ameren Citi-June-2008

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ameren Citi-June-2008

  1. 1. Citi Power, Gas & Utilities Conference June 5-6, 2008 investing for our future. 1
  2. 2. Cautionary Statements 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 core earnings per share (non-GAAP) and core earnings per share guidance (non-GAAP) exclude 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, a March 2007 FERC order, which retroactively adjusted prior years’ regional transmission organization costs, and net mark-to-market gains or losses from nonqualifying hedges. Ameren uses core earnings internally for financial planning and for analysis of performance. Ameren also uses core earnings as primary performance measurements when communicating with analysts and investors regarding our earnings results and outlook, as the company believes it allows it to more accurately compare the company’s ongoing performance across periods. In providing consolidated and segment core earnings guidance (non-GAAP), there could be differences between core earnings (non-GAAP) and earnings prepared in accordance with GAAP for certain items, such as the 2007 Illinois electric settlement and net mark-to market gains or losses from nonqualifying hedges. Except for the Illinois settlement, Ameren is not able to estimate the impact, if any, on future GAAP earnings of these items. Forward-looking Statements Ameren’s earnings guidance assumes normal weather and is subject to, among other things, regulatory decisions and legislative actions, 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 releases and in the Forward-looking Statements and Risk Factors sections in its periodic filings with the Securities and Exchange Commission. investing for our future. 2
  3. 3. Ameren Introduction ● Regional electric and gas utility • Missouri regulated generation, transmission and delivery business CILCO • Illinois regulated transmission and delivery businesses CIPS UE • Non-rate-regulated IP generation business ● NYSE-listed under AEE • Market cap. ~ $9.5 billion • Component of the S&P 500 investing for our future. 3
  4. 4. Investment Highlights ● Focused on the Basics - the generation of electricity, and the delivery of electricity and natural gas ● Strong EPS growth prospects ● Strong, sustainable dividend • Current yield of ~5.5% • 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. 4
  5. 5. 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 High generation business customer satisfaction ● Maximize the value of our shareholders’ investment investing for our future. 5
  6. 6. 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
  7. 7. Financial Outlook Opportunities Regulated Businesses ● Significant longer-term earnings growth ● Regulated rates reflecting more current costs • Rate cases filed in Illinois and Missouri ● Increasing rate base investment ● Earning fair returns in regulated operations investing for our future. 7
  8. 8. Current Regulated Returns Support Earnings Growth ● Missouri Regulated Operations(a) 2007 Core (non-GAAP) ROE = 9% Estimated 2008 Core (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 Core (non-GAAP) ROE = 5% Estimated 2008 Core (non-GAAP) ROE = 4% • Allowed return in last rate case was 10%. Every 1% equals approximately $27 million of revenues Based on actual and projected financial results excluding non-GAAP items (a) Based on actual and projected financial results excluding non-GAAP items and (b) impact of goodwill associated with CILCORP and Illinois Power acquisitions investing for our future. 8
  9. 9. Regulated Investment Plans Support Earnings Growth Rate Base Growth ($ in Millions) (Issued and effective as of January 17, 2008) $9,000 Missouri Rate Base $8,000 $7,000 Missouri $6,000 Electric(a) $5,900 $5,000 Gas(b) 218 $4,000 Subtotal $6,118 $3,000 $2,000 $1,000 Illinois(b) $0 Distribution $2,120 2006 2007 2008 2009 2010 2011 2012 Transmission 245 $4,500 Illinois $4,000 Gas 928 $3,500 Subtotal $3,293 $3,000 $2,500 TOTAL $9,411 $2,000 $1,500 At June 30, 2008 (est.) as submitted in current (a) $1,000 rate case filing $500 At December 31, 2007 (b) At December 31, 2006, as submitted in current (c) $0 rate case filings 2006 2007 2008 2009 2010 2011 2012 investing for our future. 9
  10. 10. Illinois Rate Filings ● Illinois electric and gas delivery service rate cases filed November 2, 2007 • Decision by end of September 2008 ● Current requested revenue increase is $220 million • 11% ROE; 50% to 53% equity ● Requested rider rate-making mechanisms for electric infrastructure investment and gas decoupling • Withdrew request for bad debt expense rider in rebuttal testimony ● ICC staff revenue increase recommendation of $87 million • 10.7% ROE recommended. Modifications to capital structure • Recommended disallowances include certain A&G costs, plant additions, and post-test year reliability expenditures • Rider mechanism recommendations investing for our future. 10
  11. 11. Missouri Rate Case Filing ● Electric rate case filed on April 4, 2008 • Decision by March 2009 ● Requested electric revenue increase of $251 million • 10.9% ROE; 51% equity ● Increase driven by higher costs and increased investment • Utilized test year ended March 31, 2008 ● Requested implementation of fuel and purchased power cost recovery mechanism • Did not pursue environmental cost recovery mechanism • Expect changes to recently adopted rules to be considered by MoPSC investing for our future. 11
  12. 12. Financial Outlook Opportunities Non-rate-regulated Generation ● Position non-rate-regulated business for earnings growth • Improving plant performance • Effective marketing, trading and hedging • Environmental compliance ● Areas significantly impacting future earnings results include future power, capacity and fuel prices investing for our future. 12
  13. 13. Q1 2008 Earnings Reconciliation $ 0.59 2007 GAAP Earnings per Share 0.09 2007 severe storm-related costs 0.05 FERC order – MISO charges (0.05) Illinois contribution plan termination 0.02 Net mark-to-market losses $ 0.70 2007 Core Earnings per Share (Non-GAAP) 0.06 Missouri rate cases (margin and expense) (0.05) Illinois rate redesign 0.16 Other electric and gas margins 0.03 Weather (estimate) (0.09) Fuel prices (0.02) Plant operations and maintenance (0.06) Distribution system reliability (0.01) Other labor and employee benefits (0.01) Bad debt expenses (0.01) Depreciation and amortization (0.01) Other taxes (0.05) Other, net $ 0.64 2008 Core Earnings per Share (Non-GAAP) (0.03) Illinois electric rate relief settlement 0.05 Net mark-to-market gains $ 0.66 2008 GAAP Earnings per Share investing for our future. 13
  14. 14. 2008 Earnings Guidance (Issued and effective as of May 2, 2008) 2007 GAAP Earnings per Share $2.98 2007 severe storm-related costs 0.09 Illinois electric rate relief settlement, net 0.21 FERC order – MISO charges 0.06 2007 Core Earnings per Share (non-GAAP) $3.34 Missouri 2007 rate cases (margin and expense) 0.09 Other electric and gas margins 0.77 Weather (estimate) (0.08) 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 (0.06) Dilution and financing, net (0.13) Other taxes (0.05) Other, net (0.07) 2008 Core EPS Guidance Range (non-GAAP) $2.80 – $3.20 Illinois electric rate relief settlement (0.12) 2008 GAAP EPS Guidance Range $2.68 – $3.08 investing for our future. 14
  15. 15. 2008 Core EPS Segment Guidance (Issued and effective as of May 2, 2008) Expected Segment Contribution to Earnings per Share Missouri Regulated $1.20 – $1.30 Illinois Regulated 0.30 – 0.40 Non-Rate-Regulated Generation 1.30 – 1.50 2008 Core EPS Guidance Range (Non-GAAP)(a) $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 and net mark-to market gains or losses from nonqualifying hedges are excluded from non-GAAP guidance. investing for our future. 15
  16. 16. 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 ~5.5% • Cash flows do not support near-term change • Focus on future dividend growth ● Targeting long-term total annual shareholder return of ~10% Bottom line: strong underlying value Straight-forward strategy to deliver value investing for our future. 16
  17. 17. Long-Range EPS Targets >$4.00 ~$3.70 Non-GAAP Non-GAAP $3.34 $2.80 - $3.20 Weather-Normalized $3.24 GAAP $2.98 GAAP $2.68 - $3.08 2007 2008 2009 2010 2011 2012 GAAP Non-GAAP investing for our future. 17
  18. 18. Appendix investing for our future. 18
  19. 19. Ameren Segments investing for our future. 19
  20. 20. Missouri Regulated 2007 Electric Revenue Mix ● 1.2 million electric and 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. 20
  21. 21. Ameren Illinois Utilities 2007 Margin Mix ● Regulated transmission and distribution company 29% Electric • Owns no generation Gas 71% ● 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. 21
  22. 22. 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. 22
  23. 23. References investing for our future. 23
  24. 24. Fuel Costs Forecasted numbers are issued and effective as of January 17, 2008 Fuel Costs per MWh(a) ● Fuel costs expected to continue to increase ● Estimates include all fuel costs $23 $21 $19 (coal, nuclear, natural gas, $17 $15 $14 diesel, emission allowances and transportation) 2008 2009 2010 ● Regulated costs are assumed to Estimated Costs Hedged 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. 24
  25. 25. Non-rate-regulated Generation Positioned for Earnings Growth Forecasted numbers are issued and effective as of January 17, 2008 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. 25
  26. 26. Solid Market Fundamentals Forecasted numbers are issued and effective as of January 17, 2008 ● Generation hedging policy designed Hedged Power Sales to reduce risk, but allow for market (excludes capacity-only revenues) 86% upside Tar get ● Energy prices 60% Ran • ATC forward curve for 2008 to 2010 ge 45% ranged from $48/MWh to $54/MWh $54 at time of January 17, 2008 $52 $50 MWh MWh guidance MWh • Fundamentals support energy 2008 2009 2010 prices strengthening Hedged Capacity Sales ● Expect continued development and tightening of MISO capacity market 28% • Targeting to sell ~75% 18% of capacity through 2010 37% 10% 22% • MISO prices are well below PJM 10% 2008 2009 2010 Embedded in Full Requirements Contract Capacity Only investing for our future. 26
  27. 27. 2008 Illinois Electric Rate Redesign ● Illinois electric rate redesign will 10¢ result in quarterly changes in earnings per share, but no annual change 5¢ 5¢ Q1 Q2 Q3 Q4 investing for our future. 27
  28. 28. Ameren Calendar Illinois Evidentiary hearings June 9-13, 2008 Briefs July 2008 Proposed delivery service order August 2008 (estimate) Final delivery service order issued September 2008 Missouri Submit actual data for forecasted data June 4, 2008 Supplemental direct testimony regarding updated data June 16, 2008 MoPSC Staff and intervenor testimony filed August 28, 2008 Rebuttal testimony filed by all parties October 14, 2008 Surrebuttal testimony filed by all parties November 5, 2008 Hearings November 17-25 & December 1-5, 2008 Briefs January 8, 2009 Rate order issued February 2009 New rates effective March 2009 Investor Relations Q2 2008 quiet period Begins July 7, 2008 Q3 2008 quiet period Begins October 7, 2008 investing for our future. 28
  29. 29. 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-2008-0318 – Electric rate case investing for our future. 29
  30. 30. 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. 30

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