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    ameren InvestorMeetings_0308 ameren InvestorMeetings_0308 Presentation Transcript

    • Investor Meetings March 2008 investing for our future. 1
    • Warner Baxter Executive Vice President & Chief Financial Officer Bruce Steinke Vice President and Controller investing for our future. 2
    • Cautionary Statements All forecasted numbers in this presentation are issued and effective as of January 17, 2008 Regulation G Statement Ameren has presented certain information in this presentation on a diluted cents per share basis. These diluted per share amounts reflect certain factors that directly impact Ameren’s total earnings per share. The non-GAAP earnings per share and non-GAAP earnings per share guidance excludes one or more of the following: costs related to severe January 2007 storms, abnormal weather, the earnings impact of the settlement agreement among parties in Illinois for comprehensive electric rate relief and customer assistance, the reversal of accruals made in 2006 for low-income energy assistance and energy efficiency program funding commitments in Illinois and a March 2007 FERC order, which retroactively adjusted prior years’ regional transmission organization costs. Ameren believes this information is useful because it enables readers to better understand the impact of these factors on Ameren’s results of operations and earnings per share. In providing non-GAAP earnings guidance and a non-GAAP earnings growth forecast, there could be differences between non-GAAP earnings and earnings prepared in accordance with Generally Accepted Accounting Principles (GAAP) for unusual items, such as the 2007 Illinois electric settlement and the impact of abnormal weather. Except for the Illinois settlement, Ameren is not able to estimate the impact, if any, on future GAAP earnings of these items. Therefore, Ameren is not able to provide a corresponding GAAP equivalent for its earnings growth rate forecast. Forward-looking Statements Ameren’s consolidated and segment earnings guidance excludes one or more of the following: costs related to severe January 2007 storms, abnormal weather, the earnings impact of the settlement agreement among parties in Illinois for comprehensive electric rate relief and customer assistance, the reversal of accruals made in 2006 for low-income energy assistance and energy efficiency program funding commitments in Illinois and a March 2007 FERC order, which retroactively adjusted prior years’ regional transmission organization costs. Ameren’s earnings guidance assumes normal weather and is subject to, among other things, regulatory and legislative decisions, plant operations, energy market and economic conditions, severe storms, unusual or otherwise unexpected gains or losses and other risks and uncertainties outlined in Ameren’s Forward-looking Statements in its news release issued today and in the Forward- looking Statements and Risk Factors sections in its periodic filings with the Securities and Exchange Commission. investing for our future. 3
    • Ameren Introduction ● Focused on the Basics ● Regional electric and gas utility • Missouri regulated generation, transmission and CILCO delivery business • Illinois regulated transmission and CIPS delivery businesses UE IP • Non-rate-regulated generation business ● NYSE-listed under AEE • Market cap. ~ $9 billion • Component of the S&P 500 investing for our future. 4
    • Ameren’s Business Plan ● Achieve operational excellence in all Meaningful aspects of our business investment in serving ● Improve our customer service, customers satisfaction and image ● Demonstrate environmental Fair leadership return High quality on service ● Improve regulatory frameworks and investment returns ● Optimize non-rate-regulated generation business High customer ● Maximize the value of our satisfaction shareholders’ investment investing for our future. 5
    • Financial Outlook ● Near-term regulatory lag • Rising cost environment (O&M and capital) • Fuel • Reliability projects • Environmental projects • Depreciation • Finance costs • No significant rate adjustments until late 2008 and early 2009 ● Significant longer-term earnings growth opportunities investing for our future. 6
    • Financial Outlook Opportunities ● Regulated rates reflecting more current costs ● Increasing rate base investment ● Earning fair returns in regulated operations ● Position non-rate-regulated business for earnings growth • Improved plant performance • Effective marketing, trading and hedging • EPS contribution expected to be relatively flat through 2010 • Expectations could change meaningfully depending upon future power, capacity and fuel prices • Greater prospects for tightening power markets • Ancillary and capacity market development Bottom line: strong underlying value Straight-forward strategy to deliver value investing for our future. 7
    • Financial Objectives ● Targeting 4% to 6% average non-GAAP EPS growth from normalized 2007 base to 2010 • Driven primarily by regulated business growth • Goal of ~$4 per share by 2011 and higher in 2012 ● Overall percentage of earnings contribution by regulated business segments forecasted to increase and approximate current annual dividend by the end of 2010 ● Focused on providing a strong, sustainable dividend • Current yield of ~6% • Cash flows do not support near-term change • Focus on future dividend growth ● Targeting long-term total annual shareholder return of ~10% ● Proven and lower-risk strategies to achieve these results investing for our future. 8
    • Long-Range EPS Expectations 2007 to 2010 CAGR of 4% to 6%, continued growth thereafter >$4.00 ~$3.70 Non-GAAP Non-GAAP $3.25 - $3.35 $2.80 - $3.20 Weather-Normalized $3.24 GAAP $2.90 - $3.00 GAAP $2.68 - $3.08 2007 2008 2009 2010 2011 2012 GAAP Non-GAAP investing for our future. 9
    • Current Regulated Returns Support Earnings Growth ● Missouri Regulated Operations(a) 2007 non-GAAP ROE = 9% Estimated 2008 non-GAAP ROE = 7% • Allowed return in last rate case was 10.2%. Every 1% equals approximately $50 million of revenues ● Illinois Regulated Operations(b) 2007 non-GAAP ROE = 5% Estimated 2008 non-GAAP ROE = 5% • Allowed return in last rate case was 10%. Every 1% equals approximately $27 million of revenues Based on actual and projected financial results excluding non-GAAP items (a) Based on actual and projected financial results excluding non-GAAP items and (b) impact of goodwill associated with CILCORP and Illinois Power acquisitions investing for our future. 10
    • Regulated Investment Plans Support Earnings Growth Rate Base Growth ($ in Millions) $9,000 Missouri Rate Base $8,000 $7,000 Missouri(a) $6,000 Electric $5,744 $5,000 Gas 218 $4,000 Subtotal $5,962 $3,000 $2,000 $1,000 Illinois(b) $0 Distribution $2,120 2006 2007 2008 2009 2010 2011 2012 $4,500 Transmission 245 Illinois $4,000 Gas 928 $3,500 Subtotal $3,293 $3,000 $2,500 $2,000 TOTAL $9,255 $1,500 $1,000 (a) At December 31, 2007 $500 (b) At December 31, 2006, $0 as submitted in current rate case filings 2006 2007 2008 2009 2010 2011 2012 investing for our future. 11
    • Illinois Rate Filings ● Illinois electric and gas delivery service rate cases filed November 2, 2007 • Decision by end of September 2008 ● Requested revenue increase of $247 million ($180 million electric, $67 million gas) • Electric: 11% ROE; 51% to 53% equity; rate base = $2.1 billion • IP residential increase capped at 9.9% in year 1 • Gas 11% ROE; 51% to 53% equity; rate base = $0.9 billion ● Increase driven by higher costs and increased investment ● Requested rider rate-making mechanisms for electric infrastructure investment, gas decoupling and bad debt expenses investing for our future. 12
    • Missouri Rate Case Filing ● Expect to file next electric rate case in Q2 2008 • Rate case process in Missouri is typically an 11-month process, but can be settled earlier ● Increase driven by higher costs and increased investment ● Expect to seek implementation of fuel and environmental cost recovery mechanisms in next rate case ● Gas infrastructure cost recovery mechanism currently in place investing for our future. 13
    • Non-rate-regulated Generation Positioned for Earnings Growth Baseload Generation Baseload Capacity and (Megawatthours) Availability Factors 40,000 100% Net Capacity Factor Forecasted 35,000 Equivalent Availability Factor Actual 90% 30,000 25,000 80% 20,000 70% 15,000 10,000 60% 5,000 0 50% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2007 2008 2009 2010 investing for our future. 14
    • Solid Market Fundamentals Hedged Power Sales ● Generation hedging policy (excludes capacity-only revenues) designed to reduce risk, but allow 86% Tar for market upside get ● Energy prices 60% Ran ge • ATC forward curve for 2008 to 45% 2010 ranged from $48/MWh to $54 $52 $50 MWh $54/MWh at time of guidance MWh MWh • Fundamentals support energy 2008 2009 2010 prices strengthening Hedged Capacity Sales ● Expect continued development and tightening of MISO capacity 28% market 18% • Targeting to sell ~75% 37% 10% 22% of capacity through 2010 10% • MISO prices are well below PJM 2008 2009 2010 Embedded in Full Requirements Contract Capacity Only investing for our future. 15
    • Investment Highlights ● Focused on the Basics - the generation of electricity, and the delivery of electricity and natural gas ● Strong EPS growth prospects through 2010 – continued growth thereafter (goal of ~$4 per share by 2011 and higher in 2012) • 4% - 6% CAGR • Driven primarily by regulated business growth • Optimization of existing non-rate-regulated generation/potential tightening of power markets ● Strong, sustainable dividend • Current yield of ~6% • Focused on future dividend growth ● Commitment to conservative financial management ● Attractive, risk-adjusted long-term total return potential ● Strong underlying value/straight-forward strategy to deliver shareholder value investing for our future. 16
    • Appendix investing for our future. 17
    • Ameren Segments investing for our future. 18
    • Missouri Regulated Electric Revenue Mix ● 1.2 million electric and (LTM September 30, 2007) 127,000 gas customers 18% • Diverse electric revenue mix 44% ● 10,000 MW generation 38% • Low-cost 7,000 MW baseload coal-fired and nuclear fleet Residential Commercial Industrial ● 24,000 square miles Average Residential Electricity • 2,900 miles of electric Prices (2006) 0.19 19¢ transmission lines 0.17 17¢ 15¢ 0.15 • 32,000 miles of electric 13¢ 0.13 distribution lines 11¢ 0.11 ● 3,300 employees 9¢ 0.09 San Francisco New York City 7¢ Los Angeles ● Residential rates approximately 40% 0.07 Philadelphia Cleveland Wash DC St.Louis* Houston Chicago 5¢ Boston Seattle Atlanta Detroit 0.05 Dallas Miami below national average 3¢ 0.03 Source: Bureau of Labor statistics Assumes UE’s 2007 rate increase was in effect in 2006 investing for our future. 19
    • Ameren Illinois Utilities Margin Mix (LTM September 30, 2007) ● Regulated transmission and distribution company 30% Electric • Owns no generation Gas 70% ● 1.2 million electric and 830,000 gas customers ● 44,000 square miles • 4,490 miles of electric transmission lines • 45,000 miles of electric distribution lines CILCO • 17,900 miles of natural gas mains ● 2,300 employees CIPS ● Current bundled electric rates approximate IP national average investing for our future. 20
    • Non-Rate-Regulated Generation ● Operate power plants Edwards CTGs • Three legal entities 745 MW 1,140 MW Coal – 1960 Gas – 2000-01 ● Market power and Hutsonville Duck Creek related products 150 MW 330 MW Coal – 1953 Coal – 1976 ● 6,300 MW generation • Low-cost 4,500 MW baseload coal-fired fleet Coffeen Meredosia 900 MW 445 MW ● 1,100 employees Coal – 1965 Coal/Oil – 1948 Newton 1,210 MW Grand Tower CTG Coal – 1977 510 MW Gas – 2001 Joppa – 80% 1,000 MW Coal – 1953 investing for our future. 21
    • Earnings Guidance investing for our future. 22
    • Major 2008 Assumptions Missouri Regulated Segment ● Electric rate case expected to be filed Q2-2008 • No impact on 2008 earnings/regulatory lag ● Rising cost environment continues • Labor, materials, etc. • Fuel • Depreciation and financing costs ● Increased investment in rate base and operating expenses to improve reliability and environmental compliance ● Generation output of 51 million MWh (capacity factor ~83%) ● Callaway nuclear plant refueling in Fall 2008 (25-30 days) ● Normal weather and organic growth investing for our future. 23
    • Major 2008 Assumptions Illinois Regulated Segment ● Electric and gas rate orders effective October 2008 • Requested 11% ROE • Bad debt expense, electric infrastructure investment and gas decoupling rate mechanisms approved ● Rising cost environment continues • Labor, materials, etc. • Depreciation and financing costs ● Increased investment in rate base and operating expenses to improve reliability ● Impact of Illinois electric settlement (5 cents per share) excluded from guidance ● Normal weather and organic growth investing for our future. 24
    • Major 2008 Assumptions Non-Rate-Regulated Generation ● Improved plant operations • Generation output of 33 million MWh vs. 31 million MWh in 2007 • Generation capacity factor of 79% vs. 74% in 2007 ● Hedged approximately 86% of output at December 31, 2007 • Expected realized prices of $53.50/MWh vs. $54.50/MWh in 2007 (including energy and capacity sales) ● Ancillary services market revenues of approximately $15 million (vs. ~$5 million in 2007) ● Capacity market revenues of approximately $40 million (vs. ~$25 million in 2007) ● Rising cost environment • Labor, materials, etc. • Fuel • Depreciation and financing costs ● Impact of Illinois electric settlement (7 cents per share) excluded from guidance ● Illinois Monterey coal mine closure investing for our future. 25
    • Major 2008 Assumptions Corporate ● No new equity issuances planned outside of DRIP/401k plans (hybrids under consideration) ● Significant levels of debt financings ● No increase in dividend investing for our future. 26
    • 2008 Non-GAAP Earnings Guidance 2007 GAAP Earnings per Share Guidance $2.98 2007 Severe storm-related costs 0.09 IL electric rate relief settlement, net 0.21 FERC order – MISO charges 0.06 2007 Non-GAAP Earnings per Share Guidance $3.34 Missouri 2007 rate case (margin and expense) 0.09 Other electric and gas margins 0.69 Weather (estimate) (0.10) Fuel prices (0.40) Callaway refueling and maintenance outage 0.06 Plant operations and maintenance (0.19) Distribution system reliability (0.22) Other labor and employee benefits (0.06) Depreciation and amortization (0.03) Dilution and financing, net (0.06) Other taxes (0.05) Other, net (0.07) 2008 Non-GAAP EPS Guidance Range $2.80 – $3.20 Illinois electric rate relief settlement (0.12) 2008 GAAP EPS Guidance Range $2.68 – $3.08 investing for our future. 27
    • 2008 Non-GAAP Segment Guidance Contribution to Earnings per Share 2007 2008 Missouri Regulated $1.47 $1.20 – $1.30 Illinois Regulated 0.38 0.35 – 0.45 Non-Rate-Regulated Generation 1.45 1.25 – 1.45 Other 0.04 – Non-GAAP EPS Guidance Range(a) $3.34 $2.80 – $3.20 (a) The 12 cents per share earnings impact of the settlement agreement among parties in Illinois for comprehensive electric rate relief and customer assistance are excluded from non-GAAP guidance. investing for our future. 28
    • Capital Expenditure Summary ($ in Millions) Capital Expenditures ● 65% to 70% of total capital expenditures in the $2,235 regulated business segments Target Range: 735 ● Approximately 70% of $1,600 to $2,100 per year non-rate-regulated $1,395 generation capital 400 expenditures due to 425 Non-Rate-Regulated Generation environmental Illinois Regulated compliance 310 ● Does not include any Missouri Regulated 1030 potential expenditures Other/Corporate related to climate 620 legislation 70 40 2007 2008 2009 2010 2011 2012 investing for our future. 29
    • Expected Cash Flow ($ in Millions) 2008 Funds From Operations $1,340 Capital Expenditures (2,235) Dividends (530) EEI Dividends (30) Free Cash Flow ($1,455) ● Negative free cash flow for foreseeable future, an industry-wide phenomenon ● Cash flow needs expected to be primarily financed with debt and proceeds from DRIP/401k plan issuances investing for our future. 30
    • 2008 Illinois Electric Rate Redesign ● Illinois electric rate redesign will result in quarterly changes 18¢ in earnings per share, but no annual change 2¢ 7¢ 13¢ Q1 Q2 Q3 Q4 investing for our future. 31
    • Post-2008 Commentary ● Rising cost environment continues (e.g. labor, materials, fuel, depreciation, financing) ● Regulatory lag will persist, but will be less significant over time ● Rate cases • Will be more frequent • Proposed recovery mechanisms will be granted • Granted fair ROEs ● No Callaway refueling in 2009 and 2012 ● New baseload plant decision for Missouri regulated operations will need to be made • Constructive regulatory framework will need to be in place investing for our future. 32
    • Fuel Costs Fuel Costs per MWh(a) ● Fuel costs expected to continue to increase $23 ● Estimates include all fuel costs $21 $19 $17 $15 $14 (coal, nuclear, natural gas, diesel, emission allowances and transportation) 2008 2009 2010 Estimated Costs Hedged ● Regulated costs are assumed to be recoverable through a cost recovery mechanism beginning in 2009 94% 98% 86% 72% 54% 16% 2008 2009 2010 (a) Includes contracted and estimated cost increase Regulated Missouri Non-Rate-Regulated investing for our future. 33
    • Post-2008 Commentary ● Improved non-rate-regulated generation plant performance ● 2 million MWhs of below-market wholesale contracts at ~$33/MWh expire in late 2008 ● Fundamentals point to more robust energy and capacity prices compared to current forward curves ● No impact from climate legislation ● No new equity issuances currently planned through 2010, excluding DRIP/401k plans (hybrids under consideration) ● Focused on strong, sustainable dividend and growing dividend in the future investing for our future. 34
    • Illinois Settlement investing for our future. 35
    • Illinois Electric Settlement ● Constructively resolved significant legislative, regulatory and legal uncertainties • All major parties participated in settlement ● Provides stability to Illinois electric market and provides agreed path for power procurement ● Significant disincentives for additional legislative action • Rate relief programs would terminate • Financial swap agreements could be terminated or renegotiated • Strong legal position ● No prohibition on ability to file for delivery service rate increases investing for our future. 36
    • Illinois Electric Settlement Costs ($ in Millions, Except Per Share Amounts) 2007 2008 2009 2010 Total Ameren Illinois Customers’ Benefit $231.6 $150.4 $100.5 $5.5 $488.0 Contributions of Ameren Companies Non-rate-regulated Generation 48.2 24.9 15.8 1.1 90.0 Illinois Regulated 30.7 17.9 10.7 0.7 60.0 Total Funding $78.9 $42.8 $26.5 $1.8 $150.0 EPS impact $0.25 $0.12 $0.07 $0.01 $0.45 investing for our future. 37
    • Illinois Electric Settlement - Swap ● Ameren Illinois utilities entered into swap agreements with an affiliate to lock-in prices for a portion of power requirements from 2008 through 2012 at relevant market prices Period Volume Price per MWh 6/1/08 to 12/31/08 400 MW $47.45 1/1/09 to 05/31/09 400 MW $49.47 6/1/09 to 12/31/09 800 MW $49.47 1/1/10 to 5/31/10 800 MW $51.09 6/1/10 to 12/31/10 1,000 MW $51.09 1/1/11 to 12/31/11 1,000 MW $52.06 1/1/12 to 12/31/12 1,000 MW $53.08 ● If any of the following events occur, negotiations may be undertaken so as to preserve the economic benefits of the swap agreements. If unable to negotiate a settlement, the swap agreements may be terminated in 60 to 90 days after the event occurs • A state tax is enacted on electric generation • A state or federal tax is enacted on or regulation is imposed on greenhouse gas emissions • A state law is enacted that eliminates retail electric supplier choice for residential and small commercial customers investing for our future. 38
    • Power Procurement ● Procurement plan approved ● New Illinois Power Agency (IPA) by Illinois Commerce to procure power for Illinois utilities Commission (ICC) for June beginning June 2009 2008 to May 2009 • Process based on acquiring 20 standard market products Contracted Power Supply 18 (e.g., 7x24 and 5x16 blocks 16 of energy) MWh (in millions) 14 • RFP process with benchmarks 12 • Third party administrator hired 10 8 by IPA 6 • ICC review and approval 4 • Results of IPA procurement 2 process deemed prudent 0 2008 2009 2010 2011 2012 Auction Financial Swap Contracts investing for our future. 39
    • References investing for our future. 40
    • Ameren Calendar Illinois ICC Staff and intervenor testimony filed March 14, 2008 Ameren rebuttal filed April 14, 2008 ICC Staff and intervenor rebuttal May 13, 2008 Ameren surrebuttal May 27, 2008 Written prehearing motions May 29, 2008 Evidentiary hearings June 9-13, 2008 Briefs July 2008 Proposed delivery service order August 2008 (estimate) Final delivery service order issued September 2008 Missouri Final environmental rider rules Q2 2008 File electric rate case Q2 2008 Investor Relations Q1 2008 quiet period Begins April 7, 2008 Q2 2008 quiet period Begins July 7, 2008 Q3 2008 quiet period Begins October 7, 2008 investing for our future. 41
    • Major Regulatory Proceedings Illinois Web site www.icc.illinois.gov/e-docket Case # 07-0527 – Interim procurement plan Case # 07-0585, 07-0586, 07-0587 – Electric delivery services rate cases Case #07-0588, 07-0589, 07-0590 – Gas delivery services rate cases Missouri Web site www.efis.psc.mo.gov/mpsc/DocketSheet.html Case # ER-2007-0002 – Electric rate case (Order issued) Case # GR-2007-0003 – Gas rate case (Order issued) Case # ES-2007-0474 – Taum Sauk incident investigation investing for our future. 42
    • Investor Relations Contacts ● Bruce Steinke 314-554-2574 • Vice President & Controller bsteinke@ameren.com Manager – Investor Relations ● Theresa Nistendirk 314-206-0693 • Managing Supervisor, tnistendirk@ameren.com Investor Relations investing for our future. 43