10-QPeriod: Q2 FY2011

AMEREN CORP Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 9, 2011For Securities:AEE

Summary

Ameren Corporation (AEE) reported a decrease in net income for the second quarter and first six months of 2011 compared to the same periods in 2010. This decline was primarily attributed to lower margins in its Merchant Generation segment due to decreased power prices and increased fuel costs, higher storm-related expenses for its utility segments, and the impact of milder weather and a weak economy on utility sales. Additionally, a regulatory disallowance related to the Taum Sauk energy center rebuild in Missouri will result in a significant pre-tax charge in the third quarter. Despite these challenges, Ameren Missouri received a substantial rate increase that became effective in late July 2011, and Ameren Illinois is seeking significant rate increases for its electric and natural gas delivery services. The company continues to manage its environmental compliance and capital expenditures, with strategic adjustments made in response to new environmental regulations like the CSAPR.

Financial Highlights

46 data points
Beta

Revenue

$1.78B

Net Income

$138.00M

7.7% Net Margin

EPS (Diluted)

$0.57

Total Assets

$23.39B

Cash & Equivalents

$378.00M

Free Cash Flow

$63.00M

Financial Statements
Beta
Revenue$1.78B
Operating Expenses$1.47B
Operating Income$316.00M
Interest Expense$104.00M
Net Income$138.00M
EPS (Basic)$0.57
Shares Outstanding (Basic)241.20M

Key Highlights

  • 1Net income attributable to Ameren Corporation decreased to $138 million ($0.57 per share) in Q2 2011 from $152 million ($0.64 per share) in Q2 2010.
  • 2For the six months ended June 30, 2011, net income attributable to Ameren Corporation decreased to $209 million ($0.87 per share) from $254 million ($1.07 per share) in the prior year.
  • 3Ameren Missouri received a $173 million annual electric rate increase from the MoPSC, effective July 31, 2011, although a $89 million pre-tax charge will be recorded in Q3 2011 due to disallowed Taum Sauk rebuild costs.
  • 4Ameren Illinois filed revised requests for electric and natural gas delivery service rate increases, seeking $40 million and $50 million annually, respectively.
  • 5The company's capital expenditure plans for 2011-2015 were reduced, primarily due to Ameren Missouri's coal procurement strategy and Genco's optimization of environmental compliance plans.
  • 6Ameren Missouri's FAC prudence review resulted in an $18 million pre-tax charge in Q2 2011 for customer refunds related to certain sales.
  • 7Environmental regulations, particularly the EPA's CSAPR and proposed MACT standards, continue to be a significant factor influencing future capital expenditures and operating costs.

Frequently Asked Questions

Ameren Corporation's net income attributable to Ameren Corporation decreased in both the second quarter and the first six months of 2011 compared to the same periods in 2010. Net income for Q2 2011 was $138 million ($0.57 per share), down from $152 million ($0.64 per share) in Q2 2010. For the six months ended June 30, 2011, net income was $209 million ($0.87 per share), a decrease from $254 million ($1.07 per share) in the corresponding 2010 period.

The decrease in net income was primarily driven by lower margins in the Merchant Generation segment due to reduced power prices and higher fuel costs, increased storm-related expenses for its utility segments (Ameren Missouri and Ameren Illinois), and the impact of milder weather and a weak economy on utility sales. Additionally, a regulatory disallowance related to the Taum Sauk energy center rebuild in Missouri will lead to a significant pre-tax charge in the third quarter.

Yes, Ameren Missouri received a $173 million annual electric rate increase that became effective on July 31, 2011. However, the order included a disallowance for certain Taum Sauk energy center rebuild costs, which will result in an $89 million pre-tax charge to earnings in the third quarter. Ameren Missouri also incurred an $18 million pre-tax charge due to a FAC prudence review ruling. Ameren Illinois has filed requests for increases in its electric and natural gas delivery service rates. Environmental regulations, particularly the EPA's CSAPR and proposed MACT standards for emissions, are also significant, potentially impacting future capital expenditures and operating costs.

Ameren has adjusted its capital expenditure plans, with reductions at Ameren Missouri and Genco primarily due to updated environmental compliance strategies and fuel procurement plans. Ameren Missouri's strategy to procure ultra low-sulfur coal is expected to reduce planned capital expenditures for pollution control equipment. Genco is also optimizing its environmental compliance plans. The company continues to monitor and evaluate the impact of evolving environmental regulations, such as CSAPR and proposed MACT standards, which may necessitate further investments.