Q4 2024 Summary
Published Feb 14, 2025, 6:13 PM UTC- Ameren expects to deliver earnings per share growth near the upper end of their 6% to 8% range in the mid- to latter part of the plan, driven by anticipated sales growth starting in late 2026 and into 2027.
- The company has a robust pipeline of investment opportunities, including significant capital investments in new generation and infrastructure to support economic development, which may lead to accelerated growth and a potential reevaluation of their earnings growth rate in the future.
- Ameren's financial metrics are strong, with the company being closer to a credit rating upgrade threshold than the downgrade threshold, indicating financial stability and potential for improved borrowing costs.
- Regulatory uncertainties may impact earnings growth, as Ameren's future growth depends on favorable regulatory and legislative outcomes which are uncertain. For example, in the Missouri rate case, the company requested a $446 million revenue increase, while the staff recommended only $398 million, mainly due to differences in ROE assumptions (company proposed 10.25%, staff recommended 9.74%). This discrepancy highlights potential challenges in achieving desired returns. Additionally, future legislative initiatives are critical for their plans, and any unfavorable outcomes may affect investment execution and returns.
- Execution risks in capital projects and sales growth plans, as the company's growth is dependent on significant capital investments and attracting new large customers like data centers. There are industry challenges in procuring new gas-fired generation due to supply chain constraints, which could impact their ability to expand generation capacity as planned. Moreover, there's a risk that the anticipated sales growth may not materialize as expected, affecting earnings projections.
- Earnings growth is back-end loaded, raising concerns about near-term growth, since substantial sales and rate base growth are expected to occur in the mid- to latter part of their five-year plan, with 500 megawatts of new demand expected by end of 2027 and 1 gigawatt by end of 2029. This means that earnings growth in the near term may be limited, and any delays in project execution or sales growth could affect their ability to meet earnings targets.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
2025 Diluted EPS | FY 2025 | $4.85 to $5.05 per share | $4.85 to $5.05 per share | no change |
Long-Term EPS Growth Rate | FY 2025 | 6% to 8% CAGR (2024–2028) | 6% to 8% CAGR (2025–2029) | no change |
Rate Base Growth | FY 2025 | 8.2% CAGR over 2024–2028 | 9.2% CAGR over 2024–2029 | raised |
Dividend Growth | FY 2025 | no prior guidance | $2.84 per share (6% increase) | no prior guidance |
Capital Investment Plan (2025) | FY 2025 | no prior guidance | Approximately $4.2 billion | no prior guidance |
Weather-Normalized Retail Sales Growth | FY 2025 | no prior guidance | Approximately 5.5% CAGR | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Regulatory environment and legislative outcomes | Mentioned in Q1–Q3 2024 calls with a focus on minimizing regulatory lag, extending PISA, and advancing supportive legislative measures in Missouri and Illinois. | Continued emphasis on constructive policy; highlighted rate reviews, legislative session, ICC approval, and focus on minimizing regulatory lag. | Consistently prominent; environment remains constructive, potential “win-win” for shareholders. |
Earnings per share (EPS) growth and guidance | Q1–Q3 2024 calls affirmed 6–8% EPS CAGR, with incremental updates to near 7% or higher, referencing strong track record and confidence in meeting annual midpoints. | Confirmed 2025 EPS range ($4.85–$5.05), 6–8% long-term CAGR using midpoint $4.95, aiming for the upper end of the range in later years. | Reaffirmed growth; no major sentiment change, still targeting mid- to upper-range EPS expansion. |
Capital investments in infrastructure and generation | Q1–Q3 2024 calls detailed major grid modernization, renewable projects, and integration of new gas-fired facilities. | Plan to invest $26.3B from 2025–2029, up 20% from prior plan, including accelerated generation investments for ~1.8 GW of new capacity. | Significant uptick in planned CapEx to meet growing demand and support reliability. |
Data center expansions and large load growth | Q1–Q3 2024 calls noted 250 MW+ data center deals, pipeline of several gigawatts, new construction agreements, and potential for large industrial tariff. | Additional 1.5 GW of data center load agreements, working on a modified large industrial tariff for PSC approval, capacity to serve up to 2 GW of new demand. | Momentum increasing; expanded pipeline, tariff filings to accommodate large loads. |
Clean energy transition and decarbonization | Consistent in Q1–Q3 2024 calls: emphasis on renewables, natural gas additions, battery storage, and meeting IRP targets. | Updated preferred resource plan to accommodate ~500 MW load growth by 2027, up to 1.5 GW by 2032, focusing on reliable clean energy. | Continuously central; scaling up renewables and dispatchable resources to align with load growth. |
Rush Island Energy Center retirement and litigation | Q1–Q3 2024 calls covered retirement timeline (no later than Oct. 2024), PSC securitization approvals, and mitigation measures (e.g., bus electrification). | A final charge related to NSR settlement was recognized ($0.21/share impact). No expanded discussion beyond settlement accounting. | Winding down; settlement costs are recognized, concluding prior litigation. |
Supply chain constraints for new generation | No prior mentions in Q1–Q3 2024. | Newly discussed as an area of attention for gas-fired generation procurement; management feels “in good shape” but acknowledges ongoing challenges. | Newly introduced; monitoring procurement but remaining confident. |
Credit rating upgrade potential | Discussed in Q3 2024 as maintaining solid ratios at Baa1/BBB+ and feeling secure. | Indicated they are closer to an upgrade than a downgrade; strong metrics above 17% thresholds for S&P and Moody’s. | More positive outlook; nearing an upgrade threshold. |
Equity issuance plans | Q1 and Q3 2024 referenced roughly $300M–$600M annual issuance with forward sales and ATM programs. | Minimal incremental equity despite higher CapEx; only ~$300M additional equity planned, citing a strong balance sheet. | Maintaining caution; financing growth mostly with existing balance sheet strength. |
Clean energy tax credits | Mentioned in Q3 2024 regarding ~$1.5B in potential value to Missouri under IRA provisions. | No mention in Q4 2024. | No update; topic not referenced this quarter. |
EPA regulations and greenhouse gas rules | Q1–Q3 2024 calls cited potential rule changes, greenhouse gas limits, and expected legal challenges. | No mention in Q4 2024. | Not discussed; overshadowed by other priorities. |
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EPS Growth Prospects
Q: Are you nearing the top end of your 6–8% EPS growth guidance?
A: We aim to deliver at or above the midpoint each year, and expect to achieve near the upper end of the range in the mid- to latter part of the plan, especially as sales and rate base growth ramp up in the later years. -
CapEx and Potential Upside
Q: Can you quantify upside investment opportunities not in the 5-year plan?
A: We've identified upside potential, particularly in competitive transmission projects. Our $5 billion, 10-year pipeline includes $2 billion allocated in the first 5 years and $1.3 billion awarded in Tranche 2, with $6.5 billion of projects we're bidding on, so there's room for growth beyond what's currently planned. -
Balance Sheet Strength
Q: Are you strongly positioned to maintain your credit ratings with the new capital plan?
A: Yes, we've proactively managed our balance sheet and feel confident we'll support our Baa1/BBB+ ratings. We're at or above the 17% threshold set by Moody's, and closer to the upgrade threshold than the downgrade at S&P. -
Sales Growth Outlook
Q: How does the 5.5% sales CAGR fit into your pipeline?
A: Significant demand from data centers is driving growth. We've signed 1.5 GW of new construction agreements, aiming to serve 2 GW by 2032, which represents a 45% increase in Missouri sales. This growth ramps up over time, providing a solid foundation for our projections. -
Regulatory Lag and Legislation
Q: How do you manage regulatory lag amid your investment cycle and potential legislative impacts?
A: We time projects and rate reviews to minimize lag and maximize returns. Legislative initiatives, like extending PISA and including gas generation, could enhance regulatory certainty and support our investments. -
Capacity to Meet Future Demand
Q: Will you need additional CapEx to serve more than 2 GW of demand?
A: Our current plan supports serving 2 GW by 2032 and potentially more thereafter. If demand exceeds that, we'll explore additional ways to serve beyond our current plans without constraints. -
Nuclear Energy Plans
Q: How do you envision new nuclear capacity in your IRP?
A: By 2040, we plan to add 1,500 MW of new nuclear capacity, aiming for a balanced portfolio with nearly 40% nuclear by 2045. We're studying technologies but expect no material financial commitments in the next few years. -
Missouri Rate Case Settlement
Q: What's the outlook for settling the Missouri rate case?
A: We're optimistic about reaching a constructive settlement soon, as differences with staff are narrowing, especially on ROE figures. -
Financing Plan and Equity Issuance
Q: How are you minimizing equity issuance despite increased CapEx?
A: Our strong balance sheet and proactive management allow us to increase CapEx by $4.4 billion with only $300 million in incremental equity, maintaining our credit metrics. -
Large Load Tariffs
Q: Will large new loads impact existing customers?
A: We're structuring tariffs to ensure existing customers are at least neutral, focusing on contracts that cover costs and protect ratepayers. -
Gas-Fired Generation Procurement
Q: Can you add 1,600 MW of gas-fired generation by 2030 amid supply challenges?
A: We've proactively secured critical components and are confident in bringing this capacity online as planned.