American Gas Association Financial Forum

Transcription

1 American Gas Association Financial Forum May

2 Warner Baxter Executive Vice President & Chief Financial Officer 2

3 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. 3

4 Ameren Introduction Regional electric and gas utility Missouri regulated generation, transmission and delivery business Illinois regulated transmission and delivery businesses Non-rate-regulated generation business NYSE-listed under AEE Market cap. ~ $9.5 billion Component of the S&P 500 UE CILCO IP CIPS 4

5 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 5

6 Ameren s Business Plan Achieve operational excellence in all aspects of our business Improve our customer service, satisfaction and image Demonstrate environmental leadership Improve regulatory frameworks and returns Optimize non-rate-regulated generation business Maximize the value of our shareholders investment Fair return on investment Meaningful investment in serving customers High customer satisfaction High quality service 6

7 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 7

8 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 8

9 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 (a) (b) Based on actual and projected financial results excluding non-gaap items Based on actual and projected financial results excluding non-gaap items and impact of goodwill associated with CILCORP and Illinois Power acquisitions 9

10 Regulated Investment Plans Support Earnings Growth ($ in Millions) Rate Base Missouri Electric (a) $5,900 Gas (b) 218 Subtotal $6,118 Illinois (b) Distribution $2,120 Transmission 245 Gas 928 Subtotal $3,293 TOTAL $9,411 (a) At June 30, 2008 (est.) as submitted in current rate case filing (b) At December 31, 2007 (c) At December 31, 2006, as submitted in current rate case filings $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 Missouri Illinois Rate Base Growth $

11 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; 51% 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 $47 million One step in a multi-step process 10.7% ROE recommended. Modifications to capital structure Recommended disallowances include certain A&G costs, plant additions, storm and post-test year reliability expenditures Rider mechanism recommendations 11

12 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 12

13 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 13

14 Q Earnings Reconciliation GAAP Earnings per Share 2007 severe storm-related costs FERC order MISO charges Illinois contribution plan termination Net mark-to-market losses 2007 Core Earnings per Share (Non-GAAP) Missouri rate cases (margin and expense) Illinois rate redesign Other electric and gas margins Weather (estimate) Fuel prices Plant operations and maintenance Distribution system reliability Other labor and employee benefits Bad debt expenses Depreciation and amortization Other taxes Other, net 2008 Core Earnings per Share (Non-GAAP) Illinois electric rate relief settlement Net mark-to-market gains 2008 GAAP Earnings per Share $ (0.05) 0.02 $ (0.05) (0.09) (0.02) (0.06) (0.01) (0.01) (0.01) (0.01) (0.05) $ 0.64 (0.03) 0.05 $ 0.66

15 Earnings Guidance 2007 GAAP Earnings per Share 2007 severe storm-related costs Illinois electric rate relief settlement, net FERC order MISO charges 2007 Core Earnings per Share (non-gaap) Missouri 2007 rate cases (margin and expense) Other electric and gas margins Weather (estimate) Fuel prices Callaway refueling and maintenance outage Plant operations and maintenance Distribution system reliability Other labor and employee benefits Depreciation and amortization Dilution and financing, net Other taxes Other, net 2008 Core EPS Guidance Range (non-gaap) Illinois electric rate relief settlement 2008 GAAP EPS Guidance Range $ $ (0.08) (0.40) 0.06 (0.19) (0.22) (0.06) (0.06) (0.13) (0.05) (0.07) $2.80 $3.20 (0.12) $2.68 $3.08

16 2008 Core EPS Segment Guidance Expected Segment Contribution to Earnings per Share Missouri Regulated $1.20 $1.30 Illinois Regulated Non-Rate-Regulated Generation 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. 16

17 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 17

18 Long-Range EPS Targets >$4.00 Non-GAAP $3.34 Non-GAAP $ $3.20 ~$3.70 Weather-Normalized $3.24 GAAP $2.98 GAAP $ $ GAAP Non-GAAP 18

19 Q & A 19

20 Appendix 20

21 Ameren Segments 21

22 Missouri Regulated 1.2 million electric and 127,000 gas customers Diverse electric revenue mix 10,000 MW generation Low-cost 7,000 MW baseload coal-fired and nuclear fleet 24,000 square miles 2,900 miles of electric transmission lines 32,000 miles of electric distribution lines 3,300 employees Residential rates approximately 40% below national average Electric Revenue Mix St.Louis* Seattle 18% 38% 44% Residential Commercial Industrial Average Residential Electricity Prices (2006) Atlanta Cleveland Wash DC Chicago Detroit Miami Dallas Philadelphia Houston New York City Boston San Francisco Los Angeles Source: Bureau of Labor statistics Assumes UE s 2007 rate increase was in effect in

23 Ameren Illinois Utilities Regulated transmission and distribution company Owns no generation 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 17,900 miles of natural gas mains 2,300 employees Current bundled electric rates approximate national average 2007 Margin Mix 29% Electric Gas 71% CILCO CIPS IP 23

24 Non-Rate-Regulated Generation Operate power plants Three legal entities Market power and related products Duck Creek 330 MW Coal 1976 Edwards 745 MW Coal 1960 CTGs 1,140 MW Gas Hutsonville 150 MW Coal ,300 MW generation Low-cost 4,500 MW baseload coal-fired fleet 1,100 employees Meredosia 445 MW Coal/Oil 1948 Coffeen 900 MW Coal 1965 Grand Tower CTG 510 MW Gas 2001 Joppa 80% 1,000 MW Coal 1953 Newton 1,210 MW Coal

25 References 25

26 2008 Illinois Electric Rate Redesign Illinois electric rate redesign will result in quarterly changes in earnings per share, but no annual change Q1 Q2 Q3 Q4 26

27 Ameren Calendar Illinois ICC Staff and intervenor rebuttal May 14, 2008 Ameren Illinois utilities surrebuttal filed 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 Supplemental direct testimony to submit actual data for budgeted End of June 2008 (estimate) MoPSC Staff and intervenor testimony filed August 2008 (estimate) Rebuttal testimony filed by all parties September 2008 (estimate) Surrebuttal testimony filed by all parties October 2008 (estimate) Hearings November 2008 Briefs January 2009 (estimate) Rate order issued February 2009 New rates effective March 2009 Investor Relations Q quiet period Begins July 7, 2008 Q quiet period Begins October 7,

28 Major Regulatory Proceedings Illinois Web site Case # Interim procurement plan Case # , , Electric delivery services rate cases Case # , , Gas delivery services rate cases Missouri Web site Case # ER Electric rate case 28

29 Investor Relations Contacts Bruce Steinke Vice President & Controller Manager Investor Relations Theresa Nistendirk Managing Supervisor Investor Relations 29