Q1 2024 Summary
Published Jan 10, 2025, 5:10 PM UTC- Ameren is capitalizing on significant data center and manufacturing expansion opportunities, including a signed agreement to serve a 250-megawatt data center by 2026 and is actively working on over 1,000 megawatts of additional projects, which will drive substantial load growth and investment.
- The company demonstrates strong cost management capabilities, with a history of flexing operations and maintenance expenses to achieve earnings guidance, positioning it well to deliver 2024 earnings within the guidance range of $4.52 to $4.72 per share, despite challenges such as milder weather impacts and one-time charges.
- Regulatory processes in Illinois are progressing favorably, with minimal differences between Ameren and regulatory staff on the multiyear rate plan, expecting a decision by June, which will support investments and underpin future earnings growth.
- New EPA regulations could create significant challenges for Ameren, potentially leading to increased costs and accelerated retirements of coal-fired plants. The rules require technologies like carbon capture and storage, which are not ready for full-scale deployment, and could impact planned projects such as the Labadie Energy Center, which may need to co-fire with natural gas by 2030 to continue operating until 2039, posing permitting and construction challenges.
- Legal risks from the Rush Island Energy Center litigation, where the Department of Justice is seeking $120 million in additional mitigation relief, significantly higher than Ameren's $20 million proposal. If the court rules in favor of the DOJ, Ameren could face substantial non-recurring costs.
- Regulatory uncertainties in Illinois could impact Ameren's financial performance. The Illinois Commerce Commission's decisions on Ameren's multiyear rate plan and grid investment levels are pending, with potential differences between Ameren's requested $305 million cumulative annual revenue increase and the ICC staff's recommendation of $283 million. Delays or unfavorable outcomes in these proceedings could affect future earnings. ,
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EPA Regulations Impact
Q: How will new EPA rules affect your operations?
A: The new EPA regulations could necessitate revisions to our IRP and potentially require greater investment to maintain system reliability over the next 10 years. We're still assessing the rules, which rely on carbon capture and sequestration—a technology that's not ready for prime time today. We foresee challenges in implementing required changes, such as co-firing with natural gas at our Labadie Energy Center by 2030 and reassessing our planned 1,200 MW combined cycle facility due to carbon capture requirements. Overall, we have concerns about the feasibility and reliability implications of these rules. -
Illinois Rate Case Outlook
Q: Any updates on the Illinois rehearing process?
A: We feel good about where we stand in the Illinois rehearing process. We expect a decision in June with rates effective in July, which will be an interim adjustment. The differences between us and staff are minimal, with our requested increase at $305 million and staff at $283 million. The main issues are the OPEB matter and some projects deferred into the grid plan. We believe our embedded figures are solid, and we have flexibility with additional capital if needed. -
Rush Island Mitigation Costs
Q: What's the status of the Rush Island settlement?
A: We've proposed a mitigation program valued at about $20 million, while the DOJ has proposed programs estimated at $120 million. The programs are similar in components but differ in scale and cost. Ultimately, wherever this settles, the cost will be non-recurring and one-time in nature. Given the size today, we didn't think it appropriate to carve it out, but we aim to overcome the cost through operational savings. -
Missouri Legislation
Q: Any progress on Missouri's PISA legislation?
A: The PISA legislation is well-positioned for passage, with House Bill 1746 and Senate Bills 740 and 1422 moving forward. However, time is short as the legislative session ends on May 17, and the legislature has significant tasks like the budget to address. We'll continue to work with key stakeholders toward passage if we have a window to get it done. -
PRA Auction Variability
Q: What's behind the recent PRA auction results in Zone 5?
A: In Zone 5, the new seasonal construct led to variability with summer prices at $30, winter at $0.75, and fall and spring at CONE of $7.19. It's a capacity issue, not an energy issue, and we foresee no problems providing reliable service. From a customer impact standpoint, we don't see any material effects. Factors included increased load, accreditation issues with some generation, and reduced import capabilities. We expect these issues to alleviate over the next couple of years. -
O&M Flexibility
Q: How are you managing O&M trends for 2024?
A: We're focused on the midpoint of our guidance range of $450 million to $472 million. The team is aligned on flexing what we need to flex from an O&M perspective. We've implemented hiring freezes and are scrutinizing discretionary spending. Our long history of automation and technology investments is driving productivity improvements, giving us the ability to adjust as needed. -
Future Equity Needs
Q: What are your equity needs for 2025 and beyond?
A: For 2025 and beyond, we're still anticipating issuing about $600 million in equity each year. This is consistent with what we discussed previously. -
Data Center Opportunities
Q: Can you discuss opportunities with data centers?
A: We see strong opportunities in serving data centers and manufacturers. We've executed a construction agreement for one data center with an estimated 250 MW load, to be served by 2026. We're actively working on over 1,000 MW beyond that. These projects will contribute to load growth and align with our renewable and dispatchable generation plans. -
Transmission Investments
Q: How does Tranche 2 transmission investment compare to Tranche 1?
A: The Tranche 2 portfolio is about twice the size of Tranche 1, which was a $10 billion portfolio where we had about 25%. We’re excited about the substantial proposed additional lines in our service territory. However, it's premature to quantify investment levels as MISO is still refining plans with stakeholder input. We expect approval of the Tranche 2 portfolio by mid-September.