Powering Growth 2014 RESULTS AND EARNINGS GUIDANCE 2.25.15 2014 - - PowerPoint PPT Presentation

Powering Growth

2014 RESULTS AND EARNINGS GUIDANCE

2.25.15

2014 Results and Earnings Guidance

2

Cautionary Statements

Regulation G Statement In this presentation, Ameren has presented free cash flow, which is a non-GAAP measure. Ameren calculates free cash flow by subtracting its cash flows from investing activities (which include capital expenditures), dividends on common stock, and dividends paid to noncontrolling interest holders from its cash flows from operating activities. Ameren uses free cash flow internally and when communicating with analysts and investors to measure its ability to generate cash. Forward-looking Statements Statements in this presentation not based on historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Ameren is providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. In addition to factors discussed in this presentation, Ameren’s Annual Report on Form 10-K for the year ended December 31, 2013, and its other reports filed with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 contain a list of factors and a discussion of risks which could cause actual results to differ materially from management expectations suggested in such “forward-looking” statements. All “forward-looking” statements included in this presentation are based upon information presently available, and Ameren, except to the extent required by the federal securities laws, undertakes no

• bligation to update or revise publicly any “forward-looking” statements to reflect new information or current events.

Earnings Guidance In this presentation, Ameren has presented earnings guidance and growth expectations. The guidance assumes normal temperatures for 2015 and, along with the growth expectations, is subject to the effects of, among other things, changes in 30-year U.S. Treasury bond yields; regulatory decisions and legislative actions; energy center and energy delivery operations; energy, economic, capital and credit market conditions; severe storms; unusual or otherwise unexpected gains or losses; and other risks and uncertainties outlined,

• r referred to, in the Forward-looking Statements section of this presentation and in Ameren’s periodic reports filed with the Securities

and Exchange Commission.

Business Update

Warner Baxter

Chairman, President and Chief Executive Officer Ameren Corp.

2014 Results and Earnings Guidance

$2.10 $2.40 2013 2014

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2014 Earnings Summary

Strong 2014 earnings growth primarily driven by:

• Increased Illinois electric delivery and FERC2-regulated

electric transmission earnings under formula ratemaking

– Driven by infrastructure investments made to serve customers

• Increased rates for Illinois natural gas delivery effective
• Jan. 2014

– Driven by infrastructure investments and costs to serve customers

• Decreased interest charges
• Substantial elimination of parent company costs previously

allocated to divested merchant generation business

• Absence, in 2014, of Missouri fuel adjustment clause-

related charge in 2013

1 Earnings per share from continuing operations. 2 Federal Energy Regulatory Commission.

2014 vs. 2013 Diluted EPS1

2014 Results and Earnings Guidance

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Executing Our Strategy in 2014

• Investing in and operating our utilities in a manner consistent with existing regulatory

frameworks

– Invested more than $1 billion in FERC-regulated electric transmission and Illinois electric and natural gas delivery infrastructure – Successfully completed key Missouri infrastructure projects in a timely fashion – Achieved constructive outcome in Illinois electric delivery formula rate case – Relentlessly focused on operational improvement and disciplined cost management

• Enhancing regulatory frameworks and advocating for responsible energy policies

– Illinois General Assembly passed legislation extending electric formula rates by two years through 2019

• Legislation submitted to Governor

– Aggressively advocated for pragmatic solutions to mitigate rate impacts and reliability risks of EPA’s1 proposed Clean Power Plan

• Creating and capitalizing on opportunities for investment for the benefit of our customers

and shareholders

– Filed updated Missouri Integrated Resource Plan that supports investment in a cleaner, more fuel- diverse generation portfolio – Identified additional transmission investment opportunities – Continue to move forward on Illinois Modernization Action Plan

1 U.S. Environmental Protection Agency

2014 Results and Earnings Guidance

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Executing Our Strategy in 2014

Delivered positive results for both customers and shareholders

• Operating results

– Solid safety performance – Strong electric distribution system reliability – Continued solid base load energy center performance – Electric rates remained well below regional and national averages – Improved customer satisfaction

• Financial results

– Strong earnings growth – Earned higher return on average common equity – Increased dividend – Maintained financial strength and flexibility

2014 Results and Earnings Guidance

$2.40 $2.45 $2.65 2014 2015E

2014 vs. 2015 Diluted EPS

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2015 Earnings Guidance

Expect solid 2015 earnings growth primarily driven by:

• Increased investment in FERC-regulated

electric transmission and Illinois electric delivery infrastructure under formula ratemaking

• Absence of Callaway refueling and

maintenance outage

• Higher Missouri electric service rates
• Continued disciplined cost management

1 Weather-normalized 2014 EPS were ~$2.37 per share. See pg. 13 for estimated impact of weather in 2014.

1

2015 Diluted EPS Guidance Range of $2.45 to $2.65

2014 Results and Earnings Guidance

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Executing Our Strategy in 2015

Key Focus Areas:

FERC-regulated electric transmission

• Advance existing projects, including Illinois Rivers
• Pursue additional projects that enhance reliability, safety and efficiency
• Working for constructive outcome in MISO1 ROE2 complaint cases; FERC approved

ROE adder of up to 50 basis points for RTO participation effective Jan. 6, 2015

Illinois electric and natural gas delivery

• Execute Illinois infrastructure Modernization Action Plan
• Advocate for legislation extending Illinois formula rates
• Successfully advance Illinois gas delivery rate increase request
• Begin use of Illinois gas infrastructure rider

Missouri

• Achieve constructive outcome in Missouri electric rate case
• Advocate for modernized regulatory framework to support upgrading of infrastructure
• Gain approval of 2016-2018 Missouri energy efficiency plan

Ameren-wide

• Advocate for responsible energy policies, including EPA carbon emission rules
• Relentlessly improve operating performance, including disciplined cost management

1 Midcontinent Independent System Operator. 2 Return on Equity.

2014 Results and Earnings Guidance

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Long-Term Total Return Outlook

• Reaffirm 7% to 10% compound annual EPS growth

from 2013 through 20181

– Primarily driven by strong rate base growth – Outlook accommodates range of Treasury rates, sales growth, spending levels and regulatory developments

• Expect solid 6% compound annual rate base growth

from 2014 through 2019 driven by:

– Strong pipeline of investments to benefit customers and shareholders – Allocation of discretionary capital to regulatory frameworks with fair, predictable and timely cost recovery – Particular focus on reliability, efficiency and safety projects at FERC-regulated electric transmission and Modernization Action Plan at Illinois electric and gas delivery businesses

• Continue to deliver a solid dividend

1 From continuing operations. 2 Reflects year-end rate base except for FERC-regulated transmission, which is average rate base. Includes construction

work in progress for Ameren Transmission Company of Illinois’ (ATXI) projects.

3 Ameren Illinois and ATXI. Excludes Ameren Missouri transmission, which is included in bundled Missouri rates. 4 Compound annual growth rate.

2014 to 2019E Regulated Infrastructure Rate Base2

$7.2 $8.0 $2.3 $3.0 $0.9 $3.0 $11.5 $15.5

2014 2019E ($ Billions)

Ameren Illinois Gas Delivery FERC-Regulated Transmission Ameren Illinois Electric Delivery Ameren Missouri

3

$1.1 $1.5

'14-'19E

6% 27% 5% 2% 6%

5-Yr Rate Base CAGR4

Financial and Regulatory Update

Marty Lyons

Executive Vice President and Chief Financial Officer, Ameren Corp.

2014 Results and Earnings Guidance

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2014 Earnings Analysis

1 From continuing operations. 2 Excludes amounts incorporated into Illinois electric delivery and FERC-regulated electric transmission formula ratemaking. 3 Illinois Commerce Commission.

Key Drivers of Earnings Variance:

 Increased Illinois electric delivery and FERC-regulated electric transmission earnings: +$0.11

– Includes reserve for potential reduction in allowed ROE

 Increased Illinois natural gas delivery service rates: +$0.08  Decreased interest charges2: +$0.08  ICC’s3 2014 decision allowing recovery of the majority of debt redemption costs initially disallowed and charged to earnings in 2013: +$0.07  Absence of 2013 Missouri fuel adjustment clause-related charge: +$0.07  Colder winter temperatures, largely offset by milder summer: ~+$0.01  Increased depreciation and amortization expenses2: $(0.05)  Higher effective income tax rate: $(0.04)  Increased other operations and maintenance costs2: $(0.03)

– Increased utility costs partially offset by lower parent costs

$2.10 $2.40 2013 2014

2013 vs. 2014 Diluted EPS1

2014 Results and Earnings Guidance

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Select Pending Regulatory Matters

Missouri Public Service Commission

• Updated request for increase in

electric service rates

– ~$190 million annual increase reflecting true-up through Dec. 31, 2014 and Jan. 1, 2015 and partial settlement filed Feb. 23, 2015

• Net energy costs1: ~$100 million
• Other costs: ~$90 million

– ROE: 10.4% – Rate base: ~$7.0 billion – Equity ratio: 51.8% – MoPSC2 decision expected by May 2015, with new rates effective by early June 2015

Illinois Commerce Commission

• Filed with ICC for $53 million annual

natural gas delivery rate increase

– Based on future test year ended

• Dec. 31, 2016

– Includes decoupling mechanism that permits collection of revenue requirement from residential and small non-residential customers independent of sales volume fluctuations – Expect decision by Dec. 2015, with new rates effective by Jan. 2016

Federal Energy Regulatory Commission

• Complaint cases seek to reduce

Ameren Illinois’ and ATXI’s transmission service allowed base ROE of 12.38% retroactive to

• Nov. 2013 filing date

– FERC approved ROE adder of up to 50 basis points for RTO participation effective Jan. 6, 2015

• Collection deferred until complaint

cases are resolved

• Subject to zone of reasonableness

– Procedural schedule for initial case:

• Hearings begin Aug. 17, 2015
• Initial ALJ3 order by Nov. 30, 2015
• Final FERC order expected in 2016

1 Net energy costs include fuel and purchased power costs, including transportation charges and revenues,

net of off-system sales

2 Missouri Public Service Commission. 3 Administrative Law Judge.

2014 Results and Earnings Guidance

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2015 Earnings Guidance: Key Drivers and Assumptions

2015 Diluted EPS Guidance Range of $2.45 to $2.65

1 Annualized EPS impact of 50 basis point move in ROE changes EPS by ~$0.075.

FERC-Regulated Electric Transmission

 Higher earnings under formula ratemaking

– Higher avg. est. rate base: ~$1.4 billion compared to ~$0.9 billion in 2014 – Includes reserve for potential reduction in allowed ROE but also incorporates 50 basis point adder effective Jan. 6, 2015 – 50 basis point move in ROE changes EPS by ~$0.015

Ameren Illinois Electric Delivery

 Higher electric delivery service earnings under formula ratemaking

– Year-end est. rate base: ~$2.39 billion compared to $2.25 billion in 2014 – Midpoint ROE of 8.8% based on forecasted 2015 30-year avg. Treasury yield of 3.0%. – 50 basis point move in ROE changes EPS by ~$0.025

 Absence of 2014 reversal of debt redemption costs disallowance: $(0.03)

Ameren Missouri

 No Callaway refueling outage: +$0.08  Higher electric service rates expected in early June 2015

– 50 basis point move in ROE changes EPS by ~$0.0451 for partial year

 Regulatory lag, in 1st half 2015, related to major projects placed in service in 2014

 Return to normal temperatures: ~($0.03)

2014 Results and Earnings Guidance

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2015 Earnings Guidance: Key Drivers and Assumptions, Cont’d

Parent and Other

 Lower interest charges

– Full-year of savings related to May 2014 maturity of 8.875% senior notes, which was funded with lower cost, short-term debt

Consolidated

 Lower estimated effective income tax rate of ~38% compared to ~39% in 2014  Average basic common shares outstanding unchanged at 242.6 million

2015 Diluted EPS Guidance Range of $2.45 to $2.65

2014 Results and Earnings Guidance

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2015 Cash Flow Guidance

2015 Capital Expenditures

$710 $580 $670 $1,960

2015E ($ millions)

FERC-Regulated Transmission Ameren Illinois Electric and Gas Delivery Ameren Missouri

1 Approximate amount incorporating current common dividend rate. Amount and timing of common dividends are within

the sole discretion of Ameren’s board of directors.

($ millions) 2015 Guidance

Net cash provided by operating activities $ 1,940 Capital expenditures (1,960) Other cash from investing activities (80) Dividends: common and preferred1 (400) Free cash flow $ (500)

• Maturities of long-term debt

$ (114)

• Planned issuances of long-term debt

$ 500

2014 Results and Earnings Guidance

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2015-2019 Planned Capital Expenditures and Expected Funding

Expected Funding:

• Return of capital through depreciation in rates
• Retained earnings
• ~$1.1-$1.2 billion of income tax deferrals and tax assets

– Income tax deferrals driven primarily by capital expenditures – Includes ~$715 million of tax assets at year-end 2014

• Net operating losses, tax credit carryforwards, expected tax

refunds and state over-payments

• ~$440 million of this at parent company
• Expected to be realized into 2017
• No public equity issuances expected through 2019
• Use of DRIP2/401(k) will be evaluated through period
• Debt financing
• Capitalization target: ~50% equity

Ameren Missouri $3.7 B 41% Ameren Illinois Electric and Gas Delivery $2.9 B 33% Ameren Illinois Transmission $1.0 B 11% Ameren Transmission Company of Illinois $1.3 B 15%

$8.9 Billion of Regulated Infrastructure Investment1 2015-2019

1 Dollars reflect mid-points of five-year spending range rounded to nearest $100 million. 2 Dividend reinvestment and direct stock purchase plan.

2014 Results and Earnings Guidance

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FERC-Regulated Electric Transmission

Planned $2.3 billion investment – 2015-2019

• $1.3 billion of regional multi-value projects at ATXI
• $1.0 billion of local reliability and connecting portions of regional

multi-value projects at Ameren Illinois

Total Multi-value Project Costs Illinois Rivers Project - $1.4 billion

• ATXI ~$1.3 billion; Ameren Illinois ~$100 million
• Under construction; expect to complete in 2019

Spoon River Project - $150 million

• ATXI ~$145 million; Ameren Illinois ~$5 million
• Requested Certificate of Public Convenience and Necessity at ICC

and expect decision in Q3 2015; expect to complete in 2018

Mark Twain Project - $225 million

• 100% ATXI project
• Plan to file for MoPSC Certificate of Public Convenience and

Necessity in Q2 2015; expect to complete in 2018

Regional Multi-Value Projects

2014 Results and Earnings Guidance

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Summary

Delivered strong earnings growth in 2014 Successfully executing our strategy Strong long-term growth outlook

• Expect solid EPS growth in 2015, compared to 2014
• Reaffirm 7% to 10% compound annual EPS1 growth rate from 2013 through 2018
• Expect 6% compound annual rate base growth from 2014 through 2019 driven by:

– Allocating discretionary capital to modern, constructive regulatory frameworks – Capitalizing on strong long-term investment opportunities

Attractive dividend

• Current dividend of $1.642 per share provides 3.8%3 yield
• Above average yield compared to regulated utility peers

1 From continuing operations. 2 Annualized equivalent rate. 3 Based on Feb. 24, 2015 closing share price.

Appendix

2014 Results and Earnings Guidance

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Pending Missouri Electric Rate Case

• ~$190 million updated annual rate increase request reflecting

true-up through Dec. 31, 2014 and Jan. 1, 2015 and partial settlement filed Feb. 23, 2015 pending at MoPSC

– Net energy costs: ~$100 million – Other costs: ~$90 million – Rate base: ~$7.0B – ROE: 10.4% – Equity ratio: 51.8% – MoPSC decision expected by May 2015, with new rates effective by early June 2015

• Select MoPSC Staff and Intervenor recommendations:

– MoPSC staff: ROE of 9.25% (midpoint of 9.0% to 9.5% range) – MIEC1 and OPC2: Midpoint ROEs of 9.3% and 9.01% (range of 8.7% to 9.6%) – MIEC: Move recovery of transmission costs from fuel adjustment clause to base rates and make various adjustments to income taxes – OPC: Eliminate fuel adjustment clause; but if retained, change sharing to 90/10% from 95/5% – Eliminate vegetation management, infrastructure inspection and storm cost trackers

RATE CASE SCHEDULE:

• Feb. 23, 2015

Hearings began

May 2015

MoPSC decision expected

June 2015

New rates effective

1 Missouri Industrial Energy Consumers. 2 Missouri Office of the Public Counsel.

2014 Results and Earnings Guidance

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Pending Illinois Natural Gas Delivery Rate Filing

• On Jan. 23, 2015, filed with ICC for ~$53 million annual

natural gas delivery rate increase based on:

– Return on equity (ROE): 10.25% (mid-point of 10%-10.5% request) – Equity ratio: 50% – Rate base: $1.19 billion – Future test year ended Dec. 31, 2016 – ICC decision required by Dec. 2015 with new rates effective Jan. 2016

• Drivers of rate increase request:

– Infrastructure investments, including depreciation and returns: +$35 million – Gas storage, transmission, distribution and other operating expenses: +$25 million – Cost of debt and capital structure: $(5) million – Other: $(2) million

• Requested decoupling mechanism

– Permits collection of revenue requirement from residential and small non- residential customers independent of sales volume fluctuations

2014 Results and Earnings Guidance

Solid Operating Performance

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Average Residential Electricity Prices1

Electric rates are low Safety has improved Delivery system reliability has improved Generating plant performance remains strong BETTER BETTER BETTER BETTER BETTER 50 100 150 200 400 600 Lost Workday Cases Recordable Cases Recordable Cases Lost Workday Away Cases 60 120 180 0.6 1.0 1.4 1.8 Outage duration (min.) Outage frequency (year) SAIFI SAIDI 0% 20% 40% 60% 80% 100% Net Capacity Factor Equivalent Availability Factor

Distribution System Reliability2 Baseload Energy Center Performance Safety Performance

5 10 15 20 25 30 ¢/KWh

1 Source: “2014 EEI Typical Bills and Average Rates Report” for the twelve month period ending 06/30/2014. Includes major metropolitan

areas for which EEI data is available.

2 As measured by System Average Interruption Duration Index (SAIDI), which measures the average outage duration for each customer

served and System Average Interruption Frequency Index (SAIFI), which measures total number of interruptions per customer served.

2014 Results and Earnings Guidance

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Select Regulatory Matters

Illinois Commerce Commission

• Request for Certificate of Public Convenience and Necessity for ATXI’s Spoon River transmission project:

Docket No. 14-0514

• 2016 natural gas rate case: Docket No. not yet assigned
• Website: http://www.icc.illinois.gov

Missouri Public Service Commission

• 2014 electric rate case: Docket No. ER-2014-0258
• 2016-2018 Energy Efficiency Plan: Docket No. EO-2015-0055
• Request for Certificate of Public Convenience and Necessity for 7-mile Missouri portion of ATXI’s Illinois

Rivers transmission project: Docket No. EA-2015-0145

• Website: https://www.efis.psc.mo.gov/mpsc/DocketSheet.html

Federal Energy Regulatory Commission

• Complaints challenging MISO base ROE: Docket Nos. EL14-12-002 and EL15-45
• Ameren Illinois electric transmission case related to acquisition premiums: Docket No. AC11-46
• Website: http://elibrary.ferc.gov/idmws/search/fercadvsearch.asp

Other Filings

• ATXI 2015 Projected Attachment O: http://www.oasis.oati.com/AMRN/
• Ameren Illinois 2015 Projected Attachment O: http://www.oasis.oati.com/AMRN/

2014 Results and Earnings Guidance

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Investor Relations Calendar

MARCH 2015

SUN. MON. TUES. WED. THUR. FRI. SAT.

1 2 3 4 5 6 7

UBS Conf. Morgan Stanley Conf.

8 9 10 11 12 13 14

European Meetings European Meetings European Meetings European Meetings Q4 Quiet Period

15 16 17 18 19 20 21

Barclays Conf.

22 23 24 25 26 27 28 29 30 31

APRIL 2015

SUN. MON. TUES. WED. THUR. FRI. SAT.

1 2 3 4

MUFG Conf.

5 6 7 8 9 10 11

Q1 Quiet Period

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

• Mar. 4

UBS Natural Gas, Electric Power and MLP Conference

• Mar. 5

Morgan Stanley MLP/Diversified Natural Gas, Utilities & Clean Tech Conference

• Mar. 9-12 European Investor Meetings
• Mar. 18

Barclays Atlanta Utilities Conference

• Apr. 2

MUFG Spring Utility Day (Fixed Income)

• Apr. 8

Q1 2015 quiet period begins

• May 7

Q1 2015 earnings release and call