|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
|
Ameren Illinois Electric Distribution
|
|
Ameren Transmission
|
|
|
Other/Intersegment Eliminations
|
|
Natural Gas Margins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) by Segment
|
|
|
|
|
|
Overall Ameren Increase of $4 Million (QTD YoY)
|
|
Overall Ameren Increase of $36 Million (YTD YoY)
|
|
|
|
Total by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
|
Ameren Illinois Natural Gas
|
|
The following tables present the favorable (unfavorable) variations by Ameren segment for electric and natural gas margins for the six months ended June 30, 2021, compared with the year-ago periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric and Natural Gas Margins
|
|
|
|
|
|
|
Three Months
|
Ameren Missouri
|
|
Ameren Illinois
Electric Distribution
|
|
Ameren Illinois
Natural Gas
|
|
Ameren Transmission(a)
|
|
Other /Intersegment Eliminations
|
|
Ameren
|
|
|
|
|
|
|
Electric revenue change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
|
|
|
|
|
Base rates (estimate)(c)
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volumes and changes in customer usage patterns (excluding the estimated effects of weather and MEEIA)
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
|
|
|
|
|
Change in rate design
|
(63)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63)
|
|
|
|
|
|
|
|
Customer demand charges
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-system sales, capacity, and FAC revenues, net
|
54
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
|
|
|
|
|
Energy-efficiency program investment revenues
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
|
|
|
|
Other
|
5
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
1
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in fuel and purchased power(d)
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
|
|
|
|
|
Other cost recovery mechanisms(e)
|
(7)
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)
|
|
|
|
|
|
|
|
Total electric revenue change
|
$
|
18
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(7)
|
|
|
$
|
47
|
|
|
|
|
|
|
|
Fuel and purchased power change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy costs (excluding the estimated effect of weather)
|
$
|
(53)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(53)
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
2
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in electric revenue(d)
|
(11)
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22)
|
|
|
|
|
|
|
|
Total fuel and purchased power change
|
$
|
(67)
|
|
|
$
|
(11)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
(74)
|
|
|
|
|
|
|
|
Net change in electric margins
|
$
|
(49)
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3)
|
|
|
$
|
(27)
|
|
|
|
|
|
|
|
Natural gas revenue change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
$
|
(1)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1)
|
|
|
|
|
|
|
|
Base rates (estimate)
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
|
|
|
|
Change in rate design
|
—
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in natural gas purchased for resale(d)
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
|
|
|
|
|
Other cost recovery mechanisms(e)
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
|
|
|
|
Total natural gas revenue change
|
$
|
(1)
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
|
|
|
|
|
Natural gas purchased for resale change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in natural gas revenue(d)
|
—
|
|
|
—
|
|
|
(24)
|
|
|
—
|
|
|
—
|
|
|
(24)
|
|
|
|
|
|
|
|
Total natural gas purchased for resale change
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(24)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(23)
|
|
|
|
|
|
|
|
Net change in natural gas margins
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
Ameren Missouri
|
|
Ameren Illinois
Electric Distribution
|
|
Ameren Illinois
Natural Gas
|
|
Ameren Transmission(a)
|
|
Other /Intersegment Eliminations
|
|
Ameren
|
|
|
|
|
|
|
Electric revenue change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
|
|
|
|
|
Base rates (estimate)(c)
|
(6)
|
|
|
22
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
23
|
|
|
|
|
|
|
|
Sales volumes and changes in customer usage patterns (excluding the estimated effects of weather and MEEIA)
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
|
|
|
|
|
Change in rate design
|
(63)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-system sales, capacity, and FAC revenues, net
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
|
|
|
|
|
Energy-efficiency program investment revenues
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
|
|
|
|
|
Other
|
4
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(9)
|
|
|
1
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in fuel and purchased power(d)
|
14
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
|
|
|
|
|
Other cost recovery mechanisms(e)
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
|
|
|
|
|
Total electric revenue change
|
$
|
28
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
(9)
|
|
|
$
|
83
|
|
|
|
|
|
|
|
Fuel and purchased power change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy costs (excluding the estimated effect of weather)
|
$
|
(53)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(53)
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
(6)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)
|
|
|
|
|
|
|
|
Effect of lower net energy costs included in base rates
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
(4)
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in electric revenue(d)
|
(14)
|
|
|
(24)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38)
|
|
|
|
|
|
|
|
Total fuel and purchased power change
|
$
|
(41)
|
|
|
$
|
(23)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
(56)
|
|
|
|
|
|
|
|
Net change in electric margins
|
$
|
(13)
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
(1)
|
|
|
$
|
27
|
|
|
|
|
|
|
|
Natural gas revenue change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
Base rates (estimate)
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
|
|
|
|
|
Change in rate design
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in natural gas purchased for resale(d)
|
10
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
|
|
|
|
|
Other cost recovery mechanisms(e)
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
|
|
|
|
|
Total natural gas revenue change
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
117
|
|
|
|
|
|
|
|
Natural gas purchased for resale change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of weather (estimate)(b)
|
$
|
(2)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
(2)
|
|
|
|
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
|
|
|
|
|
Cost recovery mechanisms – offset in natural gas revenue(d)
|
(10)
|
|
|
—
|
|
|
(68)
|
|
|
—
|
|
|
—
|
|
|
(78)
|
|
|
|
|
|
|
|
Total natural gas purchased for resale change
|
$
|
(12)
|
|
|
$
|
—
|
|
|
$
|
(69)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(81)
|
|
|
|
|
|
|
|
Net change in natural gas margins
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
36
|
|
|
|
|
|
|
(a)Includes an increase in transmission margins of $1 million and $8 million at Ameren Illinois for the three and six months ended June 30, 2021, compared with the year-ago periods.
(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 periods; 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. For Ameren Missouri, base rates exclude an increase of $7 million for the recovery of lost electric margins for the six months ended June 30, 2021, compared with the year-ago period, resulting from the MEEIA 2016 and 2019 customer energy-efficiency programs. This amount is included in the “sales volumes and changes in customer usage patterns (excluding the estimated effects of weather and MEEIA)” line item.
(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 and "Income Taxes" in the statement of income. These items have no overall impact on earnings.
Ameren
Ameren’s electric margins decreased $27 million, or 3%, for the three months ended June 30, 2021, compared with the year-ago period, primarily because of decreased margins at Ameren Missouri, partially offset by increased margins at Ameren Illinois Electric Distribution, as discussed below. Ameren’s electric margins increased $27 million, or 1%, for the six months ended June 30, 2021, compared with the year-ago periods, primarily because of increased margins at Ameren Illinois Electric Distribution and Ameren Transmission, partially offset by decreased margins at Ameren Missouri, as discussed below. Ameren’s natural gas margins increased $4 million, or 3%, and $36 million, or 11%, for the three and six months ended June 30, 2021, respectively, compared with the year-ago periods, primarily because of increased margins at Ameren Illinois Natural Gas, as discussed below.
Ameren Transmission
Ameren Transmission’s margins were comparable between the three months ended June 30, 2021 and 2020. Ameren Transmission’s margins increased $7 million, or 3%, for the six months ended June 30, 2021, compared with the year-ago period. Base rate revenues were favorably affected by increased capital investment, as evidenced by a 12% increase in rate base used to calculate the revenue requirement, partially offset by the absence in 2021 of the FERC’s May 2020 order addressing the allowed base ROE, and the effect of the FERC’s March 2021 order, which required refunds related to historical recovery of materials and supplies inventories. See Transmission Formula Rate Revisions in Note 2 – Rate and Regulatory Matters under Part I, Item 1, of this report for additional information regarding the May 2020 and March 2021 FERC orders.
Ameren Missouri
Ameren Missouri’s electric margins decreased $49 million, or 8%, and $13 million, or 1%, for the three and six months ended June 30, 2021, respectively, compared with the year-ago periods. Fuel and purchased power costs increased $11 million and $14 million for the three and six months ended June 30, 2021, respectively, primarily resulting from higher electric prices, the Callaway Energy Center maintenance outage, and, for the six month comparison, a significant increase in customer demand for electricity in mid-February 2021 due to extremely cold weather. The increased fuel and purchased power costs were fully offset by an increase in electric revenues, resulting in no impact to margin. The increase in purchased power cost is reflected in “Cost recovery mechanisms – offset in electric revenue” and the associated recoverability from customers is reflected in “Cost recovery mechanisms – offset in fuel and purchased power” in the table above.
The following items had an unfavorable effect on Ameren Missouri’s electric margins for three and six months ended June 30, 2021, compared with the year-ago periods (except when a specific period is referenced):
•The implementation of a change in rate design pursuant to the March 2020 MoPSC electric rate order decreased margins $63 million in both periods. The change in rate design applies lower winter rates to May sales volumes and higher summer rates to September sales volumes beginning in 2021. Previously, blended rates were applied in both months’ sales volumes. As the decrease in margins associated with May sales volumes is expected to be offset by increases associated with September sales volumes, the change is not expected to materially affect annual earnings comparisons.
•The absence of the Callaway Energy Center generation and extremely cold weather in mid-February 2021, partially offset by insurance recoveries related to the Callaway Energy Center maintenance outage, drove net energy costs higher than those reflected in base rates, which reduced margins by $4 million, resulting from Ameren Missouri’s 5% exposure to net energy cost variances under the FAC for the six months ended June 30, 2021. The change in net energy costs is the sum of the revenue change in “Off-system sales, capacity and FAC revenues, net” (+$49 million) and the change in “Energy costs (excluding the estimated effect of weather)” (-$53 million) in the table above. See Note 10 – Callaway Energy Center under Part I, Item 1, of this report for additional information on insurance recoveries related to the outage.
The following items had a favorable effect on Ameren Missouri’s electric margins for three and six months ended June 30, 2021, compared with the year-ago periods (except when a specific period is referenced):
•The March 2020 MoPSC electric rate order that resulted in lower net energy costs included in base rates, partially offset by lower electric base rates, increased margins $30 million for the six months ended June 30, 2021. The change in electric base rates is the sum of the change in “Base rates (estimate)” (-$6 million) and the “Effect of lower net energy costs included in base rates” (+$36 million) in the table above.
•Excluding the estimated effects of weather and the MEEIA customer energy-efficiency programs, electric revenues increased an estimated $11 million and $8 million, respectively. The increase was primarily due to an increase in sales volumes, which were unfavorably affected by the COVID-19 pandemic in 2020, and an increase in the average retail price per kilowatthour due to changes in customer usage patterns. While the MEEIA customer energy-efficiency programs reduced retail sales volumes, the recovery of lost electric margins under the MEEIA ensured that electric margins were not affected.
•Summer temperatures were warmer as cooling degree days increased 7% for the three months ended June 30, 2021, and winter temperatures were colder as heating degree days increased 7% for the six months ended June 30, 2021. The aggregate effect of
weather increased margins an estimated $4 million and $17 million, respectively. The change in margins due to weather is the sum of the “Effect of weather (estimate)” on electric revenues (+$5 million and +$23 million, respectively) and the “Effect of weather (estimate) on fuel and purchased power” (-$1 million and -$6 million, respectively) in the table above.
•Lower net energy costs increased margins $1 million for the three months ended June 30, 2021. The change in net energy costs is the sum of “Off-system sales, capacity and FAC revenues, net” (+$54 million) and “Energy costs (excluding the estimated effect of weather)” (-$53 million) in the table above.
Ameren Missouri’s natural gas margins were comparable between periods. Purchased gas costs increased $10 million for the six months ended June 30, 2021, primarily resulting from the significant increase in customer demand and prices for natural gas in mid-February 2021 due to extremely cold weather. The increased purchased gas costs are fully offset by an increase in natural gas revenues under the PGA rider, resulting in no impact to margin. The increase in purchased gas cost is reflected in “Cost recovery mechanisms – offset in natural gas revenue” and the associated recoverability from customers is reflected in “Cost recovery mechanisms – offset in natural gas purchased for resale” in the table above.
Ameren Illinois
Ameren Illinois’ electric margins increased $26 million, or 7%, and $42 million, or 6%, for the three and six months ended June 30, 2021, respectively, compared with the year-ago periods, driven by increased margins at Ameren Illinois Electric Distribution and Ameren Illinois Transmission. Ameren Illinois Natural Gas’ margins increased $4 million, or 4%, and $35 million, or 12%, for the three and six months ended June 30, 2021, respectively, compared with the year-ago periods.
Ameren Illinois Electric Distribution
Ameren Illinois Electric Distribution’s margins increased $25 million, or 9%, and $34 million, or 6%, for the three and six months ended June 30, 2021, respectively, compared with the year-ago periods. Purchased power costs increased $11 million and $24 million for the three and six months ended June 30, 2021, respectively, primarily resulting from higher electric prices and, for the six month comparison, the significant increase in customer demand for electricity in mid-February 2021 due to extremely cold weather. The increased purchased power costs are fully offset by an increase in electric revenues under the cost recovery mechanisms for purchased power, resulting in no impact to margin. The increase in purchased power cost is reflected in “Cost recovery mechanisms – offset in electric revenue” and the associated recoverability from customers is reflected in “Cost recovery mechanisms – offset in fuel and purchased power” in the table above. The following items had a favorable effect on Ameren Illinois Electric Distribution’s margins for the three and six months ended June 30, 2021, compared with the year-ago periods:
•Margins increased due to a higher recognized ROE (+$4 million and +$7 million, respectively), as evidenced by an increase of 74 basis points in the estimated annual average of the monthly yields of the 30-year United States Treasury bonds, increased capital investment (+$2 million and +$4 million, respectively), as evidenced by a 7% increase in rate base used to calculate the revenue requirement, and higher recoverable non-purchased power expenses (+$13 million and +$11 million, respectively). The sum of these changes collectively increased margins $19 million and $22 million, respectively.
•Revenues increased $2 million and $5 million, respectively, due to recovery of increased energy-efficiency program investments under performance-based formula ratemaking.
Ameren Illinois Natural Gas
Ameren Illinois Natural Gas’ margins increased $4 million, or 4%, and $35 million, or 12%, for the three and six months ended June 30, 2021, respectively, compared with the year-ago periods. Purchased gas costs increased $24 million and $68 million for the three and six months ended June 30, 2021, primarily resulting from higher natural gas prices and, for the six month comparison, the significant increase in customer demand for natural gas in mid-February 2021 due to extremely cold weather. The increased purchased gas costs are fully offset by an increase in natural gas revenues under the PGA rider, resulting in no impact to margin. The increase in purchased gas cost is reflected in “Cost recovery mechanisms – offset in natural gas revenue” and the associated recoverability from customers is reflected in “Cost recovery mechanisms – offset in natural gas purchased for resale” in the table above. The following items had a favorable effect on Ameren Illinois Natural Gas’ margins for the three and six months ended June 30, 2021, compared with the year-ago periods (except when a specific period is referenced):
•Revenues increased $4 million and $16 million, respectively, due to higher natural gas base rates as a result of the January 2021 natural gas rate order.
•The implementation of a change in rate design pursuant to the January 2021 natural gas rate order, which increased margins $8 million for the six months ended June 30, 2021. This change in rate design concentrates more revenues in the winter heating season due to an increase in volumetric rates and a decrease in fixed customer rates. As such, the change is not expected to materially affect annual earnings comparisons.
Ameren Illinois Natural Gas’ margins decreased due to the implementation of a change in rate design pursuant to the January 2021 natural gas rate order, which decreased margins $4 million for the three months ended June 30, 2021. As noted above, the change is not expected to materially affect annual earnings comparisons.
Ameren Illinois Transmission
Ameren Illinois Transmission’s margins increased $1 million, or 1%, and $8 million, or 5%, for the three and six months ended June 30, 2021, respectively, compared with the year-ago periods. Margins were favorably affected by increased capital investment, as evidenced by a 18% increase in rate base used to calculate the revenue requirement, partially offset by the absence in 2021 of the FERC’s May 2020 order addressing the allowed base ROE, and the effect of the FERC’s March 2021 order, which required refunds related to historical recovery of materials and supplies inventories. See Transmission Formula Rate Revisions in Note 2 – Rate and Regulatory Matters under Part I, Item 1, of this report for additional information regarding the May 2020 and March 2021 FERC orders.
Other Operations and Maintenance Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) by Segment
|
|
|
|
|
|
Overall Ameren Increase of $28 Million (QTD YoY)
|
|
Overall Ameren Increase of $10 Million (YTD YoY)
|
|
|
|
Total by Segment(a)
|
|
|
|
(a)Includes $14 million and $15 million at Ameren Transmission in the three months ended June 30, 2021 and 2020, respectively. Includes other/intersegment eliminations of $(2) million and $(3) million in the three months ended June 30, 2021 and 2020, respectively. Also includes other/intersegment eliminations of $(4) million and $(5) million in the six months ended June 30, 2021 and 2020, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
|
Ameren Illinois Natural Gas
|
|
|
Other/Intersegment Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Illinois Electric Distribution
|
|
Ameren Transmission
|
|
|
|
|
Ameren
Other operations and maintenance expenses increased $28 million and $10 million in the three and six months ended June 30, 2021, compared with the year-ago periods, due to changes discussed below.
Ameren Transmission
Other operations and maintenance expenses were comparable between periods.
Ameren Missouri
Other operations and maintenance expenses increased $16 million in the three months ended June 30, 2021, compared with the year-ago period. Other operations and maintenance expenses were comparable between the six months ended June 30, 2021 and 2020. The
following items increased other operations and maintenance expenses in the three and six months ended June 30, 2021, compared with the year-ago periods (except where a specific period is referenced):
•Callaway Energy Center refueling operations and maintenance costs increased $7 million and $14 million, respectively, because of the amortization of those costs, beginning in January 2021, which were previously deferred as a regulatory asset, pursuant to the MoPSC’s February 2020 order.
•Energy center maintenance costs, other than Callaway refueling and maintenance costs, increased $6 million and $7 million, respectively, primarily due to the deferral of projects in the year-ago period.
•Customer energy-efficiency program costs increased $8 million in the six months ended June 30, 2021, because of increased participation in the MEEIA programs in the current-year period.
•The cash surrender value of company-owned life insurance decreased $5 million because of less favorable market returns in the three months ended June 30, 2021, compared with the year-ago period.
The following items partially offset the above increases in other operations and maintenance expenses in the six months ended June 30, 2021, compared with the year-ago period:
•Amortization of costs, primarily solar rebate costs pursuant to the MoPSC’s March 2020 electric rate order, decreased $8 million.
•Transmission and distribution expenditures decreased $6 million, primarily resulting from less maintenance and meter reading costs, because of recent capital improvements related to the Smart Energy Plan.
•Deferral to a regulatory asset of $5 million of certain prior period costs incurred related to the COVID-19 pandemic, pursuant to the MoPSC’s March 2021 orders.
•The cash surrender value of company-owned life insurance increased $4 million because of more favorable market returns in the six months ended June 30, 2021, compared with the year-ago period.
Ameren Illinois
Other operations and maintenance expenses increased $11 million and $6 million in the three and six months ended June 30, 2021, compared with the year-ago periods, as discussed below. Other operations and maintenance expenses were comparable between periods at Ameren Illinois Natural Gas and Ameren Illinois Transmission.
Ameren Illinois Electric Distribution
Other operations and maintenance expenses increased $11 million and $6 million in the three and six months ended June 30, 2021, compared with the year-ago periods. The following items increased other operations and maintenance expenses in the three and six months ended June 30, 2021, compared with the year-ago periods (except where a specific period is referenced):
•Employee benefit costs increased $3 million and $4 million, respectively, primarily because of higher medical and pension costs.
•Amortization of regulatory assets associated with energy-efficiency program investments under performance-based formula ratemaking increased $2 million and $4 million, respectively.
•Distribution expenditures increased $3 million in the three months ended June 30, 2021, primarily because of increased storm costs.
•The cash surrender value of company-owned life insurance decreased $2 million because of less favorable market returns in the three months ended June 30, 2021, compared with the year-ago period.
Depreciation and Amortization Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) by Segment
|
|
|
|
|
Overall Ameren Increase of $14 Million (QTD YoY)
|
|
Overall Ameren Increase of $40 Million (YTD YoY)
|
|
|
|
Total by Segment(a)
|
|
|
|
(a)Includes other/intersegment eliminations of $2 million and $2 million in the three months ended June 30, 2021 and 2020, respectively. Also includes other/intersegment eliminations of $2 million and $2 million in the six months ended June 30, 2021 and 2020, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
|
Ameren Illinois Natural Gas
|
|
|
Other/Intersegment Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Illinois Electric Distribution
|
|
Ameren Transmission
|
|
|
|
|
Depreciation and amortization expenses increased $14 million and $10 million in the three months ended June 30, 2021, and $40 million and $18 million in the six months ended June 30, 2021, compared with the year-ago periods, at Ameren and Ameren Illinois, respectively, primarily because of additional property, plant, and equipment investments across their respective segments. Depreciation and amortization expenses were comparable at Ameren Missouri between the three months ended June 30, 2021 and 2020. Depreciation and amortization expenses increased $19 million at Ameren Missouri in the six months ended June 30, 2021, compared with the year-ago period, primarily because of additional property, plant, and equipment investments. Ameren’s and Ameren Missouri’s depreciation and amortization expenses reflected a deferral to a regulatory asset of depreciation and amortization expenses pursuant to the PISA and the RESRAM. The PISA and RESRAM deferrals of depreciation and amortization expenses were $22 million and $1 million for the three months ended June 30, 2021 and 2020, respectively, and $41 million and $14 million for the six months ended June 30, 2021 and 2020, respectively.
Taxes Other Than Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) by Segment
|
|
|
|
|
|
Overall Ameren Increase of $3 Million (QTD YoY)
|
|
Overall Ameren Increase of $6 Million (YTD YoY)
|
|
|
|
Total by Segment(a)
|
|
|
|
(a)Includes $2 million, $2 million, $4 million, and $4 million at Ameren Transmission in the three months ended June 30, 2021 and 2020, and in the six months ended June 30, 2021 and 2020, respectively. Also includes other/intersegment eliminations of $2 million, $2 million, $6 million, and $5 million in the three months ended June 30, 2021 and 2020, and in the six months ended June 30, 2021 and 2020, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
|
Ameren Illinois Natural Gas
|
|
|
Other/Intersegment Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Illinois Electric Distribution
|
|
Ameren Transmission
|
|
|
|
|
Taxes other than income taxes increased $3 million at Ameren in the three months ended June 30, 2021, compared with the year-ago period, primarily because of increased property taxes across Ameren segments. Taxes other than income taxes were comparable at Ameren Missouri and Ameren Illinois between the three months ended June 30, 2021 and 2020. Taxes other than income taxes increased $6 million at Ameren and Ameren Illinois in the six months ended June 30, 2021, compared with the year-ago period, primarily because of a $4 million increase in excise taxes at Ameren Illinois Natural Gas, as a result of increased sales. Taxes other than income taxes were comparable at Ameren Missouri between the six months ended June 30, 2021 and 2020.
Other Income, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) by Segment
|
|
|
|
|
|
Overall Ameren Increase of $1 Million (QTD YoY)
|
|
Overall Ameren Increase of $26 Million (YTD YoY)
|
|
|
|
Total by Segment(a)
|
|
|
|
(a)Includes $2 million and $3 million at Ameren Transmission in the three months ended June 30, 2021 and 2020, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
|
Ameren Illinois Natural Gas
|
|
|
Other/Intersegment Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Illinois Electric Distribution
|
|
Ameren Transmission
|
|
|
|
|
Other income, net, was comparable at Ameren, Ameren Missouri, and Ameren Illinois between the three months ended June 30, 2021 and 2020. Other income, net, increased $26 million and $18 million at Ameren and Ameren Missouri, respectively, in the six months ended June 30, 2021, compared with the year-ago period, primarily because of a $9 million increase in the non-service cost components of net periodic benefit income at Ameren Missouri and an $8 million decrease in charitable donations at Ameren Missouri due to the absence of charitable donations made in the year-ago period pursuant to the MoPSC’s March 2020 electric rate order. Other income, net, also increased $6 million at Ameren in the six months ended June 30, 2021, compared with the year-ago period for activity not reported as part of a segment, primarily because of increased income from equity method investments. Other income, net was comparable at Ameren Illinois between the six months ended June 30, 2021 and 2020.
See Note 5 – Other Income, Net, under Part I, Item 1, of this report for additional information.
Interest Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) by Segment
|
|
|
|
|
|
Overall Ameren Decrease of $12 Million (QTD YoY)
|
|
Overall Ameren Decrease of $5 Million (YTD YoY)
|
|
|
|
Total by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
|
Ameren Illinois Natural Gas
|
|
|
Other/Intersegment Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Illinois Electric Distribution
|
|
Ameren Transmission
|
|
|
|
|
Interest charges decreased $12 million and $14 million in the three months ended June 30, 2021, and $5 million and $15 million in the six months ended June 30, 2021, at Ameren and Ameren Missouri, respectively, compared with the year-ago periods, primarily because of increased deferrals to a regulatory asset of interest charges pursuant to the PISA and the RESRAM. The PISA and RESRAM deferrals of interest charges were $19 million and $1 million in the three months ended June 30, 2021 and 2020, respectively, and $34 million and $9 million in the six months ended June 30, 2021 and 2020, respectively. Interest charges were comparable at Ameren Illinois between the three months ended June 30, 2021 and 2020. Interest charges increased $5 million at Ameren Illinois in the six months ended June 30, 2021, compared with the year-ago period.
The following items partially offset the decreases in interest charges in the three and six months ended June 30, 2021, compared with the year-ago periods (except where a specific period is referenced):
•Issuance of long-term debt at Ameren Missouri in October 2020 increased interest charges by $4 million and $7 million, respectively.
•Issuance of long-term debt at Ameren (parent) in April 2020 increased interest charges by $7 million in the six months ended June 30, 2021, compared with the year-ago period.
•Interest charges increased by $4 million in the six months ended June 30, 2021, compared with the year-ago period, at Ameren Illinois Transmission as a result of the FERC’s March 2021 order and the Ameren Illinois issuance of long-term debt in November 2020.
Income Taxes
The following table presents effective income tax rates for the three and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months(a)
|
|
Six Months(a)
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Ameren
|
|
|
|
|
|
13
|
%
|
|
17
|
%
|
|
12
|
%
|
|
15
|
%
|
|
Ameren Missouri
|
|
|
|
|
|
(3)
|
%
|
|
7
|
%
|
|
(3)
|
%
|
|
7
|
%
|
|
Ameren Illinois
|
|
|
|
|
|
26
|
%
|
|
26
|
%
|
|
25
|
%
|
|
25
|
%
|
|
Ameren Illinois Electric Distribution
|
|
|
|
|
|
25
|
%
|
|
25
|
%
|
|
24
|
%
|
|
24
|
%
|
|
Ameren Illinois Natural Gas
|
|
|
|
|
|
29
|
%
|
|
29
|
%
|
|
27
|
%
|
|
26
|
%
|
|
Ameren Illinois Transmission
|
|
|
|
|
|
25
|
%
|
|
27
|
%
|
|
25
|
%
|
|
26
|
%
|
|
Ameren Transmission
|
|
|
|
|
|
26
|
%
|
|
27
|
%
|
|
26
|
%
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Estimate of the annual effective income tax rate adjusted to reflect the tax effect of items discrete to the three and six months ended June 30, 2021 and 2020.
See Note 12 – Income Taxes under Part I, Item 1, of this report for a reconciliation of the 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 Transmission in the three months ended June 30, 2021, compared with the year-ago period, primarily because of higher tax benefits from certain depreciation differences on property-related items largely attributable to the allowance for equity funds used during construction and higher amortization of excess deferred taxes, compared with the year-ago period.
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 consisting of rate-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 of Ameren Missouri and Ameren Illinois, with capital contributions from Ameren (parent). We expect to make significant capital expenditures over the next five years, supported by a combination of long-term debt and equity, as we invest in our electric and natural gas utility infrastructure to support overall system reliability, grid modernization, renewable energy target requirements, environmental compliance, and other improvements. As part of its funding plan for capital expenditures, 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 2025. Ameren expects these issuances to provide equity of about $100 million annually. In addition, Ameren established an ATM program under which Ameren may offer and sell from time to time up to $750 million of its common stock, subject to market conditions and other factors. For the six months ended June 30, 2021, Ameren issued a total of 3.0 million shares of common stock and received aggregate proceeds of $234 million under the ATM program and the settlement of the remaining portion of the forward sale agreement. Ameren plans to issue approximately $30 million of equity in the second half of 2021 and approximately $300 million each year from 2022 to 2025 in addition to issuances under the DRPlus and employee benefit plans. Ameren expects its equity to total capitalization ratio to be approximately 45% through December 31, 2025, with the long-term intent to support solid investment-grade credit ratings. See Long-term Debt and Equity below and Note 4 – Long-term Debt and Equity Financings under Part I, Item 1, of this report for additional information on the 2021 settlement of the remaining portion of the forward sale agreement and the ATM program.
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 June 30, 2021, for Ameren. With the credit capacity available under the Credit Agreements, and cash and cash equivalents, Ameren (parent), Ameren Missouri, and Ameren Illinois, collectively, had net available liquidity of $2.0 billion at June 30, 2021. See Credit Facility Borrowings and Liquidity for additional information.
The following table presents net cash provided by (used in) operating, investing, and financing activities for the six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided By
Operating Activities
|
|
Net Cash Used In
Investing Activities
|
|
Net Cash Provided By
Financing Activities
|
|
|
2021
|
|
2020
|
|
Variance
|
|
2021
|
|
2020
|
|
Variance
|
|
2021
|
|
2020
|
|
Variance
|
|
Ameren
|
$
|
436
|
|
|
$
|
694
|
|
|
$
|
(258)
|
|
|
$
|
(1,760)
|
|
|
$
|
(1,315)
|
|
|
$
|
(445)
|
|
|
$
|
1,290
|
|
|
$
|
608
|
|
|
$
|
682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
224
|
|
|
292
|
|
|
(68)
|
|
|
(1,053)
|
|
|
(604)
|
|
|
(449)
|
|
|
701
|
|
|
284
|
|
|
417
|
|
|
Ameren Illinois
|
286
|
|
|
340
|
|
|
(54)
|
|
|
(668)
|
|
|
(659)
|
|
|
(9)
|
|
|
477
|
|
|
336
|
|
|
141
|
|
Cash Flows from Operating Activities
Our cash provided by operating activities is affected by fluctuations of trade accounts receivable, inventories, and accounts and wages payable, among other things, as well as the unique regulatory environment for each of our businesses. Substantially all expenditures related to fuel, 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 of those costs. Additionally, the seasonality of our electric and natural gas businesses, primarily caused by seasonal customer rates and changes in customer demand due to weather, such as increased demand resulting from the extremely cold weather in mid-February 2021, significantly affects the amount and timing of our cash provided by operating activities.
Ameren
Ameren’s cash provided by operating activities decreased $258 million in the first six months of 2021, compared with the year-ago period. The following items contributed to the decrease:
•A $185 million decrease resulting from increased purchases for natural gas for resale and purchased power costs as a result of the significant increase in customer demand and prices for natural gas and electricity experienced in mid-February 2021 due to extremely cold weather, which are recovered under the PGA, the FAC, and Ameren Illinois’ purchased power rider; a net decrease attributable to other regulatory recovery mechanisms; and a decrease related to a change in Ameren Missouri’s electric rate design. These items were partially offset by increased customer collections resulting from base rate increases pursuant to Ameren Illinois’ January 2021 natural gas rate order and due to Ameren Illinois’ electric transmission rate base growth, and state funding received by Ameren Illinois for customer billing assistance. These decreases were also partially offset by increased retail sales at Ameren Missouri and Ameren Illinois and the effect of customer disconnection activity at Ameren Illinois that resumed in April 2021, which had been suspended for most of 2020.
•A $25 million increase in interest payments, primarily due to an increase in the average outstanding debt.
•A $23 million decrease in net collateral activity with counterparties, primarily resulting from changes in the market prices of power, natural gas, and other fuels.
•A $21 million increase in the cost of natural gas held in storage at Ameren Illinois because of higher prices.
•A $16 million increase in major storm restoration costs at Ameren Illinois due to a January 2021 storm.
•A $13 million increase in payroll tax payments primarily due to the employer portion of Social Security taxes as a result of a payment deferral allowed in 2020 under the Coronavirus Aid, Relief, and Economic Security Act. Half of this deferral will be paid at the end of 2021 and the remaining half will be paid at the end of 2022.
•A $10 million increase in property tax payments at Ameren Missouri primarily due to higher assessed property tax values.
The following items partially offset the decrease in Ameren’s cash from operating activities between periods:
•A $24 million increase, primarily resulting from reduced purchases of materials and supplies to support operations in 2021 as levels were increased in 2020 to mitigate against any potential supply disruptions associated with the COVID-19 pandemic.
•A $17 million decrease in payments to settle ARO liabilities, primarily related to the closure of Ameren Missouri’s CCR storage facilities.
•A $16 million increase resulting from a decrease in coal inventory levels at Ameren Missouri primarily due to weather-related delivery disruptions.
Ameren Missouri
Ameren Missouri’s cash provided by operating activities decreased $68 million in the first six months of 2021, compared with the year-ago period. The following items contributed to the decrease:
•A $74 million decrease resulting from increased purchases for natural gas for resale and purchased power costs as a result of the significant increase in customer demand and prices for natural gas and electricity experienced in mid-February 2021 due to extremely cold weather, which are recovered under the PGA and the FAC; a net decrease attributable to other regulatory recovery mechanisms; and a decrease related to a change in electric rate design. These items were partially offset by increased retail sales.
•A $25 million decrease in net collateral activity with counterparties, primarily resulting from changes in the market prices of power, natural gas, and other fuels.
•A $10 million increase in interest payments, primarily due to an increase in the average outstanding debt.
•A $10 million increase in property tax payments primarily due to higher assessed property tax values.
•A $6 million increase in payroll tax payments primarily due to the employer portion of Social Security taxes as a result of a payment deferral allowed in 2020 under the Coronavirus Aid, Relief, and Economic Security Act. Half of this deferral will be paid at the end of 2021 and the remaining half will be paid at the end of 2022.
The following items partially offset the decrease in Ameren Missouri’s cash from operating activities between periods:
•A $23 million increase in income tax refunds from Ameren (parent) pursuant to the tax allocation agreement, primarily due to the timing of payments and lower taxable income in 2021.
•A $17 million decrease in payments to settle ARO liabilities, primarily related to the closure of CCR storage facilities.
•A $16 million increase resulting from a decrease in coal inventory levels primarily due to weather-related delivery disruptions.
•A $13 million increase, primarily resulting from reduced purchases of materials and supplies to support operations in 2021 as levels were increased in 2020 to mitigate against any potential supply disruptions associated with the COVID-19 pandemic.
Ameren Illinois
Ameren Illinois’ cash provided by operating activities decreased $54 million in the first six months of 2021, compared with the year-ago period. The following items contributed to the decrease:
•A $118 million decrease resulting from increased purchases for natural gas for resale and purchased power costs as a result of the significant increase in customer demand and prices for natural gas and electricity experienced in mid-February 2021 due to extremely cold weather, which are recovered under the PGA and a purchased power rider, and a net decrease attributable to other regulatory recovery mechanisms. These items were partially offset by increased customer collections resulting from base rate increases pursuant to the January 2021 natural gas rate order and due to electric transmission rate base growth, state funding received for customer billing assistance, increased retail sales, and the effect of customer disconnection activity that resumed in April 2021, which had been suspended for most of 2020.
•A $21 million increase in the cost of natural gas held in storage because of higher prices.
•A $16 million increase in major storm restoration costs due to a January 2021 storm.
•A $6 million increase in interest payments, primarily due to an increase in the average outstanding debt.
•A $4 million increase in payroll tax payments primarily due to the employer portion of Social Security taxes as a result of a payment deferral allowed in 2020 under the Coronavirus Aid, Relief, and Economic Security Act. Half of this deferral will be paid at the end of 2021 and the remaining half will be paid at the end of 2022.
The following items partially offset the decrease in Ameren Illinois’ cash from operating activities between periods:
•A $98 million increase resulting from income tax refunds of $37 million, compared with income tax payments of $61 million in 2020, from Ameren (parent) pursuant to the tax allocation agreement, primarily due to lower taxable income in 2021.
•An $11 million increase, primarily resulting from reduced purchases of materials and supplies to support operations in 2021 as levels were increased in 2020 to mitigate against any potential supply disruptions associated with the COVID-19 pandemic.
Cash Flows from Investing Activities
Ameren’s cash used in investing activities increased $445 million during the first six months of 2021, compared with the year-ago period, primarily as a result of a $417 million increase in cash paid for the acquisition of wind generation assets at Ameren Missouri and a $118 million increase in capital expenditures, which were driven by an increase at Ameren Missouri, partially offset by a decrease at Ameren Illinois and a $26 million decrease at ATXI, primarily as a result of decreased Illinois Rivers transmission line expenditures as it was placed in service in December 2020. The increase in Ameren’s cash used in investing activities was partially offset by a $52 million decrease due to the timing of nuclear fuel expenditures and a $37 million decrease due to net investment activity in the nuclear decommissioning trust fund at Ameren Missouri.
Ameren Missouri’s cash used in investing activities increased $449 million during the first six months of 2021, compared with the year-ago period, primarily as a result of a $417 million increase in cash paid for the acquisition of wind generation assets and a $168 million increase in capital expenditures, primarily related to electric delivery infrastructure upgrades, electric distribution system reliability projects, and generator repairs at the Callaway Energy Center. The increase in Ameren Missouri’s cash used in investing activities was partially offset by a $47 million return of net money pool advances, a $52 million decrease due to the timing of nuclear fuel expenditures, and a $37 million decrease due to net investment activity in the nuclear decommissioning trust fund.
Ameren Illinois’ cash used in investing activities increased $9 million during the first six months of 2021, compared with the year-ago period, primarily as a result of a $20 million increase in Ameren Illinois’ net money pool advances, partially offset by a $15 million decrease in capital expenditures, primarily related to natural gas infrastructure and electric transmission system reliability projects.
Cash Flows from Financing Activities
Cash provided by, or used in, financing activities is a result of our financing needs, which depend on the level of cash provided by operating activities, the level of cash used in investing activities, the level of dividends, and our long-term debt maturities, among other things.
Due to extremely cold winter weather in mid-February 2021, Ameren Missouri and Ameren Illinois experienced higher than anticipated commodity costs for purchased power and natural gas purchased for resale, which contributed to the acceleration of the timing of planned 2021 debt issuances.
Ameren’s cash provided by consolidated financing activities increased $682 million during the first six months of 2021, compared with the year-ago period. During the first six months of 2021, Ameren utilized proceeds from the issuance of $1,423 million of long-term debt for general corporate purposes, including to repay then-outstanding short-term debt, including short-term debt incurred in connection with the increased purchases for natural gas for resale and purchased power costs as a result of the significant increase in customer demand and prices for natural gas and electricity experienced in mid-February 2021 due to extremely cold weather, and to fund, in part, investing activities. During the first six months of 2021, Ameren repaid net short-term debt of $59 million. In addition, Ameren received aggregate cash proceeds of $258 million from the issuance of common stock under the ATM program, the DRPlus, and the 401(k) plan and the settlement of the remaining portion of the forward sale agreement. These proceeds were used to fund a portion of Ameren Missouri’s wind generation investments and to fund, in part, other investing activities. In comparison, during the first six months of 2020, Ameren utilized proceeds from the issuance of $1,263 million of long-term debt for general corporate purposes, including to repay then-outstanding short-term debt, including short-term debt incurred in connection with the repayment at maturity of long-term debt of $85 million and to fund, in part, investing activities. During the first six months of 2020, Ameren repaid net short-term debt of $320 million. During the first six months of 2021, Ameren paid common stock dividends of $282 million, compared with $244 million in the year-ago period, as a result of an increase in both the dividend rate and the number of common shares outstanding.
Ameren Missouri’s cash provided by financing activities increased $417 million during the first six months of 2021, compared with the year-ago period. During the first six months of 2021, Ameren Missouri utilized net proceeds from the issuance of long-term debt of $524 million to repay then-outstanding short-term debt, including short-term debt incurred in connection with the increased purchases for natural gas for resale and purchased power costs as a result of the significant increase in customer demand and prices for natural gas and electricity experienced in mid-February 2021 due to extremely cold weather. Additionally, proceeds from the issuance of long-term debt and capital contributions of $183 million from Ameren (parent) were used to fund, in part, investing activities. In comparison, during the first six months of 2020, Ameren Missouri utilized net proceeds from the issuance of $465 million of long-term debt to repay then-outstanding short-term debt, including short-term debt incurred in connection with the repayment at maturity of long-term debt of $85 million. During the first six months of 2020, Ameren Missouri repaid net short-term debt of $155 million, borrowed $65 million from the money pool, and used cash provided by financing activities to fund, in part, investing activities.
Ameren Illinois’ cash provided by financing activities increased $141 million during the first six months of 2021, compared with the year-ago period. During the first six months of 2021, Ameren Illinois utilized net proceeds from the issuance of long-term debt of $449 million to repay then-outstanding short-term debt, including short-term debt incurred in connection with the increased purchases for natural gas for resale and purchased power costs as a result of the significant increase in customer demand and prices for natural gas and electricity experienced in mid-February 2021 due to extremely cold weather, and to fund, in part, investing activities. In the first six months of 2021, Ameren Illinois received capital contributions of $70 million from Ameren (parent), compared with $350 million in the year-ago period. In addition, Ameren Illinois repaid $19 million of money pool borrowings and redeemed $13 million of preferred stock in the current year period. During the first six months of 2020, Ameren Illinois repaid net short-term debt of $12 million.
See Long-term Debt and Equity in this section for additional information on maturities and issuances of long-term debt, issuances of common stock, and redemptions of preferred stock.
Credit Facility Borrowings and Liquidity
The following table presents Ameren’s consolidated liquidity as of June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available at June 30, 2021
|
|
Ameren (parent) and Ameren Missouri:
|
|
|
|
|
|
|
Missouri Credit Agreement – borrowing capacity
|
|
|
|
|
$
|
1,200
|
|
|
|
|
|
|
|
|
|
Less: Ameren (parent) commercial paper outstanding
|
|
|
|
|
277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Ameren Missouri letters of credit
|
|
|
|
|
2
|
|
|
Missouri Credit Agreement – subtotal
|
|
|
|
|
921
|
|
|
Ameren (parent) and Ameren Illinois:
|
|
|
|
|
|
|
Illinois Credit Agreement – borrowing capacity
|
|
|
|
|
1,100
|
|
|
|
|
|
|
|
|
|
Less: Ameren (parent) commercial paper outstanding
|
|
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Ameren Illinois letters of credit
|
|
|
|
|
1
|
|
|
Illinois Credit Agreement – subtotal
|
|
|
|
|
945
|
|
|
Subtotal
|
|
|
|
|
$
|
1,866
|
|
|
Add: Cash and cash equivalents
|
|
|
|
|
99
|
|
|
Net Available Liquidity
|
|
|
|
|
$
|
1,965
|
|
The Credit Agreements, among other things, provide $2.3 billion of credit until maturity in December 2024. See Note 3 – Short-term Debt and Liquidity under Part I, Item 1, of this report for additional information on the Credit Agreements. During the six months ended June 30, 2021, Ameren (parent), Ameren Missouri, and Ameren Illinois each issued commercial paper. Borrowings under the Credit Agreements and commercial paper issuances are based upon available interest rates at that time of the borrowing or issuance.
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 pool, the Credit Agreements, or the commercial paper programs depending on which option has the lowest interest rates.
See Note 3 – Short-term Debt and Liquidity under Part I, Item 1, of this report for additional information on credit agreements, commercial paper issuances, Ameren’s money pool arrangements and related borrowings, and relevant interest rates.
The issuance of short-term debt securities by Ameren’s utility subsidiaries is subject to FERC approval under the Federal Power Act. In 2020, the FERC issued orders authorizing Ameren Missouri and Ameren Illinois to each issue up to $1 billion of short-term debt securities through March 2022 and September 2022, respectively. In July 2021, the FERC issued an order authorizing ATXI to issue up to $300 million of short-term debt securities, which expires in July 2023.
The Ameren Companies continually evaluate the adequacy and appropriateness of their liquidity arrangements for changing business 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 Ameren’s issuances (net of any issuance premiums or discounts) of long-term debt and equity, as well as maturities of long-term debt and redemptions of preferred stock for the six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month Issued, Redeemed, or Matured
|
|
2021
|
|
2020
|
|
|
Issuances of Long-term Debt
|
|
|
|
|
|
|
|
Ameren:
|
|
|
|
|
|
|
|
1.75% Senior unsecured notes due 2028
|
March
|
|
$
|
450
|
|
|
$
|
—
|
|
|
|
3.50% Senior unsecured notes due 2031
|
April
|
|
—
|
|
|
798
|
|
|
|
Ameren Missouri:
|
|
|
|
|
|
|
|
2.95% First mortgage bonds due 2030
|
March
|
|
—
|
|
|
465
|
|
|
|
2.15% First mortgage bonds due 2032 (green bonds)
|
June
|
|
524
|
|
|
—
|
|
|
|
Ameren Illinois:
|
|
|
|
|
|
|
|
2.90% First mortgage bonds due 2051 (green bonds)
|
June
|
|
349
|
|
|
|
|
|
0.375% First mortgage bonds due 2023
|
June
|
|
100
|
|
|
—
|
|
|
|
Total Ameren long-term debt issuances
|
|
|
$
|
1,423
|
|
|
$
|
1,263
|
|
|
|
Issuances of Common Stock
|
|
|
|
|
|
|
|
Ameren:
|
|
|
|
|
|
|
|
DRPlus and 401(k) (a)
|
Various
|
|
$
|
24
|
|
|
$
|
27
|
|
|
|
Forward sale agreement (b)
|
February
|
|
113
|
|
|
—
|
|
|
|
ATM program (c)
|
Various
|
|
121
|
|
|
—
|
|
|
|
Total Ameren common stock issuances (d)
|
|
|
$
|
258
|
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
|
Maturities of Long-term Debt
|
|
|
|
|
|
|
|
Ameren Missouri:
|
|
|
|
|
|
|
|
5.00% Senior secured notes due 2020
|
February
|
|
$
|
—
|
|
|
$
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Ameren long-term debt maturities
|
|
|
$
|
—
|
|
|
$
|
85
|
|
|
|
Redemptions of Preferred Stock
|
|
|
|
|
|
|
|
Ameren Illinois:
|
|
|
|
|
|
|
|
6.625% Series
|
March
|
|
$
|
12
|
|
|
$
|
—
|
|
|
|
7.75% Series
|
March
|
|
1
|
|
|
—
|
|
|
|
Total Ameren Illinois preferred stock redemptions
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
(a)Ameren issued a total of 0.3 million and 0.4 million shares of common stock under its DRPlus and 401(k) plan in the six months ended June 30, 2021 and 2020, respectively.
(b)Ameren issued 1.6 million shares of common stock to settle the remainder of the forward sale agreement.
(c)Ameren issued 1.4 million shares of common stock under the ATM program.
(d)Excludes 0.5 million and 0.5 million shares of common stock valued at $33 million and $38 million issued for no cash consideration in connection with stock-based compensation for the six months ended June 30, 2021 and 2020, respectively.
See Note 4 – Long-term Debt and Equity Financings under Part I, Item 1, of this report for additional information, including proceeds from issuances of long-term debt, the use of those proceeds, Ameren’s forward equity sale agreement, and the ATM program, as well as information on capital contributions received by Ameren Missouri and Ameren Illinois from Ameren (parent).
Indebtedness Provisions and Other Covenants
At June 30, 2021, the Ameren Companies were in compliance with the provisions and covenants contained in their credit agreements, indentures, and articles of incorporation, as applicable, and ATXI was in compliance with the provisions and covenants contained in its note purchase agreement. See Note 3 – Short-term Debt and Liquidity under Part I, Item 1, of this report and Note 4 – Short-term Debt and Liquidity and Note 5 – Long-term Debt and Equity Financings under Part II, Item 8, of the Form 10-K for a discussion of provisions, applicable cross-default provisions, and covenants contained in our credit agreements, in ATXI’s note purchase agreement, and in certain of the Ameren Companies’ indentures and articles of incorporation.
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. After 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 Ameren’s, Ameren Missouri’s, 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 of capital and adversely affect our ability to access the capital markets.
Dividends
The amount and timing of dividends payable on Ameren’s common stock are within the sole discretion of Ameren’s board of directors. Ameren’s board of directors has not set specific targets or payout parameters when declaring common stock dividends, but it considers various factors, including Ameren’s overall payout ratio, payout ratios of our peers, projected cash flow and potential future cash flow requirements, historical earnings and cash flow, projected earnings, impacts of regulatory 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.
See Note 4 – Short-term Debt and Liquidity and Note 5 – Long-term Debt and Equity Financings under Part II, Item 8, of the 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 of dividends in certain circumstances. At June 30, 2021, none of these 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 six months ended June 30, 2021 and 2020:
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Six Months
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2021
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2020
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Ameren
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$
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282
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$
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244
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ATXI
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32
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—
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Commitments
As of June 30, 2021, there have been no material changes other than in the ordinary course of business related to cash requirements arising from contractual obligations provided in Item 7 of the Form 10-K for the year ended December 31, 2020. See Long-term Debt and Equity section above for Ameren (parent), Ameren Missouri, and Ameren Illinois for debt issuances during the period ended June 30, 2021.
Off-balance-sheet Arrangements
At June 30, 2021, none of the Ameren Companies had any significant off-balance-sheet financing arrangements, other than variable interest entities. See Note 1 – Summary of Significant Accounting Policies under Part I, Item 1, of this report for further detail concerning variable interest entities.
Credit Ratings
Our credit ratings affect our liquidity, our access to the capital markets and credit markets, our cost of borrowing under our credit facilities and our commercial paper programs, and our collateral posting requirements under commodity contracts.
The following table presents the principal credit ratings by Moody’s and S&P, as applicable, effective on the date of this report:
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Moody’s
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S&P
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Ameren:
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Issuer/corporate credit rating
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Baa1
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BBB+
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Senior unsecured debt
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Baa1
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BBB
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Commercial paper
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P-2
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A-2
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Ameren Missouri:
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Issuer/corporate credit rating
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Baa1
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BBB+
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Secured debt
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A2
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A
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Senior unsecured debt
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Baa1
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Not Rated
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Commercial paper
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P-2
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A-2
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Ameren Illinois:
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Issuer/corporate credit rating
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A3
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BBB+
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Secured debt
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A1
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A
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Senior unsecured debt
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A3
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BBB+
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Commercial paper
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P-2
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A-2
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ATXI:
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Issuer credit rating
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A2
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Not Rated
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Senior unsecured debt
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A2
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Not Rated
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A credit rating is not a recommendation to buy, sell, or hold securities. It should be evaluated independently of any other rating. Ratings are subject to revision or withdrawal at any time by the rating organization.
Collateral Postings
Any weakening of our credit ratings may reduce access to capital and trigger additional collateral postings and prepayments. Such changes may also increase the cost of borrowing, resulting in an adverse effect on earnings. Cash collateral postings and prepayments made with external parties, including postings related to exchange-traded contracts, were $41 million for Ameren and Ameren Missouri and cash collateral posted by external parties were $24 million for Ameren and Ameren Illinois at June 30, 2021. A sub-investment-grade issuer or senior unsecured debt rating (below “Baa3” from Moody’s or below “BBB-” from S&P) at June 30, 2021, could have resulted in Ameren, Ameren Missouri, or Ameren Illinois being required to post additional collateral or other assurances for certain trade obligations amounting to $139 million, $116 million, and $23 million, respectively.
Changes in commodity prices could trigger additional collateral postings and prepayments. Based on credit ratings at June 30, 2021, if market prices were 15% higher or lower than June 30, 2021 levels in the next 12 months and 20% higher or lower thereafter through the end of the term of the commodity contracts, then Ameren, Ameren Missouri, or Ameren Illinois could be required to post an immaterial amount, compared to each company’s liquidity, of collateral or other assurances for certain trade obligations.
OUTLOOK
Below are some key trends, events, and uncertainties that may reasonably affect our results of operations, financial condition, or liquidity, as well as our ability to achieve strategic and financial objectives, for 2021 and beyond. The continued effect of the COVID-19 pandemic on our results of operations, financial position, and liquidity in subsequent periods will depend on its severity and longevity, future regulatory or legislative actions with respect thereto, and the resulting impact on business, economic, and capital market conditions. We continue to assess the impacts the COVID-19 pandemic is having on our businesses, including but not limited to impacts on our liquidity; demand for residential, commercial, and industrial electric and natural gas services; changes in deferred payment arrangements for customers; the timing and extent to which recovery of incremental costs incurred, net of savings, and forgone customer late fee revenues at Ameren Missouri is allowed by the MoPSC; changes in our ability to disconnect customers for nonpayment; bad debt expense; supply chain operations; the availability of our employees and contractors; counterparty credit; capital construction; infrastructure operations and maintenance; energy-efficiency programs; and pension valuations. For additional information regarding recent rate orders, lawsuits, and pending requests filed with state and federal regulatory commissions, including those discussed below, see Note 2 – Rate and Regulatory Matters under Part I, Item 1, of this report and Note 2 – Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K.
Operations
•In the first half of 2021, our sales volumes, which have been, and continue to be, affected by the COVID-19 pandemic, among other things, increased compared to the same period in 2020, excluding the estimated effects of weather and customer energy-efficiency programs. We continue to expect a gradual improvement in sales volumes in 2021, compared to 2020. Our customers’ payment for services has been adversely affected by the COVID-19 pandemic, which has caused our accounts receivable balances that are past due or that are a part of a deferred payment arrangement to be higher than normal historical levels. Because of their regulatory frameworks, Ameren Illinois’ and ATXI’s revenues are largely decoupled from changes in sales volumes. See the Results of Operations section above for additional information on our accounts receivable balances, Ameren Illinois’ electric and natural gas bad debt riders, and changes in Ameren Missouri’s sales volumes in the second quarter and first half of 2021, compared to the same periods in 2020. Additionally, see Note 2 – Rate and Regulatory Matters under Part I, Item 1, of this report and Note 2 – Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K for information on Ameren Missouri’s and Ameren Illinois’ reinstatement of customer disconnection and late fee charges for non-payment, accounting authority orders issued by the MoPSC related to Ameren Missouri's electric and natural gas services to allow Ameren Missouri to accumulate certain costs incurred, net of savings, and forgone customer late fee revenues related to the COVID-19 pandemic for consideration of recovery in the current electric and natural gas service regulatory rate reviews, and orders issued by the ICC in a service disconnection moratorium proceeding, which required Ameren Illinois to implement more flexible credit and collection practices and allowed for recovery of costs incurred related to the COVID-19 pandemic and forgone late fees.
•The PISA permits Ameren Missouri to defer and recover 85% of the depreciation expense and earn a return at the applicable WACC on investments in certain property, plant, and equipment placed in service, 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 of 20 years following a regulatory rate review. Additionally, under the RESRAM, Ameren Missouri is permitted to recover the 15% of depreciation expense not recovered under the PISA, and earn a return at the applicable WACC for investments in renewable generation plant placed in service to comply with Missouri’s renewable energy standard. Accumulated RESRAM deferrals earn carrying costs at short-term interest rates. The PISA and the RESRAM mitigate the effects of regulatory lag between regulatory rate reviews. Those investments not eligible for recovery under the PISA and the remaining 15% 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 of debt on PISA deferrals as an offset to interest charges, instead of using the applicable WACC, with the difference recognized in revenues when recovery of such deferrals is reflected in customer rates. As a result of the PISA election, additional provisions of the law apply to Ameren Missouri, including limitations on electric customer rate increases. Ameren Missouri does not expect to exceed these rate increase limitations in 2021. Both the rate increase limitation and the PISA are effective through December 2023, unless Ameren Missouri requests and the MoPSC approves an extension through December 2028.
•In 2018, the MoPSC issued an order approving Ameren Missouri’s MEEIA 2019 plan. The plan includes a portfolio of customer energy-efficiency programs through December 2022 and low-income customer energy-efficiency programs through December 2024, along with a rider. Ameren Missouri intends to invest $290 million over the life of the plan, including $90 million in 2021 and $70 million in 2022. 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 margins and the amounts collected from customers. In addition, the plan includes a performance incentive that provides Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy-efficiency goals. If the target goals were achieved for 2020, additional revenues of $10 million would be recognized in 2021, and, if target goals are achieved for 2021 and 2022, additional revenues of $24 million would be recognized in 2022. Ameren Missouri’s ability to achieve targeted goals could be affected by the COVID-19 pandemic. For the year ended December 31, 2020, Ameren Missouri recognized $6 million in revenues related to MEEIA performance incentives.
•In March 2021, Ameren Missouri filed a request with the MoPSC seeking approval to increase its annual revenues for electric service by $299 million. The MoPSC proceeding relating to the proposed electric service rate changes will take place over a period of up to 11 months, with a decision by the MoPSC expected by February 2022 and new rates effective by late February 2022. Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, or whether any rate change that may eventually be approved will be sufficient for Ameren Missouri to recover its costs and earn a reasonable return on its investments when the rate change goes into effect.
•In March 2020, the MoPSC issued an order in Ameren Missouri’s July 2019 electric service regulatory rate review, resulting in a decrease of $32 million to Ameren Missouri’s annual revenue requirement for electric retail service. The order also approved a change in rate design, which resulted in lower winter rates applied to May sales volumes and will result in higher summer rates applied to September sales volumes beginning in 2021. Previously, blended rates were applied to both months’ sales volumes. The year-over-year decrease to second quarter 2021 earnings, compared to the same period in 2020, from the effect of the change in rate design is estimated at approximately $45 million and is expected to largely reverse in the third quarter.
•Ameren Illinois and ATXI use a forward-looking rate calculation with an annual revenue requirement reconciliation for each company’s electric transmission business. Based on expected rate base growth and the currently allowed 10.52% ROE, which includes a 50 basis point incentive adder for participation in an RTO, the revenue requirements included in 2021 rates for Ameren Illinois’ and ATXI’s electric transmission businesses are $380 million and $200 million, respectively. These revenue requirements represent an increase in Ameren Illinois’ and ATXI’s revenue requirements of $67 million and $8 million, respectively, from the revenue requirements reflected in 2020 rates, primarily due to expected rate base growth. These rates will affect Ameren Illinois’ and ATXI’s cash receipts during 2021, but will not determine their respective electric transmission service operating revenues, which will instead be based on 2021 actual recoverable costs, rate base, and a return on rate base at the applicable WACC as calculated under the FERC formula ratemaking framework.
•The allowed base ROE for FERC-regulated transmission rates previously charged under the MISO tariff is the subject of an appeal filed with the United States Court of Appeals for the District of Columbia Circuit. Depending on the outcome of the appeal, the transmission rates charged during previous periods and the currently effective rates may be subject to change. Additionally, in March 2019, the FERC issued a Notice of Inquiry regarding its transmission incentives policy. In March 2020, the FERC issued a Notice of Proposed Rulemaking on its transmission incentives policy, which addressed many of the issues in the Notice of Inquiry on transmission incentives. The Notice of Proposed Rulemaking 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 revised the parameters for awarding incentives, while limiting the overall incentives to a cap of 250 basis points, among other things. In April 2021, the FERC issued a Supplemental Notice of Proposed Rulemaking, which proposes to modify the Notice of Proposed Rulemaking’s incentive for participation in an RTO by limiting this incentive for utilities that join an RTO to 50 basis points and only allowing them to earn the incentive for three years, among other things. If this proposal is included in a final rule, Ameren Illinois and ATXI would no longer be eligible for the 50 basis point RTO incentive adder, prospectively. The FERC is under no deadline to issue a final rule on this matter. Ameren is unable to predict the ultimate impact of any changes to the FERC’s incentives policy, or any further order on base ROE. A 50 basis point change in the FERC-allowed base ROE would affect Ameren’s and Ameren Illinois’ annual net income by an estimated $11 million and $7 million, respectively, based on each company’s 2021 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 to reflect actual recoverable costs incurred and a return at
the applicable WACC on year-end rate base. If a given year’s 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 reflect that year’s actual revenue requirement, independent of actual sales volumes. The regulatory balance is then collected from, or refunded to, customers within two years from the end of the year. By law, Ameren Illinois may opt in to the existing formula framework to establish annual customer rates effective through 2023. Pursuant to a March 2021 ICC order, once Ameren Illinois ceases to update customer rates under performance-based formula ratemaking, Ameren Illinois would be allowed to reconcile its revenue requirement for up to two annual periods in which customer rates had been established, but not yet reconciled, under the performance-based formula ratemaking framework. To utilize the reconciliation, Ameren Illinois is required to file a request to update its electric distribution service rates through a traditional regulatory rate review, which may be based on a future test year and would reflect a proposed ROE subject to ICC approval. That request would need to be filed by the end of March in the year following the last year in which Ameren Illinois opted to set annual rates via the performance-based formula ratemaking framework. Ameren Illinois would be required to file that request no later than March 2023. Pursuant to the order, and without legislative change or Ameren Illinois’ election to opt out of performance-based formula ratemaking, Ameren Illinois’ 2022 and 2023 revenues would reflect each year’s actual recoverable costs, year-end rate base, and a return at the applicable WACC, with the ROE component based on the annual average of the monthly yields of the 30-year United States Treasury bonds plus 580 basis points. The revenue requirement reconciliation adjustment would be collected from, or refunded to, customers within two years from the end of the reconciled year. By law, the decoupling provisions extend beyond the end of existing performance-based formula ratemaking, which ensures that Ameren Illinois’ electric distribution revenues authorized in a regulatory rate review are not affected by changes in sales volumes. Ameren Illinois is actively pursuing improvements to ratemaking applicable to rates established after the performance-based formula ratemaking is no longer utilized.
•In 2020, the ICC issued an order in Ameren Illinois’ annual update filing that approved a $49 million decrease in Ameren Illinois’ electric distribution service rates beginning in January 2021. Ameren Illinois’ 2021 electric distribution service revenues will be based on its 2021 actual recoverable costs, 2021 year-end rate base, and a return at the applicable WACC, with the ROE component based on the annual average of the monthly yields of the 30-year United States Treasury bonds plus 580 basis points. As of June 30, 2021, Ameren Illinois expects its 2021 electric distribution year-end rate base to be $3.7 billion. With or without extension of the formula ratemaking framework, the 2021 revenue requirement reconciliation adjustment will be collected from, or refunded to, customers in 2023. A 50 basis point change in the annual average of the monthly yields of the 30-year United States Treasury bonds would result in an estimated $10 million change in Ameren’s and Ameren Illinois’ annual net income, based on Ameren Illinois’ 2021 projected year-end rate base, including electric energy-efficiency investments. Ameren Illinois’ allowed ROE for the first half of 2021 was based on an estimated annual average of the monthly yields of the 30-year United States Treasury bonds of 2.31%.
•In July 2021, Ameren Illinois filed a revised request seeking to increase its annual revenues for electric distribution service by $60 million. An ICC decision in this proceeding is expected by December 2021, with new rates effective January 2022. These rates will affect Ameren Illinois' cash receipts during 2022, but will not affect electric distribution service revenues, which will be based on 2022 actual recoverable costs, 2022 year-end rate base, and a return at the applicable WACC as calculated under the Illinois performance-based formula ratemaking framework.
•In January 2021, the ICC issued an order in Ameren Illinois’ February 2020 natural gas delivery service regulatory rate review, which resulted in an increase to its annual revenues for natural gas delivery service of $76 million. The new rates became effective in January 2021. As a result of this order, the rate base under the QIP was reset to zero. Ameren Illinois used a 2021 future test year in this proceeding. The order also approved the implementation of a change in rate design, which concentrates more revenues in the winter heating season due to an increase in volumetric rates and a decrease in fixed customer rates. As such, the change in rate design will have an impact on interim period 2021 earnings, compared to 2020, but is not expected to materially affect annual earnings comparisons. The quarterly year-over-year increases/(decreases) to 2021 earnings, compared to the same periods in 2020, from the combined effect of the rate increase and the change in rate design are estimated at $17 million, $(7) million, and $7 million for the first quarter, third quarter, and fourth quarter comparisons, respectively.
•Pursuant to Illinois law, Ameren Illinois’ electric energy-efficiency investments are deferred as a regulatory asset and earn a return at the applicable WACC, with the ROE component based on the annual average of the monthly yields of the 30-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 of annual energy savings goals. Ameren Illinois plans to invest up to approximately $100 million per year in electric energy-efficiency programs through 2025. 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 if there 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 recovered through the electric distribution service performance-based formula ratemaking framework. In July 2021, the ICC issued an order approving Ameren Illinois’ energy-efficiency plan that includes annual investments in electric energy-efficiency programs up to approximately $100 million per year from 2022 through 2025.
•During its return to full power after the completion of the last refueling and maintenance outage in late December 2020, the Callaway Energy Center experienced a non-nuclear operating issue related to its generator. After replacement of certain key components of the generator, the energy center returned to service on August 4, 2021. The cost of generator repairs was approximately $60 million, which was largely capital expenditures. In April 2021, Ameren Missouri’s insurance claims were accepted by NEIL, which are expected to cover a significant portion of the capital expenditures and covered lost sales of up to $4.5 million weekly after March 17, 2021. Insurance recoveries related to lost sales were included in net energy costs under the FAC. Pursuant to a MoPSC February 2020 order, Ameren Missouri deferred, as a regulatory asset, a total of $39 million in maintenance expenses related to its scheduled fall 2020 outage, which it began to amortize in January 2021. The regulatory asset will be amortized until the completion of the next refueling and maintenance outage, which is scheduled for the spring of 2022. During an outage, depending on the availability of its other generation sources and the market prices for power, Ameren Missouri’s purchased power costs may increase and the amount of excess 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.
•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 of investments 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 of their customers. Ameren Missouri and Ameren Illinois continue to face cost recovery pressures, including limited economic growth in their service territories, economic impacts of the COVID-19 pandemic, 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 of the economy for efficiencies and as a means to address economy-wide CO2 emission concerns. We expect that increased investments, including expected future investments for environmental compliance, system reliability improvements, and new generation sources, will result in rate base and revenue growth but also higher depreciation and financing costs.
Liquidity and Capital Resources
•Our customers’ payment for our services has been adversely affected by the COVID-19 pandemic. See the Results of Operations section above for additional information on our accounts receivable balances. Further, our liquidity and our capital expenditure plans could be adversely affected by other impacts resulting from the COVID-19 pandemic, including but not limited to potential impacts on our ability to access the capital markets on reasonable terms when needed and the timing of tax payments and the utilization of tax credits. 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, see below.
•In February 2021, 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 2021. The plan is designed to upgrade Ameren Missouri’s electric infrastructure and includes investments that will upgrade the grid and accommodate more renewable energy. Investments under the plan are expected to total approximately $8.4 billion over the five-year period from 2021 through 2025, with expenditures largely recoverable under the PISA and the RESRAM. The planned investments in 2024 and 2025 are based on the assumption that Ameren Missouri requests and receives MoPSC approval of an extension of the PISA through December 2028.
•In connection with Ameren Missouri’s 2020 IRP, Ameren established a goal of achieving net-zero carbon emissions by 2050. Ameren is also targeting a 50% CO2 emission reduction by 2030 and an 85% reduction by 2040 from the 2005 level. The plan, which is subject to review by the MoPSC for compliance with Missouri law, targets cleaner and more diverse sources of energy generation, including solar, wind, hydro, and nuclear power, and supports increased investment in new energy technologies. It also includes expanding renewable sources by adding 3,100 MWs of renewable generation by the end of 2030 and a total of 5,400 MWs of renewable generation by 2040. These amounts include 700 MWs related to the High Prairie and Atchison renewable energy centers, which will support Ameren Missouri’s compliance with the state of Missouri’s requirement of achieving 15% of native load sales from renewable energy sources beginning in 2021. The plan also includes advancing the retirement dates of the Sioux and Rush Island coal-fired energy centers to 2028 and 2039, respectively, which are subject to the approval of a change in the assets’ depreciable lives by the MoPSC in Ameren Missouri’s current electric service regulatory rate review, the continued implementation of customer energy-efficiency programs, and the expectation that Ameren Missouri will seek NRC approval for an extension of the operating license for the Callaway Energy Center beyond its current 2044 expiration date. Additionally, the plan includes retiring the Meramec and Labadie coal-fired energy centers at the end of their useful lives (by 2022 and 2042, respectively). Ameren Missouri’s plan could be affected by, among other factors: Ameren Missouri’s ability to obtain certificates of convenience and necessity from the MoPSC, and any other required approvals for the addition of renewable resources, retirement of energy centers, and new or continued customer energy-efficiency programs; 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 COVID-19 pandemic, among other things; the availability of federal production and investment tax credits related to renewable energy and Ameren
Missouri’s ability to use such credits; the cost of wind, solar, and other renewable generation and storage technologies; changes in environmental regulations, including those related to carbon emissions; energy prices and demand; and Ameren Missouri’s ability to obtain timely interconnection agreements with the MISO or other RTOs at an acceptable cost. The next integrated resource plan is expected to be filed in September 2023.
•In July 2021, Missouri House Bill 734 was enacted, which will become effective in August 2021. The law allows Missouri electric utility companies to petition the MoPSC for a financing order to authorize the issuance of securitized utility tariff bonds to finance the cost of retiring coal-fired energy centers, including the repayment of existing debt.
•Through 2025, 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 $17.8 billion (Ameren Missouri – up to $9.3 billion; Ameren Illinois – up to $8.2 billion; ATXI – up to $0.2 billion) of capital expenditures during the period from 2021 through 2025. Ameren’s and Ameren Missouri’s estimates include 300 MWs of wind generation at the Atchison Renewable Energy Center, but exclude incremental renewable generation investment opportunities of 1,200 MWs by 2025, which are included in Ameren Missouri’s 2020 IRP. As of the date of this filing, no regulatory approvals have been requested related to these opportunities. These planned investments are based on the assumption of continued constructive regulatory frameworks, including an assumption that Ameren Missouri requests and receives MoPSC approval of an extension of the PISA through December 2028.
•Environmental regulations, including those related to CO2 emissions, or other actions taken by the EPA or state regulators, or requirements that may result from the NSR and Clean Air Act Litigation discussed in Note 9 – Commitments and Contingencies under Part I, Item 1, of this report, could result in significant increases in capital expenditures and operating costs. Regulations enacted by a prior federal administration can be reviewed and repealed, and replacement or alternative regulations can be proposed or adopted by the current federal administration including the EPA. The ultimate implementation of any of these regulations, as well as the timing of any such implementation, is uncertain. However, the individual or combined effects of existing and new environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration of some of Ameren Missouri’s coal-fired energy centers. Ameren Missouri’s capital expenditures are subject to MoPSC prudence reviews, which could result in cost disallowances as well as regulatory lag. The cost of Ameren 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. Ameren’s and Ameren Missouri’s earnings could benefit from increased investment to comply with environmental regulations if those 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 of credit 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, of this report and Note 4 – Short-term Debt and Liquidity under Part II, Item 8, in the Form 10-K for additional information regarding the Credit Agreements. The Ameren Companies have no material maturities of long-term debt until 2022. With the recently completed Ameren (parent), Ameren Missouri, and Ameren Illinois debt issuances and availability under the Credit Agreements, as well as the proceeds from the recent settlement of the forward sale agreement and the ATM program sales, Ameren, Ameren Missouri, and Ameren Illinois believe that their liquidity is adequate given their expected operating cash flows, capital expenditures, and financing plans. The Ameren Companies continue to monitor the effect of the COVID-19 pandemic on their liquidity. 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 funding plan for capital expenditures, 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 2025. Ameren expects these issuances to provide equity of about $100 million annually. In addition, Ameren established an ATM program under which Ameren may offer and sell from time to time up to $750 million of its common stock, subject to market conditions and other factors. Ameren plans to issue approximately $30 million of equity in the second half of 2021 and approximately $300 million each year from 2022 to 2025 in addition to issuances under the DRPlus and employee benefit plans. Ameren expects its equity to total capitalization ratio to be approximately 45% through December 31, 2025, 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).
•As of June 30, 2021, Ameren had $105 million in tax benefits from federal and state income tax credit carryforwards and $85 million in tax benefits from federal and state net operating loss carryforwards, which will be utilized in future periods. Ameren expects federal income tax payments at the required minimum levels from 2021 to 2025 resulting from the anticipated use of production tax credits that
will be generated by Ameren Missouri’s High Prairie and Atchison renewable energy centers, existing tax net operating losses, tax credit carryforwards, tax overpayments, and outstanding refunds.
•As a result of the significant increase in customer demand and prices for natural gas and electricity experienced in mid-February 2021 due to extremely cold weather, for the month of February 2021, Ameren Missouri and Ameren Illinois had under-recovered commodity costs (Ameren Missouri - PGA $53 million, FAC $50 million; Ameren Illinois - PGA $221 million). Ameren Missouri’s PGA and FAC under-recoveries are designed to be collected from customers over 12 months beginning November 2021 and eight months beginning October 2021, respectively. Longer recovery periods may be sought by Ameren Missouri or imposed by the MoPSC to lessen the impact on customer rates. Ameren Illinois’ PGA under-recovery is being collected from customers over 12 months beginning April 2021, but the collection of the remaining balance may be extended to a new 12-month period at Ameren Illinois’ election to lessen the impact on customer rates.
The above items could have a material impact on our results of operations, financial position, and liquidity. Additionally, in the ordinary course of business, we evaluate strategies to enhance our results of operations, financial position, and liquidity. These strategies may include acquisitions, divestitures, opportunities to reduce costs or increase revenues, and other strategic initiatives to increase Ameren’s shareholder value. We are unable to predict which, if any, of these initiatives will be executed. The execution of these initiatives may have a material impact on our future results of operations, financial position, or liquidity.
REGULATORY MATTERS
See Note 2 – Rate and Regulatory Matters under Part I, Item 1, of this report.
