320 Total revenues 680 S
390 271 123 (24) 1,440 Three Months 2019:
Residential 312 217
S
S 529 Commercial 239 123
362 Industrial 55 34
89 other 98 13 114 (23) 202 Total electric revenues S
704 387 S
1 14 (23) 1,182 Residential 38 S
246
284 Commercial 16 65
81 Industnal 2
4
6 other (2) 5
3 Total natural gas revenues S
54 320
374 Totalrevenues 758 387 S
320 S
114 S
(23)
S 1,556 (a)
The following table presents increases/(decreases) in revenues from alternative revenue programs and other revenues not from contracts with customers for the three months ended March 31, 2020 and 2019:
Ameren Illinois Ameren Ameren Electric Illinois Ameren Missouri Distribution Natural Gas Transmission Ameren Three Months 2020:
Revenues from alternative revenue programs (3) 46 11 12 66 other revenues not from contracts with customers 8
1 1
10 Three Months 2019:
Revenues from alternative revenue programs S
15 22 (3)
(5) 29 Other revenues not from contracts with customers 5
3 1
9 35
Ameren Illinois Ameren Illinois Ameren Electric Illinois Natural Ameren Illinois Intersegment Distribution Gas Transmission Eliminations Ameren Illinois Three Months 2020:
Residential 220 213
S
433 Commercial 126 54
180 Industrial 35 3
38 other 9
1 74 (12) 72 Total revenues 390 271 74 (12)
S 723 Three Months 2019:
Residential 217 S
246
463 Commercial 123 65
?
188 Industrial 34 4
38 Other 13 5
70 (15) 73 Total revenues 387 320 70 S
(15)
S 762 (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 forthe three months ended March 31, 2020 and 2019:
Ameren Illinois Ameren Illinois Ameren Illinois Electric Distribution Natural Gas Transmission Ameren Illinois Three Months 2020:
Revenues from alternative revenue programs 46 S
11 10 67 Other revenues not from contracts with customers 1
1
2 Three Months 2019:
Revenues from alternative revenue programs 22 (3)
(5) 14 Other revenues not from contracts with customers 3
1
4 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 contained in this form 1O-Q, as well as Managements Discussion and Analysis offinancial Condition and Results ofOperations 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 ofour business segments to provide a better understanding ofhow those segments and their results affect the financial condition and results of operations ofAmeren as a whole. Also see the Glossary ofTerms and Abbreviations at the front ofthis report and in the Form 10-K.
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company whose primary assets are its equity interests in its subsidiaries. Arnerens subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. Dividends on 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 ofits 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 ofoperations and earnings amounts in total, we present certain information in cents per share. These amounts reflect factors that directly affect Amerens earmngs. We believe this per share information helps readers to understand the impact ofthese factors on Amerens earnings per share.
36
OVERVIEW Amerens first quarter 2020 net income attributable to common shareholders was $146 million, or $0.59 per diluted share, compared with first quarter 2019 net income attributable to common shareholders of$191 million, or $0.78 per diluted share. The decrease in year-over-year earnings reflected lower revenues due to the absence in 2020 of MEEIA performance incentives, decreased electric retail sales at Ameren Missouri primarily due to milder winter temperatures experienced in 2020, and a lower recognized ROE at Ameren Illinois Electric Distribution. The decreased earnings also reflected increased other operation and maintenance expenses not subject to riders or regulatory tracking mechanisms primarily due to changes in the cash surrender value of company-owned life insurance, partially offset by the absence in 2020 of expenses related to the Callaway Energy Centers scheduled refueling and maintenance outage. Earnings were also unfavorably affected by increased charitable donations at Ameren Missouri pursuant to its March 2020 electric rate order. Net income, compared to the year-ago period, was favorably affected by infrastructure investments that drove higher earnings at Ameren Transmission and Ameren Illinois Electric Distribution, each of which benefits from formula ratemaking.
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 ofits utility businesses and invested $0.6 billion in those businesses in the three months ended March 3 1, 2020.
The COVID-19 pandemic is a rapidly evolving situation. While the COVID-19 pandemic did not have a material impact on our results ofoperations, financial position. or liquidity for the three months ended March 31, 2020, it may adversely affect our results ofoperations, financial position, or liquidity in subsequent periods. The effect will depend on the severity and longevity ofthe COVID-19 pandemic 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 require individuals to remain at home and preclude or limit the operation ofbusinesses that are deemed nonessential. In early 2020, Ameren began implementing its business continuity plans, and continues to implement measures to mitigate the risk ofCOVID-l9 transmission. Actions included restricting domestic and international 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 Amerens business operations are deemed essential and are not directly impacted by the shelter-in-place orders, approximately 65% of our workforce transitioned to remote working arrangements in mid-March. We are monitoring 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 on these and other matters, see Managements Discussion and Analysis ofResults ofOperations, Liquidity and Capital Resources, and Outlook sections below.
In February 2020, Ameren Missouri filed an update to its Smart Energy Plan with the MoPSC, which includes a five-year capital investment overview with a detailed one-year plan for 2020. The plan is designed to upgrade Ameren Missouris electric infrastructure and includes investments that will upgrade the grid and accommodate more renewable energy. Investments under the plan are expected to total approximately $7.6 billion over the five-year period from 2020 through 2024, with expenditures largely recoverable under the PISA and the RESRAM. The planned investments in 2024 are based on the assumption that Ameren Missouri requests and receives MoPSC approval ofan extension ofthe PISA through December 2028. As a part ofits Smart Energy Plan, Ameren Missouri expects to build solar generation facilities, including utility scale facilities and nonresidential customer site facilities. In September 20 1 9, Arneren Missouri filed for certificates of convenience and necessity with the MoPSC to build three solar facilities in its service territory. Each 1 0-megawatt solar energy generation facility will connect to battery storage in order to improve system reliability. All three facilities are expected to be completed by 2022. Also in 2019, the MoPSC approved Ameren Missouris Charge Ahead program, which provides incentives for the development ofover 1,000 electric vehicle charging stations along highways and at various locations in communities throughout Ameren Missouris service territory. The purpose ofthe program is to promote the development of electric vehicle charging infrastructure that will enable long-distance electric vehicle travel and encourage electrification ofthe transportation sector.
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 ofthe 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 ofoperations for the three months ended March 3 1, 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 revietv, reaffirming the existing percentage ofnet energy cost variances allowed to be recovered or refunded under the FAC. See Note 2 Rate and Regulatory Matters under Part I, Item 1, ofthis report for more information regarding Ameren Missouris March and April 2020 electric service regulatory rate orders.
Consistent with its 20 17 IRP filing, in 2019, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 300-megatvatt wind generation facility. In 201 8, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, 37
an up-to 400-megawatt wind generation facility. These two agreements are subject to customary contract terms and conditions. The two build-transfer acquisitions collectively represent $1.2 billion ofcapital expenditures 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 RIO interconnection agreements, and have begun construction activities. In 2020, the developers ofthe wind generation facilities received notices from the wind turbine supplier, and the developer ofthe up-to 300-megawatt project received a notice from the construction contractor, of changes in supply and/or construction activities resulting from the COVID-l9 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. To date, neither developer has reported to Ameren Missouri that the projects will not be completed in 2020. Ameren Missouri expects the up-to 400-megawatt project to be placed rn-service by the end of2020. However, at this time, due to manufacturing, shipping, and other supply chain issues, and based on Ameren Missouris discussions with the developer, Ameren Missouri expects that a portion ofthe up-to 300-megawatt project, representing approximately $100 million ofinvestment, could be placed in-service in the first quarter of2021. The build-transfer agreements include provisions for the event in which any portion ofeither project is completed after 2020. In such an event, according to the terms of the agreements, Ameren Missouri would pay a reduced contract price on the portion ofthe project completed after 2020, to account for risks associated with qualifying for production tax credits, subject to an obligation to later pay such price differential should Ameren Missouri be entitled to receive production tax credits. See Note 2 Rate and Regulatory Matters under Part I, Item I, of this report for more information regarding Ameren Missouri wind generation investments.
In February 2020, the MoPSC issued an order approving a stipulation and agreement allowing Ameren Missouri to defer and amortize maintenance expenses related to scheduled refueling and maintenance outages at its Callaway Energy Center. Beginning with the fall 2020 refueling and maintenance outage, Ameren Missouri will defer the maintenance expenses incurred related to a scheduled refueling and maintenance outage as a regulatory asset and amortize those expenses after completion of the outage. Maintenance expenses will be amortized over the period between refueling and maintenance outages, which is approximately 1$
months. Deferring and amortizing these expenses allows the timing ofexpense 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 by $102 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 202 1 future test year in this proceeding. A decision by the ICC in this proceeding is required by January 2021, with new rates expected to be effective in February 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 establish the revenue requirement to be used for 2021 rates with the ICC. Pending ICC approval, this update filing will result in a $45 million decrease in Ameren Illinois electric distribution service rates, beginning in January 202 1
. This update reflects a decrease to the annual formula rate based on 20 1 9 actual costs, a decrease to include the 20 1 9 revenue requirement reconciliation adjustment, and a decrease for the conclusion ofthe 2018 revenue requirement reconciliation adjustment, which will be frilly collected from customers in 2020, consistent with the ICCs December 2019 annual update filing order. It also reflects an increase based on expected net plant additions for 2020.
An ICC decision in this proceeding is expected by December 2020.
RESULTS Of OPERATIONS Our results ofoperations 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 ofkey customers can significantly affect the demand for our services. Ameren and Ameren Missouri results are also affected by seasonal fluctuations in winter heating and summer cooling demands, as well as by nuclear reftieling and other energy center maintenance outages. Additionally, fluctuations in interest rates and conditions in the capital and credit markets affect our cost ofborrowing, and our pension and postretirement benefits costs. Almost all ofAmerens revenues are subject to state or federal regulation. This regulation has a material impact on the rates we charge customers for our services. Customer rates are determined under various regulatory mechanisms. See Note 2 Rate and Regulatory Matters for additional information regarding Ameren Missouris, Ameren Illinois, and ATXIs regulatory mechanisms. Our results ofoperations, financial position, and liquidity are affected by our ability to align our overall spending, both operating and capital, within the frameworks established by our regulators.
The COVID-19 pandemic is a rapidly evolving situation. While the COVID-19 pandemic did not have a material impact on our results ofoperations, financial position, or liquidity for the three months ended March 3 1, 2020, it may adversely affect our results of operations, financial position, or liquidity in subsequent periods. The effect will depend on the severity and longevity ofthe COVID-19 pandemic and the resulting impact on business, economic, and capital market conditions. On March 21, 2020, a shelter-in-place order for the state oflllinois became effective and will remain in effect until at least May 30, 2020. Similar orders became effective for Saint Louis City and County on 38
March 23, 2020, and the state ofMissouri on April 6, 2020. The state ofMissouri order was effective through May 3, 2020, while Saint Louis City and County are expected to begin easing restrictions on May 18, 2020. These orders generally preclude or limit the operation ofbusinesses that are deemed nonessential. While Amerens business operations are deemed essential and are not directly impacted by the shelter-in-place orders, approximately 65% ofour workforce transitioned to remote working arrangements in mid-March. We are monitoring the impacts the pandemic is having on our businesses, including impacts on electric and natural gas sales volumes, supply chain operations, and bad debt expense. On March 13, 2020, and March 16, 2020, Ameren Illinois and Ameren Missouri, respectively, suspended customer disconnections for non-payment and began to waive late fees. Regarding bad debt expense, Ameren Illinois electric distribution and natural gas distribution businesses have bad debt riders, which would provide for recovery ofincreased bad debt expense. However, Ameren Missouris earnings are exposed to potential increases in future bad debt expense, which could result in incremental accounts receivable write-offs in future periods as Ameren Missouri does not have a bad debt rider or regulatory tracking mechanism. In the three months ended March 3 1, 2020, Ameren Missouris total electric sales volumes were comparable with the same period in 2019, with a 2% decrease in industrial electric sales volumes and a 1.5% decrease in commercial electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. These decreases were offset by a 2.5% increase in higher margin residential electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. Ameren Illinois also experienced decreases in electric and natural gas sales volumes. However, Ameren Illinois electric distribution and transmission businesses have formula ratemaking frameworks, which provide for recovery oftheir revenue requirements independent of sales volumes, and Ameren Illinois natural gas distribution business has a VBA, which provides for recovery ofthe natural gas distribution service revenue requirement that is dependent on 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 requirements independent of sales volumes. Furthermore, none ofAmerens businesses have experienced significant disruptions to their supply cham operations. However, see Note 2 Rate and Regulatory Matters under Part I, Item 1, ofthis report for information regarding supply chain disruptions related to Ameren Missouris acquisition ofan 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 ofthe 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 Missouri s 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 ofoperations, financial position, and liquidity.
Earnings Summary The following table presents a summary ofAmerens earnings for the three months ended March 31, 2020 and 2019:
Three Months 2020 2019 Net income attributable to Ameren common shareholders 146 191 Earnings per common share basic and diluted 0.59 0.78 Net income attributable to Ameren common shareholders decreased $45 million, or 19 cents per diluted share, in the three months ended March 31, 2020, compared with the year-ago period. The decrease was due to net income decreases of $49 million and $2 million at Ameren Missouri and Ameren Illinois Natural Gas, respectively. These decreases were partially offset by net income increases of $3 million, $2 million, and $ 1 million at Ameren Transmission, activity not reported as part of a segment, primarily at Ameren (parent), and Ameren Illinois Electric Distribution, respectively.
Earnings per diluted share were unfavorably affected between periods by:
increased other operation and maintenance expenses not subject to riders or regulatory tracking mechanisms, excluding the absence ofthe Callaway Energy Centers scheduled refueling and maintenance outage costs, primarily due to changes in the cash surrender value of company-owned life insurance (8 cents per share) the absence in 2020 ofMEFIA 2013 and MEEIA 2016 performance incentives at Ameren Missouri recognized in the first quarter of2019 (6 cents per share),
decreased electric retail sales at Ameren Missouri, primarily due to milder winter temperatures experienced in 2020 (estimated at 5 cents per share);
39
decreased income tax benefits at Ameren (parent) related to stock-based compensation and company-owned life insurance (5 cents per share);
decreased Ameren Illinois Electric Distribution earnings under formula ratemaking because of a lower recognized ROE (2 cents per share); and increased charitable donations at Ameren Missouri pursuant to its March 2020 electric rate order (2 cents per share).
Earnings per diluted share were favorably affected between periods by:
increased Ameren Transmission and Ameren Illinois Electric Distribution earnings under formula ratemaking because of additional rate base investments (3 cents per share);
decreased other operation and maintenance expenses related to the absence ofa Callaway Energy Centers scheduled refueling and maintenance outage, which last occurred in the second quarter of2019, and the deferral of2020 outage expenses under the February 2020 MoPSC order (2 cents per share);
increased Ameren Illinois Natural Gas earnings from investments in qualifying infrastructure recovered under the QIP rider (I cent per share); and decreased net fmancing costs at Ameren Missouri, primarily as a result ofthe regulatory deferral ofinterest expense pursuant to the PISA, partially offset by lower levels ofthe allowance for funds used during construction (1 cent per share).
The cents per share information presented is based on the weighted-average basic common shares outstanding in the three months ended March 3 1, 20 1 9, 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 ofincome taxes using Amerens 2020 statutory tax rate of26%. For additional details regarding the Ameren Companies results of operations, including explanations ofElectric and Natural Gas Margins, Other Operations and Maintenance Expenses, Depreciation and Amortization, Taxes Other Than Income Taxes, Other Income, Net, Interest Charges, and Income Taxes, see the major headings below.
Below is Amerens table ofincome statement components by segment for the three months ended March 3 1, 2020 and 2019:
Ameren Illinois Ameren Other I Ameren Electric Illinois Ameren Intersegment Missouri Distribution Natural Gas Transmission Eliminations Ameren Three Months 2020:
Electnc margins 452 s
280
123 (9)
$46 Natural gas margins 31
182
213 Other operations and maintenance expenses (239)
(130)
(57)
(14) 2 (43$)
Depreciation and amortization expenses (139)
(71)
(21)
(24)
(255)
Taxes other than income taxes (79)
(19)
(22)
(2)
(3)
(125)
Other income, net 4
7 2
2 6
21 Interestcharges (40)
(1$)
(10)
(21)
(4)
(93)
Income (taxes) benefit i
(11)
(19)
(17) 25 (21)
Net income (loss)
(9) 3$
47 17 148 Noncontrolling interests preferred stock dividends (1)
(1)
(2)
Net income (loss) attributable to Ameren comnson shareholders (10) s 37 55 47 17 146 Three Months 2019:
Electncmargins 493 267 s
114 (8) 866 Natural gas margins 27
186
213 Other operations and maintenance expenses (224)
(1 19)
(59)
(15)
(417)
Depreciation and amortization expenses (140)
(68)
(20)
(20)
(248)
Taxes other than income taxes (77)
(20)
(24)
( I )
(4)
(126)
Other income, net 12 6
3 1
7 29 Interestcharges (47)
(18)
(10)
(19)
(3)
(97)
Income (taxes) benefit (4)
(1 1)
(19)
(16) 23 (27)
Netmcome 40 37 57 44 15 193 Noncontrolling interests preferred stock dividends (1)
(1)
(2)
Net income attributable to Ameren common shareholders 39 36 S
57 S
44 15 S
191 40
Below is Ameren Illinois table of income statement components by segment for the three months ended March 3 1, 2020 and 2019:
Ameren Illinois Ameren Electric Illinois Ameren Distribution Natural Gas Illinois Transmission Ameren Illinois Three Months 2020:
Electric and natural gas margins 280 182 74 536 Other operations and maintenance expenses (130)
(57)
(12)
(199)
Depreciation and amortization expenses (71)
(21)
(15)
(107)
Taxes other than income taxes (19)
(22)
(1)
(42)
Other income, net 7
2 2
11 Interestcharges (18)
(10)
(11)
(39)
Income taxes (11)
(19)
(9)
(39)
Net income 38 55 28 121 Preferred stock dividends (1)
(1)
Net income attributable to common shareholder 37 55 2$
120 Three Months 2019:
Electric and natural gas margins 267 S
186 70 S
523 Other operations and maintenance expenses (119)
(59)
(13)
(191)
Depreciation and amortization expenses (68)
(20)
(13)
(101)
Taxes other than income taxes (20)
(24)
(1)
(45)
Other income, net 6
3 2
11 Interestcharges (18)
(10)
(9)
(37)
Incoinetaxes (11)
(19)
(9)
(39)
Netincome 37 57 27 121 Preferred stock dividends (1)
( I)
Net income attributable to common shareholder 36 57 S
27 120 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 ofour 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.
41
Electric Margins Total by Segment Increase (Decrease) by Segment (Overall Ameren Decrease of $20 Million)
S(1)
Sf41)
$1oQD
$20
$10
$800
$0
$800 I
I
$4 U,
5(20)
Ai
$200 4flfn it Pl5 Sf30)
Elednc DtibI I Atr-e 5(40) nv EIimiicns 2020 2019 5(50)
(a)
Tncludes other/intersegment eliminations ofS(9) million and $(8) million in the three months ended March 31, 2020 and 2019, respectively.
Natural Gas Margins Increase (Decrease) by Segment Total by Segment (Overall Ameren Change of$- Million)
$250 5213
$200
.___$15o 1j3
!$: $I SI AlTe-er !s A
rren ID:s
$i, Nural 3at 2020
$5
$213 C
$0 U,
2019
$(4)
$(5) 42
The following table presents the favorable (unfavorable) variations by Ameren segment for electric and natural gas margins for the three months ended March 31, 2020, compared with the year-ago period.
Ameren Illinois Ameren Other I Ameren Electric Illinois Ameren Intersegment Three Months Missouri Distribution Natural Gas Transmission Eliminations Ameren Electric revenue change:
Effect ofweather (estimate)
(27)
(27)
Base rates (estimate)
I 1
9
20 Sales volumes and changes in customer usage patterns (excluding the estimated effects ofweather and MEEIA) 1
1 MEEIA 2013 and MI EIA 2016 performance incentives (20)
J
(20)
Off-system sales (22)
(22)
Energy-efficiency program investments
3
3 Other I
(1)
Cost recovery mechanisms offset in fuel and purchased power (3)
(9)
(12)
Other cost recovery mechanisrns (3)
(2)
(5)
Total electric revenue change (73) 3
9
( 1 )
S (62) fuel and purchased power change:
Energy costs (excluding the estimated effect oftveather) 24 S
24 Effect ofweather (estirnate))
7 7
Transmission services charges (2)
(2)
Other
1
5
S Cost recovery mechanisms offset in electric revenue 3
9
1Jis-4 12 Total fuel and purchased power change 32 10 S
S
S
42 Net change in electric margins S
(41) 13 9
(1)
(20)
Natural gas revenue change:
S-Effect of weather (estirnate)5
( 1 )
S
(I)
Change in rate design 4
4 QIP rider S
5 Other 1
(1)
Cost recovery mechanisms offset in natural gas purchased for resal&dj (9)
(45) 55 S
(54)
Other cost recovery mechanisms°
(8)
(8)
Total natural gas revenue change (5)
(49) 5
(54)
Natural gas purchased for resale change:
Effect ofweather (estimate)5 Cost recovery mechanisms offset in natural gas revenue 9
45 54 Total natural gas purchased for resale change 9
45
54 Net change in natural gas margins S
4
S (4)
S
(a)
Includes an increase in transmission margins of $4 million at Ameren Illinois for the three months ended March 3 1, 2020, compared with the year-ago period.
(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 period, 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.
(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 ofthe statement ofincome. These items have no overall impact on earnings.
43
Arneren Amerens electric margins decreased $20 million, or 2%, for the three months ended March 3 1, 2020, compared with the year-ago period, primarily because of decreased margins at Ameren Missouri, partially offset by increased margins at Ameren Illinois Electric Distribution and Ameren Transmission, as discussed below. Amerens natural gas margins were comparable between periods because ofincreased margins at Ameren Missouri natural gas, offset by decreased margins at Ameren Illinois Natural Gas, as discussed below.
Ameren Transmission Ameren Transmission s margins increased $9 million, or 8%, for the three months ended March 3 1, 2020, compared with the year-ago period. Margins were favorably affected by increased capital investment, as evidenced by a 1 3% increase in rate base used to calculate the revenue requirement.
Arneren Missouri Ameren Missouris electric margins decreased $41 million, or 8%, for the three months ended March 31, 2020, compared with the year-ago period.
The following items had an unfavorable effect on Ameren Missouris electric margins between periods:
Winter temperatures were milder as heating degree days decreased 16% for the three months ended March 31, 2020. The aggregate effect of weather decreased margins an estimated $20 million. The change in margins due to weather is the sum ofthe effect ofweather (estimate) on electric revenues (-$27 million) and the effect ofweather (estimate) on fuel and purchased power (+$7 million) in the table above.
The absence in 2020 ofMEEIA 2013 and MEEIA 2016 performance incentives, which were recognized in the first quarter of2019, decreased revenues $20 million. See Note 2 Rate and Regulatory Matters under Part 1, Item 1 ofthis report for information regarding the MEEIA 201 3 and MEEIA 2016 performance incentives.
The following items had a favorable effect on Ameren Missouris electric margins between periods:
Net energy costs increased margins $2 million as a result oflower energy costs (+$24 million), largely offset by a reduction in off-system sales revenue (-$22 million). The decrease in energy costs is the result oflower fuel costs and decreased generation volumes, while the reduction in off-system sales revenues is primarily due to lower sales prices.
Excluding the estimated effects ofweather and the MEEIA 2016 and 2019 customer energy-efficiency programs, electric revenues increased an estimated $1 million for the three months ended March 3 1, 2020. The increase was primarily due to an increase in the average retail price per kilowatthour due to changes in customer usage patterns (+$2 million). The benefit ofthe higher average retail price was partially offset by a decrease to sales volumes (-$1 million), which were unfavorably affected the COVID-19 pandemic, but favorably affected by an additional day in 2020 as a result ofthe leap year. While the MEEIA 2016 and 2019 customer energy-efficiency programs reduced retail sales volumes, the recovery oflost electric margins ensured that electric margins were not affected.
Ameren Missouris natural gas margins were favorably affected by the implementation of a change in rate design, which increased margins $4 million, or 15%, for the three months ended March 31, 2020, compared with the year-ago period. Pursuant to the MoPSCs September 2019 natural gas order, this change in rate design concentrates more revenues in the winter heating season. As a result, the change is not expected to materially affect year-over-year earnings.
Ameren Illinois Ameren Illinois electric margins increased $17 million, or 5%, for the three months ended March 31, 2020, compared with the year-ago period, driven by increased margins at Ameren Illinois Electric Distribution and Ameren Illinois Transmission. Ameren Illinois Natural Gas margins decreased $4 million, or 2%,
between periods.
Ameren Illinois Electric Distribution Ameren Illinois Electric Distributions margins increased $13 million, or 5%, for the three months ended March 31, 2020, compared with the year-ago period.
Margins increased due to higher recoverable expenses related to other operations and maintenance and depreciation and amortization (+$14 million) and higher return on rate base (+$3 million), partially offset by a lower recognized ROE (-$6 million), as evidenced by a decrease of 134 basis points in the estimated annual average ofthe monthly yields ofthe 30-year United States Treasury bonds under formula ratemaking. The sum ofthese changes collectively increased margins $11 million. Revenues also increased $3 million due to recovery ofenergy-efficiency program investment expenses under formula ratemaking.
44
Ameren illinois Natural Gas Ameren Illinois Natural Gas margins decreased $4 million, or 2%, for the three months ended March 3 1, 2020, compared with the year-ago period, due to revenues from other cost recovery mechanisms, which decreased margins $8 million. The decrease was partially offset by increased revenues from QIP recoveries due to additional investment in qualified natural gas infrastructure, which increased margins $5 million.
Arneren Illinois Transmission Ameren Illinois Transmissions margins increased $4 million, or 6%, for the three months ended March 31, 2020, compared with the year-ago period. Margins were favorably affected by increased capital investment, as evidenced by an 1 8% increase in rate base used to calculate the revenue requirement.
Other Operations and Maintenance Expenses Increase (Decrease) by Segment (a)
Includes other/intersegment eliminations of$(2) million in the three months ended March 31, 2020.
Aineren Other operations and maintenance expenses were $2 1 million higher in thethree months ended March 3 1, 2020, compared with the year-ago period. due to changes discussed below.
Ameren Transmission Other operations and maintenance expenses were comparable between periods.
Ameren Missouri The $15 million increase in other operations and maintenance expense in the three months ended March 31, 2020, compared with the year-ago period, was primarily due to the following items:
The cash surrender value ofcompany-owned life insurance decreased $15 million, because ofunfavorable market returns.
Labor and benefit costs increased $7 million, primarily because ofincreased staffing to support the Smart Energy Plan and higher medical costs.
The following items partially offset the above increases in other operations and maintenance expenses between periods:
Total by Segment (Overall Ameren Increase of $2 1 Million) 0
$500
$400
$300
$200
$100
$0 I,)
0
$20
$15
$10
$5
$0
$(5) r7ee, ti,
EIec:fic C it bubcn im Naut8I 133 ArEe-
Ehrr afions 2020 2019
$(1)
$(2)
$2) 45
Callaway Energy Center refueling operations and maintenance costs decreased $7 million. Costs were incurred in the prior year period in preparation for the refueling and maintenance outage that began in April 2019. Costs for the current years fall refueling and maintenance outage are being deferred pursuant to the March 2020 MoPSC electric rate order.
MEEIA customer energy-efficiency program costs decreased $3 million because oflower participation in the MEEIA programs.
Ameren Illinois Other operations and maintenance expenses were $2 million higher in the three months ended March 3 1, 2020, compared with the year-ago period, as discussed below. Other operations and maintenance expenses were comparable between periods at Ameren Illinois Transmission.
Arneren Illinois Electric Distribution Other operations and maintenance expenses were $1 1 million higher in the three months ended March 3 1, 2020, compared with the year-ago period, primarily due to a $7 million decrease in the cash surrender value of company-owned life insurance, resulting from increased unfavorable market returns, and a $3 million increase in employee benefit costs due to higher medical costs.
Aineren Illinois Natural Gas Other operations and maintenance expenses were comparable between periods, as a $5 million decrease in bad debt, customer energy-efficiency, and environmental remediation costs was partially offset by a $3 million decrease in the cash surrender value of company-owned life insurance.
Depreciation and Amortization Expenses Increase (Decrease) by Segment Depreciation and amortization expenses increased $7 million and $6 million in the three months ended March 3 1, 2020, compared with the year-ago period, at Ameren and Ameren Illinois, respectively, primarily because of additional property, plant, and equipment investments across their respective segments.
Depreciation and amortization expenses at Ameren Missouri were comparable between periods as incremental property, plant and equipment investments were offset by increased regulatory deferrals of depreciation and amortization expenses pursuant to PISA.
Taxes Other Than Income Taxes Total by Segment
$255
$248 0
$300 2JO
$100
$0
$4
$3 (Overall Ameren Increase of $7 Million)
$5 I
$3
$1
$(1)
$(2) tIfee t.
.ttee I EIec:nD D trbuhcn
_ An1E-WVD Na:ural tWE-Tra9sr 2020 2019 46
Increase (Decrease) by Segment Total by Segment (Overall Ameren Decrease of $1 Million)
$150
$3
$125
$126
$2
$2
$1001
$1 0
(1
==
0
$0 6,
$50 Aie t SU[l
[ to S I EIec:ric C strbubcn
I Arnee Trair s o
$0 2020 2019 EIirraiions
${3)
(a)
Includes $2 million and $1 million at Ameren Transmission in the three months ended March 31, 2020 and 2019, respectively, and other/intersegment eliminations of$3 million and $4 million in the three months ended March 31, 2020 and 2019, respectively.
Taxes other than income taxes were comparable between periods at Ameren, Ameren Missouri, Ameren Illinois, and their respective segments.
Other Income, Net Increase (Decrease) by Segment (Overall Ameren Decrease of $8 Million)
$5 Si e,
I 5(1)
SCi)
Sb
. 4ff, AI1-,4 tflI ElHlri: r.srIl o
_ 4fis*s! lirii Nt:uroI tt
lrasrrtssnn s,o Oh,rtsrssrn I
2020 2019
$(iD)
Other income, net, decreased $8 million in the three months ended March 3 1, 2020 compared with the year-ago period, primarily due to 47
$30
$20 r
$0i
a $6 million increase in charitable donations at Ameren Missouri, pursuant to the March 2020 MoPSC electric rate order. See Note 2 Rate and Regulatory Matters 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 1, ofthis report for additional information.
Interest Charges Increase (Decrease) by Segment Interest charges decreased $4 million in the three months ended March 3, 2020, compared with the year-ago period. This decrease was primarily due to decreased interest charges at Arneren Missouri, which resulted from increased regulatory deferrals of interest expense pursuant to PISA of $7 million.
Income Taxes The following table presents effective income tax rates for the three months ended March 31, 2020 and 2019:
Three Months 2020 2019 Ameren 12%
12%
Arneren Missouri 8tY0 9%
Ameren Illinois 24%
25%
Ameren Illinois Electric Distribution 22%
24%
Ameren Illinois Natural Gas 26%
26%
Arneren Illinois Transmission 24%
25°/s Ameren Transmission 26%
26%
(a)
Estimate of the annual effective income tax rate adjusted to reflect the tax effect of items discrete to the three months ended March 3 1, 2020 and 2019.
See Note 12 Income Taxes under Part I, Item 1, ofthis report for a reconciliation ofthe federal statutory corporate income tax rate to the effective income tax rate for the Ameren Companies.
The effective income tax rate was lower at Ameren Illinois Electric Distribution in the three months ended March 3 1, 2020, compared with the year-ago period, primarily because ofhigher tax benefits from certain depreciation differences on property-related items largely attributable to the allowance for equity funds used during construction.
Total by Segment (Overall Ameren Decrease of$4 Million) 6100
$97
$5 360 s4
$20 riC0 U,
$0 Eirntten 1I3ur Ameton zlecfric Uiribut fjnrer IIhni Natuu Git 1T,tfl DF*t r.I,s4H:irnst IIrIIIIHIi1
$0
$(5)
$(1O) 2020 2019 48
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 consistmg ofrate-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 of Ameren 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 expect to make significant capital expenditures over the next five years as we invest in our electric and natural gas utility infrastructure to support overall system reliability, grid 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 ofabout $100 million annually. Ameren also plans to issue incremental common equity to fund a portion ofAmeren Missouris wind generation investments through the physical settlement ofthe forward sale agreement entered into in August 2019 relating to 7.5 million shares ofcommon stock.
Additionally, Ameren plans to issue incremental equity ofabout $150 million annually from 2021 to 2024. for additional information about the forward sale agreement, see Note 4 Long-Term Debt and Equity financmgs under Part I, Item 1, ofthis 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 March 3 1, 2020, for Ameren and Ameren Illinois. The working capital deficit at Ameren and Ameren Illinois as ofMarch 31, 2020, was primarily the result ofcurrent maturities oflong-term debt, direct borrowings on our credit facilities, and commercial paper issuances. With the credit capacity available under the Credit Agreements, and cash and cash equivalents, the Ameren Companies had net available liquidity of $1.7 billion at March 3 1, 2020. Additionally, in April 2020, Ameren (parent) issued $800 million of3.50% senior unsecured notes due January 2031 and 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. further, Ameren expects to receive between $540 million and $550 million upon settlement ofthe forward sale agreement, which can be settled at Amerens discretion on or prior to March 31, 2021. As ofApril 30, 2020, Ameren had cash and cash equivalents of$l49 million and did not have any credit facility borrowings or commercial paper outstanding. 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 three months ended March 31, 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 290 387 (97)
(684)
(567)
S (117) 421 S
191 S
230 Ameren Missouri 41 152 (111)
(32$)
(264)
(64) 272 116 156 Ameren Illinois 232 227 5
(323)
(267)
(56) 106 53 53 Cash flows from Operating Activities Our cash provided by operating activities is affected by fluctuations oftrade accounts receivable, inventories, and accounts and wages payable, among other things, as well as the unique regulatory environment for each ofour businesses. Substantially all expenditures related to ftiel, 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 ofthose costs. Additionally, the seasonality ofour electric and natural gas businesses, primarily caused by changes in customer demand due to weather, significantly affect the amount and timing ofour cash provided by operating activities.
As a result ofthe COVID-19 pandemic, on March 13, 2020, and March 16, 2020, Ameren Illinois and Ameren Missouri, respectively, suspended customer disconnections for non-payment and began to waive late fees. Our customers ability to pay for our services may be adversely affected by the COVID-l9 pandemic. A reduction in collections from our tariff-based revenues could reduce our cash from operations and cause an adverse impact to our liquidity.
49
Arneren Amerens cash provided by operating activities decreased $97 million in the first three months of2020, compared with the year-ago period. The following items contributed to the decrease:
A $39 million decrease resulting from decreased customer collections, primarily due to a decrease in weather-related sales volumes at Ameren Missouri, partially offset by a net increase attributable to regulatory recovery mechanisms, decreased fuel costs and production volumes at Ameren Missouri, and decreased purchase power costs and volumes and natural gas costs at Ameren Illinois.
A $30 million decrease resulting from an increase in coal inventory levels due to delivery disruptions that occurred from flooding in 2019.
A $15 million increase in property tax payments at Ameren 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.
Arneren Missouri Ameren Missouris cash provided by operating activities decreased $111 million in the first three months of2020, compared with the year-ago period. The following items contributed to the decrease:
A $44 million decrease resulting from decreased customer collections, primarily due to a decrease in weather-related sales volumes, partially offset by decreased fuel costs and production volumes and a net increase attributable to regulatory recovery mechanisms.
A $30 million decrease resulting from an increase in coal inventory levels due to delivery disruptions that occurred from flooding in 2019.
A $15 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.
Arneren Illinois Ameren Illinois cash provided by operating activities increased $5 million in the first three months of2020, compared with the year-ago period. The following items contributed to the increase:
A $5 million increase primarily resulting from decreased purchased power costs and volumes and decreased natural gas costs, as well as the change in customer receivable balances, partially offset by a net decrease attributable to regulatory recovery mechanisms.
Cash flows from Investing Activities Amerens cash used in investing activities increased $117 million in the first three months of2020, compared with the year-ago period, primarily as a result of a $92 million increase in capital expenditures from increases at Ameren Missouri and Ameren Illinois, and a $14 million increase due to the timing ofnuclear fuel expenditures at Ameren Missouri.
Ameren Missouris cash used in investing activities increased $64 million between periods, primarily as a result ofa $38 million increase in capital expenditures and a $14 million increase due to the timing ofnuclear fuel expenditures. The increase in capital expenditures primarily related to electric delivery infrastructure upgrades and electric transmission system reliability projects.
Ameren Illinois cash used in investing activities increased $56 million between periods, primarily due to a $57 million increase in capital expenditures primarily related to upgrades to natural gas main infrastructure, and electric transmission and distribution system reliability projects.
Cash flows from Financing Activities Cash provided by, or used in, financing activities is a result ofour financing needs, which depend on the level ofcash provided by operating activities, the level ofcash used in investing activities, the level ofdividends, and our long-term debt maturities, among other things.
Amerens cash provided by financing activities increased $230 million during the first three months of2020, compared with the year-ago period. During the first three months of 2020, Ameren utilized proceeds of $640 million from a long-term debt issuance, credit facility borrowings, and net commercial paper issuances to repay at maturity long-term debt of $85 million and to fund, in part, investing activities. In comparison, during the first three months of 2019, Ameren utilized proceeds of $652 million from a long-term debt issuance and net commercial paper issuances to repay $329 million ofhigher-cost long-term debt and to hind, in part, investing activities. During the first three months of2020, Ameren paid common stock dividends of$122 million, compared with $1 16 million in dividend payments in the year-ago period.
Ameren Missouris cash provided by financing activities increased $156 million during the first three months of2020, compared with the year-ago period.
During the first three months of2020, Ameren Missouri utilized net proceeds from the issuance of$465 million oflong-term debt to repay then-outstanding commercial paper issuances, including short-term debt incurred in connection with the repayment at maturity 50
oflong-term debt of $85 million. In 2020, Ameren Missouri repaid net short-term debt of $ 1 04 million and used cash provided by financing activities to fund, in part, investing activities. In comparison, during the first three months of2019, 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 to fund, in part, investing activities.
Ameren Illinois cash provided by financing activities increased $53 million during the first three months of2020, compared with the year-ago period. During the first three months of 2020, Ameren Illinois utilized net proceeds from credit facility and commercial paper issuances of $7 million to fund, in part, investing activities. In comparison, during the first three months of2019, Ameren Illinois utilized net proceeds from commercial paper issuances of$54 million to fund, in part, investing activities. Ameren Illinois also received a $100 million capital contribution from Ameren (parent) in the current year period, compared to no capital contributions in the year-ago period.
See Long-term Debt and Equity in this section for additional information on maturities and issuances oflong-term debt.
Credit facility Borrowings and Liquidity The liquidity needs ofthe Ameren Companies are typically supported through the use ofavailable 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 ofMarch 3 1, 2020:
Ameren (parent) and Ameren Missouri:
Missouri Credit Agreement borrotving capacity 1,200 Less: Ameren (parent) credit facility borrowings outstanding 100 Less: Ameren (parent) commercial paper outstanding 96 Less: Arneren Missouri credit facility borrowings outstanding 130 Less: Ameren Missouri letters ofcredit 2
Missouri Credit Agreement subtotal 872 Ameren (parent) and Ameren Illinois:
Illinois Credit Agreement borrowing capacity 1,100 Less: Ameren (parent) credit facility borrowings outstanding 175 Less: Ameren (parent) commercial paper outstanding 54 Less: Arneren Illinois credit facility borrowings outstanding 60 Less: Arneren Illinois letters ofcredit 2
Illinois Credit Agreement subtotal 809 Subtotal 1,681 Cash and cash equivalents 42 Net Available Liquidity 1,723 The Credit Agreements, among other things, provide $2.3 billion ofcredit until maturity in December 2024. See Note 3 Short-term Debt and Liquidity under Part I, Item 1, ofthis report for additional information on credit agreements. During the three months ended March 31, 2020, Ameren (parent), Ameren Missouri, and Ameren Illinois each borrowed cash and issued commercial paper under the Credit Agreements. Borrowings under the Credit Agreements and commercial paper issuances are based UOfl available interest rates at that time ofthe borrowing or issuance. In the first quarter of2020, there was volatility in the capital markets. As a result ofthat volatility, the Ameren Companies borrowed cash under the Credit Agreements rather than issuing commercial paper, and accelerated a debt issuance at Ameren (parent), which was planned for later in 2020. See Long-term Debt and Equity below for additional information.
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 pooi, 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 ofshort-term debt securities, which expires in March 2022. In 2018, the FERC issued an order authorizing Ameren Illinois to issue up to $1 billion ofshort-term debt securities, which expires in September 2020. In July 2019, 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 oftheir liquidity arrangements for changing business 51
conditions. When business conditions warrant, changes may be made to existing credit agreements or to other borrowing arrangements, or other arrangements may be made.
Long-term Debt and Equity The following table presents Amerens issuances (net ofany issuance premiums or discounts) oflong-term debt and equity, as well as redemptions and maturities oflong-term debt for the three months ended March 3 1, 2020 and 2019:
Month Issued, Redeemed, or Matured 2020 2019 Issuances of Long-term Debt Ameren Missouri:
2.95% First mortgage bonds due 2030 March 465
3.50% first mortgage bonds due 2029 March
450 Total Arneren long-term debt issuances 465 450 Issuances of Common Stock Ameren:
DRPIus and 401(k)
Various 13
()(b) 19
()(b)
Total common stock issuances 13 19 Total Ameren long-term debt and common stock issuances 478 S
469 Redemptions and Maturities of Long-term Debt Ameren Missouri:
5.00% Senior secured notes due 2020 febmaiy 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 ofO.2 million and 0.3 million shares ofcommon stock under its DRP1us and 401(k) plan in the three months ended March 31, 2020 and 2019, respectively.
(b)
Excludes 0.5 million and 0.8 million shares ofcomrnon stock valued at $38 million and $54 million issued for no cash consideration in connection with stock-based compensation for the three months ended March 31, 2020 and 2019, respectively.
In April 2020, Ameren (parent) issued $800 million of3.50% senior unsecured notes due January 2031, with interest payable semiannually on January )5 and July 1 5, beginning July 1 5, 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.
See Note 4 Long-Term Debt and Equity financings under Part I, Item 1, ofthis report for additional information, including proceeds from issuances of long-term debt, the use ofthose proceeds and Amerens forward equity sale agreement relating to 7.5 million shares ofcommon stock.
Indebtedness Provisions and Other Covenants See Note 3 Short-term Debt and Liquidity under Part I, Item 1, ofthis report and Note 4 Short-term Debt and Liquidity and Note 5 Long-term Debt and Equity Financings under Part II, Item 8, ofthe Form 10-K for a discussion ofprovisions (and applicable cross-default provisions) and covenants contained in our credit agreements, in ATXIs note purchase agreement, and in certain ofthe Ameren Companies indentures and articles of mcorporation.
At March 3 1, 2020. the Arneren Companies were in compliance with the provisions and covenants contained in their credit agreements, indentures, and articles ofincorporation, 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. Afier 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 ofcapital and adversely affect our ability to access the capital markets.
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Dividends The amount and timing ofdividends payable on Amerens common stock are within the sole discretion ofAmerens board ofdirectors. Amerens board of directors has not set specific targets or payout parameters when declaring common stock dividends, but it considers various factors, including Amerens overall payout ratio, payout ratios ofour peers, projected cash flow and potential future cash flow requirements, historical earnings and cash flow, projected earnings, impacts ofregulatory orders or legislation, and other key business considerations. Ameren expects its dividend payout ratio to be between 55% and 70% of annual earnings over the next few years. On May 8, 2020, Amerens board ofdirectors declared a quarterly common stock dividend of49.5 cents per share payable on June 30, 2020, to shareholders ofrecord on June 10, 2020.
See Note 4 Short-term Debt and Liquidity and Note 5 Long-term Debt and Equity Fmancmgs under Part II, Item 8, ofthe Form 10-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 ofdividends in certain circumstances. At March 31, 2020, none ofthese 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 three months ended March 31, 2020 and 2019:
Three Months 2020 2019 Arneren 122 116 ATXI
15 Commitments for a listing ofour obligations and commitments, see Other Obligations in Note 9 Commitments and Contingencies under Part I, Item 1, ofthis report. See Note 10 Retirement Benefits under Part II, Item 8, ofthe form 10-K for information regarding expected minimum funding levels for our pension plan.
Off-balance-sheet Arrangements At March 3 1, 2020, none ofthe 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 (jarent) guarantee arrangements on behalfof its subsidiaries. See Note 1
Summary ofSignificant 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 ofborrowing under our credit facilities and our commercial paper programs, and our collateral posting requirements under commodity contracts.
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The following table presents the principal credit ratings by Moodys and S&P, as applicable, effective on the date ofthis 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 Baa!
BBB+/-
Secured debt A2 A
Senior unsecured debt Baa!
Not Rated Commercial paper P-2 A-2 Ameren Illinois:
Issuer/corporate credit rating A3 BBB+/-
Secureddebt 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 ofany other rating. Ratings are subject to revision or withdrawal at any time by the rating organization.
Collateral Postings Any weakening ofour credit ratings may reduce access to capital and trigger additional collateral postings and prepayments. Such changes may also increase the cost ofbonowmg, resultmg 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 March 3 1, 2020. A sub-investment-grade issuer or senior unsecured debt rating (below Baa3 from Moodys or below BBB-from S&P) at March 31, 2020, could have resulted in Ameren, Ameren Missouri, or Ameren Illinois bemg required to post additional collateral or other assurances for certain trade obligations amounting to $123 million, $150 million, and $33 million, respectively.
Changes in commodity prices could trigger additional collateral postings and prepayments. Based on credit ratings at March 3 1, 2020, ifmarket prices were 15% higher or lower than March 31, 2020 levels in the next 12 months and 20% higher or lower thereafter through the end ofthe term ofthe commodity contracts, then Ameren, Ameren Missouri, or Ameren Illinois could be required to post an immaterial amount, compared to each companys liquidity, ofcollateral or other assurances for certain trade obligations.
OUTLOOK Below are some key trends, events, and uncertainties that may reasonably affect our results ofoperations, financial condition, or liquidity, as well as our ability to achieve strategic and financial objectives, for 2020 and beyond.
Operations The COVID-19 pandemic is a rapidly evolving situation. While the COVID-19 pandemic did not have a material impact on our results ofoperations, financial position, or liquidity for the three months ended March 3 1, 2020, it may adversely affect our results ofoperations, financial position, or liquidity in subsequent periods. The effect will depend on the severity and longevity ofthe COVID-19 pandemic and the resulting impact on business, economic, and capital market conditions. Shelter-m-place orders began taking effect in our service territories in mid-March 2020. These orders generally require individuals to remain at home and preclude or limit the operation ofbusmesses that are deemed nonessential. While Amerens business operations are deemed essential and are not directly impacted by the shelter-in-place orders, approximately 65% of our workforce transitioned to remote working arrangements in mid-March. We are momtormg 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; bad debt expense; supply chain operations; the availability of our employees and contractors; counterparty credit; capital construction, infrastructure operations and maintenance, and energy efficiency programs; and pension valuations. On March 13, 2020, and March 16, 2020, Ameren Illinois and Ameren Missouri, respectively, suspended customer disconnections for non-payment and began to waive late fees. Regarding bad debt expense, Ameren Illinois electric distribution and natural gas distribution businesses have bad debt riders, which would provide for recovery ofincreased bad debt expense. However, Ameren Missouris earnings are exposed to potential increases in future bad debt expense, which could result in incremental accounts receivable write-offs in future periods as 54
Ameren Missouri does not have a bad debt rider or regulatory tracking mechanism. In the three months ended March 3 1, 2020, Ameren Missouris total electric sales volumes were comparable with the same period in 2019, with a 2% decrease in industrial electric sales volumes and a 1.5% decrease in commercial electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. These decreases were offset by a 2.5% increase in higher margm residential electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. In April 2020, a month that includes the most recent impacts ofthe COVID-19 pandemic, Ameren Missouri experienced a 7% decrease in total electric sales volumes, with a 15% decrease in commercial electric sales volumes and a 10% decrease in industrial electric sales volumes, compared with the same month in 2019, excluding the estimated effects ofweather and customer energy-efficiency programs. These decreases were partially offset by a 6% increase in higher margin residential electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. Ameren Illinois electric distribution and transmission businesses have formula ratemaking frameworks, which provide for recovery oftheir 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 that is dependent on sales volumes for residential and small nonresidential customers. Additionally, ATXIs electric transmission business has a formula ratemaking framework, which provides for recovery ofits revenue requirements independent ofsales volumes. Based on current projections that assume a gradual improvement in sales from those expected to be experienced in the second quarter of 2020 as stay-at-home restrictions are lifted or eased, we expect total Ameren Missouri electric sales volumes to decrease by approximately 2.5% in 2020, compared with 2019, with a 7% decrease in commercial electric sales volumes and a 4% decrease in industrial electric sales volumes, excluding the estimated effects ofweather and any unanticipated impacts from the COVID-19 pandemic. These decreases are expected to be partially offset by a 2.5% increase in higher margin residential electric sales volumes. A 1%
change in 2020 Ameren Missouri electric sales volumes to residential, commercial, and industrial customers would impact earnings per share by approximately 3 cents, 2 cents, and a half-cent, respectively.
The PISA permits Ameren Missouri to defer and recover 85% ofthe depreciation expense and a return at the applicable WACC on investments in certain property, plant, and equipment placed in service after September 1, 2018, and not included in base rates. The regulatory asset for accumulated PISA deferrals also earns a return at the applicable WACC, with all approved PISA deferrals added to rate base prospectively and recovered over a period of2O years following a regulatory rate review. Additionally, under the RESRAM, Ameren Missouri is permitted to recover the 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 ofregulatory lag between regulatory rate reviews. Those investments not eligible for recovery under the PISA and the remaining 1 5% 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 ofdebt on PISA deferrals in revenue, instead ofusing the applicable WACC, with the difference recognized in revenues when recovery ofsuch deferrals is reflected in customer rates. As a result ofthe PISA election, additional provisions ofthe law apply to Ameren Missouri, including limitations on electric customer rate increases. Both the rate increase limitation and PISA are effective through December 2023, unless Ameren Missouri requests and receives MoPSC approval ofan 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 and includes investments that will upgrade the grid and acconmiodate more renewable energy. Investments under the plan are expected to total approximately $7.6 billion over the five-year period from 2020 through 2024, with expenditures largely recoverable under the PISA and the RESRAM. The planned investments in 2024 are based on the assumption that Ameren Missouri requests and receives MoPSC approval ofan extension ofthe PISA through December 2028. As a part ofits Smart Energy Plan, Ameren Missouri expects to build solar generation facilities, including utility scale facilities and nonresidential customer site facilities. In September 20 1 9, Ameren Missouri filed for certificates ofconvenience and necessity with the MoPSC to build three solar facilities in its service territory. Each 10-megawatt solar energy generation facility will connect to battery storage in order to improve system reliability. All three facilities are expected to be completed by 2022. Also in 2019, the MoPSC approved Ameren Missouris Charge Ahead program, which provides incentives for the development ofover 1,000 electric vehicle charging stations along highways and at various locations in communities throughout Ameren Missouris service territory. The purpose ofthe program is to promote the development ofelectric 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 plan includes a portfolio ofcustomer energy-efficiency programs through December 202 1 and low-income customer energy-efficiency programs through December 2024, along with a rate-adjustment mechanism. Ameren Missouri intends to invest $226 million over the life ofthe plan, including $65 million per year through 2021. The plan includes the continued use of the MEEIA rider, which allows Ameren Missouri to collect from, or refund to, customers any difference in actual MEEIA program costs and related lost electric margms and the amounts collected from customers. In addition, the plan includes a performance mcentive that provides Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy-efficiency goals. Ifthe target goals are achieved for 2019, 2020, and 2021, which could be affected by the COVID-19 pandemic, additional revenues of$7 million, $10 million, and $13 million would be recognized in late 2020, 2021, and 2022, respectively. Incremental additional revenues of$l million, $3 million, and $3 million may be earned for 2019, 2020, and 2021, 55
respectively, and would be recognized in the respective following year, ifAmeren Missouri exceeds its targeted energy savings goals. Ameren Missouri recognized $28 million, $1 1 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, 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 ofthe 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 ofnet energy costs pursuant to the FAC by approximately $1 15 million from the base level established in the MoPSCs March 2017 electric rate order. The order also changed the annualized regulatory asset and liability amortization amounts and the base level ofexpenses for regulatory tracking mechanisms. These changes will result in approximately $20 million ofincreased revenues and approximate decreases in purchased power expenses of$15 million, other operating and maintenance expenses of $60 million, and income tax expenses of $20 million. An estimated $70 million would have otherwise been deferred under the PISA. A stipulation and agreement approved by the MoPSCs March 2020 order states that the net impact ofthe revenue and expense changes noted above reflect 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 ofoperations for the three months ended March 31, 2020. The new rates, base level ofexpenses, 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 ofnet 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 10.38% ROE, the revenue requirements included in 2020 rates for Ameren Illinois and ATXIs electric transmission businesses are $3 1 1 million and $190 million, respectively. These revenue requirements represent an increase in Ameren Illinois and ATXIs revenue requirements of$14 million and $13 million, respectively, from the revenue requirements reflected in 2019 rates, primarily due to expected rate base growth. These rates will affect Ameren Illinois and ATMs 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 February 2020, MISO, on behalfofAmeren Illinois, filed a request with the FERC to revise Ameren Illinois transmission formula rate calculation with respect to calculation inputs for materials and supplies. In May 2020, the FERC issued an order approving the revisions prospectively. In addition, the FERC noted that the fERC staff should review historical rate recovery in connection with an ongoing FERC audit. At this time, Ameren and Ameren Illinois are evaluating this order, but do not expect the impact to be material on their results of operations, financial position, or liquidity.
The ROE for MISO transmission owners, including Ameren Illinois and ATXI, is the subject offERC complaint cases filed in November 2013 and February 2015 challenging the allowed base ROE. In November 2019, the FERC issued an order addressing the November 2013 complaint case, which set the allowed base ROE at 9.88% and required refunds, with interest, for the periods November 2013 to February 2015 and from late September 2016 fonvard. The order also dismissed the February 2015 complaint case. As a result ofthis order, Ameren and Ameren Illinois expect to pay refunds ofapproximately $40 million and $23 million, respectively, in 2020. In December 2019, Ameren and the MISO transmission owners, including Ameren Missouri, Ameren Illinois, and ATXI, filed requests for rehearing with the FERC. Additionally, in December 2019, various parties filed requests for rehearing with the FERC, challenging the dismissal ofthe February 2015 complaint case. The FERC has not ruled on the merits ofthe rehearing requests and is under no deadline to do so. In March 2019, the FERC issued separate Notices oflnquiry regarding its allowed base ROE policy and its transmission incentives policy. Initial comments were due by June 2019, and reply comments were due by late August 2019. The Notice oflnquiry addressing the fERCs base ROE policy, among other things, broadened the ability to comment on the new methodology beyond electric utilities that are participants in the complaint cases. The transmission incentives Notice 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 ofProposed Rulemaking on its transmission incentives policy, which included an increased incentive in the allowed base ROE for participation in an RIO 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, among other things. Initial comments are due by July 2020. Ameren is unable to predict the ultimate impact ofthe Notices oflnquiry, the Notice ofProposed Rulemaking, or the requests for rehearing at this time. A 50 basis point reduction in the FERC-allowed base ROE would reduce Amerens and Ameren Illinois annual net income by an estimated $10 million and $6 million, respectively, based on each companys 2020 projected rate base.
Ameren Illinois electric distribution service performance-based formula ratemaking framework allows Ameren Illinois to reconcile electric distribution service rates to its actual revenue requirement on an annual basis. Ifa 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 56
reflect that years actual revenue requirement, independent ofactual sales volumes. The regulatory balance is then collected from, or refunded to, customers within two years from the end ofthe year. Unless extended, the formula ratemaking framework expires at the end of2022. Ifnot extended, Ameren Illinois would then be required to establish future rates through a traditional regulatory rate review with the ICC. The decoupling provisions extend beyond the end 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 ofthe electric distribution revenue requirement as is necessary to reflect the actual costs incurred and a return at the applicable WACC on year-end rate base in a given year with the revenue requirement that was reflected in customer rates for that year. Consequently, Ameren Illinois 2020 electric 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. 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 of the 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 was based on an expected annual average ofthe monthly yields ofthe 30-year United States Treasury bonds of 1.6% and 3.1% for the first quarter of2020 and 2019, respectively.
In April 2020, Ameren Illinois filed its annual electric distribution service formula rate update to establish the revenue requirement to be used for 202 1 rates with the ICC. Pending ICC approval, this update filing will result in a $45 million decrease in Ameren Illinois electric distribution service rates, beginning in January 2021
. These rates will affect Ameren Illinois cash receipts during 202 1, but will not affect electric distribution service revenues, which will be based on actual recoverable costs, rate base, and return on common equity as calculated under the Illinois performance-based formula ratemaking framework. An ICC decision in this proceeding is expected by December 2020.
In February 2020, Ameren Illinois filed a request with the ICC seeking approval to increase its annual revenues for natural gas delivery service by $102 million, which includes an estimated $46 million ofannual revenues that would otherwise be recovered under the QIP and other riders. The request is based on a 10. 5% allowed ROE, a capital structure composed of 54. 1% common equity, and a rate base of $2. I billion. Ameren Illinois used a 202 1 future test year in this proceeding. A decision by the ICC in this proceeding is required by January 2021, with new rates expected to be effective in February 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 March 2020, the ICC issued an order requiring all Illinois electric distribution, natural gas, water, and sewer utilities to suspend disconnections for customer non-payment and waive late fees, on an interim basis, effective March 18, 2020, and for as long as the public health emergency related to the COVID-l 9 pandemic remains in effect for the state oflllinois. At this time, the state oflllinois public health emergency remains in effect until May 30, 2020. The order also requires utilities to design and implement, upon ICC approval and on a temporary basis, more flexible credit and collection practices. In March 2020, Ameren Illinois filed a response to the ICC order stating their compliance with the suspension of disconnections and late fees for electric distribution and natural gas customers, and proposing more flexible credit and collection practices, including longer deferred payment arrangements for customers that fall behind on bill payments. In April 2020, similar to other utilities in Illinois, Ameren Illinois also requested approval to recover forgone late fees related to natural gas service through its existing bad debt rider and the ability to defer, as a regulatory asset, costs incurred related to the COVID-19 pandemic.
Recovery ofelectric distribution forgone late fees and costs incurred related to the COVID-19 pandemic are included in Ameren Illinois electric distribution formula rates. In April 2020, the ICC staffrecommended extending the suspension ofdisconnections and late fees for 60 days beyond when the state of Illinois public health emergency has ended. The ICC is under no deadline to issue an order in this proceeding.
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 ofthe monthly yields of the 3t)-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 ofannual energy savings goals, which may be affected by the COVID-19 pandemic. Pursuant to the FEJA, Ameren Illinois plans to invest up to approximately $100 million per year in electric energy-efficiency programs through 2024, and will earn a return on those investments. While the ICC has approved a plan consistent with this spending level through 2021, the ICC has the ability to reduce the amount of electric energy-efficiency savings goals in future plan program years ifthere are insufficient cost-effective programs available, which could reduce the investments in electric energy-efficiency programs. 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.
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In February 2020, the MoPSC issued an order approving a stipulation and agreement allowing Ameren Missouri to defer and amortize maintenance expenses related to scheduled refueling and maintenance outages at its Callaway Energy Center. Beginning with the fall 2020 refueling and maintenance outage, Ameren Missouri will defer the maintenance expenses incurred related to a refueling and maintenance outage as a regulatory asset and amortize those expenses afier completion ofthe outage. Maintenance expenses will be amortized over the period between refueling and maintenance outages, which is approximately I 8 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 prices for power, Ameren Missouris purchased power costs may mcrease and the amount ofexcess 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 ofinvestrnents and earn an adequate return. Ameren Missouri and Ameren Illinois will also seek new, or to maintain existing, legislative solutions to address regulatory lag and to support investment in their utility infrastructure for the benefit oftheir customers. Ameren Missouri and Ameren Illinois continue to face cost recovery pressures, including limited economic growth in their service territories, economic impacts ofCOVID-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 ofthe economy for efficiencies and as a means to address economywide CO2 emission concerns. Increased investments, including expected future mvestments 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.
For additional information regarding recent rate orders, lawsuits, and pending requests filed with state and federal regulatory commissions, see Note 2 Rate and Regulatory Matters under Part I, Item 1, ofthis report and Note 2 Rate and Regulatory Matters under Part II, Item 8, ofthe Form 10-K.
Liquidity and Capital Resources The COVID-19 pandemic could adversely affect our liquidity and capital resources, including hut not limited to potential impacts on collections from our tariff-based revenues, capital expenditures, our ability to access the capital markets on reasonable terms and when needed, Ameren Missouris expected 2020 wind generation acquisitions, and the timing oftax payments and the utilization oftax credits. Our customers ability to pay for our services may be adversely affected by the COVID-19 pandemic. A reduction in collections from our tariff-based revenues could reduce our cash from operations and cause an adverse impact to our liquidity. 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 2020 wind generation acquisitions, and the timing oftax payments and the utilization oftax credits, see below.
Ameren Missouris 201 7 IRP targets cleaner and more diverse sources ofenergy generation, including solar, wind, natural gas, hydro, and nuclear power. It also includes expanding renewable sources by adding 700 megawatts ofwind generation by the end of2020 in Missouri and adding 100 megawatts of solar generation by 2027. These new renewable energy sources would support Ameren Missouris compliance with the state ofMissouris requirement of achieving 15% ofnative 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 ofthese renewable resources would represent the lowest-cost option for customers. The plan also provides for the expected implementation of continued customer energy-efficiency programs.
Ameren Missouris plan for the addition ofrenewable resources could be affected by, among other factors: 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 ofnecessary materials and equipment, including those that are affected by the disruptions in the global supply chain caused by the COVID-19 pmdemic, among other things the availability offederal production and investment tax credits related to renewable energy and Ameren Missouris ability to use such credits the cost ofwind 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 2017 IRP filing, Ameren Missouri established a goal ofreducing CO2 emissions 80% by 2050 from a 2005 base level. Ameren Missouri is also targeting a 35% CO2 emission reduction by 2030 and a 50% reduction by 2040 from the 2005 level. In order to meet these goals, among other things, Ameren Missouri expects to retire its coal-fired generation at the end ofeach energy 58
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 will be filed in September 2020.
Consistent with its 2017 IRP filing, in 2019, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 300-megawatt wind generation facility. In 20 1 8, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 400-megawatt wind generation facility. These two agreements are subject to customary contract terms and conditions. The two build-transfer acquisitions collectively represent
$ 1.2 billion 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 RIO interconnection agreements, and have begun construction activities. In 2020, the developers ofthe wind generation facilities received notices from the wind turbine supplier, and the developer ofthe 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. To date, neither developer has reported to Ameren Missouri that the projects will not be completed in 2020. Ameren Missouri expects the up-to 400-megawatt project to be placed in-service by the end of2020. However, at this time, due to manufacturing, shipping, and other supply chain issues, and based on Ameren Missouris discussions with the developer, Ameren Missouri expects that a portion ofthe up-to 300-megawatt project, representing approximately $100 million ofinvestment, could be placed in-service in the first quarter of2021. 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) ofcapital 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 ofthe NSR and Clean Air Act litigation discussed in Note 9 Commitments and Contingencies under Part I, Item 1, ofthis report.
Environmental regulations, including those related to CO2 emissions, or other actions taken by the EPA, could result in significant increases in capital expenditures and operating costs. Certain ofthese regulations are being challenged through litigation, or reviewed or recommended for repeal by the EPA, or new replacement or alternative regulations are being contemplated, proposed, or adopted by the EPA and state regulators. The ultimate implementation of any ofthese regulations, as well as the timing ofany such implementation, is uncertain. However, the individual or combined effects ofexisting and new environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration ofsome ofAmeren Missouris coal-fired energy centers. Ameren Missouris capital expenditures are subject to MoPSC prudence reviews, which could result in cost disallowances as well as regulatory lag. The cost ofAmeren Illinois purchased power and natural gas purchased for resale 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 ifthose investments are reflected and recovered on a timely basis in customer rates.
The Ameren Companies have multiyear credit agreements that cumulatively provide $2.3 billion ofcredit through December 2024, subject to a 364-day repayment term for Ameren Missouri and Ameren Illinois, with the option to seek incremental commitments to increase the cumulative credit provided to $2.7 billion. See Note 3 Short-term Debt and Liquidity under Part I, Item 1, ofthis report for additional information regarding the Credit Agreements. In November 2020, Ameren (parent)s $350 million ofsenior unsecured notes mature, and are expected to be repaid using a portion ofthe proceeds from Ameren (parent)s April 2020 issuance of $800 million ofsenior unsecured notes. The Ameren Companies have no additional maturities oflong-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 ofthe equity forward discussed below, Ameren, Ameren Missouri, and Arneren Illinois believe that their liquidity is adequate given their expected operating cash flows, capital expenditures, including the expected 2020 wind generation acquisitions, and related financing plans. The Ameren Companies will continue to monitor the effect ofthe COVID-19 pandemic on their liquidity, including as a result ofdecreased sales and expected 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 find these cash flow requirements, Ameren is using newly issued shares of common stock, rather than market-purchased shares, to satisfy requirements under the DRP1us and employee benefit plans and expects to continue to do so through at least 2024. Ameren expects these issuances to provide equity ofabout $100 million annually. Ameren also plans to issue incremental common equity to fund a portion ofAmeren Missouris wind generation investments through the physical settlement ofthe forward sale agreement discussed below. Additionally, Ameren plans to issue incremental equity ofabout $150 million 59
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 2019, Ameren entered into a forward sale agreement with a counterparty relatmg to 7.5 million shares ofcommon stock. The forward sale agreement can be settled at Amerens discretion on or prior to March 3 1, 2021. On a settlement date or dates, ifAmeren elects to physically settle the forward sale agreement, Ameren will issue shares of common stock to the counterparty at the then-applicable forward sale price. The forward sale agreement will be physically settled unless Ameren elects to settle in cash or to net share settle. Ifphysically settled, Ameren expects to receive between $540 million and $550 million upon settlement. See Note 5 Long-Term Debt and Equity Financings under Part II, Item 8, ofthe Form 10-K for additional information.
As ofMarch 31, 2020, Ameren had $98 million in tax benefits related to federal and state income tax credit carryforwards and $11 million in outstanding income tax refunds and overpayments. future expected income tax payments and refunds are based on planned capital expenditures and any related income tax credits and, in the case of Ameren Missouri and Ameren Illinois, are consistent with the tax allocation agreement between Ameren (parent) and its subsidiaries. Ameren expects to make income tax payments between $5 million and $75 million in each year from 2020 to 2024, totaling $150 million to $200 million for the five-year period. Ameren Missouri expects to make income tax payments to Ameren (parent) between $35 million and $45 million in 2020.
Additionally, Ameren Missouri expects to receive refunds from Ameren (parent) in each year from 2021 to 2024, totaling $60 million to $100 million for the four-year period, primarily due to the expected utilization offederal production tax credits to be generated from its 2020 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 202 1 to 2024, totaling $260 million to $3 1 0 million for the five-year period.
Ameren Missouri expects its 2020 wind generation acquisitions to generate federal production tax credits between $65 million and $70 million in each year from 2021 to 2030. Ameren expects to utilize approximately $140 million ofthese federal production tax credits from 2021 to 2024. Delays in the timely completion ofthe wind generation facilities may affect Amerens ability to realize some or all ofthe anticipated federal production tax credits. Unless relevant regulations are modified by the IRS or applicable legislation is enacted by Congress to include an extension ofthe December 3 1, 2020 in-service date criteria, ifany portion ofthese facilities is completed after 2020, Ameren Missouri would need to satisfy additional IRS requirements in order to qualify for all of the anticipated federal production tax credits for such portion. The build-transfer agreements include provisions for the event in which any portion of either project is completed after 2020. In such an event, according to the terms ofthe agreements, Ameren Missouri would pay a reduced contract price on the portion of the project completed after 2020, to account for risks associated with qualifying for production tax credits, subject to an obligation to later pay such price differential should Ameren Missouri be entitled to receive production tax credits.
The Coronavims Aid, Relief and Economic Security Act is a federal law enacted in March 2020. Provisions in the act include temporary changes to the utilization ofnet operating losses, temporary suspension ofthe payment ofthe employer portion ofSocial 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 March 3 1, 2020, there was no material impact to Amerens, Arneren Missouris, and Ameren Illinois financial statements.
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 ofthis tax decrease is reflected in Ameren Missouris electric service rates that became effective on April 1, 2020. Ameren (parent) and nonregistrant subsidiaries do not expect this income tax decrease to have a material impact on net income.
The above items could have a material impact on our results ofoperations, financial position, and liquidity. Additionally, in the ordinary course of business, we evaluate strategies to enhance our results ofoperations, financial position, and liquidity. These strategies may include acquisitions, divestitures, opportunities to reduce costs or increase revenues, and other strategic initiatives to increase Amerens shareholder value. We are unable to predict which, ifany, ofthese initiatives will be executed. The execution ofthese initiatives may have a material impact on our future results ofoperations, financial position, or liquidity.
REGULATORY MATTERS See Note 2 Rate and Regulatory Matters under Part I, Item 1, ofthis 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 10-K. See Item 7A under Part II ofthe Form 10-K for a more detailed discussion ofour market risk.
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ITEM 4. CONTROLS AND PROCEDURES.
(a)
Evaluation ofDisclosure Controls and Procedures As ofMarch 3 1, 2020, evaluations were performed under the supervision and with the participation ofmanagement, including the principal executive officer and the principal financial officer ofeach ofthe Ameren Companies, ofthe effectiveness ofthe design and operation ofsuch registrants disclosure controls and procedures (as defmed in Rules 13a-15(e) and 15d-15(e) ofthe Exchange Act). Based on those evaluations, as ofMarch 31, 2020, the principal executive officer and the principal fmancial officer ofeach ofthe 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 ofthe 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 oftheir internal control over fmancial reporting.
PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS.
We are mvolved in legal and administrative proceedings before various courts and agencies with respect to matters that arise in the ordinary course of business, some ofwhich involve substantial amounts ofmoney. We believe that the final disposition ofthese proceedings, except as otherwise disclosed in this report, will not have a material adverse effect on our results ofoperations, financial position, or liquidity. Risk ofloss is mitigated, in some cases, by insurance or contractual or statutory indemnification. 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 1, ofthis report, include the following:
Arneren 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 QIP reconciliation hearing with the ICC requested in March 2019; the March 2020 ICC service disconnection moratorium proceeding; Ameren and the MISO transmission owners request for a rehearing ofthe November 2019 FERC order related to the November 2013 complaint case; the March 2019 FERC separate Notices oflnquiry regarding its allowed base ROE policy and its transmission incentives policy; the March 2020 fERC Notice ofProposed 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 1A. RISK FACTORS.
The Form 10-K includes a detailed discussion ofour risk factors. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in the Form I 0-K.
The international public health emergency associated with the COVID-19 pandemic may have a material adverse effect on our results of operations, financial position, or liquidity.
The COVID-19 pandemic is a rapidly evolving situation. While the COVID-19 pandemic did not have a material impact on our results ofoperations, financial position, or liquidity for the three months ended March 3 1, 2020, it may adversely affect our results of operations, financial position, or liquidity in subsequent periods. It may also affect our ability to earn our allowed ROEs. The effect will depend on the severity and longevity ofthe COVID-l9 pandemic and the resulting impact on business, economic, and capital market conditions. 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. On March 21, 2020, a shelter-in-place order for the state oflllinois became effective and will remain in effect until at least May 30, 2020. Similar orders became effective for Saint Louis City and County on March 23, 2020, and the state ofMissouri on April 6, 2020. The state ofMissouri order was effective through May 3, 2020, while Saint Louis City and County are expected to begin easing restrictions on May 18, 2020. These orders generally preclude or limit the operation ofbusinesses that are deemed nonessential. Amerens business operations are deemed essential and are not directly impacted by the shelter-in-place orders. As a result ofthe COVID-l9 pandemic, economic activity has been disrupted in the service territories ofAmeren Missouri and Ameren Illinois. It has also caused 61
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 oftime or become more severe.
We rely on the issuance of short-term and long-term debt and equity as significant sources of liquidity and fundmg 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-l 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 ofthe COVID-19 pandemic, we have experienced and expect to continue to experience changes to our sales volumes. In the three months ended March 3 1, 2020, Ameren Missouris total electric sales volumes were comparable with the same period in 2019, with a 2% decrease in industrial electric sales volumes and a 1.5% decrease in commercial electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. These decreases were offset by a 2.5% increase in higher margin residential electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. In April 2020, a month that includes the most recent impacts ofthe COVID-19 pandemic, Ameren Missouri experienced a 7% decrease in total electric sales volumes, with a 15% decrease in commercial electric sales volumes and a 10% decrease in industrial electric sales volumes, compared with the same month in 2019, excluding the estimated effects ofweather and customer energy-efficiency programs. These decreases were partially offset by a 6% increase in higher margin residential electric sales volumes, excluding the estimated effects ofweather and customer energy-efficiency programs. Pursuant to the PISA, Ameren Missouris electric rates are limited to a 2.85% compound annual growth rate cap. Continued long-term declines in sales volumes, along with increased capital investments and operating costs, could cause customer rates to exceed the rate cap. Ameren Illinois also experienced decreases in electric and natural gas sales volumes. While the revenues from Ameren Illinois electric distribution business, residential and small nonresidential customers ofAmeren 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 Ameren Illinois, as it relates to large nonresidential natural gas customers, are exposed to such changes.
Further, our customers ability to pay for our services may be adversely affected by the COVID-l9 pandemic. On March 13, 2020, and March 16, 2020, Ameren Illinois and Ameren Missouri, respectively, suspended customer disconnections for non-payment and began to waive late fees. In addition, future regulations could require long-term suspensions ofcustorner disconnections and late fees, including as may be required in the ICCs service disconnection moratorium proceeding. Regarding bad debt expense, Ameren Illinois electric distribution and natural gas distribution businesses have bad debt riders, which would provide for recovery ofincreased bad debt expense. However, Ameren Missouris earnings are exposed to potential increases in future bad debt expense, which could result in incremental accounts receivable write-offs in future periods as Ameren Missouri does not have a bad debt rider or regulatory tracking mechanism. IfAmeren Missouri and Ameren Illinois seek recovery ofcertain COVID-19 pandemic related costs, they could be unsuccessful in obtaining regulatory approval to recover them, which may adversely affect their results ofoperations. A reduction in collections from our tariff-based revenues could reduce our cash from operations and cause an adverse impact to our liquidity.
In addition, suppliers and contractors may not perform as provided under their contracts. This could cause delays in construction projects or the performance ofnecessary maintenance to our electric and natural gas infrastructure, which could lead to failures ofequipment that can result in unanticipated liabilities or unplanned outages. Delays in our construction projects could also result in reduced planned capital expenditures, and decreased rate base growth.
In 20 19, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 300-megawatt wind generation facility. In 2018, Ameren Missouri entered into a build-transfer agreement to acquire, after construction, an up-to 400-megawatt wind generation facility. In 2020, the developers of the wind generation facilities received notices from the wind turbine supplier, and the developer ofthe up-to 300-megawatt project received a notice from the construction contractor, of changes in supply and/or construction activities resulting from the COVID-1 9 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. To date, neither developer has reported to Ameren Missouri that the projects will not be completed in 2020. Ameren Missouri expects the up-to 400-megawatt project to be placed in-service by the end of2020. however, at this time, due to manufacturing, shipping, and other supply chain issues, and based on Ameren Missouris discussions with the developer, Ameren Missouri expects that a portion ofthe up-to 300-megawatt project, representing approximately $ 100 million of investment, could be placed in-service in the first quarter of 202 1
. The build-transfer agreements include provisions for the event in which any portion of either project is completed after 2020. In such an event, according to the terms ofthe agreements, Ameren Missouri would pay a reduced contract price on the portion ofthe project completed after 2020, to account for risks associated with qualifying for production tax credits, subject to an obligation to later pay such price differential should Ameren Missouri be entitled to receive production tax credits. Delays in the timely completion ofthe wind generation facilities may affect Amerens ability to realize some or all ofthe anticipated federal production tax credits. Unless relevant regulations are modified by the IRS or applicable legislation is enacted by Congress to include an extension ofthe December 31, 2020 in-service date criteria, ifany portion ofthese facilities is completed 62
after 2020, Ameren Missouri would need to satisfy additional IRS requirements in order to qualify for all ofthe anticipated federal production tax credits for such portion.
Also, our businesses depend on skilled professional and technical employees. Our operations could be adversely affected if a large portion of our employees contracted COVID-19 or became quarantined at the same time. This could lead to facility shutdowns and disruptions in the delivery ofelectricity and natural gas to our customers. In addition, 65% of our workforce has transitioned to remote working arrangements, which increases our data security risks, including loss of data related to sensitive customer, employee, financial, and operating system information, through insider or outsider actions.
Ameren cannot predict the extent or duration ofthe COVID-l9 pandemic or its effects on the global, national, or local economy, the capital markets, or its customers, suppliers, business continuity pians, results ofoperations, financial position, liquidity, planned rate base growth, and sales volumes.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Ameren Corporation, Ameren Missouri, and Ameren Illinois did not purchase equity securities reportable under Item 703 ofRegulation S-K during the period from January 1, 2020, to March 31, 2020.
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ITEM 6. EXHIBITS.
The documents listed below are being filed or have previously been filed on behalfofthe 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 offxhibit Previously Filed as Exhibit to:
Instruments Defining Rights of Security Holders, Including Indentures 4.1 Ameren Ameren Indenture Co11pan\\ Oider, jjjec1Ajri1 3, 1t)20, cstahlishiiui the 3.50° Senim April 3, 2020 Form 8-K, Exhibits 4.3 and Notes (tile 203 1 (incltidiiuz the glol)al flOtS 4 4, file No. 114756 4.2 Ameren Sitpplemental Indenture to the Ameren Missouri Mortgage, dated March 1. 2020. for March 20, 2020 form 8-K, Exhibit 4.2, file Ameren Missouri 2.95°c First MoiFtage Bonds due 2030 No. 1-2967 Material Contracts Rule 13a-14(a) I 15d-14(a) Certifications
- 31. 1 Ameren Rttle 13a-14(a)/15d-14(a) Certification ofPnncipal Executive Officer ofArneren 31.2 Ameren Rule 13a-14(a) 15d-14(a) Certification ofPrincipal financial Officer of Ameren 31.3 Ameren Missouri Rttle 13a-14(a)/l5d-14(p) Certification ofPrincipal Executive Officer of Ameren Missouri 31.4 Ameren Missouri Rtile 13a-14(a)/l5d-14(a) Certification ofPrincipal financial Officer ofAmeren Missouri 3 1.5 Ameren Illinois Rule I 3a-14(a)/15d-14(a) Certification ofPrincipal Executive Officer ofArneren Illinois 31.6 Ameren Illinois Rttle 13a-l4(a)/15d-14(a) Certification ofPrincipal financial Officer ofAmeren Illinois Section 1350 Certifications
- 32. 1 Ameren Section 1 350 Certification ofPrincipal Executive Officer and Principal financial Officer of Ameren 32.2 Ameren Missouri Section 1 350 Certification ofPrincipal Executive Officer and Principri Financial Officer ofAmeren Missouri 32.3 Arneren Illinois Section 1351) (edification ofPrincipal Executie Officer and Principal Financial Officer of Aioeren Illinois Interactive Data Files lOl.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 docunsent 10 1.SCH Ameren Companies Inline XBRL T&xonomy Extension Schema Document l01.CAL Ameren Companies Inline XBRL Taxonomy Extension Calculation Linkbase Document l01.LAB Ameren Companies Inline XBRL Taxonomy Extension Label Linkbase Document 10 1.PRE Ameren Companies Inline XBRL Taxonomy Extension Presentation Linkbase Document I01.DEf Ameren Conspanies Inline XBRL Taxonomy Extension Definition Document I 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) ofRegulation S-K.
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SIGNATURES Pursuant to the requirements ofthe Exchange Act, each registrant has duly caused this report to be signed on its behalfby 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 Chieffinancial Officer (Principal financial Officer)
U1\\]TON ELECTRIC COMPANY (Registrant)
Is! Michael L. Moehn Michael L. Moehn Executive Vice President and Chieffinancial Officer (Principal financial Officer)
AMEREN ILLINOIS COMPANY (Registrant)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chieffinancial Officer (Principal Financial Officer)
Date: May I 1, 2020 65
Exhibit 31.1 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF AMEREN CORPORATION (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Warner L Baxter, certify that:
1 I have reviewed this report on Form 10-Q for the quarterly period ended March 3 1, 2020 ofAmeren Corporation 2.
Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of and for, the periods presented in this report; 4.
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over fmancial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(O) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material 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 ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d)
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and 5.
The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofintemal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, 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: May 11, 2020
/5/ Warner L. Baxter WamerL. Baxter Chairman, President and Chief Executive Officer (Principal Executive Officer)
Exhibit 31.2 RULE I 3a-14(a)/15d-1 4(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF AMEREN CORPORATION (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
1.
I have reviewed this report on form 10-Q for the quarterly period ended March 3 1, 2020 ofAmeren Corporation; 2.
Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of, and for, the periods presented in this report; 4.
The registrants other certifymg officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules l3a-l5(e) and 15d-15(e)) and internal control over fmancial reporting (as defined in Exchange Act Rules l3a-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 withm those entities, particularly during the period in which this report is being prepared; b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c)
Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d)
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and 5.
The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofintemal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, 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: May 11, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chieffinancial Officer (Principal Financial Officer)
Exhibit 31.3 RULE 1 3a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF UNION ELECTRIC COMPANY (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Martin J. Lyons, Jr., certify that:
1.
I have reviewed this report on Form 10-Q for the quarterly period ended March 3 1, 2020 ofUnion Electric Company, 2.
Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of and for, the periods presented in this report; 4.
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules l3a-15(f) and l5d-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 ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d)
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and 5.
The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent fhnctions):
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: May 11, 2020
/5/ Martin J. Lyons, Jr.
Martin J. Lyons, Jr.
Chairman and President (Principal Executive Officer)
Exhibit 31.4 RULE 1 3a-14(a)115d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF UNION ELECTRIC COMPANY (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Michael L. Moehn, certify that:
1.
I have reviewed this report on Form 10-Q for the quarterly period ended March 3 1, 2020 ofUnion Electric Company; 2.
Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the fmancial condition, results ofoperations and cash flows ofthe registrant as of and for, the periods presented in this report; 4.
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c)
Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d)
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and 5.
The registrants other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 11, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and ChiefFinancial Officer (Principal Financial Officer)
Exhibit 31.5 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF AMEREN ILLINOIS COMPANY (required by Section 302 ofthe Sarbanes-Oxley Act of 2002)
I, Richard J. Mark, certify that:
1.
I have reviewed this report on Form 10-Q for the quarterly period ended March 31, 2020 ofAmeren Illinois Company; 2.
Based on my knowledge, this report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the fmancial condition, results ofoperations arid cash flows ofthe registrant as of, and for, the periods presented in this report; 4.
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-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 offinancial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles; c)
Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d)
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and 5.
The registrants other certifring officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent ftinctions):
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: May 1 1, 2020
/5/ Richard J. Mark Richard J. Mark Chairman and President (Principal Executive Officer)
Exhibit 31.6 RULE 1 3a-14(a)/1 5d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF AMEREN ILLINOIS COMPANY (required by Section 302 ofthe Sarbanes-Oxley Act of2002)
I, Michael L. Moehn, certify that:
1.
I have reviewed this report on Form 1O-Q for the quarterly period ended March 31, 2020 ofAmeren Illinois Company, 2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results ofoperations and cash flows ofthe registrant as of and for, the periods presented in this report; 4.
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over fmancial 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 offinancial reporting and the preparation offmancial statements for external purposes in accordance with generally accepted accounting principles; c)
Evaluated the effectiveness ofthe registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and d)
Disclosed in this report any change in the registrants internal control over fmancial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting: and 5.
The registrants other certifiing officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrants auditors and the audit committee ofthe registrants board ofdirectors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 1 1, 2020
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and ChiefFinancial 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 ofthe Sarbanes-Oxley Act of 2002)
In connection with the report on Form 10-Q for the quarterly period ended March 3 1, 2020 ofAmeren Corporation (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof(the Form l0-Q), each undersigned officer ofthe Registrant does hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 ofthe Sarbanes-Oxley Act of2002, that:
(I)
The Form 10-Q ftilly complies with the requirements ofSection 13(a) or 15(d) ofthe Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2)
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results ofoperations ofthe Registrant.
Date: May 1 1, 2020
/5/ Warner L. Baxter Warner L. Baxter Chairman, President and ChiefExecutive 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 ofthe Sarbanes-Oxley Act of 2002)
In connection with the report on Form 10-Q for the quarterly period ended March 3 1, 2020 of Union Electric Company (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof(the Form I0-Q). each undersigned officer ofthe Registrant does hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 ofthe Sarbanes-Oxley Act of2002, that:
(1)
The Form 10-Q fully complies with the requirements ofSection 13(a) or 15(d) ofthe Securities Exchange Act of 1934 (15 U.S.C. 78m or 7$o(d)); and (2)
The information contained in the Form l0-Q fairly presents, in all material respects, the financial condition and results ofoperations ofthe Registrant.
Date: May 1 1, 2020
/5/ Martin J. Lyons, Jr.
Martin J. Lyons, Jr.
Chairman and President (Principal Executive Officer)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and Chief Financial Officer (Principal financial Officer)
Exhibit 32.3 SECTION 1350 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND THE PRINCIPAL FllANCIAL OFFICER OF AMEREN ILLINOIS COMPANY (required by Section 906 ofthe Sarbanes-Oxley Act of 2002)
In connection with the report on form l0-Q for the quarterly period ended March 31, 2020 ofAmeren Illinois Company (the Registrant) as filed by the Registrant with the Securities and Exchange Commission on the date hereof(the Form l0-Q), each undersigned officer ofthe Registrant does hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 ofthe Sarbanes-Oxley Act of2002, that:
(1)
The Form l0-Q fully complies with the requirements ofSection 13(a) or 15(d) ofthe Securities Exchange Act of 1934 (15 U.S.C. 78m or 7$o(d)); and (2)
The information contained in the Form l0-Q fairly presents, in all material respects, the financial condition and results ofoperations ofthe Registrant.
Date: May 11, 2020
/5/ Richard J. Mark Richard J. Mark Chairman and President (Principal Executive Officer)
/5/ Michael L. Moehn Michael L. Moehn Executive Vice President and ChiefFinancial Officer (Principal Financial Officer)