10-QPeriod: Q3 FY2001

AMEREN CORP Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 14, 2001For Securities:AEE

Summary

Ameren Corporation's Q3 2001 10-Q filing shows a mixed financial performance for the nine months ended September 30, 2001. While third-quarter earnings per share saw an increase of 7 cents year-over-year, the nine-month period reported a slight decrease in EPS compared to the prior year. This fluctuation is attributed to various factors including sales growth, weather, regulatory adjustments, and operational costs. The company continues to invest heavily in new combustion turbine generating facilities, adding significant capacity in the period. However, investors should note the ongoing regulatory uncertainty in Missouri, where the Public Service Commission staff has proposed substantial revenue reductions, a matter Ameren plans to contest vigorously. Financially, Ameren reported increased electric and gas operating revenues driven by higher sales volumes. However, these gains were significantly offset by a substantial rise in fuel and purchased power costs, largely due to higher sales volume and the Callaway Nuclear Plant refueling outage. The company reaffirmed its full-year 2001 earnings per share guidance, but cautioned that regulatory issues in Missouri could materially impact this estimate. The company also continues to manage its capital structure, with plans for significant long-term financing to support its ongoing construction program.

Key Highlights

  • 1Third quarter 2001 earnings per share increased by 7 cents year-over-year to $1.94, driven by higher electric revenues and a reduction in customer credits.
  • 2Nine months ended September 30, 2001 earnings per share decreased to $3.06 from $3.14 in the prior year, primarily due to increased fuel and purchased power costs and other operating expenses.
  • 3Ameren invested $812 million in construction expenditures during the first nine months of 2001, primarily for combustion turbine generating facilities, adding 670 megawatts of capacity.
  • 4The company faces significant regulatory uncertainty in Missouri, with the MoPSC staff proposing annual electric revenue reductions of $213 million to $250 million following the expiration of an alternative regulation plan.
  • 5Electric operating revenues increased by $231 million in Q3 2001 compared to Q3 2000, driven by a 30% increase in kilowatt-hour sales.
  • 6Fuel and purchased power costs rose by $209 million in Q3 2001 year-over-year, primarily due to increased purchased power from higher sales volumes and higher fuel costs, along with the Callaway Nuclear Plant refueling outage.
  • 7Ameren reaffirmed its 2001 ongoing earnings per share estimate to be between $3.30 and $3.45, but noted this is subject to the resolution of Missouri regulatory issues.

Frequently Asked Questions

Ameren estimates ongoing earnings per share for the year ending December 31, 2001, to range between $3.30 and $3.45. However, this estimate is subject to the resolution of significant regulatory issues in Missouri, which could materially impact the outcome.

Electric operating revenues have increased due to a higher volume of kilowatt-hour sales, including growth in residential, commercial, and industrial sales, as well as increased interchange sales. Favorable adjustments to estimated credits for Missouri electric customers also contributed positively.

Ameren utilizes various techniques to mitigate commodity price risks, including purchased gas adjustment clauses for its gas utility business, which allow for cost pass-throughs. For its electric operations, it uses long-term contracts for coal and nuclear fuel, and for non-regulated generation, it employs a strategy to optimize transportation and storage and reduce price volatility through various supply agreements. Derivative financial instruments are also used to manage price risks for electricity and natural gas.

The Missouri Public Service Commission staff has proposed significant annual electric revenue reductions ranging from $213 million to $250 million. Ameren plans to contest this vigorously and is negotiating for a new incentive regulation plan. The outcome of these proceedings is uncertain and could materially impact the company's financial position and results of operations.