AMEREN CORPORATION The following discussion should be read in conjunction with the financial statements contained in this Form 10-Q, as well as Management's Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors contained in the Form 10-K. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. The discussion also provides information about the financial results of our business segments to provide a better understanding of how those segments and their results affect the financial condition and results of operations ofAmeren as a whole. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.
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Ameren's common stock and the payment of expenses byAmeren depend on distributions made to it by its subsidiaries.Ameren's principal subsidiaries are listed below.Ameren has other subsidiaries that conduct other activities, such as providing shared services. •Union Electric Company, doing business as Ameren Missouri, operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business inMissouri . •Ameren Illinois Company, doing business asAmeren Illinois , operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses inIllinois . •ATXI operates aFERC rate-regulated electric transmission business in the MISO.Ameren's and Ameren Missouri's financial statements are prepared on a consolidated basis and therefore include the accounts of their majority-owned subsidiaries. All intercompany transactions have been eliminated.Ameren Missouri's subsidiaries were created for the ownership of renewable generation projects.Ameren Illinois has no subsidiaries. All tabular dollar amounts are in millions, unless otherwise indicated. In addition to presenting results of operations and earnings amounts in total, we present certain information in cents per share. These amounts reflect factors that directly affectAmeren's earnings. We believe this per share information helps readers to understand the impact of these factors onAmeren's earnings per share. OVERVIEW Net income attributable toAmeren common shareholders in the three months endedSeptember 30, 2022 , was$452 million , or$1.74 per diluted share, compared with$425 million , or$1.65 per diluted share, in the year-ago period. Net income attributable toAmeren common shareholders in the nine months endedSeptember 30, 2022 , was$911 million , or$3.51 per diluted share, compared with$865 million , or$3.36 per diluted share, in the year-ago period. Net income for the three and nine months endedSeptember 30, 2022 , was favorably affected by increased rate base investments across all segments and a higher recognized ROE at Ameren Illinois Electric Distribution, increased base rate revenues atAmeren Missouri pursuant to theDecember 2021 MoPSC electric rate order, and increased retail electric sales volumes at Ameren Missouri, primarily resulting from colder winter and warmer summer temperatures experienced in 2022. Net income for the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods, was unfavorably affected by increased other operations and maintenance expenses not subject to formula rates, riders, or trackers, primarily due to a reduction in the cash surrender value of COLI, an increase due to the expiration of contracts relating to refined coal tax credits at Ameren Missouri in 2021, and higher transmission and distribution expenses due to a change in the timing of capitalized work, disciplined project management, and other project-related costs. Net income comparisons in both periods were also unfavorably affected by increased financing costs from debt issuances; a higher effective income tax rate, primarily due to changes in the cash surrender value of COLI; and an increase in the weighted-average basic common shares outstanding.Ameren's strategic plan includes investing and operating its utilities in a manner consistent with existing regulatory frameworks, enhancing those frameworks, and advocating for responsible energy and economic policies, as well as creating and capitalizing on opportunities for investment for the benefit of its customers, shareholders, and the environment.Ameren remains focused on disciplined cost management and strategic capital allocation.Ameren invested$2.4 billion in its rate-regulated businesses in the nine months endedSeptember 30, 2022 . InDecember 2021 , Ameren Missouri filed a motion with theUnited States District Court for the Eastern District of Missouri to modify aSeptember 2019 remedy order issued by the district court to allow the retirement of theRush Island Energy Center in advance of its previously expected useful life in lieu of installing a flue gas desulfurization system. TheMarch 31, 2024 compliance date contained in the district court'sSeptember 2019 remedy order remains in effect unless extended by the district court. InJuly 2022 , in response to anAmeren Missouri request for a final, binding reliability assessment, the MISO designated the Rush Island Energy Center as a system support resource and concluded that certain mitigation measures, including transmission upgrades, should occur before the energy center is retired. The transmission upgrade projects have been approved by the MISO, and Ameren Missouri has started design and procurement activities necessary to complete the upgrades and expects to complete the upgrades by late 2025. InOctober 2022 , theFERC approved a system support resource agreement, which became effective retroactively as ofSeptember 1, 2022 . The agreement details the manner of continued operation for a system support resource that results in operating during peak demand times and emergencies. The system support resource designation and the related agreement are subject to annual renewal and revision. InSeptember 2022 , theRush Island Energy Center began operating consistent with the system support resource agreement. In addition, inOctober 2022 , theFERC established hearing and settlement procedures in response to anAugust 2022 request from Ameren Missouri for recovery of non-energy costs under the related MISO tariff. TheFERC is under no deadline to issue an order related to this proceeding. Revenues and costs under the MISO tariff are expected to be included in the FAC. The district court has the authority to determine the retirement date and operating parameters for the Rush Island Energy Center and is not bound by the MISO determination of the Rush Island Energy Center as a system support resource or theFERC's approval. The district court is under no deadline to issue a ruling modifying the remedy order. Related to this matter, inFebruary 2022 , the MoPSC issued an order directing the MoPSC staff to review Ameren Missouri's planned accelerated retirement of the Rush Island Energy 43
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Center, including potential impacts on the reliability and cost ofAmeren Missouri's service to its customers; Ameren Missouri's plans to mitigate the customer impacts of the accelerated retirement; and the prudence ofAmeren Missouri's actions and decisions with regard to the Rush Island Energy Center, which is expected to be addressed in the 2022 electric service regulatory rate review, among other things. InApril 2022 , the MoPSC staff filed an initial report with the MoPSC in which the staff concluded early retirement of the Rush Island Energy Center may cause reliability concerns. The MoPSC staff is under no deadline to complete this review. Ameren Missouri expects to seek approval from the MoPSC to finance the costs associated with the retirement, including the remaining unrecovered net plant balance associated with the facility, through the issuance of securitized utility tariff bonds pursuant to theMissouri securitization statute. See Note 9 - Commitments and Contingencies under Part I, Item 1, of this report for additional information. InFebruary 2022 , Ameren Missouri filed an annual update to its Smart Energy Plan with the MoPSC, which includes a five-year capital investment overview with a detailed one-year plan for 2022. The Smart Energy Plan is designed to upgrade Ameren Missouri's electric infrastructure and includes investments that will upgrade the grid and accommodate more renewable energy. Investments under the plan are expected to total approximately$8.4 billion over the five-year period from 2022 through 2026, with expenditures largely recoverable under thePISA and the RESRAM. InFebruary 2022 , Ameren Missouri, through a subsidiary, entered into a build-transfer agreement to acquire, after construction, a 150-MW solar generation facility, which is expected to be located in southeasternIllinois and, if approved by the MoPSC, to serve customers under Ameren Missouri's Renewable Solutions Program. InJune 2022 , Ameren Missouri, through a subsidiary, entered into a build-transfer agreement to acquire, after construction, a 200-MW solar generation facility, which is expected to be located in centralMissouri and support Ameren Missouri's compliance with the state ofMissouri's requirement of achieving 15% of retail sales from renewable energy sources, of which 2% must be derived from solar energy sources. The acquisitions are aligned with the 2022 Change to the 2020 IRP, whichAmeren Missouri filed with the MoPSC inJune 2022 , and are subject to certain conditions, including the issuance of certificates of convenience and necessity by the MoPSC, obtaining MISO transmission interconnection agreements, and approval by theFERC . InJuly 2022 , Ameren Missouri filed for certificates of convenience and necessity with the MoPSC for both facilities and expects decisions byMarch 2023 andApril 2023 for the 200-MW facility and the 150-MW facility, respectively. Depending on the timing of regulatory approvals and the impact of potential sourcing issues, the projects could be completed as early as the fourth quarter of 2024. InJune 2022 ,Missouri Senate Bill 745 was enacted and became effective onAugust 28, 2022 . The law extended Ameren Missouri'sPISA election throughDecember 2028 and allows for an additional extension throughDecember 2033 if requested by Ameren Missouri and approved by the MoPSC, among other things. The law established a 2.5% annual limit on increases to the electric service revenue requirement used to set customer rates due to the inclusion of incrementalPISA deferrals in the revenue requirement. The limitation will be effective for revenue requirements approved by the MoPSC afterJanuary 1, 2024 , and will be based on the revenue requirement established in the immediately preceding rate order. The current rate limitation, which is effective through 2023, is a 2.85% cap on the compound annual growth rate in the average overall customer rate per kilowatthour, based on the electric rates that became effective inApril 2017 , less half of the annual savings from the TCJA that was passed on to customers as approved in aJuly 2018 MoPSC order. The law also established electric and natural gas property tax trackers that allow Ameren Missouri to defer the difference between actual property taxes incurred and related taxes included in customer rates as a regulatory asset or regulatory liability, with the difference expected to be reflected in rate base in a subsequent rate order. Upon the effective date of the law, Ameren Missouri began deferring amounts under these trackers. InAugust 2022 , Ameren Missouri filed a request with the MoPSC seeking approval to increase its annual revenues for electric service by$316 million . The electric rate increase request is based on a 10.2% ROE, a capital structure composed of 51.9% common equity, a rate base of$11.6 billion , and a test year endedMarch 31, 2022 , with certain pro-forma adjustments expected through an anticipated true-up date ofDecember 31, 2022 . The MoPSC proceeding relating to the proposed electric service rate changes will take place over a period of up to 11 months, with a decision by the MoPSC expected byJune 2023 and new rates effective byJuly 2023 . InSeptember 2022 , the ICC issued an order approving the performance metrics to be used byAmeren Illinois in determining ROE incentives and penalties under an MYRP. The ICC order approved total ROE incentives and penalties of 24 basis points, allocated among seven approved performance metrics. These performance metrics include improvements in service reliability in both the frequency and duration of outages, a reduction in peak loads, an increased percentage of spend with diverse suppliers, a reduction in disconnections for certain customers, and improved timeliness in response to customer requests for interconnection of distributed energy resources. The ROE incentives and penalties would apply annually from 2024 through 2027 if, as planned,Ameren Illinois elects to file an MYRP byJanuary 20, 2023 . InApril 2022 ,Ameren Illinois filed its annual electric distribution service performance-based formula rate update with the ICC to be used for 2023 rates. InJuly 2022 ,Ameren Illinois filed a revised request seeking to increase its annual revenues for electric distribution service by$84 million . InAugust 2022 , the ICC staff submitted its calculation of the revenue requirement included inAmeren Illinois' update filing, recommending a$61 million increase inAmeren Illinois' electric distribution service rates. An ICC decision in this proceeding is required byDecember 2022 , with new rates effective inJanuary 2023 . 44
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InJune 2022 ,Ameren Illinois filed its annual electric customer energy-efficiency formula rate update to increase its rates by$17 million with the ICC. InAugust 2022 , the ICC staff submitted a calculation of the revenue requirement included inAmeren Illinois' filing, recommending a$15 million increase in rates. An ICC decision in this proceeding is required byDecember 2022 , with new rates effectiveJanuary 2023 . InJune 2022 , the ICC issued an order approvingAmeren Illinois' revised energy-efficiency plan that includes annual investments in electric energy-efficiency programs of approximately$120 million per year through 2025, which reflects the increased level of annual investments allowed under the IETL. The ICC has the ability to reduce the amount of electric energy-efficiency savings goals in future program years if there are insufficient cost-effective programs available, which could reduce the investments in electric energy-efficiency programs. The electric energy-efficiency program investments and the return on those investments are collected from customers through a rider and are not recovered through the electric distribution service performance-based formula ratemaking framework. In 2021, the MISO issued a report outlining a preliminary long-range transmission planning roadmap of projects through 2039, which considers the rapidly changing generation mix within MISO resulting from significant additions of renewable generation, actual and expected generation plant closures, and state mandates or goals for clean energy or carbon emissions reductions. InJuly 2022 , the MISO approved the first tranche of projects under the first phase of the roadmap. A portion of these projects were assigned to various utilities, of whichAmeren was awarded projects that are estimated to cost approximately$1.8 billion , based on MISO's cost estimate. The MISO is expected to initiate requests for proposals inDecember 2022 andMarch 2023 for additional first tranche projects crossingMissouri , which are expected to be awarded between late-2023 and early-2024. InJuly 2022 , a group of industrial customers filed a complaint with theFERC , challenging provisions of a MISO tariff that exclude regional transmission projects from the MISO's competitive bid process based on state laws related to the right of first refusal, which provide an incumbent utility the right to build, maintain, and own transmission lines located within its service territory. The complaint seeks to require MISO to revise its tariff to prohibit the application of state laws related to the right of first refusal in the MISO's long-range transmission planning and require projects to be bid on a competitive basis, to the maximum extent possible. It also is asking for refunds related to any costs under the tariff that would not comply with the sought-after revisions. TheFERC is under no deadline to issue an order in this proceeding. The IRA was enacted inAugust 2022 , and extends federal production and investment tax credits for projects beginning construction through 2024 and creates clean energy tax credits for projects placed in service after 2024, among other things. The clean energy tax credits will supportAmeren's net-zero carbon emission goals and Ameren Missouri's 2022 Change to the 2020 IRP, incentivize electrification, and enhance customer affordability duringAmeren's transition to clean energy. In addition, the new law imposes a 15% minimum tax on adjusted financial statement income, as defined in the law, for corporations whose average annual adjusted financial statement income exceeds$1 billion for three consecutive preceding tax years effective for tax years beginning afterDecember 31, 2022 . Once a corporation exceeds this three-year average annual adjusted financial statement income threshold, it will be subject to the minimum tax for all future tax years. See Note 12 - Income Taxes under Part I, Item 1, of this report for additional information.
RESULTS OF OPERATIONS
Our results of operations and financial position are affected by many factors. Economic conditions, energy-efficiency investments by our customers and by us, technological advances, distributed generation, and the actions of key customers can significantly affect the demand for our services.Ameren and Ameren Missouri results are also affected by seasonal fluctuations in winter heating and summer cooling demands, as well as by energy center maintenance outages. Additionally, fluctuations in interest rates and conditions in the capital and credit markets affect our cost of borrowing, our pension and postretirement benefits costs, the cash surrender value of COLI, and the asset value of Ameren Missouri's nuclear decommissioning trust fund. Almost all ofAmeren's revenues are subject to state or federal regulation. This regulation has a material impact on the rates we charge customers for our services. Our results of operations, financial position, and liquidity are affected by our ability to align our overall spending, both operating and capital, with the frameworks established by our regulators. See Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report and Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K for additional information regarding Ameren Missouri's,Ameren Illinois' , and ATXI's regulatory mechanisms. We are observing inflationary pressures on the prices of commodities, labor, services, materials, and supplies, as well as increasing interest rates.Ameren Missouri is also experiencing coal transportation disruptions. Ameren Missouri andAmeren Illinois are generally allowed to pass on to customers prudently incurred costs for fuel, purchased power, and natural gas supply. Additionally, for certain non-commodity cost changes, the use of trackers, riders, and formula ratemaking, as applicable, mitigates our exposure. 45
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Due to a change in customer behavior and certain business practices resulting from the COVID-19 pandemic, there has been a shift in sales volumes by customer class at both Ameren Missouri andAmeren Illinois , which began in 2020, with an increase in residential sales, and a decrease in commercial and industrial sales. While our electric sales volumes in the first nine months of 2022, excluding the estimated effects of weather and customer energy-efficiency programs, were comparable to the same period in 2021 and, at Ameren Missouri, were comparable to pre-pandemic levels,Ameren Illinois' sales volumes remain below pre-pandemic levels. However, revenues fromAmeren Illinois' electric distribution business, residential and small nonresidential customers ofAmeren Illinois' natural gas distribution business, andAmeren Illinois' and ATXI's electric transmission businesses are decoupled from changes in sales volumes. While our customers are also observing inflationary pressures, those pressures have not significantly affected customer payments. As ofSeptember 30, 2022 , accounts receivable balances that were 30 days or greater past due or that were a part of a deferred payment arrangement represented 17%, 12%, and 21%, or$117 million ,$39 million , and$78 million , ofAmeren's , Ameren Missouri's, andAmeren Illinois' customer trade receivables before allowance for doubtful accounts, respectively. In comparison, as ofSeptember 30, 2021 , these percentages were 18%, 12%, and 25%, or$97 million ,$33 million , and$64 million , forAmeren , Ameren Missouri, andAmeren Illinois , respectively.Ameren Illinois' electric distribution and natural gas distribution businesses have bad debt riders, which provide for recovery of bad debt write-offs, net of any subsequent recoveries. Ameren Missouri does not have a bad debt rider or tracker, and thus its earnings are exposed to increases in bad debt expense, absent regulatory relief. Ameren Missouri principally uses coal and enriched uranium for fuel in its electric operations and purchases natural gas for its customers.Ameren Illinois purchases power and natural gas for its customers. The prices for these commodities can fluctuate significantly because of the global economic and political environment, weather, supply, demand, and many other factors. We have natural gas cost recovery mechanisms for ourIllinois andMissouri natural gas distribution businesses, a purchased power cost recovery mechanism forAmeren Illinois' electric distribution business, and a FAC for Ameren Missouri's electric business. We employ various risk management strategies to reduce our exposure to commodity risk and other risks inherent in our business. The reliability ofAmeren Missouri's energy centers and our transmission and distribution systems, and the level and timing of operations and maintenance costs and capital investment, are key factors that we seek to manage in order to optimize our results of operations, financial position, and liquidity.
Earnings Summary
The following table presents a summary of
Three Months Nine Months
2022 2021 2022 2021
Net income attributable to Ameren common shareholders $ 452 $ 425 $ 911 $ 865
Earnings per common share - diluted 1.74 1.65 3.51 3.36
Net income attributable toAmeren common shareholders increased$27 million , or9 cents per diluted share, in the three months endedSeptember 30, 2022 , compared with the year-ago period. The increase was due to net income increases of$22 million ,$15 million , and$5 million at Ameren Missouri,Ameren Illinois Electric Distribution, andAmeren Transmission , respectively, and a decrease in net loss of$4 million atAmeren Illinois Natural Gas . These earnings increases were partially offset by an increase in net loss of$19 million for activity not reported as part of a segment, primarily atAmeren (parent). Net income attributable toAmeren common shareholders increased$46 million , or15 cents per diluted share, in the nine months endedSeptember 30, 2022 , compared with the year-ago period. The increase was due to net income increases of$28 million ,$24 million ,$14 million , and$7 million atAmeren Illinois Electric Distribution,Ameren Transmission , Ameren Missouri, andAmeren Illinois Natural Gas , respectively. These increases were partially offset by an increase in net loss of$27 million for activity not reported as part of a segment, primarily atAmeren (parent). 46
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Earnings per diluted share were favorably affected in the three and nine months
ended
•increased rate base investments atAmeren Transmission andAmeren Illinois Electric Distribution and a higher recognized ROE due to a higher estimated annual average of the monthly yields of the 30-year United States Treasury bonds at Ameren Illinois Electric Distribution, which increased revenues at these segments (7 cents and17 cents per share, respectively); •higher base rates at Ameren Missouri pursuant to theDecember 2021 MoPSC electric rate order, partially offset by the amortization of previously deferred depreciation expense under thePISA and RESRAM, financing costs otherwise recoverable under thePISA and RESRAM, a higher base level of expenses, and the net recovery for amounts associated with the reduction in sales volumes resulting from MEEIA programs (10 cents and12 cents per share, respectively); •increased electric retail sales at Ameren Missouri, primarily resulting from changes in customer usage patterns in the three months endedSeptember 30, 2022 , and colder winter temperatures and warmer summer temperatures experienced in 2022 for the nine months endedSeptember 30, 2022 (estimated at2 cents and10 cents per share, respectively); •increased base rate revenues for the inclusion of previously deferred interest charges pursuant to theDecember 2021 MoPSC electric rate order, partially offset by lower deferral of interest charges related to infrastructure investments associated with thePISA and RESRAM (1 cent and6 cents per share, respectively); •increasedAmeren Illinois Natural Gas earnings from investments in qualifying infrastructure recovered under the QIP and higher base rates for the nine months endedSeptember 30, 2022 , pursuant to the ICC'sJanuary 2021 natural gas rate order (1 cent and6 cents per share, respectively); •the absence in 2022 of theFERC's March 2021 order, primarily related to the historical recovery of materials and supplies inventories, which decreasedAmeren Transmission revenues in 2021 (3 cents per share for the nine months endedSeptember 30, 2022 ); and •increased other income, net, primarily due to increased non-service cost components of net periodic benefit income not subject to formula rates or trackers (1 cent and2 cents per share, respectively).
Earnings per diluted share were unfavorably affected in the three and nine
months ended
•increased other operations and maintenance expenses not subject to formula rates, riders, or trackers, primarily due to a reduction in the cash surrender value of COLI, an increase due to the expiration of contracts relating to refined coal tax credits at Ameren Missouri in 2021, and higher transmission and distribution expenses due to a change in the timing of capitalized work, disciplined project management, and other project-related costs, (4 cents and25 cents per share, respectively); •increased financing costs, primarily at Ameren Missouri andAmeren (parent), largely due to higher long-term debt balances (4 cents and10 cents per share, respectively); •an increase in the effective tax rate, primarily due to a change in the cash surrender value of COLI (3 cents and4 cents per share, respectively); and •increased weighted-average basic common shares outstanding resulting from issuances of common shares as detailed in Note 4 - Long-term Debt and Equity Financings under Part I, Item 1, of this report, and Note 5 - Long Term Debt and Equity Financings under Part II, Item 8, of the Form 10-K (1 cent and3 cents per share, respectively). The cents per share variances above are presented based on the weighted-average basic common shares outstanding in the three and nine months endedSeptember 30, 2021 , and do not reflect the impact of dilution on earnings per share, unless otherwise noted. The amounts above other than variances related to income taxes have been presented net of income taxes usingAmeren's 2022 blended federal and state statutory tax rate of 26%. For additional details regarding theAmeren Companies' results of operations, including explanations of Electric and Natural Gas Margins; Other Operations and Maintenance Expenses; Depreciation and Amortization Expenses; Taxes Other Than Income Taxes; Other Income, Net; Interest Charges; and Income Taxes, see the major headings below. 47 -------------------------------------------------------------------------------- Table of Contents Below isAmeren's table of income statement components by segment for the three and nine months endedSeptember 30, 2022 and 2021: Ameren Illinois Ameren Other / Ameren Electric Illinois Ameren Intersegment Missouri Distribution Natural Gas Transmission Eliminations Ameren Three Months 2022: Electric revenues$ 1,338 $ 672 $ - $ 169 $ (39)$ 2,140 Fuel (117) - - - - (117) Purchased power (247) (350) - - 34 (563) Electric margins 974 322 - 169 (5) 1,460 Natural gas revenues 21 - 146 - (1) 166 Natural gas purchased for resale (7) - (51) - - (58) Natural gas margins 14 - 95 - (1) 108 Other operations and maintenance expenses (252) (145) (59) (14) (5)
(475)
Depreciation and amortization expenses (208) (84) (24) (31) (3)
(350)
Taxes other than income taxes (106) (21) (12) (3) (2) (144) Operating income (loss) 422 72 - 121 (16) 599 Other income, net 25 15 6 5 7 58 Interest charges (58) (19) (10) (21) (18) (126) Income (taxes) benefit 9 (17) - (27) (43) (78) Net income (loss) 398 51 (4) 78 (70) 453 Noncontrolling interests - preferred stock dividends (1) - - - -
(1)
Net income (loss) attributable to Ameren common shareholders$ 397 $ 51 $ (4) $ 78 $ (70)$ 452 Three Months 2021: Electric revenues$ 1,113 $ 428 $ - $ 160 $ (33)$ 1,668 Fuel (184) - - - - (184) Purchased power (57) (126) - - 24 (159) Electric margins 872 302 - 160 (9) 1,325 Natural gas revenues 16 - 127 - - 143 Natural gas purchased for resale (4) - (41) - - (45) Natural gas margins 12 - 86 - - 98 Other operations and maintenance expenses (240) (148) (55) (16) 2
(457)
Depreciation and amortization expenses (161) (78) (22) (28) (1)
(290)
Taxes other than income taxes (104) (21) (12) (2) (3) (142) Operating income (loss) 379 55 (3) 114 (11) 534 Other income, net 27 10 4 5 10 56 Interest charges (32) (19) (11) (20) (12) (94) Income (taxes) benefit 2 (10) 2 (26) (38) (70) Net income (loss) 376 36 (8) 73 (51) 426 Noncontrolling interests - preferred stock dividends (1) - - - -
(1)
Net income (loss) attributable to Ameren common shareholders$ 375 $ 36 $ (8) $ 73 $ (51)$ 425 48
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Ameren
Illinois Ameren Other /
Ameren Electric Illinois Ameren Intersegment
Missouri Distribution Natural Gas Transmission Eliminations Ameren
Nine Months 2022:
Electric revenues $ 2,966 $ 1,641 $ - $ 465 $ (101) $ 4,971
Fuel (376) - - - - (376)
Purchased power (458) (683) - - 83 (1,058)
Electric margins 2,132 958 - 465 (18) 3,537
Natural gas revenues 130 - 811 - (1) 940
Natural gas purchased for resale (65) - (366) - - (431)
Natural gas margins 65 - 445 - (1) 509
Other operations and maintenance
expenses (744) (440) (185) (46) (12) (1,427)
Depreciation and amortization expenses (550) (247) (72) (91) (5)
(965)
Taxes other than income taxes (281) (60) (59) (7) (8) (415) Operating income (loss) 622 211 129 321 (44) 1,239 Other income, net 72 46 16 12 34 180 Interest charges (157) (55) (32) (63) (49) (356) Income (taxes) benefit 13 (50) (31) (71) (9) (148) Net income (loss) 550 152 82 199 (68) 915 Noncontrolling interests - preferred stock dividends (3) (1) - - -
(4)
Net income (loss) attributable to Ameren common shareholders$ 547 $ 151 $ 82 $ 199$ (68) $ 911 Nine Months 2021: Electric revenues$ 2,543 $ 1,227 $ - $ 426$ (88) $ 4,108 Fuel (422) - - - - (422) Purchased power (195) (347) - - 63 (479) Electric margins 1,926 880 - 426 (25) 3,207 Natural gas revenues 99 - 642 - - 741 Natural gas purchased for resale (40) - (235) - - (275) Natural gas margins 59 - 407 - - 466 Other operations and maintenance expenses (683) (402) (164) (46) 6
(1,289)
Depreciation and amortization expenses (474) (230) (66) (83) (3)
(856)
Taxes other than income taxes (266) (59) (52) (6) (9) (392) Operating income (loss) 562 189 125 291 (31) 1,136 Other income, net 74 29 10 10 28 151 Interest charges (107) (56) (31) (63) (33) (290) Income (taxes) benefit 7 (38) (29) (63) (5) (128) Net income (loss) 536 124 75 175 (41) 869 Noncontrolling interests - preferred stock dividends (3) (1) - - -
(4)
Net income (loss) attributable to Ameren common shareholders$ 533 $ 123 $ 75 $ 175$ (41) $ 865 49
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Below is
Ameren
Illinois Ameren Ameren Other /
Electric Illinois Illinois Intersegment
Distribution Natural Gas Transmission Eliminations Ameren Illinois
Three Months 2022:
Electric revenues $ 672 $ - $ 117 $ (31) 758
Purchased power (350) - - 31 (319)
Electric margins 322 - 117 - 439
Natural gas revenues - 146 - - 146
Natural gas purchased for resale - (51) - - (51)
Natural gas margins - 95 - - 95 Other operations and maintenance expenses (145) (59) (11) -
(215)
Depreciation and amortization expenses (84) (24) (22) -
(130)
Taxes other than income taxes (21) (12) (1) - (34) Operating income (loss) 72 - 83 - 155 Other income, net 15 6 5 - 26 Interest charges (19) (10) (13) - (42) Income (taxes) benefit (17) - (19) - (36) Net income (loss) 51 (4) 56 - 103 Preferred stock dividends - - - - - Net income (loss) attributable to Ameren common shareholders $ 51 $ (4) $ 56 $ - $ 103 Three Months 2021: Electric revenues 428 $ - $ 108 $ (18) 518 Purchased power (126) - - 18 (108) Electric margins 302 - 108 - 410 Natural gas revenues - 127 - - 127 Natural gas purchased for resale - (41) - -
(41)
Natural gas margins - 86 - - 86 Other operations and maintenance expenses (148) (55) (14) -
(217)
Depreciation and amortization expenses (78) (22) (18) -
(118)
Taxes other than income taxes (21) (12) (1) - (34)
Operating income (loss) 55 (3) 75 - 127
Other income, net 10 4 5 - 19
Interest charges (19) (11) (11) - (41)
Income (taxes) benefit (10) 2 (18) - (26)
Net income (loss) attributable to
Ameren common shareholders $ 36 $ (8) $ 51 $ - $ 79
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Ameren
Illinois Ameren Ameren Other /
Electric Illinois Illinois Intersegment Ameren
Distribution Natural Gas Transmission Eliminations Illinois
Nine Months 2022:
Electric revenues $ 1,641 $ - $ 320 $ (75) $ 1,886
Purchased power (683) - - 75 (608)
Electric margins 958 - 320 - 1,278
Natural gas revenues - 811 - - 811
Natural gas purchased for resale - (366) - - (366)
Natural gas margins - 445 - - 445
Other operations and maintenance
expenses (440) (185) (38) - (663)
Depreciation and amortization expenses (247) (72) (63) - (382)
Taxes other than income taxes (60) (59) (3) - (122)
Operating income (loss) 211 129 216 - 556
Other income, net 46 16 13 - 75
Interest charges (55) (32) (38) - (125)
Income taxes (50) (31) (49) - (130)
Net income 152 82 142 - 376
Preferred stock dividends (1) - - - (1)
Net income attributable to common
shareholder $ 151 $ 82 $ 142 $ - $ 375
Nine Months 2021:
Electric revenues $ 1,227 $ - $ 277 $ (49) $ 1,455
Purchased power (347) - - 49 (298)
Electric margins 880 - 277 - 1,157
Natural gas revenues - 642 - - 642
Natural gas purchased for resale - (235) - - (235)
Natural gas margins - 407 - - 407
Other operations and maintenance
expenses (402) (164) (38) - (604)
Depreciation and amortization expenses (230) (66) (54) - (350)
Taxes other than income taxes (59) (52) (3) - (114)
Operating income (loss) 189 125 182 - 496
Other income, net 29 10 10 - 49
Interest charges (56) (31) (36) - (123)
Income taxes (38) (29) (40) - (107)
Net income 124 75 116 - 315
Preferred stock dividends (1) - - - (1)
Net income attributable to common
shareholder $ 123 $ 75 $ 116 $ - $ 314 Electric and Natural Gas Margins
Electric margins are defined as electric revenues less fuel and purchased power
costs. Natural gas margins are defined as natural gas revenues less natural gas
purchased for resale. We consider electric and natural gas margins useful
measures to analyze the change in profitability of our electric and natural gas
operations between periods. We have included the analysis below to complement
the financial information we provide in accordance with GAAP. However, these
margins may not be a presentation defined under GAAP, and they may not be
comparable to other companies' presentations or more useful than the GAAP
information we provide elsewhere in this report.
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Electric Margins
Increase by Segment
Overall Ameren Increase of Overall Ameren Increase of
Total by Segment(a) $135 Million (QTD YoY) $330 Million (YTD YoY)
[[Image Removed: aee-20220930_g4.jpg]][[Image Removed: aee-20220930_g5.jpg]][[Image Removed: aee-20220930_g6.jpg]]
(a)Includes other/intersegment eliminations of
Ameren Missouri Ameren Illinois Electric Distribution Ameren Transmission Other/Intersegment Eliminations
Natural Gas Margins
Increase (Decrease) by Segment
Overall Ameren Increase
Overall Ameren Increase of $43 Million (YTD
of $10 Million (QTD YoY) YoY)
Total by Segment(a)
[[Image Removed: aee-20220930_g7.jpg]][[Image Removed: aee-20220930_g8.jpg]][[Image Removed: aee-20220930_g9.jpg]]
(a)Includes $14 million and $12 million at Ameren Missouri in the three and nine
months ended September 30, 2022 , respectively. Includes other/intersegment
eliminations of $(1) million and $(1) million in the three and nine months ended
September 30, 2022 , respectively.
Ameren Missouri
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The following tables present the favorable (unfavorable) variations byAmeren segment for electric and natural gas margins for the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods:
Electric and Natural Gas Margins
Ameren Illinois
Ameren Electric Ameren Illinois Other /Intersegment
Three Months Missouri Distribution Natural Gas Ameren Transmission(a) Eliminations Ameren
Electric revenue change:
Base rates (estimate)(b) $ 70 $ 24 $ - $ 9 $ - $ 103
Effect of weather (estimate)(c) 2 - - - - 2
Sales volumes and changes in customer
usage patterns (excluding the estimated
effects of weather and MEEIA) 5 - - - - 5
Off-system sales, capacity, and FAC
revenues, net 138 - - - - 138
Ameren Illinois energy-efficiency program
investment revenues - 2 - - - 2
Other 2 (2) - - - -
Cost recovery mechanisms - offset in fuel
and purchased power(d) (23) 224 - - (6) 195
Other cost recovery mechanisms(e) 31 (4) - - - 27
Total electric revenue change $ 225 $ 244 $ - $ 9 $ (6) $ 472
Fuel and purchased power change:
Energy costs (excluding the estimated
effect of weather) $ (139) $ - $ - $ - $
-
Effect of higher net energy costs included in base rates (6) - - - - (6) Transmission services charges 1 - - - - 1 Other (2) - - - 4 2 Cost recovery mechanisms - offset in electric revenue(d) 23 (224) - - 6 (195)
Total fuel and purchased power change
- $ - $ 10 $ (337)
Net change in electric margins $ 102 $ 20 $ - $ 9 $ 4 $ 135
Natural gas revenue change:
Base rates (estimate) $ 1 $ - $ - $ - $ - $ 1
QIP - - 5 - - 5
VBA - - 4 - - 4
Other - - (1) - (1) (2)
Cost recovery mechanisms - offset in
natural gas purchased for resale(d) 3 - 10 - - 13
Other cost recovery mechanisms(e) 1 - 1 - - 2
Total natural gas revenue change $ 5 $ - $ 19 $ - $ (1) $ 23
Natural gas purchased for resale change:
Cost recovery mechanisms - offset in
natural gas revenue(d) $ (3) $ - $ (10) $ - $ - $ (13)
Total natural gas purchased for resale
change $ (3) $ - $ (10) $ - $ - $ (13)
Net change in natural gas margins $ 2 $ - $ 9 $ - $ (1) $ 10
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Ameren Illinois Ameren
Ameren Electric Illinois Other /Intersegment
Nine Months Missouri Distribution Natural Gas Ameren Transmission(a) Eliminations Ameren
Electric revenue change:
Base rates (estimate)(b) $ 146 $ 71 $ - $ 39 $ - $ 256
Effect of weather (estimate)(c) 30 - - - - 30
Sales volumes and changes in customer usage
patterns (excluding the estimated effects
of weather and MEEIA) 9 - - - - 9
Off-system sales, capacity, and FAC
revenues, net 192 - - - - 192
Ameren Illinois energy-efficiency program
investment revenues - 8 - - - 8
Other 3 - - - - 3
Cost recovery mechanisms - offset in fuel
and purchased power(d) 5 335 - - (13) 327
Other cost recovery mechanisms(e) 38 - - - - 38
Total electric revenue change $ 423 $ 414 $ - $ 39 $ (13) $ 863
Fuel and purchased power change:
Energy costs (excluding the estimated
effect of weather) $ (195) $ - $ - $ - $ - $ (195)
Effect of weather (estimate)(c) (5) - - - - (5)
Effect of higher net energy costs included
in base rates (9) - - - - (9)
Other (3) (1) - - 7 3
Cost recovery mechanisms - offset in
electric revenue(d) (5) (335) - - 13 (327)
Total fuel and purchased power change
- $ 20 $ (533)
Net change in electric margins $ 206 $ 78 $ - $ 39 $ 7 $ 330
Natural gas revenue change:
Base rates (estimate) $ 4 $ - $ 3 $ - $ - $ 7
Change in rate design (estimate) - - 1 - - 1
QIP - - 20 - - 20
VBA - - 4 - - 4
Other - - 3 - (1) 2
Cost recovery mechanisms - offset in
natural gas purchased for resale(d) 25 - 131 - - 156
Other cost recovery mechanisms(e) 2 - 7 - - 9
Total natural gas revenue change $ 31 $ - $ 169 $ - $ (1) $ 199
Natural gas purchased for resale change:
Cost recovery mechanisms - offset in
natural gas revenue(d) $ (25) $ - $ (131) $ - $ - $ (156)
Total natural gas purchased for resale
change $ (25) $ - $ (131) $ - $ - $ (156)
Net change in natural gas margins $ 6 $ - $ 38 $ - $
(1)
(a)Includes an increase in transmission margins of$9 million and$43 million atAmeren Illinois for the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods. (b)For Ameren Illinois Electric Distribution andAmeren Transmission , base rates include increases or decreases to operating revenues related to the revenue requirement reconciliation adjustment under formula rates. For Ameren Missouri, base rates exclude an increase for the recovery of lost electric margins resulting from the MEEIA customer energy-efficiency programs and an increase in base rates for RESRAM. These changes in Ameren Missouri base rates are included in the "Sales volumes and changes in customer usage patterns (excluding the estimated effects of weather and MEEIA)" and "Cost recovery mechanisms - offset in fuel and purchased power" line items, respectively. (c)Represents the estimated variation resulting primarily from changes in cooling and heating degree-days on electric and natural gas demand compared with the year-ago periods; this variation is based on temperature readings from theNational Oceanic and Atmospheric Administration weather stations at local airports in our service territories. (d)Electric and natural gas revenue changes are offset by corresponding changes in "Fuel," "Purchased power," and "Natural gas purchased for resale" on the statement of income, resulting in no change to electric and natural gas margins. Activity in Other/Intersegment Eliminations represents the elimination of related-party transactions between Ameren Missouri,Ameren Illinois , and ATXI, as well asAmeren Transmission revenue from transmission services provided to Ameren Illinois Electric Distribution. See Note 8 - Related-party Transactions and Note 14 - Segment Information under Part I, Item 1, of this report for additional information on intersegment eliminations. (e)Offsetting expense increases or decreases are reflected in "Other operations and maintenance," "Depreciation and amortization," or in "Taxes other than income taxes," within the "Operating Expenses" section and "Income Taxes" in the statement of income. These items have no overall impact on earnings. 54
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Ameren's electric margins increased$135 million , or 10%, and$330 million , or 10%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods, due to increased margins at Ameren Missouri, Ameren Illinois Electric Distribution, andAmeren Transmission , as discussed below.Ameren's natural gas margins increased$10 million , or 10%, and$43 million , or 9%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods, due to increased margins atAmeren Illinois Natural Gas and Ameren Missouri, as discussed below.
Ameren Transmission's margins increased$9 million , or 6%, and$39 million , or 9%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods. Base rate revenues were favorably affected by increased capital investment (+$7 million and+$17 million , respectively), as evidenced by a 10% increase in rate base used to calculate the revenue requirement, higher recoverable expenses (+$1 million and+$12 million , respectively), and a higher equity percentage in the capital structure atAmeren Illinois (+$1 million and+$3 million , respectively). For the nine months endedSeptember 30, 2022 , margins increased due to the absence in 2022 of theFERC's March 2021 order (+$7 million ). See Transmission Formula Rate Revisions in Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report for additional information regarding theMarch 2021 FERC order.
Ameren Missouri
Ameren Missouri's electric margins increased$102 million , or 12%, and$206 million , or 11%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods. Revenues associated with "Cost recovery mechanisms - offset in fuel and purchased power" decreased$23 million and increased$5 million for the three and nine months endedSeptember 30, 2022 , respectively, due to changes in amortization of costs previously deferred under the FAC that were reflected in customer rates. The changes to "Cost recovery mechanisms - offset in fuel and purchased power" are fully offset by "Cost recovery mechanisms - offset in electric revenue," in the table above, and result in no impact to margins. Ameren Missouri's 5% exposure to net energy cost variances under the FAC is reflected within "Off-system sales, capacity, and FAC revenues, net" and "Energy costs (excluding the estimated effect of weather)".
The following items had a favorable effect on Ameren Missouri's electric margins
for the three and nine months ended
•TheDecember 2021 MoPSC electric rate order effectiveFebruary 28, 2022 , resulted in higher electric base rates, excluding the change in base rates for the MEEIA customer energy efficiency programs and the RESRAM, partially offset by higher net energy costs included in base rates, increased margins$64 million and$137 million , respectively. The change in electric base rates is the sum of the change in "Base rates (estimate)" (+$70 million and+$146 million , respectively) and the "Effect of higher net energy costs included in base rates" (-$6 million and -$9 million , respectively) in the table above. •Summer temperatures were warmer as cooling degree days increased 3% for the nine months endedSeptember 30, 2022 , and winter temperatures were colder as heating degree days increased 1% for the three months endedMarch 31, 2022 . The aggregate effect of weather was comparable for the three months endedSeptember 30, 2022 , and increased margins$25 million for the nine months endedSeptember 30, 2022 . The change in margins due to weather is the sum of the "Effect of weather (estimate)" on electric revenues (+$2 million and+$30 million , respectively) and the "Effect of weather (estimate)" on fuel and purchased power (-$5 million for the nine months endedSeptember 30, 2022 ) in the table above. •Other cost recovery mechanisms increased margins$31 million and$38 million , respectively, due to increased RESRAM revenues (+$30 million and+$43 million , respectively) primarily resulting from higher sales from electric generation included in the RESRAM and lower deferral of revenues due to inclusion of production tax credits in base rates pursuant to theDecember 2021 electric rate order, increased excise taxes (+$1 million and+$7 million , respectively), and a decrease in recoverable MEEIA program costs (-$12 million for the nine months endedSeptember 30, 2022 ). •Excluding the estimated effects of weather and the MEEIA customer energy-efficiency programs, electric revenues increased an estimated$5 million and$9 million , respectively. The increase was primarily due to an increase in retail sales volumes and an increase in the average retail price per kilowatthour due to changes in customer usage patterns. Ameren Missouri's electric margins were comparable for the three months endedSeptember 30, 2022 , with a decrease of$1 million , and decreased$3 million for the nine months endedSeptember 30, 2022 , due to its 5% exposure to net energy cost variances under the FAC. The change in net energy costs is the sum of "Off-system sales, capacity and FAC revenues, net" (+$138 million and+$192 million , respectively) and "Energy costs (excluding the estimated effect of weather)" (-$139 million and -$195 million , respectively) in the table above. Net energy costs were higher than those reflected in base rates, primarily because of higher purchased power costs due to higher energy prices in the three and nine months endedSeptember 30, 2022 . In the three and nine months endedSeptember 30, 2022 , capacity revenues and costs increased as the capacity price set by the annual MISO auction in 2022 increased from$5 per MW-day to$237 per MW-day. TheApril 2021 MISO auction pricing was effective fromJune 2021 throughMay 2022 , while theApril 2022 MISO auction pricing established the annual rate beginning inJune 2022 . For the three and nine months endedSeptember 30, 2022 , increased capacity revenues of$158 million 55
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and$210 million , respectively, are reflected in "Off-system sales, capacity and FAC revenues, net" and increased capacity costs of$152 million and$202 million , respectively, are reflected in "Energy costs (excluding the estimated effect of weather)" in the table above. See Outlook for additional information related to theApril 2022 MISO auction. Ameren Missouri's natural gas margins were comparable for the three months endedSeptember 30, 2022 , and increased$6 million , or 10%, for the nine months endedSeptember 30, 2022 , compared with the year-ago periods. Margins increased for the nine months endedSeptember 30, 2022 , due to increased base rates as a result of theDecember 2021 MoPSC natural gas rate order effectiveFebruary 28, 2022 . Purchased gas costs increased$25 million for the nine months endedSeptember 30, 2022 due to 2022 amortization of natural gas costs previously deferred under the PGA, driven by a significant increase in cost and customer demand as result of the extremely cold weather inmid-February 2021 . The increased purchased natural gas costs are fully offset by an increase in natural gas revenues under the PGA, resulting in no impact to margin. The increase in purchased natural gas cost is reflected in "Cost recovery mechanisms - offset in natural gas revenue" and the associated recoverability from customers is reflected in "Cost recovery mechanisms - offset in natural gas purchased for resale" in the table above.Ameren Illinois Ameren Illinois' electric margins increased$29 million , or 7%, and$121 million , or 10%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods, driven by increased margins at Ameren Illinois Electric Distribution and Ameren Illinois Transmission.Ameren Illinois Natural Gas' margins increased$9 million , or 10%, and$38 million , or 9%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods.
Ameren Illinois Electric Distribution
Ameren Illinois Electric Distribution's margins increased$20 million , or 7%, and$78 million , or 9%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods. Purchased power costs increased$224 million and$335 million for the three and nine months endedSeptember 30, 2022 , respectively. Purchased power costs were higher primarily due to increased energy prices (+$107 million and+$181 million , respectively) largely reflecting the results of IPA procurement events, and increased capacity prices (+$39 million and+$50 million , respectively). In the three and nine months endedSeptember 30, 2022 , capacity revenues and costs increased as the capacity price set by the annual MISO auction in 2022 increased from$5 per MW-day to$237 per MW-day. TheApril 2021 MISO auction pricing was effective fromJune 2021 throughMay 2022 , while theApril 2022 MISO auction pricing established the annual rate beginning inJune 2022 . See Outlook for additional information related to theApril 2022 MISO auction. In addition to increased energy and capacity prices, higher volumes increased purchased power costs (+$65 million and+$79 million , respectively), primarily due to residential and small commercial customer switching from alternative retail electric suppliers toAmeren Illinois' supplied power. The increased purchased power costs are fully offset by an increase in electric revenues under the cost recovery mechanisms for purchased power, resulting in no impact to margin. The increase in purchased power cost is reflected in "Cost recovery mechanisms - offset in electric revenue" and the associated recoverability from customers is reflected in "Cost recovery mechanisms - offset in fuel and purchased power" in the table above.
The following items had a favorable effect on
•Base rates increased due to a higher recognized ROE (+$6 million and+$14 million , respectively), as evidenced by an increase of 97 basis points in the estimated annual average of the monthly yields of the 30-yearUnited States Treasury bonds, increased capital investment (+$3 million and+$7 million , respectively), as evidenced by a 7% increase in rate base used to calculate the revenue requirement, and higher recoverable non-purchased power expenses (+$20 million and+$59 million , respectively), partially offset by the absence in 2022 of revenue requirement reconciliation adjustment true-ups (-$5 million and -$9 million , respectively) recorded in the first and third quarters of 2021. The sum of these changes collectively increased margins$24 million and$71 million , respectively. •Revenues increased$8 million for the nine months endedSeptember 30, 2022 , due to the recovery of and return on increased energy-efficiency program investments under performance-based formula ratemaking.
For the three months ended
Ameren Illinois Natural Gas' margins increased$9 million , or 10%, and$38 million , or 9%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods. Purchased gas costs increased$10 million and$131 million for the three and nine months endedSeptember 30, 2022 , respectively, due to 2022 amortization of natural gas costs previously deferred under the PGA, driven by a significant increase in cost and customer demand as a result of the extremely cold weather inmid-February 2021 . The increased purchased natural gas costs are fully offset by an increase in natural gas revenues under the PGA, resulting in no impact to 56
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margin. The increase in purchased natural gas cost is reflected in "Cost recovery mechanisms - offset in natural gas revenue" and the associated recoverability from customers is reflected in "Cost recovery mechanisms - offset in natural gas purchased for resale" in the table above.
The following items had a favorable effect on
•Revenues increased$5 million and$20 million , respectively, due to additional investment in natural gas infrastructure under the QIP. •Other cost recovery mechanisms increased revenues$7 million for the nine months endedSeptember 30, 2022 , primarily due to increased revenues for excise taxes. •Revenues increased$4 million for the three and nine months endedSeptember 30, 2022 , related to a change in the timing of revenues recognized under the VBA due to changes associated with the customer usage pattern between periods. The change in timing of revenues is not expected to materially impact full-year results. •Revenues increased$3 million inJanuary 2022 due to higher base rates as a result of theJanuary 2021 natural gas rate order.
Ameren Illinois Transmission
Ameren Illinois Transmission's margins increased$9 million , or 8%, and$43 million , or 16%, for the three and nine months endedSeptember 30, 2022 , respectively, compared with the year-ago periods. Base rate revenues were favorably affected by increased capital investment (+$7 million and+$18 million , respectively), as evidenced by a 16% increase in rate base used to calculate the revenue requirement, higher recoverable expenses (+$1 million and+$15 million , respectively), and a higher equity percentage in the capital structure (+$1 million and+$3 million , respectively). For the nine months endedSeptember 30, 2022 , margins increased due to the absence in 2022 of theFERC's March 2021 order (+$7 million ). See Transmission Formula Rate Revisions in Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report for additional information regarding theMarch 2021 FERC order. 57
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Other Operations and Maintenance Expenses
Increase (Decrease) by Segment
Overall Ameren
Increase of $18 Overall Ameren Increase of
Total by Segment(a) Million (QTD YoY) $138 Million (YTD YoY)
[[Image Removed: aee-20220930_g10.jpg]][[Image Removed: aee-20220930_g11.jpg]][[Image Removed: aee-20220930_g12.jpg]]
(a)Includes $14 million and $16 million at Ameren Transmission in the three
months ended September 30, 2022 and 2021, respectively. Also includes
other/intersegment eliminations of $5 million , $(2) million , $12 million , and
$(6) million in the three months ended September 30, 2022 and 2021, and in the
nine months ended September 30, 2022 and 2021, respectively.
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission DistributionAmeren Other operations and maintenance expenses increased$18 million and$138 million in the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods. In addition to changes by segments discussed below, other operations and maintenance expenses increased$7 million and$18 million in the three and nine months endedSeptember 30, 2022 for activity not reported as part of a segment, as reflected in "Other/Intersegment Eliminations" above, primarily because of an increase in the elimination of the non-service cost component of net periodic benefit income atAmeren Services . The non-service cost component of net periodic benefit cost or income atAmeren Services is allocated to the segments and primarily included in the segments' other operations and maintenance expenses.
Other operations and maintenance expenses were comparable between periods.
Ameren Missouri
Other operations and maintenance expenses increased$12 million and$61 million in the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods. The following items increased other operations and maintenance expenses in the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods (except where a specific period is referenced): •The cash surrender value of COLI decreased$4 million and$22 million , respectively, primarily because of unfavorable market returns in 2022. In the three and nine months endedSeptember 30, 2022 , the effect of changes in the cash surrender value of COLI were losses of$5 million and$18 million , respectively, compared with a loss of$1 million and a gain of$4 million in the year-ago periods, respectively. •Labor and benefit costs increased$12 million and$18 million , respectively, largely because of a higher base level of pension service costs reflected in electric service rates pursuant to theDecember 2021 MoPSC rate order. 58 -------------------------------------------------------------------------------- Table of Contents •The absence in 2022 of$6 million and$18 million , respectively, in service fees received under refined coal production agreements, as the result of the expiration of refined coal tax credits at the end of 2021, which impact was reflected in electric services rates pursuant to theDecember 2021 MoPSC rate order. •Transmission and distribution expenditures, excluding storm costs, increased$3 million and$8 million , respectively, primarily because of disciplined project management and other project-related costs. •The absence of a$5 million deferral to a regulatory asset of certain costs previously incurred related to the COVID-19 pandemic, pursuant to theMarch 2021 MoPSC orders, which decreased other operations and maintenance expenses in the nine months endedSeptember 30, 2021 . •Energy center operating costs increased$4 million in the nine months endedSeptember 30, 2022 , primarily because of costs related to new wind generation facilities, which are recovered under the RESRAM. •Customer billing costs increased$3 million in the nine months endedSeptember 30, 2022 , primarily because credit card fees charged to customers were discontinued inMarch 2022 pursuant to theDecember 2021 MoPSC rate order, which incorporated an amount of such fees in electric service rates.
The above increases in the three and nine months ended
•MEEIA customer energy-efficiency program spend decreased
Other operations and maintenance expenses were comparable atAmeren Illinois between the three months endedSeptember 30, 2022 and 2021. Other operations and maintenance expenses increased$59 million in the nine months endedSeptember 30, 2022 , compared with the year-ago period, as discussed below. Other operations and maintenance expenses decreased$3 million atAmeren Illinois Transmission in the three months endedSeptember 30, 2022 , compared with the year-ago period, primarily because of insignificant decreases in various expenses. Other operations and maintenance expenses were comparable atAmeren Illinois Transmission in the nine months endedSeptember 30, 2022 and 2021.
Ameren Illinois Electric Distribution
Other operations and maintenance expenses decreased$3 million in the three months endedSeptember 30, 2022 , compared with the year-ago period, primarily because of power restoration assistance provided to other utilities in the year-ago period. Other operations and maintenance expenses increased$38 million in the nine months endedSeptember 30, 2022 , compared with the year-ago period primarily because of the following items: •Distribution system expenditures increased$15 million , primarily because of projects deferred in 2021 as a result of storm restoration efforts for which the associated costs were deferred as a regulatory asset in 2021. •The cash surrender value of COLI decreased$10 million , primarily because of unfavorable market returns in 2022, compared with favorable market returns in 2021. •Increased bad debt expense of$8 million , primarily because of increased recovery of bad debt costs allowed by the ICC. •Amortization of regulatory assets associated with customer energy-efficiency program investments under formula ratemaking increased$6 million . •Injuries and damages increased$3 million , primarily because of an increase in claims compared with the year-ago period.
The above increases were partially offset by a
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Other operations and maintenance expenses increased$4 million in the three months endedSeptember 30, 2022 , compared with the year-ago period, primarily because of insignificant increases in various expenses. Other operations and maintenance expenses increased$21 million in the nine months endedSeptember 30, 2022 , compared with the year-ago period, primarily because of a$9 million increase in distribution system expenditures primarily related to a change in the timing of capitalized work related to property, plant, and equipment and operations and maintenance activity. Other operations and maintenance expenses also increased$5 million because of a decrease in the cash surrender value of COLI related to unfavorable market returns in 2022, compared with favorable market returns in 2021, and$3 million related to higher labor and benefits costs. In the nine months endedSeptember 30, 2022 , the effect of COLI was a loss of$4 million , compared with a gain of$1 million in the year-ago period.
Depreciation and Amortization Expenses
Increase by Segment
Overall Ameren Increase
of $60 Million (QTD Overall Ameren Increase of
Total by Segment(a),(b) YoY) $109 Million (YTD YoY)
[[Image Removed: aee-20220930_g13.jpg]][[Image Removed: aee-20220930_g14.jpg]][[Image Removed: aee-20220930_g15.jpg]]
(a)Includes $31 million and $28 million at Ameren Transmission in the three
months ended September 30, 2022 and 2021, respectively. Also includes
other/intersegment eliminations of $3 million , $1 million , $5 million , and $3
million in the three months ended September 30, 2022 and 2021, and in the nine
months ended September 30, 2022 and 2021, respectively.
(b)Ameren and Ameren Missouri include PISA and RESRAM deferrals of $9 million ,
$27 million , $35 million , and $68 million in the three months ended
September 30, 2022 and 2021, and in the nine months ended September 30, 2022 and
2021, respectively.
Ameren Missouri
Ameren Illinois Electric Ameren Transmission Distribution Depreciation and amortization expenses increased$60 million ,$47 million , and$12 million in the three months endedSeptember 30, 2022 , and$109 million ,$76 million , and$32 million in the nine months endedSeptember 30, 2022 , compared with the year-ago periods, atAmeren , Ameren Missouri, andAmeren Illinois , respectively, primarily because of additional property, plant, and equipment investments across their respective segments.Ameren's and Ameren Missouri's depreciation and amortization expenses for the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods, were affected by the following, which include the effect of the additional investments: •Depreciation and amortization rate changes pursuant to theDecember 2021 MoPSC electric rate order, which increased depreciation and amortization expenses by$17 million and$40 million , respectively. •Increased depreciation and amortization expenses of$17 million and$40 million , respectively, for amounts previously deferred under thePISA and RESRAM and subsequently reflected in base rates pursuant to theDecember 2021 MoPSC electric rate order, largely due to investments in wind generation. 60 -------------------------------------------------------------------------------- Table of Contents •Fewer deferrals of depreciation and amortization expenses of$18 million and$33 million , respectively, due to less property, plant, and equipment eligible for recovery under thePISA and RESRAM as a result of theDecember 2021 MoPSC electric rate order. •The net over-recovery of RESRAM eligible expenses increased depreciation and amortization expenses by$13 million in the three months endedSeptember 30 , 2022,compared with the year-ago period. •The net deferral related to the Meramec Energy Center retirement, which decreased depreciation and amortization expenses by$15 million and$35 million , respectively, pursuant to theDecember 2021 MoPSC electric rate order, which established a five-year recovery period for certain Meramec Energy Center costs. Taxes Other Than Income Taxes Increase (Decrease) by Segment Overall Ameren Increase Overall Ameren Increase of$23 Million (YTD Total by Segment(a) of$2 Million (QTD YoY) YoY) [[Image Removed: aee-20220930_g16.jpg]] [[Image Removed: aee-20220930_g17.jpg]][[Image Removed: aee-20220930_g18.jpg]] (a)Includes$3 million ,$2 million ,$7 million , and$6 million atAmeren Transmission in the three months endedSeptember 30, 2022 and 2021, and in the nine months endedSeptember 30, 2022 and 2021, respectively. Also includes other/intersegment eliminations of$2 million ,$3 million ,$8 million , and$9 million in the three months endedSeptember 30, 2022 and 2021, and in the nine months endedSeptember 30, 2022 and 2021, respectively.
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission Distribution Taxes other than income taxes were comparable atAmeren between the three months endedSeptember 30, 2022 and 2021. Taxes other than income taxes increased$23 million in the nine months endedSeptember 30, 2022 , compared with the year-ago period, primarily because of$8 million and$7 million increases in excise taxes atAmeren Missouri and Ameren Illinois Natural Gas , respectively, mostly due to higher base rates at Ameren Missouri, pursuant to theDecember 2021 MoPSC electric rate order, and increased sales at both segments. Taxes other than income taxes also increased$6 million in the nine months endedSeptember 30, 2022 , compared with the year-ago period, at Ameren Missouri because of increased property taxes, primarily resulting from higher assessed values and lower property tax refunds. 61
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Other Income, Net
Increase (Decrease) by Segment
Overall Ameren Increase
Overall Ameren Increase of $29 Million (YTD
Total by Segment(a) of $2 Million (QTD YoY) YoY)
[[Image Removed: aee-20220930_g19.jpg]][[Image Removed: aee-20220930_g20.jpg]][[Image Removed: aee-20220930_g21.jpg]]
(a)Includes
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission Distribution Other income, net, was comparable atAmeren between the three months endedSeptember 30, 2022 and 2021, primarily because a$4 million increase in the non-service cost component of net periodic benefit income atAmeren Illinois Electric Distribution, which was partially offset by decreased income from equity method investments for activity not reported as part of a segment. Other Income, net, increased$29 million in the nine months endedSeptember 30, 2022 , compared with the year-ago period, primarily because of increases in the non-service cost component of net periodic benefit income of$14 million ,$14 million , and$6 million for Ameren Illinois Electric Distribution, activity not reported as part of a segment, andAmeren Illinois Natural Gas , respectively. These increases in other income, net, were partially offset by a$7 million decrease in income from equity method investments for activity not reported as part of a segment. See Note 5 - Other Income, Net, under Part I, Item 1, of this report for additional information. See Note 11 - Retirement Benefits under Part I, Item 1, of this report for more information on the non-service cost components of net periodic benefit income. 62
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Interest Charges
Increase (Decrease) by Segment
Overall Ameren Overall Ameren Increase
Increase of $32 of $66 Million (YTD
Total by Segment(a)(b) Million (QTD YoY) YoY)
[[Image Removed: aee-20220930_g22.jpg]][[Image Removed: aee-20220930_g23.jpg]][[Image Removed: aee-20220930_g24.jpg]]
(a)Includes $19 million and $19 million at Ameren Illinois Electric Distribution
in the three months ended September 30, 2022 and 2021, respectively. Also
includes $10 million and $11 million at Ameren Illinois Natural Gas in the three
months ended September 30, 2022 and 2021, respectively.
(b)Ameren and Ameren Missouri include PISA and RESRAM deferrals of $4 million ,
$23 million , $25 million , and $56 million in the three months ended
September 30, 2022 and 2021, and in the nine months ended September 30, 2022 and
2021, respectively.
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission Distribution Interest charges increased$32 million and$66 million in the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods. The following items increased interest charges in the three and nine months endedSeptember 30, 2022 , compared with the year-ago periods: •Interest charges atAmeren and Ameren Missouri reflected a deferral to a regulatory asset of interest charges pursuant toPISA and RESRAM. The amount of interest charges included in base rates forPISA and RESRAM deferrals was updated when new customer rates became effective onFebruary 28, 2022 , pursuant to theDecember 2021 MoPSC electric rate order, which incorporated deferrals throughSeptember 30, 2021 . Lower deferrals, due to the inclusion in base rates of interest associated with certain property, plant, and equipment previously deferred under thePISA and RESRAM, increased interest charges by$18 million and$29 million , respectively. •Issuances of long-term debt at Ameren Missouri inJune 2021 andApril 2022 collectively increased interest charges by$5 million and$15 million , respectively. •Issuances of long-term debt atAmeren (parent) in March andNovember 2021 collectively increased interest charges by$3 million and$9 million , respectively. •Interest charges atAmeren (parent) increased$3 million and$5 million , respectively, because of higher interest rates on an increased level of short-term borrowings. See Note 3 - Short-term Debt and Liquidity under Part I, Item 1, of this report and the Long-term Debt and Equity section below for additional information on short-term borrowings and long-term debt, respectively. 63
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Income Taxes
The following table presents effective income tax rates for the three and nine
months ended
Three Months(a) Nine Months(a)
2022 2021 2022 2021
Ameren 15 % 14 % 14 % 13 %
Ameren Missouri (2) % (1) % (2) % (1) %
Ameren Illinois 26 % 25 % 26 % 25 %
Ameren Illinois Electric Distribution 25 % 24 % 25 % 24 %
Ameren Illinois Natural Gas 20 % 21 % 27 % 28 %
Ameren Illinois Transmission 26 % 26 % 26 % 26 %
Ameren Transmission 25 % 26 % 26 % 26 %
(a)Estimate of the annual effective income tax rate adjusted to reflect the tax
effect of items discrete to the three and nine months ended September 30, 2022
and 2021.
See Note 12 - Income Taxes under Part I, Item 1, of this report for a reconciliation of the federal statutory corporate income tax rate to the effective income tax rate for the Ameren Companies.
LIQUIDITY AND CAPITAL RESOURCES
Collections from our tariff-based revenues are our principal source of cash provided by operating activities. A diversified retail customer mix, primarily consisting of rate-regulated residential, commercial, and industrial customers, provides us with a reasonably predictable source of cash. In addition to using cash provided by operating activities, we use available cash, drawings under committed credit agreements, commercial paper issuances, and/or, in the case of Ameren Missouri andAmeren Illinois , short-term affiliate borrowings to support normal operations and temporary capital requirements. We may reduce our short-term borrowings with cash provided by operations or, at our discretion, with long-term borrowings, or, in the case of Ameren Missouri andAmeren Illinois , with capital contributions fromAmeren (parent). As ofSeptember 30, 2022 , there have been no material changes other than in the ordinary course of business related to cash requirements arising from these long-term commitments provided in Item 7 of the Form 10-K for the year endedDecember 31, 2021 . In April, May, andSeptember 2022 ,Ameren Illinois conducted procurement events, administered by the IPA, to purchase energy products and acquire capacity throughMay 2025 . As a result,Ameren andAmeren Illinois' estimated minimum purchase obligations for purchased power increased by$0.6 billion in total over the period ofOctober 2022 throughMay 2025 . We expect to make significant capital expenditures over the next five years, supported by a combination of long-term debt and equity, as we invest in our electric and natural gas utility infrastructure to support overall system reliability, grid modernization, renewable energy target requirements, environmental compliance, and other improvements. For additional information about our long-term debt outstanding, including maturities due within one year, and the applicable interest rates, see Note 5 - Long-term Debt and Equity Financings under Part II, Item 8 of the Form 10-K and Note 4 - Long-term Debt and Equity Financings under Part I, Item 1, of this report. As part of its funding plan for capital expenditures,Ameren is using newly issued shares of common stock, rather than market-purchased shares, to satisfy requirements under the DRPlus and employee benefit plans and expects to continue to do so through at least 2026.Ameren expects these issuances to provide equity of about$100 million annually. In addition, in 2021,Ameren established an ATM program under whichAmeren may offer and sell from time to time up to$750 million of its common stock, which includes the ability to enter into forward sales agreements, subject to market conditions and other factors. In the fourth quarter of 2022,Ameren expects to increase the amount available under the ATM program by approximately$1 billion for equity needs in 2024 and beyond. There were no shares issued under the ATM program for the three and nine months endedSeptember 30, 2022 .Ameren has entered into multiple forward sale agreements under the ATM program with various counterparties relating to 6.6 million shares of common stock. As ofSeptember 30, 2022 ,Ameren could have settled the forward sale agreements with physical delivery of 6.6 million shares of common stock to the respective counterparties in exchange for cash of$587 million . As ofSeptember 30, 2022 ,Ameren had substantially utilized the available capacity under the ATM program, which takes into account the forward sale agreements.Ameren expects to settle approximately$300 million of the forward sale agreements and issue 3.4 million shares of common stock byDecember 31, 2022 . In addition,Ameren expects to settle approximately$300 million of the forward sale agreements and issue 3.2 million shares of common stock byDecember 31, 2023 .Ameren plans to issue approximately$300 million of equity each year from 2022 to 2026 in addition to issuances under the DRPlus and employee benefit plans.Ameren expects its equity to total capitalization ratio to be approximately 45% throughDecember 31, 2026 , with the long-term intent to support solid investment-grade credit ratings. See Long-term Debt and Equity below and Note 4 - Long-term Debt and Equity Financings under Part I, Item 1, of this report for additional information on the ATM program, including the forward sale agreements under the ATM program relating to common stock. The use of cash provided by operating activities and short-term borrowings to fund capital expenditures and other long-term investments at theAmeren Companies frequently results in a working capital deficit, defined as current liabilities exceeding current assets, as was the case atSeptember 30, 2022 , forAmeren andAmeren Illinois . With the credit capacity available under the Credit Agreements, and cash and cash equivalents,Ameren (parent), Ameren Missouri, andAmeren Illinois , collectively, had net available liquidity of$1.1 billion atSeptember 30, 2022 . See Credit Facility Borrowings and Liquidity for additional information. 64
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The following table presents net cash provided by (used in) operating, investing, and financing activities for the nine months endedSeptember 30, 2022 and 2021: Net Cash Provided By Net Cash Used In Net Cash Provided By Operating Activities Investing Activities
Financing Activities
2022 2021 Variance 2022 2021 Variance 2022 2021 Variance
Ameren $ 1,599 $ 1,192 $ 407 $ (2,458) $ (2,646) $ 188 $ 884 $ 1,298 $ (414)
Ameren Missouri 726 645 81 (1,255) (1,478) 223 528 699 (171)
Ameren Illinois 835 507 328 (1,145) (1,074) (71) 343 542 (199)
Cash Flows from Operating Activities
Our cash provided by operating activities is affected by fluctuations of trade accounts receivable, inventories, and accounts and wages payable, among other things, as well as the unique regulatory environment for each of our businesses. Substantially all expenditures related to fuel, purchased power, and natural gas purchased for resale are recovered from customers through rate adjustment mechanisms, which may be adjusted without a traditional rate proceeding. Similar regulatory mechanisms exist for certain other operating expenses that can also affect the timing of cash provided by operating activities. The timing of cash payments for costs recoverable under our regulatory mechanisms differs from the recovery period of those costs. Additionally, the seasonality of our electric and natural gas businesses, primarily caused by seasonal customer rates and changes in customer demand due to weather, such as increased demand resulting from the extremely cold weather inmid-February 2021 discussed below, significantly affects the amount and timing of our cash provided by operating activities. As a result of the significant increase in customer demand and prices for natural gas and electricity experienced inmid-February 2021 due to extremely cold weather, Ameren Missouri andAmeren Illinois had under-recovered costs for the month ofFebruary 2021 under their PGA clauses and, for Ameren Missouri, under the FAC (Ameren Missouri - PGA$53 million , FAC$50 million ;Ameren Illinois - PGA$221 million ). Ameren Missouri's PGA under-recovery is being collected from customers over 36 months beginningNovember 2021 , pursuant to anOctober 2021 MoPSC order, and the FAC under-recovery was collected over eight months beginningOctober 2021 .Ameren Illinois collected the PGA under-recovery over 18 months beginningApril 2021 .
•A$561 million increase resulting from increased customer collections and decreased expenditures under the PGA, primarily as a result of the significant increase from customer demand and prices for natural gas experienced inmid-February 2021 due to extremely cold weather, a net increase attributable to other regulatory recovery mechanisms, and higher customer collections resulting from base rate increases pursuant to Ameren Missouri'sDecember 2021 electric rate order. •A$24 million decrease in coal inventory levels at Ameren Missouri, as less coal was purchased in 2022 due to service-related delivery disruptions. •A$23 million decrease in payments to settle ARO liabilities, primarily related to the closure of Ameren Missouri's CCR storage facilities. •A$21 million decrease in pension and postretirement benefit plan contributions. •A$12 million decrease in major storm restoration costs atAmeren Illinois , primarily due to aJanuary 2021 storm.
The following items partially offset the increase in
•A$51 million increase in purchases of materials and supplies inventories to support operations in 2022 as levels were increased to mitigate against potential supply disruptions. •A$45 million increase in payments for nuclear refueling and maintenance outages at Ameren Missouri's Callaway Energy Center. There was no scheduled refueling and maintenance outage in 2021. •A$34 million increase in payments for certain cloud computing arrangements. •A$34 million increase in interest payments, primarily due to an increase in the average outstanding debt. •The absence in 2022 of$20 million in service fees received under refined coal production agreements at Ameren Missouri, as the result of the expiration of refined coal tax credits at the end of 2021. •A$16 million increase in net collateral posted with counterparties, primarily due to changes in the market prices of power, natural gas, and other fuels. •A$15 million increase in the cost of natural gas held in storage, primarily atAmeren Illinois , because of higher prices. •A$13 million increase in property tax payments at Ameren Missouri, primarily due to higher assessed property tax values. 65
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Ameren Missouri
Ameren Missouri's cash provided by operating activities increased$81 million in the first nine months of 2022, compared with the year-ago period. The following items contributed to the increase: •A$203 million increase resulting from increased customer collections and decreased expenditures under the PGA due to the significant increase from customer demand and prices for natural gas experienced inmid-February 2021 due to extremely cold weather and higher customer collections resulting from base rate increases pursuant to theDecember 2021 electric rate order, partially offset by a decrease attributable to other regulatory mechanisms. •A$24 million decrease in coal inventory levels, as less coal was purchased in 2022 due to service-related delivery disruptions. •A$23 million decrease in payments to settle ARO liabilities, primarily related to the closure of CCR storage facilities. •An$8 million decrease in pension and postretirement benefit plan contributions.
The following items partially offset the increase in Ameren Missouri's cash from operating activities between periods:
•A$45 million increase in payments for nuclear refueling and maintenance outages at the Callaway Energy Center. There was no scheduled refueling and maintenance outage in 2021. •A$35 million increase in purchases of materials and supplies inventories to support operations in 2022 as levels were increased to mitigate against potential supply disruptions. •The absence in 2022 of$20 million in service fees received under refined coal production agreements, as the result of the expiration of refined coal tax credits at the end of 2021. •A$15 million increase in payments for certain cloud computing arrangements. •A$15 million increase in interest payments, primarily due to an increase in the average outstanding debt. •A$14 million increase in net collateral posted with counterparties, primarily due to changes in the market prices of power, natural gas, and other fuels. •A$13 million increase in property tax payments, primarily due to higher assessed property tax values.
Ameren Illinois' cash provided by operating activities increased$328 million in the first nine months of 2022, compared with the year-ago period. The following items contributed to the increase: •A$355 million increase resulting from increased customer collections and decreased expenditures under the PGA, primarily as a result of the significant increase from customer demand and prices for natural gas experienced in mid-February due to extremely cold weather and a net increase attributable to other regulatory recovery mechanisms. •A$21 million increase in income tax refunds fromAmeren (parent) pursuant to the tax allocation agreement, primarily due to lower taxable income in 2022 and the timing of payments in 2022. •A$12 million decrease in major storm restoration costs, primarily due to aJanuary 2021 storm. •A$10 million decrease in pension and postretirement benefit plan contributions.
The following items partially offset the increase in
•A$19 million increase in payments for certain cloud computing arrangements. •A$16 million increase in purchases of materials and supplies inventories to support operations in 2022 as levels were increased to mitigate against potential supply disruptions. •A$13 million increase in the cost of natural gas held in storage because of higher prices.
Cash Flows from Investing Activities
Ameren's cash used in investing activities decreased$188 million during the first nine months of 2022, compared with the year-ago period, primarily as a result of a$176 million decrease in capital expenditures, largely resulting from a reduction in expenditures related to wind generation assets atAmeren Missouri , partially offset by increased expenditures for electric delivery infrastructure upgrades at Ameren Missouri and for transmission projects atAmeren Illinois . Ameren Missouri's cash used in investing activities decreased$223 million during the first nine months of 2022, compared with the year-ago period, primarily as a result of a$330 million decrease in capital expenditures, primarily resulting from a reduction in expenditures related to wind generation assets and transmission projects partially offset by increased expenditures for electric delivery infrastructure upgrades and software projects. This decrease was partially offset by a$115 million return of net money pool advances in the first nine months of 2021. 66
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Ameren Illinois' cash used in investing activities increased$71 million during the first nine months of 2022, compared with the year-ago period, primarily as a result of a$119 million increase in capital expenditures, largely related to transmission projects. This increase was partially offset by a$41 million decrease inAmeren Illinois' net money pool advances.
Cash Flows from Financing Activities
Cash provided by, or used in, financing activities is a result of our financing needs, which depend on the level of cash provided by operating activities, the level of cash used in investing activities, the level of dividends, and our long-term debt maturities, among other things. Due to extremely cold winter weather inmid-February 2021 , Ameren Missouri andAmeren Illinois experienced higher than anticipated commodity costs for natural gas purchased for resale and purchased power, which contributed to the acceleration of the timing of certain planned 2021 debt issuances.Ameren's cash provided by consolidated financing activities decreased$414 million during the first nine months of 2022, compared with the year-ago period. During the first nine months of 2022,Ameren utilized proceeds of$1.1 billion of long-term debt to repay then-outstanding short-term debt, for near-term capital expenditures, and to repay$450 million of maturities of long-term debt. In addition, during the first nine months of 2022,Ameren utilized proceeds from net commercial paper issuances of$675 million along with cash provided by operating activities to fund, in part, capital expenditures. In comparison, during the first nine months of 2021,Ameren utilized proceeds from the issuance of$1.4 billion of long-term debt for general corporate purposes, including to repay then-outstanding short-term debt, including short-term debt incurred in connection with the increased purchases for natural gas for resale and purchased power costs discussed above, and to fund, in part, capital expenditures. During the first nine months of 2021,Ameren received$63 million from net commercial paper issuances. In addition,Ameren received aggregate cash proceeds of$297 million from the issuance of common stock under the ATM program, the DRPlus, and the 401(k) plan and the settlement of the remaining portion of the 2019 forward sale agreement during the first nine months of 2021. These proceeds were used to fund a portion of Ameren Missouri's wind generation investments and to fund, in part, other capital expenditures. During the first nine months of 2022,Ameren paid common stock dividends of$457 million , compared with$423 million in the year-ago period, as a result of an increase in both the dividend rate and the number of common shares outstanding. Ameren Missouri's cash provided by financing activities decreased$171 million during the first nine months of 2022, compared with the year-ago period. During the first nine months of 2022, Ameren Missouri utilized net proceeds from the issuance of long-term debt of$524 million to repay then-outstanding short-term debt and for near-term capital expenditures. In addition, during the first nine months of 2022, Ameren Missouri utilized proceeds from net commercial paper issuances of$13 million along with cash provided by operating activities to fund, in part, capital expenditures. In comparison, during the first nine months of 2021, Ameren Missouri utilized net proceeds from the issuance of long-term debt of$524 million to repay then-outstanding short-term debt, including short-term debt incurred in connection with the increased purchases for natural gas for resale and purchased power costs discussed above. Additionally, proceeds from the issuance of long-term debt and capital contributions of$183 million fromAmeren (parent) were used to fund a portion of wind generation investments and to fund, in part, capital expenditures during the first nine months of 2021.Ameren Illinois' cash provided by financing activities decreased$199 million during the first nine months of 2022, compared with the year-ago period. During the first nine months of 2022,Ameren Illinois utilized net proceeds from the issuance of long-term debt of$499 million to repay$400 million of maturities of long-term debt and to repay a portion of the then-outstanding short-term debt. Additionally,Ameren Illinois utilized proceeds from net commercial paper issuances of$250 million and cash provided by operating activities to fund, in part, capital expenditures. In comparison, during the first nine months of 2021,Ameren Illinois utilized net proceeds from the issuance of long-term debt of$449 million to repay then-outstanding short-term debt, including short-term debt incurred in connection with the increased purchases for natural gas for resale and purchased power costs discussed above, and to fund, in part, capital expenditures.Ameren Illinois also received a$145 million capital contribution fromAmeren (parent) during the first nine months of 2021. In addition,Ameren repaid$19 million of money pool borrowings and redeemed$13 million of preferred stock during the first nine months of 2021.
See Long-term Debt and Equity in this section for additional information on maturities and issuances of long-term debt, issuances of common stock, and redemptions of preferred stock.
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Credit Facility Borrowings and Liquidity
The following table presentsAmeren's consolidated liquidity as ofSeptember 30, 2022 : Available at September 30, 2022Ameren (parent) and Ameren Missouri: Missouri Credit Agreement - borrowing capacity $ 1,200 Less: Ameren (parent) commercial paper outstanding 444 Less: Ameren Missouri commercial paper outstanding 178 Less: Ameren Missouri letters of credit 2 Missouri Credit Agreement - subtotal 576Ameren (parent) andAmeren Illinois : Illinois Credit Agreement - borrowing capacity 1,100 Less: Ameren (parent) commercial paper outstanding 246 Less: Ameren Illinois commercial paper outstanding 353 Illinois Credit Agreement - subtotal 501 Subtotal $ 1,077 Add: Cash and cash equivalents 7 Net Available Liquidity(a) $ 1,084
(a)Does not include
The Credit Agreements, among other things, provide$2.3 billion of credit until maturity inDecember 2025 . See Note 3 - Short-term Debt and Liquidity under Part I, Item 1, of this report for additional information on the Credit Agreements. During the nine months endedSeptember 30, 2022 ,Ameren (parent), Ameren Missouri, andAmeren Illinois each issued commercial paper. Borrowings under the Credit Agreements and commercial paper issuances are based upon available interest rates at the time of the borrowing or issuance.Ameren has a money pool agreement with and among its utility subsidiaries to coordinate and to provide for certain short-term cash and working capital requirements. As short-term capital needs arise, and based on availability of funding sources, Ameren Missouri andAmeren Illinois will access funds from the utility money pool, the Credit Agreements, or the commercial paper programs depending on which option has the lowest interest rates. See Note 3 - Short-term Debt and Liquidity under Part I, Item 1, of this report for additional information on credit agreements, commercial paper issuances,Ameren's money pool arrangements and related borrowings, and relevant interest rates. The issuance of short-term debt securities byAmeren's utility subsidiaries is subject toFERC approval under the Federal Power Act. InMarch 2022 , theFERC issued an order authorizing Ameren Missouri to issue up to$1 billion of short-term debt securities throughMarch 2024 . InAugust 2022 , theFERC issued an order authorizingAmeren Illinois to issue up to$1 billion of short-term debt securities throughSeptember 2024 . In 2021, theFERC issued an order authorizing ATXI to issue up to$300 million of short-term debt securities throughJuly 2023 . The Ameren Companies continually evaluate the adequacy and appropriateness of their liquidity arrangements for changing business conditions. When business conditions warrant, changes may be made to existing credit agreements or to other borrowing arrangements, or other arrangements may be made. 68
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Long-term Debt and Equity
The following table presents issuances (net of any issuance premiums or discounts) of long-term debt and equity, as well as maturities of long-term debt and redemptions of preferred stock for the nine months endedSeptember 30, 2022 and 2021: Month Issued, Redeemed, or Matured 2022 2021 Issuances of Long-term Debt Ameren: 1.75% Senior unsecured notes due 2028 March $ -$ 450 Ameren Missouri: 3.90% First mortgage bonds due 2052 (green bonds) (a) April 524 - 2.15% First mortgage bonds due 2032 (green bonds) (a) June - 524 Ameren Illinois: 3.85% First mortgage bonds due 2032 August 499 - 2.90% First mortgage bonds due 2051 (green bonds) (a) June - 349 0.375% First mortgage bonds due 2023 June - 100
ATXI:
2.96% Senior unsecured notes due 2052 August 95 - Total Ameren long-term debt issuances$ 1,118 $ 1,423 Issuances of Common Stock Ameren: DRPlus and 401(k) (b) Various$ 29 (c)$ 36 August 2019 forward sale agreement (d) February - 113 ATM program (e) Various - 148 Total Ameren common stock issuances (f)$ 29 $ 297 Maturities of Long-term Debt Ameren Illinois: 2.70% Senior secured notes due 2022 September$ 400 $ -
ATXI:
3.43% Senior unsecured notes due 2050 August 50 - Total Ameren long-term debt maturities$ 450 $ - Redemptions of Preferred Stock Ameren Illinois: 6.625% Series March $ -$ 12 7.75% Series March - 1 TotalAmeren Illinois preferred stock redemptions $ -$ 13 (a)Ameren Missouri andAmeren Illinois intend to allocate an amount equal to the net proceeds to sustainability projects meeting certain eligible criteria. (b)Ameren issued a total of 0.4 million and 0.4 million shares of common stock under its DRPlus and 401(k) plan in the nine months endedSeptember 30, 2022 and 2021, respectively. (c)Excludes an $8 million receivable atSeptember 30, 2022 . (d)Ameren issued 1.6 million shares of common stock to settle the remainder of theAugust 2019 forward sale agreement. (e)Ameren issued 1.8 million shares of common stock under the ATM program. (f)Excludes 0.4 million and 0.5 million shares of common stock valued at$31 million and$33 million issued for no cash consideration in connection with stock-based compensation for the nine months endedSeptember 30, 2022 and 2021, respectively.
See Note 4 - Long-term Debt and Equity Financings under Part I, Item 1, of this
report for additional information, including proceeds from issuances of
long-term debt, including Ameren Missouri's
Indebtedness Provisions and Other Covenants
AtSeptember 30, 2022 , the Ameren Companies were in compliance with the provisions and covenants contained in their credit agreements, indentures, and articles of incorporation, as applicable, and ATXI was in compliance with the provisions and covenants contained in its note purchase agreements. See Note 3 - Short-term Debt and Liquidity under Part I, Item 1, of this report and Note 4 - Short-term Debt and Liquidity and Note 5 - Long-term Debt and Equity Financings under Part II, Item 8, of the Form 10-K for a discussion of provisions, applicable cross-default provisions, and covenants contained in our credit agreements, in ATXI's note purchase agreements, and in certain of theAmeren Companies' indentures and articles of incorporation. 69
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We consider access to short-term and long-term capital markets to be a significant source of funding for capital requirements not satisfied by cash provided by our operating activities. Inability to raise capital on reasonable terms, particularly during times of uncertainty in the capital markets, could negatively affect our ability to maintain and expand our businesses. After assessing their respective current operating performance, liquidity, and credit ratings (see Credit Ratings below),Ameren , Ameren Missouri, andAmeren Illinois each believes that it will continue to have access to the capital markets on reasonable terms. However, events beyondAmeren's , Ameren Missouri's, andAmeren Illinois' control may create uncertainty in the capital markets or make access to the capital markets uncertain or limited. Such events could increase our cost of capital and adversely affect our ability to access the capital markets.
Dividends
The amount and timing of dividends payable onAmeren's common stock are within the sole discretion ofAmeren's board of directors.Ameren's board of directors has not set specific targets or payout parameters when declaring common stock dividends, but it considers various factors, includingAmeren's overall payout ratio, payout ratios of our peers, projected cash flow and potential future cash flow requirements, historical earnings and cash flow, projected earnings, impacts of regulatory orders or legislation, and other key business considerations.Ameren expects its dividend payout ratio to be between 55% and 70% of annual earnings over the next few years.
See Note 4 - Short-term Debt and Liquidity and Note 5 - Long-term Debt and
Equity Financings under Part II, Item 8, of the Form 10-K for additional
discussion of covenants and provisions contained in certain of the Ameren
Companies' financial agreements and articles of incorporation that would
restrict the Ameren Companies' payment of dividends in certain circumstances. At
The following table presents common stock dividends declared and paid byAmeren Corporation to its common shareholders and byAmeren subsidiaries to their parent,Ameren Corporation , for the nine months endedSeptember 30, 2022 and 2021: Nine Months 2022 2021 Ameren$ 457 $ 423 ATXI - 82 Credit Ratings
Our credit ratings affect our liquidity, our access to the capital markets and credit markets, our cost of borrowing under our credit facilities and our commercial paper programs, and our collateral posting requirements under commodity contracts.
The following table presents the principal credit ratings by Moody's and S&P, as applicable, effective on the date of this report:
Moody's S&P
Issuer/corporate credit rating Baa1 BBB+
Senior unsecured debt Baa1 BBB
Commercial paper P-2 A-2
Ameren Missouri:
Issuer/corporate credit rating Baa1 BBB+
Secured debt A2 A
Senior unsecured debt Baa1 Not Rated
Commercial paper P-2 A-2
Ameren Illinois:
Issuer/corporate credit rating A3 BBB+
Secured debt A1 A
Senior unsecured debt A3 BBB+
Commercial paper P-2 A-2
ATXI:
Issuer credit rating A2 Not Rated
Senior unsecured debt A2 Not Rated
A credit rating is not a recommendation to buy, sell, or hold securities. It
should be evaluated independently of any other rating. Ratings are subject to
revision or withdrawal at any time by the rating organization.
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Collateral Postings
Any weakening of our credit ratings may reduce access to capital and trigger additional collateral postings and prepayments. Such changes may also increase the cost of borrowing, resulting in an adverse effect on earnings. Cash collateral postings and prepayments made with external parties, including postings related to exchange-traded contracts, were$145 million ,$140 million , and$5 million forAmeren , Ameren Missouri, andAmeren Illinois , respectively, and cash collateral posted by external parties were$33 million ,$2 million , and$31 million forAmeren , Ameren Missouri, andAmeren Illinois , respectively, atSeptember 30, 2022 . A sub-investment-grade issuer or senior unsecured debt rating (below "Baa3" from Moody's or below "BBB-" from S&P) atSeptember 30, 2022 , could have resulted inAmeren , Ameren Missouri, orAmeren Illinois being required to post additional collateral or other assurances for certain trade obligations amounting to$157 million ,$75 million , and$82 million , respectively. Changes in commodity prices could trigger additional collateral postings and prepayments. Based on credit ratings atSeptember 30, 2022 , if market prices were 15% higher or lower thanSeptember 30, 2022 levels in the next 12 months and 20% higher or lower thereafter through the end of the term of the commodity contracts, thenAmeren , Ameren Missouri, andAmeren Illinois could be required to post an immaterial amount, compared to each company's liquidity, of collateral or provide other assurances for certain trade obligations.
OUTLOOK
Below are some key trends, events, and uncertainties that may reasonably affect our results of operations, financial condition, or liquidity, as well as our ability to achieve strategic and financial objectives, for 2022 and beyond. For additional information regarding recent rate orders, lawsuits, and pending requests filed with state and federal regulatory commissions, including those discussed below, see Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report and Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K. Operations •We are observing inflationary pressures on the prices of commodities, labor, services, materials, and supplies, as well as increasing interest rates.Ameren Missouri andAmeren Illinois are generally allowed to pass on to customers prudently incurred costs for fuel, purchased power, and natural gas supply. Additionally, for certain non-commodity cost changes, the use of trackers, riders, and formula ratemaking, as applicable, mitigates our exposure. The inflationary pressures and increasing interest rates could impact our ability to control costs and/or make substantial investments in our businesses, including our ability to recover costs and investments, and to earn our allowed ROEs within frameworks established by our regulators, while maintaining rates that are affordable to our customers. InApril 2022 , the MISO released the results of its 2022 capacity auction, which projected a capacity shortage in the central region of the MISO footprint, which includes Ameren Missouri's andAmeren Illinois' service territories. The annual auction resulted in a capacity price increase from$5 per MW-day forJune 2021 throughMay 2022 to$237 per MW-day forJune 2022 throughMay 2023 . Based on estimated power prices and customer demand as ofSeptember 30, 2022 , the capacity price set by theApril 2022 MISO auction, and the amounts of energy and capacity hedged through IPA procurement events,Ameren Illinois estimates an increase to purchased power costs for calendar year 2022, compared to 2021, of approximately$450 million . The actual increase to purchased power costs will vary due to differences between estimated and realized power prices as well as customer demand satisfied byAmeren Illinois , which will be affected by changes in customers' elections to useAmeren Illinois or an alternative retail electric supplier for their energy needs. Higher purchased power costs for calendar year 2023, compared to 2021, is also likely butAmeren Illinois cannot reasonably estimate the amount of the increase as additional energy and capacity contracts for 2023 will be entered into as a part of an IPA procurement event in the first half of 2023, as well as pricing determined by theApril 2023 MISO capacity auction. Because of the power procurement riders, the difference between actual purchased power costs and costs billed to customers in a given period is deferred as a regulatory asset or liability. These pass-through costs do not affectAmeren Illinois' net income, as any change in costs are offset by a corresponding change in revenues. Also, based on the capacity price set by theApril 2022 MISO auction, Ameren Missouri estimates increases to capacity revenues and purchased power costs for the calendar year 2022, compared to 2021, of approximately$375 million .Ameren Missouri sells nearly all of its capacity to the MISO and purchases the capacity it needs to supply its native load sales from the MISO. Higher capacity revenues and purchased power costs for calendar year 2023, compared to 2021, is also likely but Ameren Missouri cannot reasonably estimate the amount of the increases as capacity pricing forJune 2023 throughDecember 2023 will be determined by theApril 2023 MISO capacity auction. Capacity revenues and purchased power costs are a part of the net energy costs recoverable under the FAC, with 95% of the variance between net energy costs and the amount set in base rates recovered or refunded through the FAC. •ThePISA permits Ameren Missouri to defer and recover 85% of the depreciation expense and earn a return at the applicable WACC on investments in certain property, plant, and equipment placed in service, and not included in base rates. The regulatory asset for accumulatedPISA deferrals also earns a return at the applicable WACC, with all approvedPISA deferrals added to rate base prospectively and recovered over a period of 20 years following a regulatory rate review. Additionally, under the RESRAM, Ameren Missouri is permitted to recover the 15% of depreciation expense not recovered under thePISA , and earn a return at the applicable 71
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WACC for investments in renewable generation plant placed in service to comply withMissouri's renewable energy standard. Accumulated RESRAM deferrals earn carrying costs at short-term interest rates. ThePISA and the RESRAM mitigate the effects of regulatory lag between regulatory rate reviews. Those investments not eligible for recovery under thePISA and the remaining 15% of certain property, plant, and equipment placed in service, unless eligible for recovery under the RESRAM, remain subject to regulatory lag. Ameren Missouri defers its cost of debt relating toPISA eligible investments as an offset to interest charges with the difference between the applicable WACC and its cost of debt recognized in revenues when recovery of such deferrals is reflected in customer rates. As a result of thePISA election, additional provisions of the law apply to Ameren Missouri, including limitations on electric customer rate increases. Ameren Missouri does not expect to exceed these rate increase limitations in 2022. InJune 2022 ,Missouri Senate Bill 745 was enacted and became effective onAugust 28, 2022 . The law extended Ameren Missouri'sPISA election throughDecember 2028 and allows for an additional extension throughDecember 2033 if requested by Ameren Missouri and approved by the MoPSC, among other things. The law established a 2.5% annual limit on increases to the electric service revenue requirement used to set customer rates due to the inclusion of incrementalPISA deferrals in the revenue requirement. The limitation will be effective for revenue requirements approved by the MoPSC afterJanuary 1, 2024 , and will be based on the revenue requirement established in the immediately preceding rate order. The current rate limitation, which is effective through 2023, is a 2.85% cap on the compound annual growth rate in the average overall customer rate per kilowatthour, based on the electric rates that became effective inApril 2017 , less half of the annual savings from the TCJA that was passed on to customers as approved in aJuly 2018 MoPSC order. •In 2018, the MoPSC issued an order approving Ameren Missouri's MEEIA 2019 plan. The plan includes a portfolio of customer energy-efficiency and demand response programs throughDecember 2023 and low-income customer energy-efficiency programs throughDecember 2024 . Ameren Missouri intends to invest approximately$360 million over the life of the plan, including$80 million in 2022 and$75 million in 2023. The plan includes the continued use of the MEEIA rider, which allows Ameren Missouri to collect from, or refund to, customers any difference in actual MEEIA program costs and related lost electric margins and the amounts collected from customers. In addition, the plan includes a performance incentive that provides Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy-efficiency goals. If target spending goals are achieved for 2022 and 2023, additional revenues of$11 million and$13 million would be recognized in 2022 and 2023, respectively. •InAugust 2022 , Ameren Missouri filed a request with the MoPSC seeking approval to increase its annual revenues for electric service by$316 million . The MoPSC proceeding relating to the proposed electric service rate changes will take place over a period of up to 11 months, with a decision by the MoPSC expected byJune 2023 and new rates effective byJuly 2023 . Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, whether the requested regulatory recovery mechanisms will be approved, or whether any rate change that may eventually be approved will be sufficient for Ameren Missouri to recover its costs and earn a reasonable return on its investments when the rate change goes into effect. •Ameren Illinois and ATXI use a forward-looking rate calculation with an annual revenue requirement reconciliation for each company's electric transmission business. Based on expected rate base and the currently allowed 10.52% ROE, which includes a 50 basis point incentive adder for participation in an RTO, the revenue requirements that will be included in 2023 rates forAmeren Illinois' and ATXI's electric transmission businesses are$476 million and$194 million , respectively. These revenue requirements represent an increase inAmeren Illinois' revenue requirement of$54 million and a decrease in ATXI's revenue requirement of$1 million from the revenue requirements reflected in 2022 rates, primarily due to higher expected rate base atAmeren Illinois and a lower expected rate base at ATXI. These rates will affectAmeren Illinois' and ATXI's cash receipts during 2023, but will not determine their respective electric transmission service operating revenues, which will instead be based on 2023 actual recoverable costs, rate base, and a return on rate base at the applicable WACC as calculated under theFERC formula ratemaking framework. •The allowed base ROE forFERC -regulated transmission rates previously charged under the MISO tariff is the subject of pending proceedings. Depending on the outcome of the proceedings, the transmission rates charged during previous periods and the currently effective rates may be subject to change. InMarch 2020 , theFERC issued a Notice of Proposed Rulemaking on its transmission incentives policy, which increased the incentive ROE for participation in an RTO to 100 basis points from the current 50 basis points and revised the parameters for awarding incentives, while limiting the overall incentives to a cap of 250 basis points, among other things. InApril 2021 , theFERC issued a Supplemental Notice of Proposed Rulemaking, which proposes to modify the Notice of Proposed Rulemaking's incentive for participation in an RTO by limiting this incentive for utilities that join an RTO to 50 basis points and only allowing them to earn the incentive for three years, among other things. If this proposal is included in a final rule,Ameren Illinois and ATXI would no longer be eligible for the 50 basis point RTO incentive adder, prospectively. TheFERC is under no deadline to issue a final rule on this matter.Ameren is unable to predict the ultimate impact of any changes to theFERC's incentives policy, or any further order on base ROE. A 50 basis point change in theFERC -allowed ROE would affectAmeren's andAmeren Illinois' annual net income by an estimated$12 million and$8 million , respectively, based on each company's 2022 projected rate base. •Ameren Illinois' electric distribution service performance-based formula ratemaking framework under the IEIMA allowsAmeren Illinois to reconcile electric distribution service rates to its actual revenue requirement on an annual basis to reflect actual recoverable costs incurred and a return at the applicable WACC on year-end rate base. If a given year's revenue requirement varies from the amount 72
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collected from customers, an adjustment is made to electric operating revenues with an offset to a regulatory asset or liability to reflect that year's actual revenue requirement, independent of actual sales volumes. The regulatory balance is then collected from, or refunded to, customers within two years from the end of the year. Pursuant to an order issued by the ICC inMarch 2021 ,Ameren Illinois expects to use the current IEIMA formula framework to establish annual customer rates effective through 2023, and reconcile the related revenue requirement for customer rates established for 2022 and 2023. As such,Ameren Illinois' 2022 and 2023 revenues would reflect each year's actual recoverable costs, year-end rate base, and a return at the applicable WACC, with the ROE component based on the annual average of the monthly yields of the 30-year United States Treasury bonds plus 580 basis points. For more information on theMarch 2021 ICC order, see Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K. By law, the decoupling provisions extend beyond the end of existing performance-based formula ratemaking, which ensures thatAmeren Illinois' electric distribution revenues authorized in a regulatory rate review are not affected by changes in sales volumes. •Pursuant to the IETL, which was enacted inSeptember 2021 ,Ameren Illinois may file an MYRP with the ICC to establish base rates for electric distribution service to be charged to customers for each calendar year of a four-year period. The base rates for a particular calendar year would be based on forecasted recoverable costs and an ICC-determined ROE applied toAmeren Illinois' forecasted average annual rate base using a forecasted capital structure, with a common equity ratio of up to 50% being deemed prudent and reasonable by law and a higher equity ratio requiring specific ICC approval. The ROE determined by the ICC is applicable to each calendar year of the four-year period and is subject to annual adjustments based on certain performance incentives and penalties. An MYRP would allowAmeren Illinois to reconcile electric distribution service rates to its actual revenue requirement on an annual basis, subject to a reconciliation cap and adjustments to the ROE.Ameren Illinois' existing riders will remain effective whether it elects to file an MYRP or a traditional regulatory rate review. Additionally, electric distribution service revenues would continue to be decoupled from sales volumes under either election.Ameren Illinois plans to file an MYRP byJanuary 20, 2023 , with rates effective beginning in 2024. For additional information regarding ratemaking under an MYRP, including details of the reconciliation cap, see Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K. •In 2021, the ICC issued an order inAmeren Illinois' annual update filing that approved a$58 million increase inAmeren Illinois' electric distribution service rates beginning inJanuary 2022 .Ameren Illinois' 2022 electric distribution service revenues will be based on its 2022 actual recoverable costs, 2022 year-end rate base, and a return at the applicable WACC, with the ROE component based on the annual average of the monthly yields of the 30-year United States Treasury bonds plus 580 basis points. As ofSeptember 30, 2022 ,Ameren Illinois expects its 2022 electric distribution year-end rate base to be$3.9 billion . The 2022 revenue requirement reconciliation adjustment will be collected from, or refunded to, customers in 2024. A 50 basis point change in the annual average of the monthly yields of the 30-year United States Treasury bonds would result in an estimated$11 million change inAmeren's andAmeren Illinois' annual net income, based onAmeren Illinois' 2022 projected year-end rate base, including electric energy-efficiency investments.Ameren Illinois' recognized ROE for the first nine months of 2022 was based on an estimated annual average of the monthly yields of the 30-year United States Treasury bonds of 3.09%. •InApril 2022 ,Ameren Illinois filed its annual electric distribution service performance-based formula rate update with the ICC to be used for 2023 rates. InJuly 2022 ,Ameren Illinois filed a revised request seeking to increase its annual revenues for electric distribution service by$84 million . InAugust 2022 , the ICC staff submitted its calculation of the revenue requirement included inAmeren Illinois' update filing, recommending a$61 million increase inAmeren Illinois' electric distribution service rates. An ICC decision in this proceeding is required byDecember 2022 , with new rates effective inJanuary 2023 . These rates will affectAmeren Illinois' cash receipts during 2023, but will not affect electric distribution service revenues, which will be based on 2023 actual recoverable costs, 2023 year-end rate base, and a return at the applicable WACC as calculated under theIllinois performance-based formula ratemaking framework. •Ameren Illinois expects to file for a natural gas delivery service regulatory rate review in early 2023, with a future test year endedDecember 31, 2024 .Ameren Illinois' current allowed ROE for natural gas delivery service is 9.67%, with a capital structure composed of 52% common equity, a rate base of$2.1 billion , and a 2021 future test year. •Pursuant toIllinois law,Ameren Illinois' electric energy-efficiency investments are deferred as a regulatory asset and earn a return at the applicable WACC, with the ROE component based on the annual average of the monthly yields of the 30-year United States Treasury bonds plus 580 basis points. The allowed ROE on electric energy-efficiency investments can be increased or decreased by up to 200 basis points, depending on the achievement of annual energy savings goals. While the ICC has approved a plan forAmeren Illinois to invest approximately$120 million per year in electric energy-efficiency programs through 2025, the ICC has the ability to reduce the amount of electric energy-efficiency savings goals in future program years if there are insufficient cost-effective programs available, which could reduce the investments in electric energy-efficiency programs. The electric energy-efficiency program investments and the return on those investments are collected from customers through a rider and are not recovered through the electric distribution service performance-based formula ratemaking framework. 73
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•Ameren Missouri's next refueling and maintenance outage at itsCallaway energy center is scheduled for the fall of 2023. During a scheduled refueling, which occurs every 18 months, maintenance expenses are deferred as a regulatory asset and amortized until the completion of the next refueling and maintenance outage. During an outage, depending on the availability of its other generation sources and the market prices for power, Ameren Missouri's purchased power costs may increase and the amount of excess power available for sale may decrease versus non-outage years. Changes in purchased power costs and excess power available for sale are included in the FAC, which results in limited impacts to earnings. In addition, Ameren Missouri may incur increased non-nuclear energy center maintenance costs in non-outage years. •Ameren Missouri continues to experience coal transportation disruptions in 2022, resulting in coal inventory levels below targeted levels at theLabadie and Sioux energy centers as of the end ofOctober 2022 . Prolonged disruptions in the delivery of coal could have adverse effects on Ameren Missouri's electric generation operations and could result in increased purchased power expense. Under the FAC, 95% of the variance in net energy costs, which includes purchased power expense, from the amount set in base rates is expected to be recovered. Further, the timing of payments for purchased power costs compared to the recovery through customer rates under the FAC could have adverse effects onAmeren and Ameren Missouri's liquidity. •InDecember 2021 , Ameren Missouri filed a motion with theUnited States District Court for the Eastern District of Missouri to modify aSeptember 2019 remedy order issued by the district court to allow the retirement of the Rush Island Energy Center in advance of its previously expected useful life in lieu of installing a flue gas desulfurization system. TheMarch 31, 2024 compliance date contained in the district court'sSeptember 2019 remedy order remains in effect unless extended by the district court. InJuly 2022 , in response to an Ameren Missouri request for a final, binding reliability assessment, the MISO designated the Rush Island Energy Center as a system support resource and concluded that certain mitigation measures, including transmission upgrades, should occur before the energy center is retired. The transmission upgrade projects have been approved by the MISO, and Ameren Missouri has started design and procurement activities necessary to complete the upgrades and expects to complete the upgrades by late 2025. InOctober 2022 , theFERC approved a system support resource agreement, which became effective retroactively as ofSeptember 1, 2022 . The agreement details the manner of continued operation for a system support resource that results in operating during peak demand times and emergencies. The system support resource designation and the related agreement are subject to annual renewal and revision. InSeptember 2022 , theRush Island Energy Center began operating consistent with the system support resource agreement. In addition, inOctober 2022 , theFERC established hearing and settlement procedures in response to anAugust 2022 request from Ameren Missouri for recovery of non-energy costs under the related MISO tariff. TheFERC is under no deadline to issue an order related to this proceeding. Revenues and costs under the MISO tariff are expected to be included in the FAC. The district court has the authority to determine the retirement date and operating parameters for the Rush Island Energy Center and is not bound by the MISO determination of the Rush Island Energy Center as a system support resource or theFERC's approval. The district court is under no deadline to issue a ruling modifying the remedy order. For additional information on the NSR and Clean Air Act litigation, see Note 9 - Commitments and Contingencies under Part I, Item 1, of this report. Ameren Missouri filed a 2022 Change to the 2020 IRP with the MoPSC inJune 2022 to reflect, among other things, the planned acceleration of the retirement of the Rush Island Energy Center from 2039, the retirement year for the facility as reflected in the 2020 IRP. InFebruary 2022 , the MoPSC issued an order directing the MoPSC staff to review Ameren Missouri's planned accelerated retirement of the Rush Island Energy Center, including potential impacts on the reliability and cost of Ameren Missouri's service to its customers; Ameren Missouri's plans to mitigate the customer impacts of the accelerated retirement; and the prudence of Ameren Missouri's actions and decisions with regard to the Rush Island Energy Center, which is expected to be addressed in the 2022 electric service regulatory rate review, among other things. InApril 2022 , the MoPSC staff filed an initial report with the MoPSC in which the staff concluded early retirement of the Rush Island Energy Center may cause reliability concerns. The MoPSC staff is under no deadline to complete this review. As ofDecember 31, 2021 , andSeptember 30, 2022 ,Ameren andAmeren Missouri classified the remaining net book value of the Rush Island Energy Center as plant to be abandoned, net, within "Property, Plant, and Equipment, Net" onAmeren's and Ameren Missouri's balance sheets. As part of the assessment of any potential future abandonment loss, consideration will be given to rate and securitization orders issued by the MoPSC to Ameren Missouri and to orders issued to otherMissouri utilities with similar facts. •The IETL established emission standards that became effective inSeptember 2021 . Ameren Missouri's natural gas-fired energy centers inIllinois are subject to limits on emissions, including CO2 and NOx, equal to their unit-specific average emissions from 2018 through 2020, for any rolling twelve-month period beginningOctober 1, 2021 , through 2029. Further reductions to emissions limits will become effective between 2030 and 2040, resulting in the closure of the Venice Energy Center by 2029. The reductions could also limit the operations of Ameren Missouri's other four natural gas-fired energy centers located in the state ofIllinois , and will result in their closure by 2040. These energy centers are utilized to support peak loads. Subject to conditions in the IETL, these energy centers may be allowed to exceed the emissions limits in order to maintain reliability of electric utility service as necessary. Ameren Missouri filed a 2022 Change to the 2020 IRP with the MoPSC inJune 2022 to reflect, among other things, the updated scheduled retirement dates of the natural gas-fired energy centers located in the state ofIllinois . •Due to a change in customer behavior and certain business practices resulting from the COVID-19 pandemic, there has been a shift in sales volumes by customer class at both Ameren Missouri andAmeren Illinois , which began in 2020, with an increase in residential 74
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sales, and a decrease in commercial and industrial sales. While our electric sales volumes in the first nine months of 2022, excluding the estimated effects of weather and customer energy-efficiency programs, were comparable to the same period in 2021 and, at Ameren Missouri, were comparable to pre-pandemic levels,Ameren Illinois' sales volumes remain below pre-pandemic levels. However, revenues fromAmeren Illinois' electric distribution business, residential and small nonresidential customers ofAmeren Illinois' natural gas distribution business, andAmeren Illinois' and ATXI's electric transmission businesses are decoupled from changes in sales volumes. Further effects of the COVID-19 pandemic on our results of operations, financial position, and liquidity in subsequent periods will depend on its severity and longevity, future regulatory or legislative actions with respect thereto, and the resulting impact on business, economic, and capital market conditions. •Ameren Missouri andAmeren Illinois continue to make infrastructure investments and expect to seek increases to electric and natural gas rates to recover the cost of investments and earn an adequate return. Ameren Missouri andAmeren Illinois will also seek new, or to maintain existing, legislative solutions to address regulatory lag and to support investment in their utility infrastructure for the benefit of their customers. Ameren Missouri andAmeren Illinois continue to face cost recovery pressures, including limited economic growth in their service territories, increasing inflation, higher cost of debt, customer conservation efforts, the impacts of additional customer energy-efficiency programs, and increased customer use of increasingly cost-effective advancements in innovative energy technologies, including private generation and energy storage. However, over the long-term, we expect the decreased demand to be partially offset by increased demand resulting from increased electrification of the economy and as a means to address economy-wide CO2 emission concerns. We expect that increased investments, including expected future investments for environmental compliance, system reliability improvements, and new generation sources, will result in rate base and revenue growth but also higher depreciation and financing costs.
Liquidity and Capital Resources
•InFebruary 2022 , Ameren Missouri filed an annual update to its Smart Energy Plan with the MoPSC, which includes a five-year capital investment overview with a detailed one-year plan for 2022. The Smart Energy Plan is designed to upgrade Ameren Missouri's electric infrastructure and includes investments that will upgrade the grid and accommodate more renewable energy. Investments under the plan are expected to total approximately$8.4 billion over the five-year period from 2022 through 2026, with expenditures largely recoverable under thePISA and the RESRAM. •InJune 2022 , Ameren Missouri filed a notice of change in preferred resource plan with the MoPSC. The filing includes a 2022 Change to the 2020 IRP, which the MoPSC may review at its election. In connection with the change,Ameren revised its goals for reduction of carbon emissions.Ameren is targeting net-zero carbon emissions by 2045, as well as a 60% reduction by 2030 and an 85% reduction by 2040 based on 2005 levels.Ameren's goals include both direct emissions from operations, as well as electricity usage atAmeren buildings, including other greenhouse gas emissions of methane, nitrous oxide, and sulfur hexafluoride. Achieving these goals will be dependent on a variety of factors, including cost-effective advancements in innovative clean energy technologies and constructive federal and state energy and economic policies. The 2022 Change to the 2020 IRP includes expanding renewable sources by adding 2,800 MWs of renewable generation by 2030, 400 MWs of battery storage by 2035, and a total of 4,700 MWs of renewable generation and 800 MWs of battery storage by 2040. These amounts include 350 MWs of solar generation projects discussed below. The change also includes adding 1,200 MWs of natural gas-fired combined cycle generation by 2031, with plans to switch to hydrogen fuel and/or blend hydrogen fuel with natural gas and install carbon capture technology if these technologies become commercially available at a reasonable cost, adding 1,200 MWs of additional clean dispatchable generation by 2043, the continued implementation of customer energy-efficiency programs, and the expectation that Ameren Missouri will seek and receive NRC approval for an extension of the operating license for the Callaway Energy Center beyond its current 2044 expiration date. Additionally, the change includes extending the retirement date of the coal-fired Sioux Energy Center from 2028 to 2030 in order to ensure reliability during the transition to clean energy generation, which is subject to the approval of a change in the asset's depreciable life by the MoPSC in Ameren Missouri's current electric service regulatory rate review, accelerating the retirement date of theRush Island coal-fired energy center to 2025, retiring the Meramec coal-fired energy center at the end of its useful life in 2022, retiring the generating units at theLabadie coal-fired energy center at the end of their useful lives (two generating units by 2036 and the other two by 2042), accelerating the retirement date of theVenice natural gas-fired energy center to 2029, and retiringAmeren Missouri's other natural gas-fired energy centers inIllinois by 2040.Ameren Missouri's plan could be affected by, among other factors: Ameren Missouri's ability to obtain certificates of convenience and necessity from the MoPSC, and any other required approvals for the addition of renewable resources, retirement of energy centers, and new or continued customer energy-efficiency programs; the ability to enter into build-transfer agreements for renewable generation and acquire that generation at a reasonable cost; the ability of developers to meet contractual commitments and timely complete projects, which is dependent upon the availability of necessary labor, materials, and equipment, including those that are affected by the disruptions in the global supply chain caused by the COVID-19 pandemic or government actions, among other things; changes in the scope and timing of projects; the availability of federal production and investment tax credits related to renewable energy and Ameren Missouri's ability to use such credits; the cost of wind, solar, and other renewable generation and battery storage technologies; the cost of natural gas or hydrogen CT technologies; changes in environmental regulations, including those related to CO2 and other greenhouse gas emissions; energy prices and demand; andAmeren Missouri's ability to obtain necessary rights-of-way, easements, and 75
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transmission interconnection agreements at an acceptable cost and in a timely fashion. The next integrated resource plan is expected to be filed inSeptember 2023 . •Missouri law allowsMissouri electric utility companies to petition the MoPSC for a financing order to authorize the issuance of securitized utility tariff bonds to finance the cost of retiring electric generation facilities before the end of their useful lives. In connection with the planned accelerated retirement of the Rush Island Energy Center due to the NSR andClean Air Act Litigation discussed above, Ameren Missouri expects to seek approval from the MoPSC to finance the costs associated with the retirement, including the remaining unrecovered net plant balance associated with the facility, through the issuance of securitized utility tariff bonds. As such, Ameren Missouri did not request a change in the depreciation rates related to the Rush Island Energy Center in the electric regulatory rate review filed inAugust 2022 . •InFebruary 2022 , Ameren Missouri, through a subsidiary, entered into a build-transfer agreement to acquire, after construction, a 150-MW solar generation facility, which is expected to be located in southeasternIllinois and, if approved by the MoPSC, to serve customers under Ameren Missouri's Renewable Solutions Program. InJune 2022 , Ameren Missouri, through a subsidiary, entered into a build-transfer agreement to acquire, after construction, a 200-MW solar generation facility, which is expected to be located in centralMissouri and support Ameren Missouri's compliance with the state ofMissouri's requirement of achieving 15% of retail sales from renewable energy sources, of which 2% must be derived from solar energy sources. The acquisitions are subject to certain conditions, including the issuance of certificates of convenience and necessity by the MoPSC, obtaining MISO transmission interconnection agreements, and approval by theFERC . InJuly 2022 , Ameren Missouri filed for certificates of convenience and necessity with the MoPSC for both facilities and expects decisions byMarch 2023 andApril 2023 for the 200-MW facility and the 150-MW facility, respectively. Depending on the timing of regulatory approvals and the impact of potential sourcing issues discussed below, the projects could be completed as early as the fourth quarter of 2024. Capital expenditures related to these facilities are not included inAmeren's and Ameren Missouri's expected capital investments discussed below. •Ameren Missouri's 2022 Change to the 2020 IRP targets cleaner and more diverse sources of energy generation, including solar generation. While rights to acquire the solar facilities discussed above were secured through build-transfer agreements, supply chain disruptions, including solar panel shortages and increasing material costs as a result of government tariffs and other factors, could affect the costs as well as the timing of these projects and other solar generation projects. The supply of solar panels tothe United States was significantly disrupted as a result of an investigation initiated by theUnited States Department of Commerce in lateMarch 2022 , which could result in punitive tariffs on solar panels imported from four Southeast Asian countries. The investigation is in response to complaints of Chinese solar manufacturers shifting solar cells to these countries to avoid tariffs required on imports fromChina .The United States Department of Commerce is expected to issue a preliminary determination by the end ofNovember 2022 , and a final determination by mid-2023. Additionally, certain solar panels fromChina have been subject to detention by theUnited States Customs and Border Protection Agency as a result of the Uyghur Forced Labor Prevention Act that was passed inDecember 2021 . InJune 2022 ,President Biden authorized theUnited States Department of Energy to use the Defense Production Act to rapidly expand American manufacturing of five critical clean energy technologies, including solar panel components.President Biden also took executive action to temporarily lift certain tariffs on solar panels imported from the four Southeast Asian countries under investigation by theUnited States Department of Commerce for 24 months in order to allowthe United States access to a sufficient supply of solar panels to meet electricity generation needs while domestic manufacturing scales up. Any future tariffs or other outcomes resulting from the investigation by theUnited States Department of Commerce or actions by theUnited States Customs and Border Protection Agency could affect the cost and the availability of solar panels and the timing and amount of Ameren Missouri's estimated capital expenditures associated with solar generation investments. •Through 2026, we expect to make significant capital expenditures to improve our electric and natural gas utility infrastructure, with a major portion directed to our transmission and distribution systems. We estimate that we will invest up to$18.0 billion (Ameren Missouri - up to$9.2 billion ;Ameren Illinois - up to$8.6 billion ; ATXI - up to$0.2 billion ) of capital expenditures during the period from 2022 through 2026. These planned investments are based on the assumption of continued constructive regulatory frameworks.Ameren's andAmeren Missouri's estimates exclude renewable generation investment opportunities of 800 MWs by 2026, which are included in Ameren Missouri's 2022 Change to the 2020 IRP, and investment opportunities that may be approved by the MISO to address reliability concerns in connection with the planned accelerated retirement of the Rush Island Energy Center. These investment opportunities may be incremental to or partially replace other expenditures included in the 2022 through 2026 estimates above. •In 2021, the MISO issued a report outlining a preliminary long-range transmission planning roadmap of projects through 2039, which considers the rapidly changing generation mix within MISO resulting from significant additions of renewable generation, actual and expected generation plant closures, and state mandates or goals for clean energy or carbon emissions reductions. InJuly 2022 , the MISO approved the first tranche of projects under the first phase of the roadmap. A portion of these projects were assigned to various utilities, of whichAmeren was awarded projects that are estimated to cost approximately$1.8 billion , based on MISO's cost estimate. The MISO is expected to initiate requests for proposals inDecember 2022 andMarch 2023 for additional first tranche projects crossingMissouri , which are expected to be awarded between late-2023 and early-2024. These investment opportunities may be incremental to 76
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or partially replace other expenditures included in the 2022 through 2026 estimates discussed above. InJuly 2022 , a group of industrial customers filed a complaint with theFERC , challenging provisions of a MISO tariff that exclude regional transmission projects from the MISO's competitive bid process based on state laws related to the right of first refusal, which provide an incumbent utility the right to build, maintain, and own transmission lines located within its service territory. The complaint seeks to require MISO to revise its tariff to prohibit the application of state laws related to the right of first refusal in the MISO's long-range transmission planning and require projects to be bid on a competitive basis, to the maximum extent possible. It also is asking for refunds related to any costs under the tariff that would not comply with the sought-after revisions. TheFERC is under no deadline to issue an order in this proceeding. •InJuly 2022 , anIllinois law prohibiting the state's oversight of certain electric utilities' choice of RTO membership ceased to be effective. Given the change in law and the high prices resulting from MISO'sApril 2022 capacity auction, the ICC issued an order requiringAmeren Illinois to perform a cost-benefit study of continued participation in the MISO compared to participation inPJM Interconnection LLC , another RTO. The cost-benefit study will examine the impacts of participation in each RTO, including reliability, resiliency, affordability, and environmental impacts, among other things, for a period of five to 10 years beginningJune 2024 . The ICC order requiresAmeren Illinois to file the study byJuly 2023 . A 30-day comment period will follow. The ICC is under no obligation to issue an order related to the cost-benefit study. •Environmental regulations, including those related to CO2 emissions, or other actions taken by theEPA or state regulators, or requirements that may result from the NSR andClean Air Act Litigation discussed in Note 9 - Commitments and Contingencies under Part I, Item 1, of this report, could result in significant increases in capital expenditures and operating costs. Regulations enacted by a prior federal administration can be reviewed and repealed, and replacement or alternative regulations can be proposed or adopted by the current federal administration, including theEPA . The ultimate implementation of any of these regulations, as well as the timing of any such implementation, is uncertain. However, the individual or combined effects of existing and new environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration of some of Ameren Missouri's coal and natural gas-fired energy centers. Ameren Missouri's capital expenditures are subject to MoPSC prudence reviews, which could result in cost disallowances as well as regulatory lag. The cost ofAmeren Illinois' purchased power and natural gas purchased for resale could increase. However,Ameren Illinois expects that these costs would be recovered from customers with no material adverse effect on its results of operations, financial position, or liquidity.Ameren's andAmeren Missouri's earnings could benefit from increased investment to comply with environmental regulations if those investments are reflected and recovered on a timely basis in customer rates. •The Ameren Companies have multiyear credit agreements that cumulatively provide$2.3 billion of credit throughDecember 2025 , subject to a 364-day repayment term for Ameren Missouri andAmeren Illinois , with the option to seek incremental commitments to increase the cumulative credit provided to$2.7 billion . See Note 3 - Short-term Debt and Liquidity under Part I, Item 1, of this report and Note 4 - Short-term Debt and Liquidity under Part II, Item 8, in the Form 10-K for additional information regarding the Credit Agreements. See Note 5 - Long-Term Debt and Equity Financings under Part II, Item 8, in the Form 10-K for long-term debt maturities from 2022 to 2026 and beyond atAmeren (parent), Ameren Missouri,Ameren Illinois , and ATXI and see Note 4 - Long-Term Debt and Equity Financings under Part I, Item 1, of this report for principal payments made on long-term debt during 2022 through the date of this report.Ameren , Ameren Missouri, andAmeren Illinois each believe that their liquidity is adequate given their respective expected operating cash flows, capital expenditures, and financing plans. To date, the Ameren Companies have been able to access the capital markets on reasonable terms when needed. However, there can be no assurance that significant changes in economic conditions, disruptions in the capital and credit markets, or other unforeseen events will not materially affect their ability to execute their expected operating, capital, or financing plans. •Ameren expects its cash used for currently planned capital expenditures and dividends to exceed cash provided by operating activities over the next several years. As part of its funding plan for capital expenditures,Ameren is using newly issued shares of common stock, rather than market-purchased shares, to satisfy requirements under the DRPlus and employee benefit plans and expects to continue to do so through at least 2026.Ameren expects these issuances to provide equity of about$100 million annually. In addition, in 2021,Ameren established an ATM program under whichAmeren may offer and sell from time to time up to$750 million of its common stock, which includes the ability to enter into forward sales agreements, subject to market conditions and other factors. In the fourth quarter of 2022,Ameren expects to increase the amount available under the ATM program by approximately$1 billion for equity needs in 2024 and beyond.Ameren has entered into multiple forward sale agreements under the ATM program with various counterparties relating to 6.6 million shares of common stock. As ofSeptember 30, 2022 ,Ameren could have settled the forward sale agreements with physical delivery of 6.6 million shares of common stock to the respective counterparties in exchange for cash of$587 million . As ofSeptember 30, 2022 ,Ameren had substantially utilized the available capacity under the ATM program, which takes into account the forward sale agreements. For additional information regarding outstanding forward sale agreements, including settlement dates, see Note 4 - Long-Term Debt and Liquidity under Part I, Item 1, of this report.Ameren expects to settle approximately$300 million of the forward sale agreements and issue 3.4 million shares of common stock byDecember 31, 2022 . In addition,Ameren expects to settle approximately$300 million of the forward sale agreements and issue 3.2 million shares of common stock byDecember 31, 2023 .Ameren plans to issue approximately$300 million of equity each year from 2022 to 2026 in addition to issuances under the DRPlus and employee benefit plans.Ameren expects its equity to total capitalization ratio to be approximately 45% throughDecember 31, 2026 , with 77
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the long-term intent to support solid investment-grade credit ratings. Ameren
Missouri and
•The IRA was enacted inAugust 2022 , and includes various income tax provisions, among other things. The law extends federal production and investment tax credits for projects beginning construction through 2024 and allows for a 10% adder to the production and investment tax credits for siting projects at existing energy communities as defined in the law, which includes sites previously used for coal-fired generation. The law also creates clean energy tax credits for projects placed in service after 2024. The clean energy tax credits will apply to renewable energy production and investments, along with certain nuclear energy production, and will be phased out beginning in 2033, at the earliest. The phase-out is triggered when greenhouse gas emissions from the electric generation industry are reduced by at least 75% from the annual 2022 emission rate or at the beginning of 2033, whichever is later. The law allows for transferability to an unrelated party for cash of up to 100% of certain tax credits generated after 2022. In addition, the new law imposes a 15% minimum tax on adjusted financial statement income, as defined in the law, for corporations whose average annual adjusted financial statement income exceeds$1 billion for three consecutive preceding tax years effective for tax years beginning afterDecember 31, 2022 . Once a corporation exceeds this three-year average annual adjusted financial statement income threshold, it will be subject to the minimum tax for all future tax years. Additional regulations, interpretations, amendments, or technical corrections to or in connection with the IRA may be issued by theIRS orUnited States Department of Treasury . •As ofSeptember 30, 2022 ,Ameren had$177 million in tax benefits from federal and state income tax credit carryforwards and$19 million in tax benefits from federal and state net operating loss carryforwards, which will be utilized in future periods. Future expected income tax payments are based on expected taxable income, available income tax credits, and current tax law. Expected taxable income is affected by expected capital expenditures, when property, plant, and equipment is placed in-service or retired, and the timing of regulatory reviews, among other things.Ameren expects federal income tax payments at the required minimum levels from 2022 to 2026 resulting from the anticipated use of existing production tax credits generated byAmeren Missouri's High Prairie Renewable and Atchison Renewable energy centers, existing tax net operating losses, tax credit carryforwards, tax overpayments, and outstanding refunds.Ameren does not expect to be subject to the 15% minimum tax imposed by the IRA in 2023.Ameren expects annual federal income tax payments, including payments related to the 15% minimum tax pursuant to the IRA, to be immaterial through 2026. The above items could have a material impact on our results of operations, financial position, and liquidity. Additionally, in the ordinary course of business, we evaluate strategies to enhance our results of operations, financial position, and liquidity. These strategies may include acquisitions, divestitures, opportunities to reduce costs or increase revenues, and other strategic initiatives to increaseAmeren's shareholder value. We are unable to predict which, if any, of these initiatives will be executed. The execution of these initiatives may have a material impact on our future results of operations, financial position, or liquidity.
REGULATORY MATTERS
See Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report.
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