10-QPeriod: Q1 FY2011

AMEREN CORP Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 10, 2011For Securities:AEE

Summary

Ameren Corporation (AEE) reported a decrease in net income attributable to Ameren Corporation for the first quarter of 2011 compared to the same period in 2010. The decline was primarily driven by lower realized electric margins in the Merchant Generation segment due to decreased power prices and increased fuel costs, higher storm-related expenses across utility segments, and unfavorable changes in mark-to-market derivative activity. These factors were partially offset by the absence of a federal tax law change impact recognized in 2010, lower interest expenses, and rate increases implemented by regulators in Missouri and Illinois. The company is actively managing its exposure to volatile commodity prices through hedging strategies and is focused on operational efficiency. Significant capital expenditures are planned for environmental compliance and infrastructure upgrades, with recovery anticipated through regulatory mechanisms. Ameren Missouri has filed for a substantial electric rate increase to recover investments in infrastructure and environmental controls, including costs for new scrubbers at its Sioux plant. Ameren Illinois is also seeking increased revenues for electric and natural gas delivery services. The company remains committed to maintaining financial strength and flexibility while navigating a dynamic regulatory and economic environment, including evolving environmental regulations.

Financial Highlights

45 data points
Beta

Revenue

$1.90B

Net Income

$71.00M

3.7% Net Margin

EPS (Diluted)

$0.29

Total Assets

$23.33B

Cash & Equivalents

$573.00M

Free Cash Flow

$329.00M

Financial Statements
Beta
Revenue$1.90B
Operating Expenses$1.68B
Operating Income$227.00M
Interest Expense$119.00M
Net Income$71.00M
EPS (Basic)$0.29
Shares Outstanding (Basic)240.60M

Key Highlights

  • 1Net income attributable to Ameren Corporation decreased to $71 million ($0.29/share) in Q1 2011 from $102 million ($0.43/share) in Q1 2010.
  • 2The decrease in net income was primarily due to lower Merchant Generation segment margins, increased storm-related expenses, and unfavorable mark-to-market derivative impacts.
  • 3Ameren Missouri filed for an approximately $200 million annual electric rate increase, including costs for Sioux plant scrubbers and higher net fuel costs.
  • 4Ameren Illinois requested combined annual increases of $111 million for electric and natural gas delivery services, utilizing a future test year.
  • 5The company is actively managing environmental risks and expects significant capital expenditures related to compliance with evolving environmental regulations.
  • 6Liquidity remains adequate, with approximately $2.1 billion in available cash and credit facilities as of March 31, 2011.
  • 7Ameren declared a quarterly dividend of $0.385 per common share, consistent with the prior year.

Frequently Asked Questions

Ameren's earnings declined primarily due to lower realized electric margins in the Merchant Generation segment (driven by lower power prices and higher fuel costs), increased storm-related operating and maintenance expenses for its utility segments, and unfavorable changes in the mark-to-market valuation of derivatives. These negative impacts were partially offset by the absence of a one-time tax charge recognized in Q1 2010, lower interest expenses, and the benefits from recent rate increases in Missouri and Illinois.

Ameren Missouri has amended its electric rate increase request to approximately $200 million annually, driven by significant infrastructure investments and environmental control costs, including $106 million for Sioux plant scrubbers. Ameren Illinois has requested combined annual increases of $111 million for electric and natural gas delivery services, utilizing a future test year to reduce regulatory lag.

Ameren employs various hedging strategies, including the use of derivative financial instruments such as forward contracts, futures, options, and swaps, to manage risks associated with fluctuations in electricity, natural gas, coal, and diesel fuel prices. These strategies aim to provide supply certainty and reduce exposure to commodity price volatility, although a portion of generation remains exposed to market price fluctuations.

Ameren anticipates significant capital expenditures to comply with evolving environmental regulations, particularly concerning emissions from coal-fired power plants. Proposed EPA rules on hazardous air pollutants (MACT), cooling water intake structures, and greenhouse gas emissions are expected to impose additional costs. The company is actively evaluating these proposed regulations and their potential impact, with estimated capital investments for pollution control equipment between 2011 and 2020 potentially reaching $3.6 billion.