10-QPeriod: Q2 FY2001

AMEREN CORP Quarterly Report for Q2 Ended Jun 30, 2001

Filed August 14, 2001For Securities:AEE

Summary

Ameren Corporation's (AEE) second quarter 2001 report shows a decrease in earnings for both the quarter and the first six months compared to the prior year, primarily due to increased operating costs, including those related to the Callaway Nuclear Plant refueling outage and higher purchased power costs. Despite a strong increase in electric revenues driven by higher sales volumes and favorable weather impacts, these gains were offset by rising expenses. Looking ahead, Ameren reaffirmed its full-year 2001 ongoing earnings per share guidance of $3.30 to $3.45, but cautioned that continued weakness in energy prices could negatively impact earnings. A significant regulatory event to watch is the Missouri Public Service Commission staff's proposed reduction in annual electric revenues, which could materially affect financial results. The company is also actively managing its generation capacity, investing in new combustion turbine facilities while exploring assignments or cancellations of other planned units.

Key Highlights

  • 1Second quarter 2001 earnings of $0.69 per share decreased by $0.14 from the prior year's $0.83 per share.
  • 2Total operating revenues increased by $116 million in the second quarter compared to the prior year, driven primarily by an 8% increase in electric kilowatt-hour sales.
  • 3Fuel and purchased power costs rose significantly in the second quarter due to higher sales volume and replacement power needed during the Callaway Nuclear Plant refueling outage.
  • 4Ameren reaffirmed its full-year 2001 ongoing earnings per share guidance of $3.30 to $3.45, but noted potential headwinds from lower energy prices.
  • 5A significant regulatory risk is identified: the Missouri Public Service Commission staff proposed an annual electric revenue reduction of $213 million to $250 million following the expiration of an alternative regulation plan.
  • 6The company is actively investing in and managing its generation capacity, adding combustion turbine units while reviewing other planned additions.
  • 7Ameren implemented SFAS No. 133, 'Accounting for Derivative Instruments and Hedging Activities,' resulting in a one-time charge and an adjustment to other comprehensive income.

Frequently Asked Questions

The decrease in earnings for the second quarter of 2001 was primarily due to an increase in operating expenses, particularly higher fuel and purchased power costs, which were impacted by the Callaway Nuclear Plant refueling outage and the need for replacement power, as well as increased purchased power due to higher sales volume.

Ameren reaffirmed its previous guidance for full-year 2001 ongoing earnings per share to be between $3.30 and $3.45. However, the company cautioned that continued weakness in energy prices could negatively impact earnings and potentially lead to a downward revision of this forecast.

Following the expiration of its experimental alternative regulation plan for Missouri electric customers on June 30, 2001, the Missouri Public Service Commission (MoPSC) staff filed an excess earnings complaint. This complaint proposes a significant reduction in annual electric revenues, ranging from $213 million to $250 million, based on factors like return on equity and cost of service. The outcome of this proceeding, which could extend into 2002, is uncertain but could be material.

Ameren is investing in new combustion turbine generating facilities, adding significant capacity in 2001 and planning for more in 2002. The company is also reviewing its long-term generation plans, which includes the possibility of assigning or canceling certain planned units and potentially utilizing different generation asset technologies.