AMEREN ILLINOIS COMPANY 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. 39 --------------------------------------------------------------------------------Ameren , headquartered inSt. Louis, Missouri , is a public utility holding company whose primary assets are its equity interests in its subsidiaries.Ameren's subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. Dividends onAmeren'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 financial statements are prepared on a consolidated basis and therefore include the accounts of its majority-owned subsidiaries. All intercompany transactions have been eliminated. Ameren Missouri andAmeren Illinois have 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 endedJune 30, 2021 , was$207 million , or$0.80 per diluted share, compared with$243 million , or$0.98 per diluted share, in the year-ago period. Net income attributable to common shareholders in the six months endedJune 30, 2021 , was$440 million , or$1.71 per diluted share, compared with$389 million , or$1.57 per diluted share, in the year-ago period. Net income for the three and six months endedJune 30, 2021 , compared to the year-ago periods, was favorably affected by increased infrastructure investments at Ameren Missouri,Ameren Transmission , and Ameren Illinois Electric Distribution; increasedAmeren Missouri electric retail sales, primarily resulting from colder winter temperatures experienced in 2021; higher delivery service rates atAmeren Illinois Natural Gas ; and a higher recognized ROE atAmeren Illinois Electric Distribution. Net income for the six months endedJune 30, 2021 , compared to the year-ago period, was also favorably affected by the results of Ameren Missouri'sMarch 2020 electric rate order, and lower other operations and maintenance expenses not subject to riders or regulatory tracking mechanisms, primarily due to disciplined cost management and changes in the value of company-owned life insurance. Earnings for the three and six months endedJune 30, 2021 , compared to the year-ago periods, were unfavorably affected by a change in rate design at Ameren Missouri, which resulted in less revenues in the second quarter of 2021 due to a change in the timing of transition from winter to summer volumetric rates; the effect of dilution; and the absence in 2021 of theFERC's May 2020 order addressing the allowed base ROE forFERC regulated transmission rate base under the MISO tariff, which increased earnings in the year-ago periods. The earnings comparisons were also unfavorably affected by higher other operations and maintenance expenses at Ameren Missouri due to the amortization of expenses, beginning inJanuary 2021 , related to the 2020 scheduled refueling and maintenance outage at the Callaway Energy Center pursuant to the MoPSC'sFebruary 2020 order. Net income for the six months endedJune 30, 2021 , compared to the year-ago period, was unfavorably affected by the result of theFERC's March 2021 order, primarily related to the historical recovery of materials and supplies inventories.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$1.8 billion in its rate-regulated businesses in the six months endedJune 30, 2021 . The COVID-19 pandemic continues to affect our results of operations, financial position, and liquidity, but we continue to expect gradual improvement in sales volumes in 2021, compared to 2020. In the first six months of 2021, our sales volumes, excluding the estimated effects of weather and customer energy-efficiency programs, increased compared to the same period in 2020. However, our accounts receivable balances that were past due or that were a part of a deferred payment arrangement are higher than normal historical levels, as customer payments have been affected. The continued effect 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. In general, restrictions on social activities and nonessential businesses implemented in our service territories in 2020 have been relaxed. However, additional restrictions may be imposed in the future. We continue to assess the impacts the COVID-19 pandemic is having on our businesses, including impacts on electric and natural gas sales volumes, liquidity, bad debt expense, and supply chain operations. For further discussion of these and other matters discussed below, see Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report, and Results of Operations, Liquidity and Capital Resources, and Outlook sections below. In addition, for information regardingAmeren Illinois' suspension and subsequent reinstatement of customer disconnection 40 -------------------------------------------------------------------------------- activities and late fee charges for nonpayment, see Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report and under Part II, Item 8, of the Form 10-K. Due to extremely cold winter weather inmid-February 2021 , Ameren Missouri andAmeren Illinois experienced higher than anticipated commodity costs for purchased power and natural gas purchased for resale, which contributed to the acceleration of the timing of planned 2021 debt issuances. Ameren Missouri andAmeren Illinois have cost recovery mechanisms in place that provide recovery of the higher purchased power and natural gas costs from customers over periods of time established under the applicable mechanisms. InJanuary 2021 , Ameren Missouri acquired a 300-MW wind generation project located in northwesternMissouri . As ofJune 30, 2021 , Ameren Missouri had placed the project in service as the Atchison Renewable Energy Center. The purchase price of the energy center was approximately$500 million , including an immaterial amount of transaction costs. The Atchison Renewable Energy Center will support Ameren Missouri's compliance with theMissouri renewable energy standard. InFebruary 2021 , Ameren Missouri filed an update to its Smart Energy Plan with the MoPSC, which includes a five-year capital investment overview with a detailed one-year plan for 2021. The plan is designed to upgradeAmeren 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 2021 through 2025, with expenditures largely recoverable under thePISA and the RESRAM. The planned investments in 2024 and 2025 are based on the assumption that Ameren Missouri requests and receives MoPSC approval of an extension of thePISA throughDecember 2028 . InMarch 2021 , Ameren Missouri filed requests with the MoPSC seeking approval to increase its annual revenues for electric service by$299 million and for natural gas delivery service by$9 million . The electric rate increase request is based on a 9.9% ROE, a capital structure composed of 51.9% common equity, a rate base of$10.0 billion and a test year endedDecember 31, 2020 , with certain pro-forma adjustments expected through a true-up date ofSeptember 30, 2021 . The MoPSC proceedings relating to the proposed rate changes will take place over a period of up to 11 months, with a decision by the MoPSC expected byFebruary 2022 and new rates effective by lateFebruary 2022 . InMarch 2021 , the MoPSC issued orders approving nonunanimous stipulation and agreements related to Ameren Missouri's electric and natural gas service accounting authority order requests. The orders allowed Ameren Missouri to accumulate$9 million of certain costs incurred related to the COVID-19 pandemic, net of cost savings, as well as forgone customer late fee and reconnection fee revenues fromMarch 2020 toMarch 2021 , for potential recovery in the electric and natural gas service regulatory rate reviews discussed above. InMarch 2021 , Ameren Missouri deferred$5 million as a regulatory asset related to the accounting authority orders. If approved for recovery, Ameren Missouri would recognize the remaining$4 million associated with forgone customer late fee and reconnection fee revenue when billed to customers. During its return to full power after the completion of the last refueling and maintenance outage in lateDecember 2020 , the Callaway Energy Center experienced a non-nuclear operating issue related to its generator. After replacement of certain key components of the generator, the energy center returned to service onAugust 4, 2021 . The cost of generator repairs was approximately$60 million , which was largely capital expenditures. See Note 10 - Callaway Energy Center under Part I, Item 1, of this report for additional information. InMarch 2021 , the ICC issued an order approvingAmeren Illinois' requested tariff to reconcile its electric distribution service revenue requirement onceAmeren Illinois ceases to update customer rates under performance-based formula ratemaking. The tariff would allowAmeren Illinois to reconcile its revenue requirement for up to two annual periods in which customer rates had been established, but not yet reconciled, under the performance-based formula ratemaking framework. To utilize the reconciliation,Ameren Illinois is required to file a request to update its electric distribution service rates through a traditional regulatory rate review, which may be based on a future test year and would reflect a proposed ROE subject to ICC approval. That request would need to be filed by the end of March in the year following the last year in whichAmeren Illinois opted to set annual rates via the performance-based formula ratemaking framework.Ameren Illinois would be required to file that request no later thanMarch 2023 . Pursuant to the order, and without legislative change orAmeren Illinois' election to opt out of performance-based formula ratemaking,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. The revenue requirement reconciliation adjustment would be collected from, or refunded to, customers within two years from the end of the reconciled year. InApril 2021 ,Ameren Illinois filed its annual electric distribution service performance-based formula rate update to be used for 2022 rates with the ICC. InJune 2021 , the ICC staff submitted its calculation of the revenue requirement included inAmeren Illinois' update filing, recommending a$54 million increase. InJuly 2021 ,Ameren Illinois filed a revised request seeking to increase its annual revenues for electric distribution service by$60 million . An ICC decision in this proceeding is expected byDecember 2021 , with new rates effectiveJanuary 2022 . InMay 2021 ,Ameren Illinois filed its annual electric customer energy-efficiency formula rate update to increase its rates by$11 million with the ICC. An ICC decision in this proceeding is expected byDecember 2021 , with new rates effectiveJanuary 2022 . 41 -------------------------------------------------------------------------------- InJuly 2021 , the ICC issued an order approvingAmeren Illinois' energy-efficiency plan that includes annual investments in electric energy-efficiency programs up to approximately$100 million per year from 2022 through 2025. The ICC has the ability to reduce the amount of electric energy-efficiency savings goals in future plan 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. RESULTS OF OPERATIONS Our results of operations and financial position are affected by many factors. Economic conditions, including those resulting from the COVID-19 pandemic discussed below, 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, and our pension and postretirement benefits costs. 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 continue to assess the impacts of the COVID-19 pandemic on our businesses, including impacts on electric and natural gas sales volumes, supply chain operations, and bad debt expense. Regarding uncollectible accounts receivable,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. However, Ameren Missouri does not expect a material impact to earnings from increases in bad debt expense. As ofJune 30, 2021 , accounts receivable balances that were 30 days or greater past due or that were a part of a deferred payment arrangement represented 26%, 17%, and 35%, or$116 million ,$32 million , and$84 million , ofAmeren's , Ameren Missouri's, andAmeren Illinois' customer trade receivables before allowance for doubtful accounts, respectively. In comparison, as ofJune 30, 2019 , these percentages were 17%, 11%, and 25%, or$83 million ,$24 million , and$59 million , forAmeren , Ameren Missouri, andAmeren Illinois , respectively. Ameren Missouri's electric sales volumes have been, and continue to be, affected by the COVID-19 pandemic. In the three and six months endedJune 30, 2021 , compared to the same periods in 2020, Ameren Missouri experienced an increase in commercial and industrial electric sales volumes, partially offset by decreased electric sales volumes to higher margin residential customers, excluding the estimated effects of weather and customer energy-efficiency programs. The following table provides the increases and (decreases) in Ameren Missouri electric sales volumes by customer class for the three and six months endedJune 30, 2021 , compared to the same periods in 2020, excluding the estimated effects of weather and customer energy-efficiency programs: Three months ended Six months ended June 30, 2021, June 30, 2021, versus same period versus same period Ameren Missouri Customer Class in 2020 in 2020 Residential (4.2) % (0.4) % Commercial 8.5 % 2.5 % Industrial 7.0 % 2.9 % Total 2.9 % 1.2 % 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. 42 -------------------------------------------------------------------------------- Earnings Summary The following table presents a summary ofAmeren's earnings for the three and six months endedJune 30, 2021 and 2020: Three Months
Six Months
2021 2020 2021 2020
Net income attributable to Ameren common shareholders $ 207 $ 243 $ 440 $ 389
Earnings per common share - diluted 0.80 0.98 1.71 1.57
Net income attributable toAmeren common shareholders decreased$36 million , or18 cents per diluted share, in the three months endedJune 30, 2021 , compared with the year-ago period. The decrease was due to net income decreases of$41 million ,$4 million , and$1 million at Ameren Missouri,Ameren Transmission , andAmeren Illinois Natural Gas , respectively. These decreases were partially offset by a$5 million increase in net income atAmeren Illinois Electric Distribution and a$5 million decrease in the net loss for activity not reported as part of a segment, primarily atAmeren (parent). Net income attributable toAmeren common shareholders increased$51 million , or14 cents per diluted share, in the six months endedJune 30, 2021 , compared with the year-ago period. The increase was due to net income increases of$19 million ,$16 million ,$14 million , and$6 million atAmeren Illinois Natural Gas , Ameren Missouri, Ameren Illinois Electric Distribution, and activity not reported as part of a segment, primarily atAmeren (parent), respectively. These increases were partially offset by a$4 million decrease in net income atAmeren Transmission . Earnings per diluted share were favorably affected in the three and six months endedJune 30, 2021 , compared to the year-ago periods (except where a specific period is referenced), by: •the results of the MoPSC'sMarch 2020 electric rate order, as discussed in Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K, which reduced the base level of expenses at Ameren Missouri, partially offset by lower base rates, net of recovery for amounts associated with the reduction in sales volumes resulting from MEEIA programs and recoverable depreciation under thePISA (10 cents per share for the six months endedJune 30, 2021 ); •increased rate base investments atAmeren Transmission andAmeren Illinois Electric Distribution and a higher recognized ROE atAmeren Illinois Electric Distribution, which increased revenues at the respective segments (4 cents and9 cents per share, respectively); •investments in infrastructure and wind generation pursuant to thePISA and the RESRAM, which resulted in increased deferral of interest expense (5 cents and7 cents per share, respectively); •decreased other operations and maintenance expense not subject to riders and trackers, primarily due to disciplined cost management and changes in the cash surrender value of company-owned life insurance (5 cents per share for the six months endedJune 30, 2021 ); •the impact of weather on electric retail sales at Ameren Missouri, primarily resulting from colder winter temperatures experienced in 2021 (estimated at1 cent and5 cents per share, respectively); •higher base rates pursuant to the ICC'sJanuary 2021 natural gas rate order, which increased margins atAmeren Illinois Natural Gas (1 cent and4 cents per share, respectively); •a change in rate design pursuant to the ICC'sJanuary 2021 natural gas rate order that concentrates more revenues in the winter heating season due to an increase in volumetric rates, which increased margins atAmeren Illinois Natural Gas , but is not expected to materially impact full year results (3 cents per share for the six months endedJune 30, 2021 ); •increased income tax benefit, primarily atAmeren (parent), due to increased interim period income tax benefits in 2021, largely related to wind generation facilities, which is not expected to materially impact full year results (3 cents per share for the six months endedJune 30, 2021 ); •increased electric retail sales, excluding the estimated effects of weather, at Ameren Missouri, largely due to improving economic conditions, which resulted in increased sales volumes to commercial and industrial customers, partially offset by decreased sales volumes to residential customers (3 cents and2 cents per share, respectively); and •the absence of charitable donations made in 2020 pursuant to the MoPSC'sMarch 2020 electric rate order (2 cents per share for the six months endedJune 30, 2021 ). Earnings per diluted share were unfavorably affected in the three and six months endedJune 30, 2021 , compared to the year-ago periods (except where a specific period is referenced), by: •a change in rate design pursuant to the MoPSC'sMarch 2020 electric rate order that resulted in less revenues in the second quarter of 2021 due to a change in the timing of transition from winter to summer volumetric rates, which decreased margins at Ameren Missouri for the three and six months endedJune 30, 2021 , but is not expected to materially impact full year results (19 cents per share for both periods); •the result of theFERC's March 2021 order, primarily related to the historical recovery of materials and supplies inventories, which decreasedAmeren Transmission earnings in 2021; and the absence in 2021 of theFERC's May 2020 order addressing the allowed 43 -------------------------------------------------------------------------------- base ROE forFERC regulated transmission rate base under the MISO tariff, which increased earnings in the year-ago periods (4 cents and7 cents per share, respectively); •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 (3 cents and6 cents per share, respectively); •increased other operations and maintenance expenses at Ameren Missouri due to the amortization of expenses, beginning inJanuary 2021 , related to the 2020 scheduled refueling and maintenance outage at the Callaway Energy Center pursuant to the MoPSC'sFebruary 2020 order, and increased energy center maintenance costs for the three months endedJune 30, 2021 , due to the deferral of projects in the year-ago period (4 cents per share for both periods); •increased financing costs primarily at Ameren Missouri andAmeren (parent), largely due to higher long-term debt balances (2 cents and4 cents per share, respectively); and •increased depreciation and amortization expenses not recoverable under riders or trackers atAmeren Missouri and Ameren Illinois Natural Gas , primarily due to additional property, plant, and equipment investments (1 cent and2 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 six months endedJune 30, 2020 , and do not reflect the impact of dilution on earnings per share, unless otherwise noted. Amounts other than variances related to income taxes have been presented net of income taxes usingAmeren's 2021 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. 44 --------------------------------------------------------------------------------
Below is
Ameren
Illinois Ameren Other /
Ameren Electric Illinois Ameren Intersegment
Missouri Distribution Natural Gas Transmission Eliminations Ameren
Three Months 2021:
Electric margins $ 566 $ 289 $ - $ 136 $ (9) $ 982
Natural gas margins 15 - 108 - - 123
Other operations and maintenance
expenses (218) (129) (53) (14) 2 (412)
Depreciation and amortization expenses (157) (77) (22) (27) (2)
(285)
Taxes other than income taxes (85) (18) (15) (2) (2) (122) Other income, net 24 11 3 2 9 49 Interest charges (36) (19) (10) (20) (11) (96) Income (taxes) benefit 3 (16) (3) (20) 5 (31) Net income (loss) 112 41 8 55 (8) 208 Noncontrolling interests - preferred stock dividends (1) - - - -
(1)
Net income (loss) attributable to Ameren common shareholders$ 111 $ 41 $ 8 $ 55 $ (8)$ 207 Three Months 2020: Electric margins$ 615 $ 264 $ - $ 136 $ (6)$ 1,009 Natural gas margins 15 - 104 - - 119 Other operations and maintenance expenses (202) (118) (52) (15) 3
(384)
Depreciation and amortization expenses (155) (71) (20) (23) (2)
(271)
Taxes other than income taxes (83) (19) (13) (2) (2) (119) Other income, net 25 9 5 3 6 48 Interest charges (50) (18) (10) (18) (12) (108) Income taxes (12) (11) (4) (22) (1) (50) Net income (loss) 153 36 10 59 (14) 244 Noncontrolling interests - preferred stock dividends (1) - (1) - 1
(1)
Net income (loss) attributable to Ameren common shareholders$ 152 $ 36 $ 9 $ 59 $ (13)$ 243 Six Months 2021: Electric margins$ 1,054 $ 578 $ - $ 266 $ (16)$ 1,882 Natural gas margins 47 - 321 - - 368 Other operations and maintenance expenses (443) (254) (109) (30) 4
(832)
Depreciation and amortization expenses (313) (152) (44) (55) (2)
(566)
Taxes other than income taxes (162) (38) (40) (4) (6) (250) Other income, net 47 19 6 5 18 95 Interest charges (75) (37) (20) (43) (21) (196) Income (taxes) benefit 5 (28) (31) (37) 33 (58) Net income 160 88 83 102 10 443 Noncontrolling interests - preferred stock dividends (2) (1) - - -
(3)
Net income attributable toAmeren common shareholders$ 158 $ 87 $ 83 $ 102 $ 10$ 440 Six Months 2020: Electric margins$ 1,067 $ 544 $ - $ 259 $ (15)$ 1,855 Natural gas margins 46 - 286 - - 332 Other operations and maintenance expenses (441) (248) (109) (29) 5
(822)
Depreciation and amortization expenses (294) (142) (41) (47) (2)
(526)
Taxes other than income taxes (162) (38) (35) (4) (5) (244) Other income, net 29 16 7 5 12 69 Interest charges (90) (36) (20) (39) (16) (201) Income (taxes) benefit (11) (22) (23) (39) 24 (71) Net income 144 74 65 106 3 392 Noncontrolling interests - preferred stock dividends (2) (1) (1) - 1
(3)
Net income attributable toAmeren common shareholders$ 142 $ 73 $ 64 $ 106 $ 4$ 389 45
--------------------------------------------------------------------------------
Below is
Ameren
Illinois Ameren Ameren
Electric Illinois Illinois Ameren
Distribution Natural Gas Transmission Illinois
Three Months 2021:
Electric and natural gas margins $ 289 $ 108 $ 88 $ 485
Other operations and maintenance expenses (129) (53) (11) (193)
Depreciation and amortization expenses (77) (22) (18) (117)
Taxes other than income taxes (18) (15) (1) (34)
Other income, net 11 3 2 16
Interest charges (19) (10) (11) (40)
Income taxes (16) (3) (12) (31)
Net income attributable to common shareholder $ 41 $
8 $ 37 $ 86
Three Months 2020:
Electric and natural gas margins $ 264 $ 104 $ 87 $ 455
Other operations and maintenance expenses (118) (52) (12) (182)
Depreciation and amortization expenses (71) (20) (16) (107)
Taxes other than income taxes (19) (13) - (32)
Other income, net 9 5 3 17
Interest charges (18) (10) (10) (38)
Income taxes (11) (4) (14) (29)
Net income 36 10 38 84
Preferred stock dividends - (1) - (1)Net income attributable to common shareholder $ 36 $
9 $ 38 $ 83
Six Months 2021:
Electric and natural gas margins $ 578 $ 321 $ 169 $ 1,068
Other operations and maintenance expenses (254) (109) (24) (387)
Depreciation and amortization expenses (152) (44) (36) (232)
Taxes other than income taxes (38) (40) (2) (80)
Other income, net 19 6 5 30
Interest charges (37) (20) (25) (82)
Income taxes (28) (31) (22) (81)
Net income 88 83 65 236
Preferred stock dividends (1) - - (1)Net income attributable to common shareholder $ 87 $
83 $ 65 $ 235
Six Months 2020:
Electric and natural gas margins $ 544 $ 286 $ 161 $ 991
Other operations and maintenance expenses (248) (109) (24) (381)
Depreciation and amortization expenses (142) (41) (31) (214)
Taxes other than income taxes (38) (35) (1) (74)
Other income, net 16 7 5 28
Interest charges (36) (20) (21) (77)
Income taxes (22) (23) (23) (68)
Net income 74 65 66 205
Preferred stock dividends (1) (1) - (2)Net income attributable to common shareholder $ 73 $
64 $ 66 $ 203
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.
46
--------------------------------------------------------------------------------
Electric Margins
Increase (Decrease) by Segment
Overall Ameren Increase
Overall Ameren Decrease of $27 Million (YTD
of $27 Million (QTD YoY) YoY)
Total by Segment(a)
[[Image Removed: aee-20210630_g4.jpg]][[Image Removed: aee-20210630_g5.jpg]][[Image Removed: aee-20210630_g6.jpg]]
(a)Includes other/intersegment eliminations of $(9) million and $(6) million in
the three months ended June 30, 2021 and 2020. Also includes other/intersegment
eliminations of $(16) million and $(15) million in the six months ended June 30,
2021 and 2020, respectively.
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
Total by Segment of $4 Million (QTD YoY) $36 Million (YTD YoY)
[[Image Removed: aee-20210630_g7.jpg]][[Image Removed: aee-20210630_g8.jpg]][[Image Removed: aee-20210630_g9.jpg]]
Ameren Missouri Ameren Illinois Natural Gas
47-------------------------------------------------------------------------------- The following tables present the favorable (unfavorable) variations byAmeren segment for electric and natural gas margins for the six months endedJune 30, 2021 , compared with the year-ago periods:
Electric and Natural Gas Margins
Electric Ameren Illinois Other /Intersegment
Three Months Ameren Missouri Distribution Natural Gas Ameren Transmission(a) Eliminations Ameren
Electric revenue change:
Effect of weather (estimate)(b) $ 5 $ - $ - $ - $ - $ 5
Base rates (estimate)(c) - 19 - - - 19
Sales volumes and changes in customer usage
patterns (excluding the estimated effects
of weather and MEEIA) 11 - - - - 11
Change in rate design (63) - - - - (63)
Customer demand charges 2 - - - - 2
Off-system sales, capacity, and FAC
revenues, net 54 - - - - 54
Energy -efficiency program investment
revenues - 2 - - - 2
Other 5 3 - - (7) 1
Cost recovery mechanisms - offset in fuel
and purchased power(d) 11 11 - - - 22
Other cost recovery mechanisms(e) (7) 1 - - - (6)
Total electric revenue change $ 18 $ 36 $ - $ - $ (7) $ 47
Fuel and purchased power change:
Energy costs (excluding the estimated
effect of weather) $ (53) $ - $ - $ - $ - $ (53)
Effect of weather (estimate)(b) (1) - - - - (1)
Other (2) - - - 4 2
Cost recovery mechanisms - offset in
electric revenue(d) (11) (11) - - - (22)
Total fuel and purchased power change $ (67) $ (11) $ - $ - $ 4 $ (74)
Net change in electric margins $ (49) $ 25 $ - $ - $ (3) $ (27)
Natural gas revenue change:
Effect of weather (estimate)(b) $ (1) $ - $ - $ - $ - $ (1)
Base rates (estimate) - - 4 - - 4
Change in rate design - - (4) - - (4)
Other - - 2 - - 2
Cost recovery mechanisms - offset in
natural gas purchased for resale(d) - - 24 - - 24
Other cost recovery mechanisms(e) - - 2 - - 2
Total natural gas revenue change $ (1) $ - $ 28 $ - $ - $ 27
Natural gas purchased for resale change:
Effect of weather (estimate)(b) $ 1 $ - $ - $ - - $ 1
Cost recovery mechanisms - offset in
natural gas revenue(d) - - (24) - - (24)
Total natural gas purchased for resale
change $ 1 $ - $ (24) $ - $ - $ (23)
Net change in natural gas margins $ - $ - $ 4 $ - $ - $ 4
48--------------------------------------------------------------------------------
Electric Ameren Illinois Other /Intersegment
Six Months Ameren Missouri Distribution Natural Gas Ameren Transmission(a) Eliminations Ameren
Electric revenue change:
Effect of weather (estimate)(b) $ 23 $ - $ - $ - $ - $ 23
Base rates (estimate)(c) (6) 22 - 7 - 23
Sales volumes and changes in customer usage
patterns (excluding the estimated effects
of weather and MEEIA) 8 - - - - 8
Change in rate design (63) - - - - (63)
Off-system sales, capacity, and FAC
revenues, net 49 - - - - 49
Energy -efficiency program investment
revenues - 5 - - - 5
Other 4 6 - - (9) 1
Cost recovery mechanisms - offset in fuel
and purchased power(d) 14 24 - - - 38
Other cost recovery mechanisms(e) (1) - - - - (1)
Total electric revenue change $ 28 $ 57 $ - $ 7 $ (9) $ 83
Fuel and purchased power change:
Energy costs (excluding the estimated
effect of weather) $ (53) $ - $ - $ - $ - $ (53)
Effect of weather (estimate)(b) (6) - - - - (6)
Effect of lower net energy costs included
in base rates 36 - - - - 36
Other (4) 1 - - 8 5
Cost recovery mechanisms - offset in
electric revenue(d) (14) (24) - - - (38)
Total fuel and purchased power change $ (41) $ (23) $ - $ - $ 8 $ (56)
Net change in electric margins $ (13) $ 34 $ - $ 7 $ (1) $ 27
Natural gas revenue change:
Effect of weather (estimate)(b) $ 3 $ - $ - $ - $ - $ 3
Base rates (estimate) - - 16 - - 16
Change in rate design - - 8 - - 8
Other - - 5 - - 5
Cost recovery mechanisms - offset in
natural gas purchased for resale(d) 10 - 68 - - 78
Other cost recovery mechanisms(e) - - 7 - - 7
Total natural gas revenue change $ 13 $ - $ 104 $ - $ - $ 117
Natural gas purchased for resale change:
Effect of weather (estimate)(b) $ (2) $ - $ - $ - - $ (2)
Other - - (1) - - (1)
Cost recovery mechanisms - offset in
natural gas revenue(d) (10) - (68) - - (78)
Total natural gas purchased for resale
change $ (12) $ - $ (69) $ - $ - $ (81)
Net change in natural gas margins $ 1 $ - $ 35 $ - $ - $ 36
(a)Includes an increase in transmission margins of $1 million and $8 million at
Ameren Illinois for the three and six months ended June 30, 2021 , compared with
the year-ago periods.
(b)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 the
National Oceanic and Atmospheric Administration weather stations at local
airports in our service territories.
(c)For Ameren Illinois Electric Distribution and Ameren 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 of $7 million for the recovery of lost electric
margins for the six months ended June 30, 2021 , compared with the year-ago
period, resulting from the MEEIA 2016 and 2019 customer energy-efficiency
programs. This amount is included in the "sales volumes and changes in customer
usage patterns (excluding the estimated effects of weather and MEEIA)" line
item.
(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.
(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.
49
--------------------------------------------------------------------------------Ameren's electric margins decreased$27 million , or 3%, for the three months endedJune 30, 2021 , compared with the year-ago period, primarily because of decreased margins at Ameren Missouri, partially offset by increased margins at Ameren Illinois Electric Distribution, as discussed below.Ameren's electric margins increased$27 million , or 1%, for the six months endedJune 30, 2021 , compared with the year-ago periods, primarily because of increased margins at Ameren Illinois Electric Distribution andAmeren Transmission , partially offset by decreased margins at Ameren Missouri, as discussed below.Ameren's natural gas margins increased$4 million , or 3%, and$36 million , or 11%, for the three and six months endedJune 30, 2021 , respectively, compared with the year-ago periods, primarily because of increased margins atAmeren Illinois Natural Gas , as discussed below.Ameren Transmission Ameren Transmission's margins were comparable between the three months endedJune 30, 2021 and 2020.Ameren Transmission's margins increased$7 million , or 3%, for the six months endedJune 30, 2021 , compared with the year-ago period. Base rate revenues were favorably affected by increased capital investment, as evidenced by a 12% increase in rate base used to calculate the revenue requirement, partially offset by the absence in 2021 of theFERC's May 2020 order addressing the allowed base ROE, and the effect of theFERC's March 2021 order, which required refunds related to historical recovery of materials and supplies inventories. See Transmission Formula Rate Revisions in Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report for additional information regarding theMay 2020 andMarch 2021 FERC orders. Ameren Missouri Ameren Missouri's electric margins decreased$49 million , or 8%, and$13 million , or 1%, for the three and six months endedJune 30, 2021 , respectively, compared with the year-ago periods. Fuel and purchased power costs increased$11 million and$14 million for the three and six months endedJune 30, 2021 , respectively, primarily resulting from higher electric prices, theCallaway Energy Center maintenance outage, and, for the six month comparison, a significant increase in customer demand for electricity inmid-February 2021 due to extremely cold weather. The increased fuel and purchased power costs were fully offset by an increase in electric revenues, 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 an unfavorable effect on Ameren Missouri's electric margins for three and six months endedJune 30, 2021 , compared with the year-ago periods (except when a specific period is referenced): •The implementation of a change in rate design pursuant to theMarch 2020 MoPSC electric rate order decreased margins$63 million in both periods. The change in rate design applies lower winter rates to May sales volumes and higher summer rates to September sales volumes beginning in 2021. Previously, blended rates were applied in both months' sales volumes. As the decrease in margins associated with May sales volumes is expected to be offset by increases associated with September sales volumes, the change is not expected to materially affect annual earnings comparisons. •The absence of the Callaway Energy Center generation and extremely cold weather inmid-February 2021 , partially offset by insurance recoveries related to the Callaway Energy Center maintenance outage, drove net energy costs higher than those reflected in base rates, which reduced margins by$4 million , resulting from Ameren Missouri's 5% exposure to net energy cost variances under the FAC for the six months endedJune 30, 2021 . The change in net energy costs is the sum of the revenue change in "Off-system sales, capacity and FAC revenues, net" (+$49 million ) and the change in "Energy costs (excluding the estimated effect of weather)" (-$53 million ) in the table above. See Note 10 - Callaway Energy Center under Part I, Item 1, of this report for additional information on insurance recoveries related to the outage. The following items had a favorable effect on Ameren Missouri's electric margins for three and six months endedJune 30, 2021 , compared with the year-ago periods (except when a specific period is referenced): •TheMarch 2020 MoPSC electric rate order that resulted in lower net energy costs included in base rates, partially offset by lower electric base rates, increased margins$30 million for the six months endedJune 30, 2021 . The change in electric base rates is the sum of the change in "Base rates (estimate)" (-$6 million ) and the "Effect of lower net energy costs included in base rates" (+$36 million ) in the table above. •Excluding the estimated effects of weather and the MEEIA customer energy-efficiency programs, electric revenues increased an estimated$11 million and$8 million , respectively. The increase was primarily due to an increase in sales volumes, which were unfavorably affected by the COVID-19 pandemic in 2020, and an increase in the average retail price per kilowatthour due to changes in customer usage patterns. While the MEEIA customer energy-efficiency programs reduced retail sales volumes, the recovery of lost electric margins under the MEEIA ensured that electric margins were not affected. •Summer temperatures were warmer as cooling degree days increased 7% for the three months endedJune 30, 2021 , and winter temperatures were colder as heating degree days increased 7% for the six months endedJune 30, 2021 . The aggregate effect of 50 -------------------------------------------------------------------------------- weather increased margins an estimated$4 million and$17 million , respectively. The change in margins due to weather is the sum of the "Effect of weather (estimate)" on electric revenues (+$5 million and+$23 million , respectively) and the "Effect of weather (estimate) on fuel and purchased power" (-$1 million and -$6 million , respectively) in the table above. •Lower net energy costs increased margins$1 million for the three months endedJune 30, 2021 . The change in net energy costs is the sum of "Off-system sales, capacity and FAC revenues, net" (+$54 million ) and "Energy costs (excluding the estimated effect of weather)" (-$53 million ) in the table above. Ameren Missouri's natural gas margins were comparable between periods. Purchased gas costs increased$10 million for the six months endedJune 30, 2021 , primarily resulting from the significant increase in customer demand and prices for natural gas inmid-February 2021 due to extremely cold weather. The increased purchased gas costs are fully offset by an increase in natural gas revenues under the PGA rider, resulting in no impact to margin. The increase in purchased 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 IllinoisAmeren Illinois' electric margins increased$26 million , or 7%, and$42 million , or 6%, for the three and six months endedJune 30, 2021 , respectively, compared with the year-ago periods, driven by increased margins atAmeren Illinois Electric Distribution and Ameren Illinois Transmission.Ameren Illinois Natural Gas' margins increased$4 million , or 4%, and$35 million , or 12%, for the three and six months endedJune 30, 2021 , respectively, compared with the year-ago periods. Ameren Illinois Electric DistributionAmeren Illinois Electric Distribution's margins increased$25 million , or 9%, and$34 million , or 6%, for the three and six months endedJune 30, 2021 , respectively, compared with the year-ago periods. Purchased power costs increased$11 million and$24 million for the three and six months endedJune 30, 2021 , respectively, primarily resulting from higher electric prices and, for the six month comparison, the significant increase in customer demand for electricity inmid-February 2021 due to extremely cold weather. 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 onAmeren Illinois Electric Distribution's margins for the three and six months endedJune 30, 2021 , compared with the year-ago periods: •Margins increased due to a higher recognized ROE (+$4 million and+$7 million , respectively), as evidenced by an increase of 74 basis points in the estimated annual average of the monthly yields of the 30-year United States Treasury bonds, increased capital investment (+$2 million and+$4 million , respectively), as evidenced by a 7% increase in rate base used to calculate the revenue requirement, and higher recoverable non-purchased power expenses (+$13 million and+$11 million , respectively). The sum of these changes collectively increased margins$19 million and$22 million , respectively. •Revenues increased$2 million and$5 million , respectively, due to recovery of increased energy-efficiency program investments under performance-based formula ratemaking.Ameren Illinois Natural Gas Ameren Illinois Natural Gas' margins increased$4 million , or 4%, and$35 million , or 12%, for the three and six months endedJune 30, 2021 , respectively, compared with the year-ago periods. Purchased gas costs increased$24 million and$68 million for the three and six months endedJune 30, 2021 , primarily resulting from higher natural gas prices and, for the six month comparison, the significant increase in customer demand for natural gas inmid-February 2021 due to extremely cold weather. The increased purchased gas costs are fully offset by an increase in natural gas revenues under the PGA rider, resulting in no impact to margin. The increase in purchased 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 onAmeren Illinois Natural Gas' margins for the three and six months endedJune 30, 2021 , compared with the year-ago periods (except when a specific period is referenced): •Revenues increased$4 million and$16 million , respectively, due to higher natural gas base rates as a result of theJanuary 2021 natural gas rate order. •The implementation of a change in rate design pursuant to theJanuary 2021 natural gas rate order, which increased margins$8 million for the six months endedJune 30, 2021 . This change in rate design concentrates more revenues in the winter heating season due to an increase in volumetric rates and a decrease in fixed customer rates. As such, the change is not expected to materially affect annual earnings comparisons. 51 --------------------------------------------------------------------------------Ameren Illinois Natural Gas' margins decreased due to the implementation of a change in rate design pursuant to theJanuary 2021 natural gas rate order, which decreased margins$4 million for the three months endedJune 30, 2021 . As noted above, the change is not expected to materially affect annual earnings comparisons. Ameren Illinois Transmission Ameren Illinois Transmission's margins increased$1 million , or 1%, and$8 million , or 5%, for the three and six months endedJune 30, 2021 , respectively, compared with the year-ago periods. Margins were favorably affected by increased capital investment, as evidenced by a 18% increase in rate base used to calculate the revenue requirement, partially offset by the absence in 2021 of theFERC's May 2020 order addressing the allowed base ROE, and the effect of theFERC's March 2021 order, which required refunds related to historical recovery of materials and supplies inventories. See Transmission Formula Rate Revisions in Note 2 - Rate and Regulatory Matters under Part I, Item 1, of this report for additional information regarding theMay 2020 andMarch 2021 FERC orders. Other Operations and Maintenance Expenses Increase (Decrease) by Segment Overall Ameren Increase Overall Ameren Increase of$10 Million (YTD Total by Segment(a) of$28 Million (QTD YoY) YoY) [[Image Removed: aee-20210630_g10.jpg]][[Image Removed: aee-20210630_g11.jpg]][[Image Removed: aee-20210630_g12.jpg]] (a)Includes$14 million and$15 million atAmeren Transmission in the three months endedJune 30, 2021 and 2020, respectively. Includes other/intersegment eliminations of$(2) million and$(3) million in the three months endedJune 30, 2021 and 2020, respectively. Also includes other/intersegment eliminations of$(4) million and$(5) million in the six months endedJune 30, 2021 and 2020, respectively.
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission DistributionAmeren Other operations and maintenance expenses increased$28 million and$10 million in the three and six months endedJune 30, 2021 , compared with the year-ago periods, due to changes discussed below.Ameren Transmission Other operations and maintenance expenses were comparable between periods. Ameren Missouri Other operations and maintenance expenses increased$16 million in the three months endedJune 30, 2021 , compared with the year-ago period. Other operations and maintenance expenses were comparable between the six months endedJune 30, 2021 and 2020. The 52 -------------------------------------------------------------------------------- following items increased other operations and maintenance expenses in the three and six months endedJune 30, 2021 , compared with the year-ago periods (except where a specific period is referenced): •Callaway Energy Center refueling operations and maintenance costs increased$7 million and$14 million , respectively, because of the amortization of those costs, beginning inJanuary 2021 , which were previously deferred as a regulatory asset, pursuant to the MoPSC'sFebruary 2020 order. •Energy center maintenance costs, other thanCallaway refueling and maintenance costs, increased$6 million and$7 million , respectively, primarily due to the deferral of projects in the year-ago period. •Customer energy-efficiency program costs increased$8 million in the six months endedJune 30, 2021 , because of increased participation in the MEEIA programs in the current-year period. •The cash surrender value of company-owned life insurance decreased$5 million because of less favorable market returns in the three months endedJune 30, 2021 , compared with the year-ago period. The following items partially offset the above increases in other operations and maintenance expenses in the six months endedJune 30, 2021 , compared with the year-ago period: •Amortization of costs, primarily solar rebate costs pursuant to the MoPSC'sMarch 2020 electric rate order, decreased$8 million . •Transmission and distribution expenditures decreased$6 million , primarily resulting from less maintenance and meter reading costs, because of recent capital improvements related to the Smart Energy Plan. •Deferral to a regulatory asset of$5 million of certain prior period costs incurred related to the COVID-19 pandemic, pursuant to the MoPSC'sMarch 2021 orders. •The cash surrender value of company-owned life insurance increased$4 million because of more favorable market returns in the six months endedJune 30, 2021 , compared with the year-ago period.Ameren Illinois Other operations and maintenance expenses increased$11 million and$6 million in the three and six months endedJune 30, 2021 , compared with the year-ago periods, as discussed below. Other operations and maintenance expenses were comparable between periods atAmeren Illinois Natural Gas andAmeren Illinois Transmission. Ameren Illinois Electric Distribution Other operations and maintenance expenses increased$11 million and$6 million in the three and six months endedJune 30, 2021 , compared with the year-ago periods. The following items increased other operations and maintenance expenses in the three and six months endedJune 30, 2021 , compared with the year-ago periods (except where a specific period is referenced): •Employee benefit costs increased$3 million and$4 million , respectively, primarily because of higher medical and pension costs. •Amortization of regulatory assets associated with energy-efficiency program investments under performance-based formula ratemaking increased$2 million and$4 million , respectively. •Distribution expenditures increased$3 million in the three months endedJune 30, 2021 , primarily because of increased storm costs. •The cash surrender value of company-owned life insurance decreased$2 million because of less favorable market returns in the three months endedJune 30, 2021 , compared with the year-ago period. 53 --------------------------------------------------------------------------------
Depreciation and Amortization Expenses
Increase (Decrease) by Segment
Overall Ameren Increase Overall Ameren Increase
of $14 Million (QTD of $40 Million (YTD
Total by Segment(a) YoY) YoY)
[[Image Removed: aee-20210630_g13.jpg]][[Image Removed: aee-20210630_g14.jpg]][[Image Removed: aee-20210630_g15.jpg]]
(a)Includes other/intersegment eliminations of $2 million and $2 million in the
three months ended June 30, 2021 and 2020, respectively. Also includes
other/intersegment eliminations of $2 million and $2 million in the six months
ended June 30, 2021 and 2020, respectively.
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission Distribution Depreciation and amortization expenses increased$14 million and$10 million in the three months endedJune 30, 2021 , and$40 million and$18 million in the six months endedJune 30, 2021 , compared with the year-ago periods, atAmeren andAmeren Illinois , respectively, primarily because of additional property, plant, and equipment investments across their respective segments. Depreciation and amortization expenses were comparable at Ameren Missouri between the three months endedJune 30, 2021 and 2020. Depreciation and amortization expenses increased$19 million at Ameren Missouri in the six months endedJune 30, 2021 , compared with the year-ago period, primarily because of additional property, plant, and equipment investments.Ameren's and Ameren Missouri's depreciation and amortization expenses reflected a deferral to a regulatory asset of depreciation and amortization expenses pursuant to thePISA and the RESRAM. ThePISA and RESRAM deferrals of depreciation and amortization expenses were$22 million and$1 million for the three months endedJune 30, 2021 and 2020, respectively, and$41 million and$14 million for the six months endedJune 30, 2021 and 2020, respectively. 54 --------------------------------------------------------------------------------
Taxes Other Than Income Taxes
Increase (Decrease) by Segment
Overall Ameren Increase Overall Ameren Increase
Total by Segment(a) of $3 Million (QTD YoY) of $6 Million (YTD YoY)
[[Image Removed: aee-20210630_g16.jpg]]
[[Image Removed: aee-20210630_g17.jpg]][[Image Removed: aee-20210630_g18.jpg]]
(a)Includes $2 million , $2 million , $4 million , and $4 million at Ameren
Transmission in the three months ended June 30, 2021 and 2020, and in the six
months ended June 30, 2021 and 2020, respectively. Also includes
other/intersegment eliminations of $2 million , $2 million , $6 million , and
$5 million in the three months ended June 30, 2021 and 2020, and in the six
months ended June 30, 2021 and 2020, respectively.
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission Distribution Taxes other than income taxes increased$3 million atAmeren in the three months endedJune 30, 2021 , compared with the year-ago period, primarily because of increased property taxes acrossAmeren segments. Taxes other than income taxes were comparable at Ameren Missouri andAmeren Illinois between the three months endedJune 30, 2021 and 2020. Taxes other than income taxes increased$6 million atAmeren andAmeren Illinois in the six months endedJune 30, 2021 , compared with the year-ago period, primarily because of a$4 million increase in excise taxes atAmeren Illinois Natural Gas , as a result of increased sales. Taxes other than income taxes were comparable at Ameren Missouri between the six months endedJune 30, 2021 and 2020. 55 --------------------------------------------------------------------------------
Other Income, Net
Increase (Decrease) by Segment
Overall Ameren Increase
Overall Ameren Increase of $26 Million (YTD
Total by Segment(a) of $1 Million (QTD YoY) YoY)
[[Image Removed: aee-20210630_g19.jpg]][[Image Removed: aee-20210630_g20.jpg]][[Image Removed: aee-20210630_g21.jpg]]
(a)Includes
Ameren Missouri
Ameren Illinois ElectricAmeren Transmission Distribution Other income, net, was comparable atAmeren , Ameren Missouri, andAmeren Illinois between the three months endedJune 30, 2021 and 2020. Other income, net, increased$26 million and$18 million atAmeren and Ameren Missouri, respectively, in the six months endedJune 30, 2021 , compared with the year-ago period, primarily because of a$9 million increase in the non-service cost components of net periodic benefit income at Ameren Missouri and an$8 million decrease in charitable donations at Ameren Missouri due to the absence of charitable donations made in the year-ago period pursuant to the MoPSC'sMarch 2020 electric rate order. Other income, net, also increased$6 million atAmeren in the six months endedJune 30, 2021 , compared with the year-ago period for activity not reported as part of a segment, primarily because of increased income from equity method investments. Other income, net was comparable atAmeren Illinois between the six months endedJune 30, 2021 and 2020. See Note 5 - Other Income, Net, under Part I, Item 1, of this report for additional information. 56 --------------------------------------------------------------------------------
Interest Charges
Increase (Decrease) by Segment
Overall Ameren Decrease Overall Ameren Decrease of
Total by Segment of $12 Million (QTD YoY) $5 Million (YTD YoY)
[[Image Removed: aee-20210630_g22.jpg]][[Image Removed: aee-20210630_g23.jpg]][[Image Removed: aee-20210630_g24.jpg]]
Ameren Missouri
Ameren Illinois Electric Ameren Transmission Distribution Interest charges decreased$12 million and$14 million in the three months endedJune 30, 2021 , and$5 million and$15 million in the six months endedJune 30, 2021 , atAmeren and Ameren Missouri, respectively, compared with the year-ago periods, primarily because of increased deferrals to a regulatory asset of interest charges pursuant to thePISA and the RESRAM. ThePISA and RESRAM deferrals of interest charges were$19 million and$1 million in the three months endedJune 30, 2021 and 2020, respectively, and$34 million and$9 million in the six months endedJune 30, 2021 and 2020, respectively. Interest charges were comparable atAmeren Illinois between the three months endedJune 30, 2021 and 2020. Interest charges increased$5 million atAmeren Illinois in the six months endedJune 30, 2021 , compared with the year-ago period. The following items partially offset the decreases in interest charges in the three and six months endedJune 30, 2021 , compared with the year-ago periods (except where a specific period is referenced): •Issuance of long-term debt at Ameren Missouri inOctober 2020 increased interest charges by$4 million and$7 million , respectively. •Issuance of long-term debt atAmeren (parent) inApril 2020 increased interest charges by$7 million in the six months endedJune 30, 2021 , compared with the year-ago period. •Interest charges increased by$4 million in the six months endedJune 30, 2021 , compared with the year-ago period, at Ameren Illinois Transmission as a result of theFERC's March 2021 order and theAmeren Illinois issuance of long-term debt inNovember 2020 . 57 -------------------------------------------------------------------------------- Income Taxes The following table presents effective income tax rates for the three and six months endedJune 30, 2021 and 2020: Three Months(a) Six Months(a) 2021 2020 2021 2020 Ameren 13 % 17 % 12 % 15 % Ameren Missouri (3) % 7 % (3) % 7 % Ameren Illinois 26 % 26 % 25 % 25 % Ameren Illinois Electric Distribution 25 % 25 % 24 % 24 % Ameren Illinois Natural Gas 29 % 29 % 27 % 26 % Ameren Illinois Transmission 25 % 27 % 25 % 26 % Ameren Transmission 26 % 27 % 26 % 27 % (a)Estimate of the annual effective income tax rate adjusted to reflect the tax effect of items discrete to the three and six months endedJune 30, 2021 and 2020. 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. The effective income tax rate was lower at Ameren Illinois Transmission in the three months endedJune 30, 2021 , compared with the year-ago period, primarily because of higher tax benefits from certain depreciation differences on property-related items largely attributable to the allowance for equity funds used during construction and higher amortization of excess deferred taxes, compared with the year-ago period. 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). 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. 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 2025.Ameren expects these issuances to provide equity of about$100 million annually. In addition,Ameren established an ATM program under whichAmeren may offer and sell from time to time up to$750 million of its common stock, subject to market conditions and other factors. For the six months endedJune 30, 2021 ,Ameren issued a total of 3.0 million shares of common stock and received aggregate proceeds of$234 million under the ATM program and the settlement of the remaining portion of the forward sale agreement.Ameren plans to issue approximately$30 million of equity in the second half of 2021 and approximately$300 million each year from 2022 to 2025 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, 2025 , 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 2021 settlement of the remaining portion of the forward sale agreement and the ATM program. 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 atJune 30, 2021 , forAmeren . 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$2.0 billion atJune 30, 2021 . See Credit Facility Borrowings and Liquidity for additional information. The following table presents net cash provided by (used in) operating, investing, and financing activities for the six months endedJune 30, 2021 and 2020: Net Cash Provided By Net Cash Used In Net Cash Provided By Operating Activities Investing Activities
Financing Activities
2021 2020 Variance 2021 2020 Variance 2021 2020 Variance
Ameren $ 436 $ 694 $ (258) $ (1,760) $ (1,315) $ (445) $ 1,290 $ 608 $ 682
Ameren Missouri 224 292 (68) (1,053) (604) (449) 701 284 417
Ameren Illinois 286 340 (54) (668) (659) (9) 477 336 141
58-------------------------------------------------------------------------------- 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 , significantly affects the amount and timing of our cash provided by operating activities.Ameren Ameren's cash provided by operating activities decreased$258 million in the first six months of 2021, compared with the year-ago period. The following items contributed to the decrease: •A$185 million decrease resulting from increased purchases for natural gas for resale and purchased power costs 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, which are recovered under the PGA, the FAC, andAmeren Illinois' purchased power rider; a net decrease attributable to other regulatory recovery mechanisms; and a decrease related to a change in Ameren Missouri's electric rate design. These items were partially offset by increased customer collections resulting from base rate increases pursuant toAmeren Illinois' January 2021 natural gas rate order and due toAmeren Illinois' electric transmission rate base growth, and state funding received byAmeren Illinois for customer billing assistance. These decreases were also partially offset by increased retail sales at Ameren Missouri andAmeren Illinois and the effect of customer disconnection activity atAmeren Illinois that resumed inApril 2021 , which had been suspended for most of 2020. •A$25 million increase in interest payments, primarily due to an increase in the average outstanding debt. •A$23 million decrease in net collateral activity with counterparties, primarily resulting from changes in the market prices of power, natural gas, and other fuels. •A$21 million increase in the cost of natural gas held in storage atAmeren Illinois because of higher prices. •A$16 million increase in major storm restoration costs atAmeren Illinois due to aJanuary 2021 storm. •A$13 million increase in payroll tax payments primarily due to the employer portion ofSocial Security taxes as a result of a payment deferral allowed in 2020 under the Coronavirus Aid, Relief, and Economic Security Act. Half of this deferral will be paid at the end of 2021 and the remaining half will be paid at the end of 2022. •A$10 million increase in property tax payments at Ameren Missouri primarily due to higher assessed property tax values. The following items partially offset the decrease inAmeren's cash from operating activities between periods: •A$24 million increase, primarily resulting from reduced purchases of materials and supplies to support operations in 2021 as levels were increased in 2020 to mitigate against any potential supply disruptions associated with the COVID-19 pandemic. •A$17 million decrease in payments to settle ARO liabilities, primarily related to the closure of Ameren Missouri's CCR storage facilities. •A$16 million increase resulting from a decrease in coal inventory levels at Ameren Missouri primarily due to weather-related delivery disruptions. Ameren Missouri Ameren Missouri's cash provided by operating activities decreased$68 million in the first six months of 2021, compared with the year-ago period. The following items contributed to the decrease: •A$74 million decrease resulting from increased purchases for natural gas for resale and purchased power costs 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, which are recovered under the PGA and the FAC; a net decrease attributable to other regulatory recovery mechanisms; and a decrease related to a change in electric rate design. These items were partially offset by increased retail sales. •A$25 million decrease in net collateral activity with counterparties, primarily resulting from changes in the market prices of power, natural gas, and other fuels. •A$10 million increase in interest payments, primarily due to an increase in the average outstanding debt. •A$10 million increase in property tax payments primarily due to higher assessed property tax values. •A$6 million increase in payroll tax payments primarily due to the employer portion ofSocial Security taxes as a result of a payment deferral allowed in 2020 under the Coronavirus Aid, Relief, and Economic Security Act. Half of this deferral will be paid at the end of 2021 and the remaining half will be paid at the end of 2022. 59 -------------------------------------------------------------------------------- The following items partially offset the decrease in Ameren Missouri's cash from operating activities between periods: •A$23 million increase in income tax refunds fromAmeren (parent) pursuant to the tax allocation agreement, primarily due to the timing of payments and lower taxable income in 2021. •A$17 million decrease in payments to settle ARO liabilities, primarily related to the closure of CCR storage facilities. •A$16 million increase resulting from a decrease in coal inventory levels primarily due to weather-related delivery disruptions. •A$13 million increase, primarily resulting from reduced purchases of materials and supplies to support operations in 2021 as levels were increased in 2020 to mitigate against any potential supply disruptions associated with the COVID-19 pandemic.Ameren Illinois Ameren Illinois' cash provided by operating activities decreased$54 million in the first six months of 2021, compared with the year-ago period. The following items contributed to the decrease: •A$118 million decrease resulting from increased purchases for natural gas for resale and purchased power costs 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, which are recovered under the PGA and a purchased power rider, and a net decrease attributable to other regulatory recovery mechanisms. These items were partially offset by increased customer collections resulting from base rate increases pursuant to theJanuary 2021 natural gas rate order and due to electric transmission rate base growth, state funding received for customer billing assistance, increased retail sales, and the effect of customer disconnection activity that resumed inApril 2021 , which had been suspended for most of 2020. •A$21 million increase in the cost of natural gas held in storage because of higher prices. •A$16 million increase in major storm restoration costs due to aJanuary 2021 storm. •A$6 million increase in interest payments, primarily due to an increase in the average outstanding debt. •A$4 million increase in payroll tax payments primarily due to the employer portion ofSocial Security taxes as a result of a payment deferral allowed in 2020 under the Coronavirus Aid, Relief, and Economic Security Act. Half of this deferral will be paid at the end of 2021 and the remaining half will be paid at the end of 2022. The following items partially offset the decrease inAmeren Illinois' cash from operating activities between periods: •A$98 million increase resulting from income tax refunds of$37 million , compared with income tax payments of$61 million in 2020, fromAmeren (parent) pursuant to the tax allocation agreement, primarily due to lower taxable income in 2021. •An$11 million increase, primarily resulting from reduced purchases of materials and supplies to support operations in 2021 as levels were increased in 2020 to mitigate against any potential supply disruptions associated with the COVID-19 pandemic. Cash Flows from Investing ActivitiesAmeren's cash used in investing activities increased$445 million during the first six months of 2021, compared with the year-ago period, primarily as a result of a$417 million increase in cash paid for the acquisition of wind generation assets at Ameren Missouri and a$118 million increase in capital expenditures, which were driven by an increase at Ameren Missouri, partially offset by a decrease atAmeren Illinois and a$26 million decrease at ATXI, primarily as a result of decreased Illinois Rivers transmission line expenditures as it was placed in service inDecember 2020 . The increase inAmeren's cash used in investing activities was partially offset by a$52 million decrease due to the timing of nuclear fuel expenditures and a$37 million decrease due to net investment activity in the nuclear decommissioning trust fund at Ameren Missouri. Ameren Missouri's cash used in investing activities increased$449 million during the first six months of 2021, compared with the year-ago period, primarily as a result of a$417 million increase in cash paid for the acquisition of wind generation assets and a$168 million increase in capital expenditures, primarily related to electric delivery infrastructure upgrades, electric distribution system reliability projects, and generator repairs at the Callaway Energy Center. The increase in Ameren Missouri's cash used in investing activities was partially offset by a$47 million return of net money pool advances, a$52 million decrease due to the timing of nuclear fuel expenditures, and a$37 million decrease due to net investment activity in the nuclear decommissioning trust fund.Ameren Illinois' cash used in investing activities increased$9 million during the first six months of 2021, compared with the year-ago period, primarily as a result of a$20 million increase inAmeren Illinois' net money pool advances, partially offset by a$15 million decrease in capital expenditures, primarily related to natural gas infrastructure and electric transmission system reliability projects. 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. 60 -------------------------------------------------------------------------------- Due to extremely cold winter weather inmid-February 2021 , Ameren Missouri andAmeren Illinois experienced higher than anticipated commodity costs for purchased power and natural gas purchased for resale, which contributed to the acceleration of the timing of planned 2021 debt issuances.Ameren's cash provided by consolidated financing activities increased$682 million during the first six months of 2021, compared with the year-ago period. During the first six months of 2021,Ameren utilized proceeds from the issuance of$1,423 million 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 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, and to fund, in part, investing activities. During the first six months of 2021,Ameren repaid net short-term debt of$59 million . In addition,Ameren received aggregate cash proceeds of$258 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 forward sale agreement. These proceeds were used to fund a portion of Ameren Missouri's wind generation investments and to fund, in part, other investing activities. In comparison, during the first six months of 2020,Ameren utilized proceeds from the issuance of$1,263 million 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 repayment at maturity of long-term debt of$85 million and to fund, in part, investing activities. During the first six months of 2020,Ameren repaid net short-term debt of$320 million . During the first six months of 2021,Ameren paid common stock dividends of$282 million , compared with$244 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 increased$417 million during the first six months of 2021, compared with the year-ago period. During the first six 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 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. Additionally, proceeds from the issuance of long-term debt and capital contributions of$183 million fromAmeren (parent) were used to fund, in part, investing activities. In comparison, during the first six months of 2020,Ameren Missouri utilized net proceeds from the issuance of$465 million of long-term debt to repay then-outstanding short-term debt, including short-term debt incurred in connection with the repayment at maturity of long-term debt of$85 million . During the first six months of 2020, Ameren Missouri repaid net short-term debt of$155 million , borrowed$65 million from the money pool, and used cash provided by financing activities to fund, in part, investing activities.Ameren Illinois' cash provided by financing activities increased$141 million during the first six months of 2021, compared with the year-ago period. During the first six 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 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, and to fund, in part, investing activities. In the first six months of 2021,Ameren Illinois received capital contributions of$70 million fromAmeren (parent), compared with$350 million in the year-ago period. In addition,Ameren Illinois repaid$19 million of money pool borrowings and redeemed$13 million of preferred stock in the current year period. During the first six months of 2020,Ameren Illinois repaid net short-term debt of$12 million . 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. 61 --------------------------------------------------------------------------------
Credit Facility Borrowings and Liquidity
The following table presents
Available at June 30, 2021
Ameren (parent) and Ameren Missouri:
Missouri Credit Agreement - borrowing capacity $ 1,200
Less: Ameren (parent) commercial paper outstanding 277
Less: Ameren Missouri letters of credit 2
Missouri Credit Agreement - subtotal 921
Ameren (parent) and Ameren Illinois :
Illinois Credit Agreement - borrowing capacity 1,100
Less: Ameren (parent) commercial paper outstanding 154
Less: Ameren Illinois letters of credit 1
Illinois Credit Agreement - subtotal 945
Subtotal $ 1,866
Add: Cash and cash equivalents 99
Net Available Liquidity $ 1,965
The Credit Agreements, among other things, provide $2.3 billion of credit until
maturity in December 2024 . 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 six months ended June 30, 2021 , Ameren (parent), Ameren
Missouri , and Ameren Illinois each issued commercial paper. Borrowings under the
Credit Agreements and commercial paper issuances are based upon available
interest rates at that 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 and Ameren 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 by Ameren's utility subsidiaries is
subject to FERC approval under the Federal Power Act. In 2020, the FERC issued
orders authorizing Ameren Missouri and Ameren Illinois to each issue up to
$1 billion of short-term debt securities through March 2022 and September 2022 ,
respectively. In July 2021 , the FERC issued an order authorizing ATXI to issue
up to $300 million of short-term debt securities, which expires in July 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.
62
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Long-term Debt and Equity
The following table presents Ameren's 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 six months ended June 30, 2021 and
2020:
Month Issued,
Redeemed, or Matured 2021 2020
Issuances of Long-term Debt
Ameren:
1.75% Senior unsecured notes due 2028 March $ 450 $ -
3.50% Senior unsecured notes due 2031 April - 798
Ameren Missouri:
2.95% First mortgage bonds due 2030 March - 465
2.15% First mortgage bonds due 2032 (green
bonds) June 524 -
Ameren Illinois:
2.90% First mortgage bonds due 2051 (green
bonds) June 349
0.375% First mortgage bonds due 2023 June 100 - Total Ameren long-term debt issuances$ 1,423 $ 1,263 Issuances of Common Stock Ameren: DRPlus and 401(k) (a) Various$ 24 $ 27 Forward sale agreement (b) February 113 - ATM program (c) Various 121 - Total Ameren common stock issuances (d)$ 258 $ 27 Maturities of Long-term Debt Ameren Missouri: 5.00% Senior secured notes due 2020 February $ -$ 85 Total Ameren long-term debt maturities $ -$ 85 Redemptions of Preferred Stock Ameren Illinois: 6.625% Series March$ 12 $ - 7.75% Series March 1 - TotalAmeren Illinois preferred stock redemptions$ 13 $ - (a)Ameren issued a total of 0.3 million and 0.4 million shares of common stock under its DRPlus and 401(k) plan in the six months endedJune 30, 2021 and 2020, respectively. (b)Ameren issued 1.6 million shares of common stock to settle the remainder of the forward sale agreement. (c)Ameren issued 1.4 million shares of common stock under the ATM program. (d)Excludes 0.5 million and 0.5 million shares of common stock valued at$33 million and$38 million issued for no cash consideration in connection with stock-based compensation for the six months endedJune 30, 2021 and 2020, 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, the use of those proceeds,Ameren's forward equity sale agreement, and the ATM program, as well as information on capital contributions received by Ameren Missouri andAmeren Illinois fromAmeren (parent). Indebtedness Provisions and Other Covenants AtJune 30, 2021 , 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 agreement. 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 agreement, and in certain of the Ameren Companies' indentures and articles of incorporation. 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 its 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. 63 --------------------------------------------------------------------------------
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 theAmeren Companies' financial agreements and articles of incorporation that would restrict the Ameren Companies' payment of dividends in certain circumstances. AtJune 30, 2021 , none of these circumstances existed atAmeren , Ameren Missouri, orAmeren Illinois and, as a result, these companies were not restricted from paying dividends. 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 six months endedJune 30, 2021 and 2020: Six Months 2021 2020 Ameren$ 282 $ 244 ATXI 32 - Commitments As ofJune 30, 2021 , there have been no material changes other than in the ordinary course of business related to cash requirements arising from contractual obligations provided in Item 7 of the Form 10-K for the year endedDecember 31, 2020 . See Long-term Debt and Equity section above forAmeren (parent), Ameren Missouri, andAmeren Illinois for debt issuances during the period endedJune 30, 2021 . Off-balance-sheet Arrangements AtJune 30, 2021 , none of the Ameren Companies had any significant off-balance-sheet financing arrangements, other than variable interest entities. See Note 1 - Summary of Significant Accounting Policies under Part I, Item 1, of this report for further detail concerning variable interest entities. 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
64-------------------------------------------------------------------------------- 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. 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$41 million forAmeren and Ameren Missouri and cash collateral posted by external parties were$24 million forAmeren andAmeren Illinois atJune 30, 2021 . A sub-investment-grade issuer or senior unsecured debt rating (below "Baa3" from Moody's or below "BBB-" from S&P) atJune 30, 2021 , could have resulted inAmeren , Ameren Missouri, orAmeren Illinois being required to post additional collateral or other assurances for certain trade obligations amounting to$139 million ,$116 million , and$23 million , respectively. Changes in commodity prices could trigger additional collateral postings and prepayments. Based on credit ratings atJune 30, 2021 , if market prices were 15% higher or lower thanJune 30, 2021 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, orAmeren Illinois could be required to post an immaterial amount, compared to each company's liquidity, of collateral or 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 2021 and beyond. The continued effect 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. We continue to assess the impacts the COVID-19 pandemic is having on our businesses, including but not limited to impacts on our liquidity; demand for residential, commercial, and industrial electric and natural gas services; changes in deferred payment arrangements for customers; the timing and extent to which recovery of incremental costs incurred, net of savings, and forgone customer late fee revenues at Ameren Missouri is allowed by the MoPSC; changes in our ability to disconnect customers for nonpayment; bad debt expense; supply chain operations; the availability of our employees and contractors; counterparty credit; capital construction; infrastructure operations and maintenance; energy-efficiency programs; and pension valuations. 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 •In the first half of 2021, our sales volumes, which have been, and continue to be, affected by the COVID-19 pandemic, among other things, increased compared to the same period in 2020, excluding the estimated effects of weather and customer energy-efficiency programs. We continue to expect a gradual improvement in sales volumes in 2021, compared to 2020. Our customers' payment for services has been adversely affected by the COVID-19 pandemic, which has caused our accounts receivable balances that are past due or that are a part of a deferred payment arrangement to be higher than normal historical levels. Because of their regulatory frameworks,Ameren Illinois' and ATXI's revenues are largely decoupled from changes in sales volumes. See the Results of Operations section above for additional information on our accounts receivable balances,Ameren Illinois' electric and natural gas bad debt riders, and changes inAmeren Missouri's sales volumes in the second quarter and first half of 2021, compared to the same periods in 2020. Additionally, 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 information onAmeren Missouri's andAmeren Illinois' reinstatement of customer disconnection and late fee charges for non-payment, accounting authority orders issued by the MoPSC related to Ameren Missouri's electric and natural gas services to allowAmeren Missouri to accumulate certain costs incurred, net of savings, and forgone customer late fee revenues related to the COVID-19 pandemic for consideration of recovery in the current electric and natural gas service regulatory rate reviews, and orders issued by the ICC in a service disconnection moratorium proceeding, which requiredAmeren Illinois to implement more flexible credit and collection practices and allowed for recovery of costs incurred related to the COVID-19 pandemic and forgone late fees. •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 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 65 -------------------------------------------------------------------------------- certain property, plant, and equipment placed in service, unless eligible for recovery under the RESRAM, remain subject to regulatory lag. Ameren Missouri recognizes the cost of debt onPISA deferrals as an offset to interest charges, instead of using the applicable WACC, with the difference 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 2021. Both the rate increase limitation and thePISA are effective throughDecember 2023 , unless Ameren Missouri requests and the MoPSC approves an extension throughDecember 2028 . •In 2018, the MoPSC issued an order approving Ameren Missouri's MEEIA 2019 plan. The plan includes a portfolio of customer energy-efficiency programs throughDecember 2022 and low-income customer energy-efficiency programs throughDecember 2024 , along with a rider. Ameren Missouri intends to invest$290 million over the life of the plan, including$90 million in 2021 and$70 million in 2022. 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 the target goals were achieved for 2020, additional revenues of$10 million would be recognized in 2021, and, if target goals are achieved for 2021 and 2022, additional revenues of$24 million would be recognized in 2022. Ameren Missouri's ability to achieve targeted goals could be affected by the COVID-19 pandemic. For the year endedDecember 31, 2020 , Ameren Missouri recognized$6 million in revenues related to MEEIA performance incentives. •InMarch 2021 , Ameren Missouri filed a request with the MoPSC seeking approval to increase its annual revenues for electric service by$299 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 byFebruary 2022 and new rates effective by lateFebruary 2022 . Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, 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. •InMarch 2020 , the MoPSC issued an order in Ameren Missouri'sJuly 2019 electric service regulatory rate review, resulting in a decrease of$32 million to Ameren Missouri's annual revenue requirement for electric retail service. The order also approved a change in rate design, which resulted in lower winter rates applied to May sales volumes and will result in higher summer rates applied to September sales volumes beginning in 2021. Previously, blended rates were applied to both months' sales volumes. The year-over-year decrease to second quarter 2021 earnings, compared to the same period in 2020, from the effect of the change in rate design is estimated at approximately$45 million and is expected to largely reverse in the third quarter. •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 growth and the currently allowed 10.52% ROE, which includes a 50 basis point incentive adder for participation in an RTO, the revenue requirements included in 2021 rates forAmeren Illinois' and ATXI's electric transmission businesses are$380 million and$200 million , respectively. These revenue requirements represent an increase inAmeren Illinois' and ATXI's revenue requirements of$67 million and$8 million , respectively, from the revenue requirements reflected in 2020 rates, primarily due to expected rate base growth. These rates will affectAmeren Illinois' and ATXI's cash receipts during 2021, but will not determine their respective electric transmission service operating revenues, which will instead be based on 2021 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 an appeal filed with theUnited States Court of Appeals for the District of Columbia Circuit . Depending on the outcome of the appeal, the transmission rates charged during previous periods and the currently effective rates may be subject to change. Additionally, inMarch 2019 , theFERC issued a Notice of Inquiry regarding its transmission incentives policy. InMarch 2020 , theFERC issued a Notice of Proposed Rulemaking on its transmission incentives policy, which addressed many of the issues in the Notice of Inquiry on transmission incentives. The Notice of Proposed Rulemaking included an increased incentive in the allowed base 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 base ROE would affectAmeren's andAmeren Illinois' annual net income by an estimated$11 million and$7 million , respectively, based on each company's 2021 projected rate base. •Ameren Illinois' electric distribution service performance-based formula ratemaking framework 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 66 -------------------------------------------------------------------------------- the applicable WACC on year-end rate base. If a given year's revenue requirement varies from the amount 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. By law,Ameren Illinois may opt in to the existing formula framework to establish annual customer rates effective through 2023. Pursuant to aMarch 2021 ICC order, onceAmeren Illinois ceases to update customer rates under performance-based formula ratemaking,Ameren Illinois would be allowed to reconcile its revenue requirement for up to two annual periods in which customer rates had been established, but not yet reconciled, under the performance-based formula ratemaking framework. To utilize the reconciliation,Ameren Illinois is required to file a request to update its electric distribution service rates through a traditional regulatory rate review, which may be based on a future test year and would reflect a proposed ROE subject to ICC approval. That request would need to be filed by the end of March in the year following the last year in whichAmeren Illinois opted to set annual rates via the performance-based formula ratemaking framework.Ameren Illinois would be required to file that request no later thanMarch 2023 . Pursuant to the order, and without legislative change orAmeren Illinois' election to opt out of performance-based formula ratemaking,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-yearUnited States Treasury bonds plus 580 basis points. The revenue requirement reconciliation adjustment would be collected from, or refunded to, customers within two years from the end of the reconciled year. 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.Ameren Illinois is actively pursuing improvements to ratemaking applicable to rates established after the performance-based formula ratemaking is no longer utilized. •In 2020, the ICC issued an order inAmeren Illinois' annual update filing that approved a$49 million decrease inAmeren Illinois' electric distribution service rates beginning inJanuary 2021 .Ameren Illinois' 2021 electric distribution service revenues will be based on its 2021 actual recoverable costs, 2021 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 ofJune 30, 2021 ,Ameren Illinois expects its 2021 electric distribution year-end rate base to be$3.7 billion . With or without extension of the formula ratemaking framework, the 2021 revenue requirement reconciliation adjustment will be collected from, or refunded to, customers in 2023. 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$10 million change inAmeren's andAmeren Illinois' annual net income, based onAmeren Illinois' 2021 projected year-end rate base, including electric energy-efficiency investments.Ameren Illinois' allowed ROE for the first half of 2021 was based on an estimated annual average of the monthly yields of the 30-year United States Treasury bonds of 2.31%. •InJuly 2021 ,Ameren Illinois filed a revised request seeking to increase its annual revenues for electric distribution service by$60 million . An ICC decision in this proceeding is expected byDecember 2021 , with new rates effectiveJanuary 2022 . These rates will affectAmeren Illinois' cash receipts during 2022, but will not affect electric distribution service revenues, which will be based on 2022 actual recoverable costs, 2022 year-end rate base, and a return at the applicable WACC as calculated under theIllinois performance-based formula ratemaking framework. •InJanuary 2021 , the ICC issued an order inAmeren Illinois' February 2020 natural gas delivery service regulatory rate review, which resulted in an increase to its annual revenues for natural gas delivery service of$76 million . The new rates became effective inJanuary 2021 . As a result of this order, the rate base under the QIP was reset to zero.Ameren Illinois used a 2021 future test year in this proceeding. The order also approved the implementation of a change in rate design, which concentrates more revenues in the winter heating season due to an increase in volumetric rates and a decrease in fixed customer rates. As such, the change in rate design will have an impact on interim period 2021 earnings, compared to 2020, but is not expected to materially affect annual earnings comparisons. The quarterly year-over-year increases/(decreases) to 2021 earnings, compared to the same periods in 2020, from the combined effect of the rate increase and the change in rate design are estimated at$17 million ,$(7) million , and$7 million for the first quarter, third quarter, and fourth quarter comparisons, respectively. •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.Ameren Illinois plans to invest up to approximately$100 million per year in electric energy-efficiency programs through 2025. While the ICC has approved a plan consistent with this spending level through 2021, the ICC has the ability to reduce the amount of electric energy-efficiency savings goals in future plan 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. InJuly 2021 , the ICC issued an order approvingAmeren Illinois' energy-efficiency plan that includes annual investments in electric energy-efficiency programs up to approximately$100 million per year from 2022 through 2025. 67 -------------------------------------------------------------------------------- •During its return to full power after the completion of the last refueling and maintenance outage in lateDecember 2020 , the Callaway Energy Center experienced a non-nuclear operating issue related to its generator. After replacement of certain key components of the generator, the energy center returned to service onAugust 4, 2021 . The cost of generator repairs was approximately$60 million , which was largely capital expenditures. InApril 2021 , Ameren Missouri's insurance claims were accepted by NEIL, which are expected to cover a significant portion of the capital expenditures and covered lost sales of up to$4.5 million weekly afterMarch 17, 2021 . Insurance recoveries related to lost sales were included in net energy costs under the FAC. Pursuant to a MoPSCFebruary 2020 order, Ameren Missouri deferred, as a regulatory asset, a total of$39 million in maintenance expenses related to its scheduled fall 2020 outage, which it began to amortize inJanuary 2021 . The regulatory asset will be amortized until the completion of the next refueling and maintenance outage, which is scheduled for the spring of 2022. 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. •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, economic impacts of the COVID-19 pandemic, customer conservation efforts, the impacts of additional customer energy-efficiency programs, and increased customer use of increasingly cost-effective technological advances, 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 for efficiencies 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 •Our customers' payment for our services has been adversely affected by the COVID-19 pandemic. See the Results of Operations section above for additional information on our accounts receivable balances. Further, our liquidity and our capital expenditure plans could be adversely affected by other impacts resulting from the COVID-19 pandemic, including but not limited to potential impacts on our ability to access the capital markets on reasonable terms when needed and the timing of tax payments and the utilization of tax credits. We expect to make significant capital expenditures to improve our electric and natural gas utility infrastructure, however, disruptions to the capital markets and the ability of our suppliers and contractors to perform as required under their contracts could impact the execution of our capital investment strategy. For further discussion on the impacts to our ability to access the capital markets, see below. •InFebruary 2021 , Ameren Missouri filed an update to its Smart Energy Plan with the MoPSC, which includes a five-year capital investment overview with a detailed one-year plan for 2021. The plan is designed to upgradeAmeren 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 2021 through 2025, with expenditures largely recoverable under thePISA and the RESRAM. The planned investments in 2024 and 2025 are based on the assumption that Ameren Missouri requests and receives MoPSC approval of an extension of thePISA throughDecember 2028 . •In connection with Ameren Missouri's 2020 IRP,Ameren established a goal of achieving net-zero carbon emissions by 2050.Ameren is also targeting a 50% CO2 emission reduction by 2030 and an 85% reduction by 2040 from the 2005 level. The plan, which is subject to review by the MoPSC for compliance withMissouri law, targets cleaner and more diverse sources of energy generation, including solar, wind, hydro, and nuclear power, and supports increased investment in new energy technologies. It also includes expanding renewable sources by adding 3,100 MWs of renewable generation by the end of 2030 and a total of 5,400 MWs of renewable generation by 2040. These amounts include 700 MWs related to theHigh Prairie andAtchison renewable energy centers, which will support Ameren Missouri's compliance with the state ofMissouri's requirement of achieving 15% of native load sales from renewable energy sources beginning in 2021. The plan also includes advancing the retirement dates of the Sioux andRush Island coal-fired energy centers to 2028 and 2039, respectively, which are subject to the approval of a change in the assets' depreciable lives by the MoPSC in Ameren Missouri's current electric service regulatory rate review, the continued implementation of customer energy-efficiency programs, and the expectation that Ameren Missouri will seek NRC approval for an extension of the operating license for the Callaway Energy Center beyond its current 2044 expiration date. Additionally, the plan includes retiring the Meramec andLabadie coal-fired energy centers at the end of their useful lives (by 2022 and 2042, respectively).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 of developers to meet contractual commitments and timely complete projects, which is dependent upon the availability of necessary materials and equipment, including those that are affected by the disruptions in the global supply chain caused by the COVID-19 pandemic, among other things; the availability of federal production and investment tax credits related to renewable energy andAmeren 68 --------------------------------------------------------------------------------Missouri's ability to use such credits; the cost of wind, solar, and other renewable generation and storage technologies; changes in environmental regulations, including those related to carbon emissions; energy prices and demand; and Ameren Missouri's ability to obtain timely interconnection agreements with the MISO or other RTOs at an acceptable cost. The next integrated resource plan is expected to be filed inSeptember 2023 . •InJuly 2021 , Missouri House Bill 734 was enacted, which will become effective inAugust 2021 . The 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 coal-fired energy centers, including the repayment of existing debt. •Through 2025, 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$17.8 billion (Ameren Missouri - up to$9.3 billion ;Ameren Illinois - up to$8.2 billion ; ATXI - up to$0.2 billion ) of capital expenditures during the period from 2021 through 2025.Ameren's and Ameren Missouri's estimates include 300 MWs of wind generation at the Atchison Renewable Energy Center, but exclude incremental renewable generation investment opportunities of 1,200 MWs by 2025, which are included in Ameren Missouri's 2020 IRP. As of the date of this filing, no regulatory approvals have been requested related to these opportunities. These planned investments are based on the assumption of continued constructive regulatory frameworks, including an assumption that Ameren Missouri requests and receives MoPSC approval of an extension of thePISA throughDecember 2028 . •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-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 2024 , 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. The Ameren Companies have no material maturities of long-term debt until 2022. With the recently completedAmeren (parent), Ameren Missouri, andAmeren Illinois debt issuances and availability under the Credit Agreements, as well as the proceeds from the recent settlement of the forward sale agreement and the ATM program sales,Ameren , Ameren Missouri, andAmeren Illinois believe that their liquidity is adequate given their expected operating cash flows, capital expenditures, and financing plans. The Ameren Companies continue to monitor the effect of the COVID-19 pandemic on their liquidity. To date, theAmeren 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 2025.Ameren expects these issuances to provide equity of about$100 million annually. In addition,Ameren established an ATM program under whichAmeren may offer and sell from time to time up to$750 million of its common stock, subject to market conditions and other factors.Ameren plans to issue approximately$30 million of equity in the second half of 2021 and approximately$300 million each year from 2022 to 2025 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, 2025 , with the long-term intent to support solid investment-grade credit ratings. Ameren Missouri andAmeren Illinois expect to fund cash flow needs through debt issuances, adjustments of dividends toAmeren (parent), and/or capital contributions fromAmeren (parent). •As ofJune 30, 2021 ,Ameren had$105 million in tax benefits from federal and state income tax credit carryforwards and$85 million in tax benefits from federal and state net operating loss carryforwards, which will be utilized in future periods.Ameren expects federal income tax payments at the required minimum levels from 2021 to 2025 resulting from the anticipated use of production tax credits that 69
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will be generated byAmeren Missouri's High Prairie andAtchison renewable energy centers, existing tax net operating losses, tax credit carryforwards, tax overpayments, and outstanding refunds. •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, for the month ofFebruary 2021 , Ameren Missouri andAmeren Illinois had under-recovered commodity costs (Ameren Missouri - PGA$53 million , FAC$50 million ;Ameren Illinois - PGA$221 million ). Ameren Missouri's PGA and FAC under-recoveries are designed to be collected from customers over 12 months beginningNovember 2021 and eight months beginningOctober 2021 , respectively. Longer recovery periods may be sought by Ameren Missouri or imposed by the MoPSC to lessen the impact on customer rates.Ameren Illinois' PGA under-recovery is being collected from customers over 12 months beginningApril 2021 , but the collection of the remaining balance may be extended to a new 12-month period atAmeren Illinois' election to lessen the impact on customer rates. 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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