PINX:UEPEO Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the Quarterly Period Ended March 31, 2012

OR

 

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from              to             .

 

Commission

File Number

  

Exact name of registrant as specified in its charter;

State of Incorporation;

Address and Telephone Number

  

IRS Employer

Identification No.

1-14756    Ameren Corporation    43-1723446
   (Missouri Corporation)   
   1901 Chouteau Avenue   
   St. Louis, Missouri 63103   
   (314) 621-3222   
1-2967    Union Electric Company    43-0559760
   (Missouri Corporation)   
   1901 Chouteau Avenue   
   St. Louis, Missouri 63103   
   (314) 621-3222   
1-3672    Ameren Illinois Company    37-0211380
   (Illinois Corporation)   
   300 Liberty Street   
   Peoria, Illinois 61602   
   (309) 677-5271   
333-56594    Ameren Energy Generating Company    37-1395586
   (Illinois Corporation)   
   1500 Eastport Plaza Drive   
   Collinsville, Illinois 62234   
   (618) 343-7700   

Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

 

Ameren Corporation      Yes         x         No         ¨      
Union Electric Company      Yes         x         No         ¨      
Ameren Illinois Company      Yes         x         No         ¨      
Ameren Energy Generating Company (a)      Yes         ¨         No         x      

 

(a) Ameren Energy Generating Company is not required to file reports under the Securities Exchange Act of 1934. However, Ameren Energy Generating Company has filed all Exchange Act reports for the preceding 12 months.

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Ameren Corporation      Yes         x         No         ¨      
Union Electric Company      Yes         x         No         ¨      
Ameren Illinois Company      Yes         x         No         ¨      
Ameren Energy Generating Company      Yes         x         No         ¨      

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

     Large Accelerated
Filer
   Accelerated
Filer
   Non-Accelerated
Filer
   Smaller
Reporting

Company

Ameren Corporation

   x    ¨    ¨    ¨

Union Electric Company

   ¨    ¨    x    ¨

Ameren Illinois Company

   ¨    ¨    x    ¨

Ameren Energy Generating Company

   ¨    ¨    x    ¨

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Ameren Corporation      Yes         ¨         No         x      
Union Electric Company      Yes         ¨         No         x      
Ameren Illinois Company      Yes         ¨         No         x      
Ameren Energy Generating Company      Yes         ¨         No         x      

The number of shares outstanding of each registrant’s classes of common stock as of April 30, 2012, was as follows:

 

Ameren Corporation   Common stock, $0.01 par value per share - 242,634,671
Union Electric Company  

Common stock, $5 par value per share, held by Ameren

Corporation (parent company of the registrant) - 102,123,834

Ameren Illinois Company  

Common stock, no par value, held by Ameren

Corporation (parent company of the registrant) - 25,452,373

Ameren Energy Generating Company  

Common stock, no par value, held by Ameren Energy

Resources Company, LLC (parent company of the

registrant and subsidiary of Ameren

Corporation) - 2,000

OMISSION OF CERTAIN INFORMATION

Ameren Energy Generating Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format allowed under that General Instruction.

 

 

This combined Form 10-Q is separately filed by Ameren Corporation, Union Electric Company, Ameren Illinois Company and Ameren Energy Generating Company. Each registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information.


Table of Contents

TABLE OF CONTENTS

 

         Page  

Glossary of Terms and Abbreviations

     3   

Forward-looking Statements

     3   

PART I

 

Financial Information

  

Item 1.

 

Financial Statements (Unaudited)

     5   
  Ameren Corporation   
 

        Consolidated Statement of Income (Loss)

     5   
 

         Consolidated Statement of Comprehensive Income (Loss)

     6   
 

        Consolidated Balance Sheet

     7   
 

        Consolidated Statement of Cash Flows

     8   
  Union Electric Company   
 

        Statement of Income and Comprehensive Income

     9   
 

        Balance Sheet

     10   
 

        Statement of Cash Flows

     11   
  Ameren Illinois Company   
 

        Statement of Income and Comprehensive Income

     12   
 

        Balance Sheet

     13   
 

        Statement of Cash Flows

     14   
  Ameren Energy Generating Company   
 

         Consolidated Statement of Income (Loss) and Comprehensive Income (Loss)

     15   
 

        Consolidated Balance Sheet

     16   
 

        Consolidated Statement of Cash Flows

     17   
 

Combined Notes to Financial Statements

     18   

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     55   

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

     76   

Item 4.

 

Controls and Procedures

     79   

PART II

 

Other Information

  

Item 1.

 

Legal Proceedings

     81   

Item 1A.

 

Risk Factors

     82   

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

     82   

Item 5.

 

Other Information

     82   

Item 6.

 

Exhibits

     84   

Signatures

     86   

This Form 10-Q contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements should be read with the cautionary statements and important factors included on page 3 of this Form 10-Q under the heading “Forward-looking Statements.” Forward-looking statements are all statements other than statements of historical fact, including those statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” and similar expressions.

 

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GLOSSARY OF TERMS AND ABBREVIATIONS

We use the words “our,” “we” or “us” with respect to certain information that relates to the individual registrants within the Ameren Corporation consolidated group. When appropriate, subsidiaries of Ameren Corporation are named specifically as their various business activities are discussed. Refer to the Form 10-K for a complete listing of glossary terms and abbreviations. Only new or significantly changed terms and abbreviations are included below.

Ameren Illinois or AIC - Ameren Illinois Company, an Ameren Corporation subsidiary that operates a rate-regulated electric and natural gas transmission and distribution business in Illinois, doing business as Ameren Illinois. Ameren Illinois is also defined as a financial reporting segment consisting of Ameren Illinois' rate-regulated businesses.

COL - Nuclear energy center combined construction and operating license.

Form 10-K - The combined Annual Report on Form 10-K for the year ended December 31, 2011, filed by the Ameren Companies with the SEC.

Megawatthour or MWh - One thousand kilowatthours.

Westinghouse - Westinghouse Electric Company.

 

 

FORWARD-LOOKING STATEMENTS

Statements in this report not based on historical facts are considered “forward-looking” and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in the Form 10-K and elsewhere in this report and in our other filings with the SEC, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:

 

 

regulatory, judicial, or legislative actions, including changes in regulatory policies and ratemaking determinations, such as the outcome of Ameren Missouri’s and Ameren Illinois’ electric rate cases filed in 2012; the court appeals related to Ameren Missouri’s 2010 and 2011 electric rate orders; Ameren Missouri's FAC prudence review; and future regulatory, judicial, or legislative actions that seek to change regulatory recovery mechanisms, such as the recent passage of legislation providing for formula ratemaking in Illinois;

 

 

the effect of Ameren Illinois participating in a new performance-based formula ratemaking process under the IEIMA, the related financial commitments required by the IEIMA and the resulting uncertain impact on the financial condition, results of operations and liquidity of Ameren Illinois;

 

 

the effects of, or changes to, the Illinois power procurement process;

 

 

changes in laws and other governmental actions, including monetary, fiscal, and tax policies;

 

 

changes in laws or regulations that adversely affect the ability of electric distribution companies and other purchasers of wholesale electricity to pay their suppliers, including Ameren Missouri and Marketing Company;

 

 

the effects of increased competition in the future due to, among other things, deregulation of certain aspects of our business at both the state and federal levels, and the implementation of deregulation;

 

 

the effects on demand for our services resulting from technological advances, including advances in energy efficiency and distributed generation sources, which generate electricity at the site of consumption;

 

 

increasing capital expenditure and operating expense requirements and our ability to recover these costs;

 

 

the cost and availability of fuel such as coal, natural gas, and enriched uranium used to produce electricity; the cost and availability of purchased power and natural gas for distribution; and the level and volatility of future market prices for such commodities, including the ability to recover the costs for such commodities;

 

 

the effectiveness of our risk management strategies and the use of financial and derivative instruments;

 

 

the level and volatility of future prices for power in the Midwest;

 

 

the development of a capacity market within MISO;

 

 

business and economic conditions, including their impact on interest rates, bad debt expense, and demand for our products;

 

 

disruptions of the capital markets, deterioration in credit metrics of the Ameren Companies, or other events that make the Ameren Companies’ access to necessary capital, including short-term credit and liquidity, impossible, more difficult, or more costly;

 

 

our assessment of our liquidity;

 

 

the impact of the adoption of new accounting guidance and the application of appropriate technical accounting rules and guidance;

 

 

actions of credit rating agencies and the effects of such actions;

 

 

the impact of weather conditions and other natural phenomena on us and our customers;

 

 

the impact of system outages;

 

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generation, transmission, and distribution asset construction, installation, performance, and cost recovery;

 

 

the effects of our increasing investment in electric transmission projects and uncertainty as to whether we will achieve our expected returns in a timely fashion, if at all;

 

 

the extent to which Ameren Missouri prevails in its claims against insurers in connection with its Taum Sauk pumped-storage hydroelectric energy center incident;

 

 

the extent to which Ameren Missouri is permitted by its regulators to recover in rates the investments it made in connection with a proposed second unit at its Callaway energy center;

 

 

impairments of long-lived assets, intangible assets, or goodwill;

 

 

operation of Ameren Missouri’s Callaway energy center, including planned and unplanned outages, decommissioning, costs and potential increased costs as a result of nuclear-related developments in Japan in 2011;

 

 

the effects of strategic initiatives, including mergers, acquisitions and divestitures, and any related tax implications;

 

 

the impact of current environmental regulations on utilities and power generating companies and new, more stringent or changing requirements, including those related to greenhouse gases, other emissions, cooling water intake structures, CCR, and energy efficiency, that are enacted over time and that could limit or terminate the operation of certain of our generating units, increase our costs, result in an impairment of our assets, reduce our customers’ demand for electricity or natural gas, or otherwise have a negative financial effect;

 

 

the impact of complying with renewable energy portfolio requirements in Missouri;

 

 

labor disputes, workforce reductions, future wage and employee benefits costs, including changes in discount rates and returns on benefit plan assets;

 

 

the inability of our counterparties and affiliates to meet their obligations with respect to contracts, credit facilities, and financial instruments;

 

 

the cost and availability of transmission capacity for the energy generated by the Ameren Companies’ energy centers or required to satisfy energy sales made by the Ameren Companies;

 

 

legal and administrative proceedings; and

 

 

acts of sabotage, war, terrorism, cybersecurity attacks or intentionally disruptive acts.

Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.

 

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Table of Contents

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

AMEREN CORPORATION

CONSOLIDATED STATEMENT OF INCOME (LOSS)

(Unaudited) (In millions, except per share amounts)

 

$ 000.00 $ 000.00
     Three Months Ended
March 31,
 
     2012      2011  

Operating Revenues:

     

Electric

   $ 1,310        $ 1,470   

Gas

     348          434   
  

 

 

    

 

 

 

Total operating revenues

     1,658          1,904   
  

 

 

    

 

 

 

Operating Expenses:

     

Fuel

     327          379   

Purchased power

     163          227   

Gas purchased for resale

     215          288   

Other operations and maintenance

     427          463   

Asset impairment

     628          -   

Depreciation and amortization

     199          195   

Taxes other than income taxes

     121          125   
  

 

 

    

 

 

 

Total operating expenses

     2,080          1,677   
  

 

 

    

 

 

 

Operating Income (Loss)

     (422)         227   

Other Income and Expenses:

     

Miscellaneous income

     17          16   

Miscellaneous expense

     15          5   
  

 

 

    

 

 

 

Total other income

             11   

Interest Charges

     113          119   
  

 

 

    

 

 

 

Income (Loss) Before Income Taxes (Benefit)

     (533)         119   

Income Taxes (Benefit)

     (130)         45   
  

 

 

    

 

 

 

Net Income (Loss)

     (403)         74   

Less: Net Income Attributable to Noncontrolling Interests

             3   
  

 

 

    

 

 

 

Net Income (Loss) Attributable to Ameren Corporation

   $ (403)       $ 71   
  

 

 

    

 

 

 

Earnings (Loss) per Common Share – Basic and Diluted

   $ (1.66)       $ 0.29   
  

 

 

    

 

 

 

Dividends per Common Share

   $ 0.40        $ 0.385   

Average Common Shares Outstanding

     242.6          240.6   

The accompanying notes are an integral part of these consolidated financial statements.

 

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AMEREN CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited) (In millions)

 

xxxxxx.xx xxxxxx.xx
     Three Months Ended
March 31,
 
     2012      2011  

Net Income (Loss)

   $ (403)       $ 74    

Other Comprehensive Income (Loss), Net of Taxes:

     

Unrealized net gain on derivative hedging instruments, net of income taxes of $7 and $1, respectively

     12            

Reclassification adjustments for derivative (gains) losses included in net income, net of income taxes (benefit) of $(1) and $2, respectively

             (4)   

Pension and other postretirement benefit plan activity, net of income taxes (benefit) of $- and $(1), respectively

             (1)   
  

 

 

    

 

 

 

Total other comprehensive income (loss), net of taxes

     15          (3)   

Comprehensive Income (Loss)

     (388)         71    

Less: Comprehensive Income Attributable to Noncontrolling Interests

               
  

 

 

    

 

 

 

Comprehensive Income (Loss) Attributable to Ameren Corporation

   $ (388)       $ 68    
  

 

 

    

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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AMEREN CORPORATION

CONSOLIDATED BALANCE SHEET

(Unaudited) (In millions, except per share amounts)

 

xxxxxxxxxx xxxxxxxxxx
     March 31,     December 31,  
     2012     2011  

ASSETS

    

Current Assets:

    

Cash and cash equivalents

   $ 208      $ 255   

Accounts receivable – trade (less allowance for doubtful accounts of $24 and $20, respectively)

     446        473   

Unbilled revenue

     232        324   

Miscellaneous accounts and notes receivable

     65        69   

Materials and supplies

     625        712   

Mark-to-market derivative assets

     167        115   

Current regulatory assets

     247        215   

Other current assets

     134        132   
  

 

 

   

 

 

 

Total current assets

     2,124        2,295   
  

 

 

   

 

 

 

Property and Plant, Net

     17,535        18,127   

Investments and Other Assets:

    

Nuclear decommissioning trust fund

     390        357   

Goodwill

     411        411   

Intangible assets

     9        7   

Regulatory assets

     1,657        1,603   

Other assets

     773        845   
  

 

 

   

 

 

 

Total investments and other assets

     3,240        3,223   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 22,899      $ 23,645   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current Liabilities:

    

Current maturities of long-term debt

   $ 179      $ 179   

Short-term debt

     126        148   

Accounts and wages payable

     366        693   

Taxes accrued

     101        65   

Interest accrued

     149        101   

Customer deposits

     98        98   

Mark-to-market derivative liabilities

     220        161   

Current regulatory liabilities

     138        133   

Other current liabilities

     237        207   
  

 

 

   

 

 

 

Total current liabilities

     1,614        1,785   
  

 

 

   

 

 

 

Long-term Debt, Net

     6,677        6,677   

Deferred Credits and Other Liabilities:

    

Accumulated deferred income taxes, net

     3,111        3,315   

Accumulated deferred investment tax credits

     77        79   

Regulatory liabilities

     1,483        1,502   

Asset retirement obligations

     434        428   

Pension and other postretirement benefits

     1,357        1,344   

Other deferred credits and liabilities

     567        447   
  

 

 

   

 

 

 

Total deferred credits and other liabilities

     7,029        7,115   
  

 

 

   

 

 

 

Commitments and Contingencies (Notes 2, 8, 9 and 10)

    

Ameren Corporation Stockholders’ Equity:

    

Common stock, $.01 par value, 400.0 shares authorized – shares outstanding of 242.6 and 242.6, respectively

     2        2   

Other paid-in capital, principally premium on common stock

     5,596        5,598   

Retained earnings

     1,869        2,369   

Accumulated other comprehensive loss

     (35     (50
  

 

 

   

 

 

 

Total Ameren Corporation stockholders’ equity

     7,432        7,919   

Noncontrolling Interests

     147        149   
  

 

 

   

 

 

 

Total equity

     7,579        8,068   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 22,899      $ 23,645   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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AMEREN CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Three Months Ended
March 31,
 
     2012      2011  

Cash Flows From Operating Activities:

     

Net income (loss)

   $ (403)       $ 74    

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

     

Loss on asset impairment

     628            

Net mark-to-market gain on derivatives

     (3)         (16)   

Depreciation and amortization

     188          187    

Amortization of nuclear fuel

     21          17    

Amortization of debt issuance costs and premium/discounts

               

Deferred income taxes and investment tax credits, net

     (142)         (16)   

Allowance for equity funds used during construction

     (9)         (6)   

Other

     (5)           

Changes in assets and liabilities:

     

Receivables

     109          94    

Materials and supplies

     80          135    

Accounts and wages payable

     (220)         (213)   

Taxes accrued

     35          71    

Assets, other

     14          50    

Liabilities, other

     64          80    

Pension and other postretirement benefits

     41          28    

Counterparty collateral, net

     (11)         70    
  

 

 

    

 

 

 

Net cash provided by operating activities

     392          560    
  

 

 

    

 

 

 

Cash Flows From Investing Activities:

     

Capital expenditures

     (282)         (231)   

Nuclear fuel expenditures

     (38)         (22)   

Purchases of securities – nuclear decommissioning trust fund

     (109)         (91)   

Sales of securities – nuclear decommissioning trust fund

     88          87    

Proceeds from sale of property

     16            

Other

     (1)           
  

 

 

    

 

 

 

Net cash used in investing activities

     (326)         (256)   
  

 

 

    

 

 

 

Cash Flows From Financing Activities:

     

Dividends on common stock

     (90)         (93)   

Dividends paid to noncontrolling interest holders

     (2)         (2)   

Short-term debt and credit facility borrowings, net

     (22)         (125)   

Generator advances received for construction

               

Repayments of generator advances received for construction

             (73)   

Issuances of common stock

             17    
  

 

 

    

 

 

 

Net cash used in financing activities

     (113)         (276)   
  

 

 

    

 

 

 

Net change in cash and cash equivalents

     (47)         28    

Cash and cash equivalents at beginning of year

     255          545    
  

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ 208        $ 573    
  

 

 

    

 

 

 

Noncash financing activity – dividends on common stock

   $ (7)       $   

The accompanying notes are an integral part of these consolidated financial statements.

 

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UNION ELECTRIC COMPANY

STATEMENT OF INCOME AND COMPREHENSIVE INCOME

(Unaudited) (In millions)

 

     Three Months Ended
March 31,
 
     2012      2011  

Operating Revenues:

     

Electric

   $ 636       $ 702   

Gas

     55         69   

Other

     -         1   
  

 

 

    

 

 

 

Total operating revenues

     691         772   
  

 

 

    

 

 

 

Operating Expenses:

     

Fuel

     180         229   

Purchased power

     20         20   

Gas purchased for resale

     32         40   

Other operations and maintenance

     202         233   

Depreciation and amortization

     108         100   

Taxes other than income taxes

     71         73   
  

 

 

    

 

 

 

Total operating expenses

     613         695   
  

 

 

    

 

 

 

Operating Income

     78         77   

Other Income and Expenses:

     

Miscellaneous income

     15         13   

Miscellaneous expense

     3         3   
  

 

 

    

 

 

 

Total other income

     12         10   

Interest Charges

     56         54   
  

 

 

    

 

 

 

Income Before Income Taxes

     34         33   

Income Taxes

     12         11   
  

 

 

    

 

 

 

Net Income

     22         22   

Other Comprehensive Income

     -         -   
  

 

 

    

 

 

 

Comprehensive Income

   $ 22       $ 22   
  

 

 

    

 

 

 

 

 

Net Income

   $ 22       $ 22   

Preferred Stock Dividends

     1         1   
  

 

 

    

 

 

 

Net Income Available to Common Stockholder

   $ 21       $ 21   
  

 

 

    

 

 

 

The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.

 

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UNION ELECTRIC COMPANY

BALANCE SHEET

(Unaudited) (In millions, except per share amounts)

 

xxxxxxxx.xx xxxxxxxx.xx
     March 31,      December 31,  
     2012      2011  

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $ 3       $ 201   

Accounts receivable – trade (less allowance for doubtful accounts of $9 and $7, respectively)

     170         212   

Accounts receivable – affiliates

     3         1   

Unbilled revenue

     110         139   

Miscellaneous accounts and notes receivable

     41         42   

Materials and supplies

     365         348   

Mark-to-market derivative assets

     59         49   

Current regulatory assets

     113         109   

Other current assets

     24         33   
  

 

 

    

 

 

 

Total current assets

     888         1,134   
  

 

 

    

 

 

 

Property and Plant, Net

     9,976         9,958   

Investments and Other Assets:

     

Nuclear decommissioning trust fund

     390         357   

Intangible assets

     9         7   

Regulatory assets

     842         855   

Other assets

     441         446   
  

 

 

    

 

 

 

Total investments and other assets

     1,682         1,665   
  

 

 

    

 

 

 

TOTAL ASSETS

   $ 12,546       $ 12,757   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current Liabilities:

     

Current maturities of long-term debt

   $ 178       $ 178   

Accounts and wages payable

     142         414   

Accounts payable – affiliates

     107         73   

Taxes accrued

     113         74   

Interest accrued

     58         62   

Current regulatory liabilities

     60         57   

Other current liabilities

     120         84   
  

 

 

    

 

 

 

Total current liabilities

     778         942   
  

 

 

    

 

 

 

Long-term Debt, Net

     3,772         3,772   

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     2,115         2,132   

Accumulated deferred investment tax credits

     68         70   

Regulatory liabilities

     874         836   

Asset retirement obligations

     333         328   

Pension and other postretirement benefits

     498         491   

Other deferred credits and liabilities

     150         149   
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     4,038         4,006   
  

 

 

    

 

 

 

Commitments and Contingencies (Notes 2, 8, 9 and 10)

     

Stockholders’ Equity:

     

Common stock, $5 par value, 150.0 shares authorized – 102.1 shares outstanding

     511         511   

Other paid-in capital, principally premium on common stock

     1,555         1,555   

Preferred stock not subject to mandatory redemption

     80         80   

Retained earnings

     1,812         1,891   
  

 

 

    

 

 

 

Total stockholders’ equity

     3,958         4,037   
  

 

 

    

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 12,546       $ 12,757   
  

 

 

    

 

 

 

The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.

 

10


Table of Contents

UNION ELECTRIC COMPANY

STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Three Months Ended
March 31,
 
     2012      2011  

Cash Flows From Operating Activities:

     

Net income

   $ 22         $ 22     

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization

     100           93     

Amortization of nuclear fuel

     21           17     

Amortization of debt issuance costs and premium/discounts

     2           2     

Deferred income taxes and investment tax credits, net

     2           9     

Allowance for equity funds used during construction

     (8)          (6)    

Net mark-to-market loss on derivatives

     -           1     

Changes in assets and liabilities:

     

Receivables

     61           16     

Materials and supplies

     (26)          14     

Accounts and wages payable

     (136)          (144)    

Taxes accrued

     39           (1)    

Assets, other

     13           29     

Liabilities, other

     14           14     

Pension and other postretirement benefits

     17           14     
  

 

 

    

 

 

 

Net cash provided by operating activities

     121           80     
  

 

 

    

 

 

 

Cash Flows From Investing Activities:

     

Capital expenditures

     (157)          (129)    

Nuclear fuel expenditures

     (38)          (22)    

Purchases of securities – nuclear decommissioning trust fund

     (109)          (91)    

Sales of securities – nuclear decommissioning trust fund

     88           87     

Other

     (2)          (1)    
  

 

 

    

 

 

 

Net cash used in investing activities

     (218)          (156)    
  

 

 

    

 

 

 

Cash Flows From Financing Activities:

     

Dividends on common stock

     (100)          (68)    

Dividends on preferred stock

     (1)          (1)    

Generator advances for construction refunded

     -           (19)    
  

 

 

    

 

 

 

Net cash used in financing activities

     (101)          (88)    
  

 

 

    

 

 

 

Net change in cash and cash equivalents

     (198)          (164)    

Cash and cash equivalents at beginning of year

     201           202     
  

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ 3         $ 38     
  

 

 

    

 

 

 

The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.

 

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Table of Contents

AMEREN ILLINOIS COMPANY

STATEMENT OF INCOME AND COMPREHENSIVE INCOME

(Unaudited) (In millions)

 

     Three Months Ended
March 31,
 
     2012      2011  

Operating Revenues:

     

Electric

   $ 431         $ 442     

Gas

     293           366     
  

 

 

    

 

 

 

Total operating revenues

     724           808     
  

 

 

    

 

 

 

Operating Expenses:

     

Purchased power

     190           211     

Gas purchased for resale

     183           248     

Other operations and maintenance

     168           168     

Depreciation and amortization

     55           52     

Taxes other than income taxes

     39           41     
  

 

 

    

 

 

 

Total operating expenses

     635           720     
  

 

 

    

 

 

 

Operating Income

     89           88     

Other Income and Expenses:

     

Miscellaneous income

     1           2     

Miscellaneous expense

     11           1     
  

 

 

    

 

 

 

Total other income (expense)

     (10)          1     

Interest Charges

     33           35     
  

 

 

    

 

 

 

Income Before Income Taxes

     46           54     

Income Taxes

     18           20     
  

 

 

    

 

 

 

Net Income

     28           34     

Other Comprehensive Loss, Net of Taxes:

     

Pension and other postretirement benefit plan activity, net of income taxes of $- and $-, respectively

     (1)          (1)    
  

 

 

    

 

 

 

Comprehensive Income

   $ 27         $ 33     
  

 

 

    

 

 

 

 

 

Net Income

   $ 28         $ 34     

Preferred Stock Dividends

     1           1     
  

 

 

    

 

 

 

Net Income Available to Common Stockholder

   $ 27         $ 33     
  

 

 

    

 

 

 

The accompanying notes as they relate to Ameren Illinois are an integral part of these consolidated financial statements.

 

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AMEREN ILLINOIS COMPANY

BALANCE SHEET

(Unaudited) (In millions)

 

xxxxxxxx.xx xxxxxxxx.xx
     March 31,
2012
     December 31,
2011
 

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $ 187       $ 21   

Accounts receivable – trade (less allowance for doubtful accounts of $16 and $13, respectively)

     228         201   

Accounts receivable – affiliates

     12         15   

Unbilled revenue

     92         146   

Miscellaneous accounts receivable

     6         6   

Materials and supplies

     96         199   

Counterparty collateral asset

     70         50   

Current regulatory assets

     316         306   

Current accumulated deferred income taxes, net

     43         58   

Other current assets

     11         15   
  

 

 

    

 

 

 

Total current assets

     1,061         1,017   
  

 

 

    

 

 

 

Property and Plant, Net

     4,804         4,770   

Investments and Other Assets:

     

Tax receivable – Genco

     51         56   

Goodwill

     411         411   

Regulatory assets

     814         748   

Other assets

     115         211   
  

 

 

    

 

 

 

Total investments and other assets

     1,391         1,426   
  

 

 

    

 

 

 

TOTAL ASSETS

   $ 7,256       $ 7,213   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current Liabilities:

     

Current maturities of long-term debt

   $ 1       $ 1   

Accounts and wages payable

     115         133   

Accounts payable – affiliates

     98         103   

Taxes accrued

     15         15   

Interest accrued

     50         22   

Customer deposits

     76         76   

Mark-to-market derivative liabilities

     122         99   

Mark-to-market derivative liabilities – affiliates

     183         200   

Environmental remediation

     25         63   

Current regulatory liabilities

     78         76   

Other current liabilities

     57         70   
  

 

 

    

 

 

 

Total current liabilities

     820         858   
  

 

 

    

 

 

 

Long-term Debt, Net

     1,657         1,657   

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     934         895   

Accumulated deferred investment tax credits

     6         7   

Regulatory liabilities

     608         666   

Pension and other postretirement benefits

     499         495   

Other deferred credits and liabilities

     291         183   
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     2,338         2,246   
  

 

 

    

 

 

 

Commitments and Contingencies (Notes 2, 8 and 9)

     

Stockholders’ Equity:

     

Common stock, no par value, 45.0 shares authorized – 25.5 shares outstanding

     -         -   

Other paid-in capital

     1,965         1,965   

Preferred stock not subject to mandatory redemption

     62         62   

Retained earnings

     398         408   

Accumulated other comprehensive income

     16         17   
  

 

 

    

 

 

 

Total stockholders’ equity

     2,441         2,452   
  

 

 

    

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

   $ 7,256       $ 7,213   
  

 

 

    

 

 

 

The accompanying notes as they relate to Ameren Illinois are an integral part of these consolidated financial statements.

 

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AMEREN ILLINOIS COMPANY

STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

xxxxxxx.xx xxxxxxx.xx
     Three Months Ended
March 31,
 
     2012      2011  

Cash Flows From Operating Activities:

     

Net income

   $ 28        $ 34    

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization

     52          50    

Amortization of debt issuance costs and premium/discounts

               

Deferred income taxes and investment tax credits, net

     55          (31)   

Other

     (2)         (1)   

Changes in assets and liabilities:

     

Receivables

     35          42    

Materials and supplies

     103          123    

Accounts and wages payable

     (16)         (47)   

Taxes accrued

             46    

Assets, other

             12    

Liabilities, other

     26          42    

Pension and other postretirement benefits

     15          11    

Counterparty collateral, net

     (11)         32    
  

 

 

    

 

 

 

Net cash provided by operating activities

     289          315    
  

 

 

    

 

 

 

Cash Flows From Investing Activities:

     

Capital expenditures

     (86)         (69)   

Returns of advances from ATXI for construction

             49    

Other

               
  

 

 

    

 

 

 

Net cash used in investing activities

     (86)         (19)   
  

 

 

    

 

 

 

Cash Flows From Financing Activities:

     

Dividends on common stock

     (37)         (62)   

Dividends on preferred stock

     (1)         (1)   

Generator advances received for construction

               

Repayments of generator advances received for construction

             (53)   

Capital contribution from parent

               
  

 

 

    

 

 

 

Net cash used in financing activities

     (37)         (110)   
  

 

 

    

 

 

 

Net change in cash and cash equivalents

     166          186    

Cash and cash equivalents at beginning of year

     21          322    
  

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ 187        $ 508    
  

 

 

    

 

 

 

Noncash investing activity – asset transfer from ATXI

   $       $ 20    

The accompanying notes as they relate to Ameren Illinois are an integral part of these consolidated financial statements.

 

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AMEREN ENERGY GENERATING COMPANY

CONSOLIDATED STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(Unaudited) (In millions)

 

     Three Months Ended
March 31,
 
     2012      2011  

Operating Revenues

   $ 194        $ 241    

Operating Expenses:

     

Fuel

     105          111    

Other operations and maintenance

     47          45    

Depreciation and amortization

     23          24    

Taxes other than income taxes

               
  

 

 

    

 

 

 

Total operating expenses

     181          187    
  

 

 

    

 

 

 

Operating Income

     13          54    

Interest Charges

     14          17    
  

 

 

    

 

 

 

Income (Loss) Before Income Taxes

     (1)         37    

Income Taxes

             15    
  

 

 

    

 

 

 

Net Income (Loss)

     (3)         22    

Less: Net Income (Loss) Attributable to Noncontrolling Interest

     (2)           
  

 

 

    

 

 

 

Net Income (Loss) Attributable to Ameren Energy Generating Company

   $ (1)       $ 21    
  

 

 

    

 

 

 

 

 

Net Income (Loss)

   $ (3)       $ 22    

Other Comprehensive Income, Net of Taxes:

     

Pension and other postretirement benefit plan activity, net of income taxes of $- and $-, respectively

               
  

 

 

    

 

 

 

Total other comprehensive income, net of taxes

               

Comprehensive Income (Loss)

     (2)         23    

Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest

               
  

 

 

    

 

 

 

Comprehensive Income Attributable to Ameren Energy Generating Company

   $ (2)       $ 23    
  

 

 

    

 

 

 

The accompanying notes as they relate to Genco are an integral part of these consolidated financial statements.

 

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Table of Contents

AMEREN ENERGY GENERATING COMPANY

CONSOLIDATED BALANCE SHEET

(Unaudited) (In millions)

 

xxxxxxxx.xx xxxxxxxx.xx
     March 31,
2012
     December 31,
2011
 
ASSETS      

Current Assets:

     

Cash and cash equivalents

   $       $   

Advances to money pool

     95          74    

Accounts receivable – affiliates

     58          89    

Miscellaneous accounts receivable

     14          13    

Materials and supplies

     121          122    

Mark-to-market derivative assets

     13          12    

Other current assets

     10            
  

 

 

    

 

 

 

Total current assets

     311          325    
  

 

 

    

 

 

 

Property and Plant, Net

     2,242          2,231    

Other assets

     18          16    
  

 

 

    

 

 

 

TOTAL ASSETS

   $ 2,571        $ 2,572    
  

 

 

    

 

 

 
LIABILITIES AND EQUITY      

Current Liabilities:

     

Accounts and wages payable

   $ 60        $ 71    

Accounts payable – affiliates

     14          13    

Current portion of tax payable – Ameren Illinois

     10            

Taxes accrued

     21          20    

Interest accrued

     27          13    

Current accumulated deferred income taxes, net

               

Other current liabilities

     18          17    
  

 

 

    

 

 

 

Total current liabilities

     158          142    
  

 

 

    

 

 

 

Long-term Debt, Net

     824          824    

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     291          304    

Accumulated deferred investment tax credits

               

Tax payable – Ameren Illinois

     51          56    

Asset retirement obligations

     67          66    

Pension and other postretirement benefits

     140          141    

Other deferred credits and liabilities

     15          12    
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     566          581    
  

 

 

    

 

 

 

Commitments and Contingencies (Notes 8 and 9)

     

Ameren Energy Generating Company Stockholder’s Equity:

     

Common stock, no par value, 10,000 shares authorized – 2,000 shares outstanding

               

Other paid-in capital

     653          653    

Retained earnings

     436          437    

Accumulated other comprehensive loss

     (71)         (72)   
  

 

 

    

 

 

 

Total Ameren Energy Generating Company stockholder’s equity

     1,018          1,018    

Noncontrolling Interest

               
  

 

 

    

 

 

 

Total equity

     1,023          1,025    
  

 

 

    

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 2,571        $ 2,572    
  

 

 

    

 

 

 

The accompanying notes as they relate to Genco are an integral part of these consolidated financial statements.

 

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Table of Contents

AMEREN ENERGY GENERATING COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

xxxxxxx.xx xxxxxxx.xx
     Three Months Ended
March 31,
 
     2012      2011  

Cash Flows From Operating Activities:

     

Net income (loss)

   $ (3)       $ 22    

Adjustments to reconcile net income to net cash provided by operating activities:

     

Net mark-to-market gain on derivatives

     (1)         (15)   

Depreciation and amortization

     23          25    

Amortization of debt issuance costs and premium/discounts

               

Deferred income taxes and investment tax credits, net

     (7)         13    

Other

               

Changes in assets and liabilities:

     

Receivables

     27          18    

Materials and supplies

     (1)           

Accounts and wages payable

     (9)         (16)   

Taxes accrued

             17    

Assets, other

     (4)         (3)   

Liabilities, other

     13          12    

Pension and other postretirement benefits

             (2)   
  

 

 

    

 

 

 

Net cash provided by operating activities

     46          76    
  

 

 

    

 

 

 

Cash Flows From Investing Activities:

     

Capital expenditures

     (33)         (35)   

Money pool advances, net

     (21)         (65)   
  

 

 

    

 

 

 

Net cash used in investing activities

     (54)         (100)   
  

 

 

    

 

 

 

Cash Flows From Financing Activities:

     

Capital contribution from parent

             24    
  

 

 

    

 

 

 

Net cash provided by financing activities

             24    
  

 

 

    

 

 

 

Net change in cash and cash equivalents

     (8)           

Cash and cash equivalents at beginning of year

               
  

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $       $   
  

 

 

    

 

 

 

The accompanying notes as they relate to Genco are an integral part of these consolidated financial statements.

 

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Table of Contents

AMEREN CORPORATION (Consolidated)

UNION ELECTRIC COMPANY

AMEREN ILLINOIS COMPANY

AMEREN ENERGY GENERATING COMPANY (Consolidated)

COMBINED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

March 31, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren’s primary assets are the common stock of its subsidiaries. Ameren’s subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses in Missouri and Illinois. Dividends on Ameren’s common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries. Ameren’s principal subsidiaries are listed below. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.

 

   

Union Electric Company, or Ameren Missouri, operates a rate-regulated electric generation, transmission and distribution business, and a rate-regulated natural gas transmission and distribution business in Missouri.

 

   

Ameren Illinois Company, or Ameren Illinois, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois.

 

   

AER consists of non-rate-regulated operations, including Genco, AERG, and Marketing Company. Genco operates a merchant electric generation business in Illinois and holds an 80% ownership interest in EEI, which it consolidates for financial reporting purposes.

Ameren has various other subsidiaries responsible for activities such as the provision of shared services.

The financial statements of Ameren and Genco are prepared on a consolidated basis. Ameren Missouri and Ameren Illinois have no subsidiaries, and therefore their financial statements are not prepared on a consolidated basis. All significant intercompany transactions have been eliminated. All tabular dollar amounts are in millions, unless otherwise indicated.

Our accounting policies conform to GAAP. Our financial statements reflect all adjustments (which include normal, recurring adjustments) that are necessary, in our opinion, for a fair presentation of our results. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The results of operations of an interim period may not give a true indication of results that may be expected for a full year. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K.

During the second quarter 2011, Genco identified an error in the cash flow statement classification of a capital contribution from Ameren that affected Genco's three months ended March 31, 2011, consolidated statements of cash flows. For the three months ended March 31, 2011, Genco's previously reported cash flows provided by operating activities were $100 million, and Genco had no reported cash flows from financing activities. As corrected herein, Genco's cash flows provided by operating activities were $76 million and cash flows provided by financing activities were $24 million. The error was corrected in Genco's six months ended June 30, 2011, consolidated statement of cash flows. This correction had no impact on Ameren's reported consolidated statement of cash flows.

Earnings Per Share

There were no material differences between Ameren’s basic and diluted earnings per share amounts for the three months ended March 31, 2012, and 2011. In the first quarter of 2012, potential issuances of common shares related to stock-based compensation plans were excluded from the quarterly diluted earnings per share calculation because the effect was antidilutive. In 2011, the number of dilutive restricted stock shares and performance share units had an immaterial impact on earnings per share.

 

18


Table of Contents

Stock-based Compensation

A summary of nonvested shares as of March 31, 2012, and changes during the three months ended March 31, 2012, under the 2006 Omnibus Incentive Compensation Plan (2006 Plan) is presented below:

 

      Performance Share Units  
      Share Units    

Weighted-average Fair Value
Per Unit

at Grant Date

 

Nonvested at January 1, 2012

     1,156,831      $ 31.70   

Granted(a)

     717,151        35.68   

Forfeitures

     (3,897     32.94   

Vested(b)

     (110,729     35.68   

Nonvested at March 31, 2012

     1,759,356      $ 33.07   

 

(a) Includes performance share units (share units) granted to certain executive and nonexecutive officers and other eligible employees in January 2012 under the 2006 Plan.
(b) Share units vested due to retirement eligibility by certain employees. Actual shares issued for retirement-eligible employees will vary depending on actual performance over the three-year measurement period.

The fair value of each share unit awarded in January 2012 under the 2006 Plan was determined to be $35.68. That amount was based on Ameren’s closing common share price of $33.13 at December 31, 2011, and lattice simulations. Lattice simulations are used to estimate expected share payout based on Ameren’s total shareholder return for a three-year performance period relative to the designated peer group beginning January 1, 2012. The simulations can produce a greater fair value for the share unit than the applicable closing common share price because they include the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also included a three-year risk-free rate of 0.41%, volatility of 17% to 31% for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period.

Ameren recorded compensation expense of $6 million and a related tax benefit of $2 million for both the three months ended March 31, 2012, and 2011. There were no significant compensation costs capitalized related to the performance share units during the three months ended March 31, 2012, and 2011. As of March 31, 2012, total compensation cost of $32 million related to nonvested awards not yet recognized was expected to be recognized over a weighted-average period of 26 months.

Accounting Changes

Disclosures about Fair Value Measurements

In May 2011, FASB issued additional authoritative guidance regarding fair value measurements. The guidance amends the disclosure requirements for fair value measurements in order to align the principles for fair value measurements and the related disclosure requirements under GAAP and International Financial Reporting Standards. The amendments do not affect the Ameren Companies’ results of operations, financial positions, or liquidity, as this guidance only requires additional disclosures. The Ameren Companies adopted this guidance for the first quarter of 2012. See Note 7 - Fair Value Measurements for the required additional disclosures.

Presentation of Comprehensive Income

In June 2011, FASB amended its guidance on the presentation of comprehensive income in financial statements. The amended guidance changes the presentation of comprehensive income in the financial statements. It requires entities to report components of comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. This guidance was effective for the Ameren Companies beginning in the first quarter of 2012 with retroactive application required. The implementation of the amended guidance did not affect the Ameren Companies’ results of operations, financial positions, or liquidity. In December 2011, the FASB amended the guidance to postpone a requirement to present reclassification adjustments by income component until further guidance is issued.

Goodwill and Intangible Assets

Goodwill. Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. As of March 31, 2012, Ameren’s and Ameren Illinois’ goodwill related to Ameren's acquisition of IP in 2004 and CILCORP in 2003. We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Intangible Assets. Ameren, Ameren Missouri and Genco classify emission allowances and renewable energy credits as intangible assets. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired.

 

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At March 31, 2012, Ameren’s and Ameren Missouri’s intangible assets consisted of renewable energy credits obtained through wind and solar power purchase agreements. The book value of each of Ameren’s and Ameren Missouri’s renewable energy credits was $9 million at March 31, 2012. The book value of each of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was immaterial at March 31, 2012.

Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. The amortization expense based on usage of renewable energy credits and emission allowances was less than $1 million for Ameren, Ameren Missouri, Ameren Illinois, and Genco for the three months ended March 31, 2012, and $2 million, $1 million, and $1 million for Ameren, Ameren Illinois, and Genco, respectively, for the three months ended March 31, 2011. Amortization expense based on Ameren Missouri's usage of renewable energy credits was deferred as a regulatory asset pending recovery from customers through rates.

Excise Taxes

Excise taxes imposed on us are reflected on Ameren Missouri electric and Ameren Missouri and Ameren Illinois natural gas customer bills. They are recorded gross in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” on the statement of income or the statement of income and comprehensive income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in “Taxes accrued” on the balance sheet. The following table presents excise taxes recorded in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” for the three months ended March 31, 2012, and 2011:

 

XXXXXX XXXXXX
      Three Months  
      2012      2011  

Ameren Missouri

   $ 27       $ 29   

Ameren Illinois

     18         22   

Ameren

   $ 45       $ 51   

Uncertain Tax Positions

The amount of unrecognized tax benefits as of March 31, 2012, was $150 million, $125 million, $11 million, and $10 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. The amount of unrecognized tax benefits (detriments) as of March 31, 2012, that would impact the effective tax rate, if recognized, was $1 million, $1 million, $(1) million and $1 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively.

Ameren’s federal income tax returns for the years 2007 through 2009 are before the Appeals Office of the Internal Revenue Service. Ameren’s federal income tax return for the year 2010 is currently under examination. In April 2012, Ameren filed a protest to the Appeals Office of the Internal Revenue Service with respect to certain adjustments proposed as a result of the Internal Revenue Service's audit examination of its 2010 federal income tax return.

State income tax returns are generally subject to examination for a period of three years after filing of the return. The Ameren Companies do not currently have material state income tax issues under examination, administrative appeals, or litigation. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

It is expected that a partial settlement will be reached with the Appeals Office of the Internal Revenue Service in the next twelve months for the years 2007 through 2009 that would result in a decrease in uncertain tax liabilities. In addition, it is reasonably possible that events will occur during the next twelve months that would cause the total amount of unrecognized tax benefits for the Ameren Companies to increase or decrease. However, the Ameren Companies do not believe such increases or decreases would be material to their results of operations, financial position or liquidity.

Asset Retirement Obligations

AROs at Ameren, Ameren Missouri, Ameren Illinois and Genco increased compared to December 31, 2011, to reflect the accretion of obligations to their fair values. In addition, Ameren and Genco recorded an additional ARO in the amount of $1 million related to the retirement costs for a Genco coal combustion byproduct storage area during the three months ended March 31, 2012.

Noncontrolling Interest

Ameren’s noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests were classified as a component of equity separate from Ameren’s equity in its consolidated balance sheet. Genco’s noncontrolling interest comprised the 20% of EEI not owned by Genco. This noncontrolling interest was classified as a component of equity separate from Genco’s equity in its consolidated balance sheet.

 

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A reconciliation of the equity changes attributable to the noncontrolling interest at Ameren and Genco for the three months ended March 31, 2012, and 2011, is shown below:

 

XXXXXXX XXXXXXX
      Three Months  
      2012     2011  

Ameren:

    

Noncontrolling interest, beginning of period

   $ 149      $ 154   

Net income attributable to noncontrolling interest

     -        3   

Dividends paid to noncontrolling interest holders

     (2     (2

Noncontrolling interest, end of period

   $ 147      $ 155   

Genco:

    

Noncontrolling interest, beginning of period

   $ 7      $ 11   

Net income (loss) attributable to noncontrolling interest

     (2     1   

Noncontrolling interest, end of period

   $ 5      $ 12   

Medina Valley Sale in 2012

In February 2012, Ameren completed the sale of its Medina Valley energy center’s net property and plant for cash proceeds of $16 million and an additional $1 million payment at the two-year anniversary date of the sale if there are no violations of representations and warranties contained in the sale agreement. Ameren recognized a $10 million pretax gain during the first quarter of 2012 from this sale. Medina Valley was included in Ameren’s Merchant Generation segment results.

NOTE 2 - RATE AND REGULATORY MATTERS

Below is a summary of significant regulatory proceedings and related lawsuits. See also Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K. We are unable to predict the ultimate outcome of these matters, the timing of the final decisions of the various agencies and courts, or the impact on our results of operations, financial position, or liquidity.

Missouri

2009 Electric Rate Order

In November 2011, the Missouri Court of Appeals issued a ruling that upheld the MoPSC’s January 2009 electric rate order. In March 2012, the Circuit Court of Stoddard County, Missouri released to Ameren Missouri all of the funds held in its registry relating to the stay, which totaled $21 million, reducing previously recorded trade accounts receivable.

2010 Electric Rate Order

The MIEC and MoOPC appealed certain aspects of the MoPSC’s electric rate order issued in May 2010 to the Cole County Circuit Court. In addition to the MIEC appeal, four industrial customers, who are members of MIEC, also were granted a stay by the Cole County Circuit Court of the 2010 electric rate increase and the 2009 electric rate increase that was also under appeal as it applied specifically to their electric service accounts until the court rendered its decision on the appeals. As of March 31, 2012, the amount held by the Cole County Circuit Court registry relating to the stay was $16 million. This amount was reflected in “Accounts receivable-trade” on Ameren’s and Ameren Missouri's balance sheets at March 31, 2012. With the resolution of the 2009 electric rate order appeal, the amount held by the Cole County Circuit Court exceeded the amount relating to the appealed issues of the MoPSC's 2010 electric rate order. Therefore, in May 2012, Ameren Missouri received $14 million from the Cole Country Circuit Court’s registry. The remaining $2 million in the Cole County Circuit Court’s registry will stay until this proceeding is ultimately resolved.

If the MoPSC’s 2010 electric rate order is ultimately upheld, Ameren Missouri will receive all of the remaining funds held in the Cole County Circuit Court’s registry, plus accrued interest. If Ameren Missouri were to conclude that some portion of the rate increase resulting from the 2010 electric rate order was probable of refund to Ameren Missouri’s customers, a charge to earnings would be recorded for the estimated amount of refund in the period in which that determination was made. At this time, Ameren Missouri does not believe any aspect of the 2010 MoPSC’s electric rate order is probable of refund to Ameren Missouri’s customers. Therefore, no reserve has been established.

2011 Electric Rate Order

In July 2011, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric service of $173 million. The MoPSC order disallowed the recovery of all costs of enhancements, or costs that would have been incurred absent the breach, related to the rebuilding of the Taum Sauk energy center in excess of amounts recovered from property insurance.

In August 2011, Ameren Missouri appealed the disallowance of Taum Sauk enhancements to the Missouri Court of Appeals, Western District. A decision is expected by the Missouri Court of Appeals, Western District, in 2012. Ameren Missouri cannot predict the ultimate outcome of its appeal.

 

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Pending Electric Rate Case

On February 3, 2012, Ameren Missouri filed a request with the MoPSC to increase its annual revenue for electric service by $376 million. The annual increase request included $81 million for recovery of the costs associated with energy efficiency programs under the MEEIA, which are discussed below. As part of its filing, Ameren Missouri requested that the MoPSC approve the implementation of a storm cost tracking mechanism, as well as plant-in-service accounting treatment.

A decision by the MoPSC in this proceeding is expected in December 2012. Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, when any rate change may go into effect, or whether any rate increase 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 increase goes into effect.

MEEIA Filing

In January 2012, Ameren Missouri made its initial filing with the MoPSC under the MEEIA. This filing proposed a three-year plan that includes a portfolio of energy efficiency programs along with a cost-recovery mechanism. If the proposal is approved, beginning in January 2013, Ameren Missouri plans to invest $145 million over three years for the proposed energy efficiency programs. Ameren Missouri is also seeking recovery of fixed costs that would not otherwise be recovered due to the effects on customer usage from energy efficiency programs in the same year the usage reduction occurs.

In April 2012, the MoPSC staff issued a recommendation in response to Ameren Missouri’s MEEIA filing. The MoPSC staff agreed with Ameren Missouri's request for contemporaneous recovery of program costs but rejected Ameren Missouri’s request to recover fixed costs in the same year the energy efficiency related usage reductions occur. Instead, the MoPSC staff recommended that the recovery of the otherwise unrecoverable fixed costs occur beginning on January 1 of the third year after the usage reduction occurs and has been verified by an independent evaluator.

A decision by the MoPSC in this proceeding is anticipated in the third quarter of 2012. The MoPSC’s order in this proceeding will not affect Ameren Missouri rates until these rates are included in an electric service rate case. Ameren Missouri anticipates that the impacts of the MoPSC’s decision in this MEEIA filing will be included in rates set under its pending electric service rate case that was filed on February 3, 2012, with a true-up date of July 31, 2012. Ameren Missouri’s pending electric rate case includes an annual revenue increase of $81 million related to its planned portfolio of energy efficiency programs included in its MEEIA filing.

FAC Prudence Review

Missouri law requires the MoPSC to complete prudence reviews of Ameren Missouri’s FAC at least every 18 months. In April 2011, the MoPSC issued an order with respect to its review of Ameren Missouri’s FAC for the period from March 1, 2009, to September 30, 2009. In this order, the MoPSC ruled that Ameren Missouri should have included in the FAC calculation all revenues and costs associated with certain long-term partial requirements sales that were made by Ameren Missouri because of the loss of Noranda's load caused by a severe ice storm in January 2009. As a result of the order, Ameren Missouri recorded a pretax charge to earnings of $18 million, including $1 million for interest, in 2011 for its obligation to refund to Ameren Missouri's electric customers the earnings associated with these sales previously recognized by Ameren Missouri during the period from March 1, 2009, to September 30, 2009. Ameren Missouri expects to have refunded the $18 million by the end of May 2012.

Ameren Missouri disagrees with the MoPSC order’s classification of these sales and believes that the terms of its FAC tariff did not provide for the inclusion of these sales in the FAC calculation. In June 2011, Ameren Missouri filed an appeal with the Cole County Circuit Court. A decision is expected from the Cole County Circuit Court in 2012. Separately, in July 2011, Ameren Missouri filed a request with the MoPSC for an accounting authority order that would allow Ameren Missouri to defer, as a regulatory asset, fixed costs totaling $36 million that were not recovered from Noranda as a result of the loss of load caused by the severe 2009 ice storm for potential recovery in a future electric rate case. We cannot predict the ultimate outcome of these regulatory or judicial proceedings.

In February 2012, the MoPSC staff issued its FAC review report for the period from October 1, 2009, to May 31, 2011. In its report, the MoPSC staff’s position directed Ameren Missouri to refund to customers the pretax earnings associated with the same long-term partial requirements sales contracts subsequent to September 30, 2009. The MoPSC staff calculated these pretax earnings to be $26 million. We cannot predict whether the MoPSC will approve the MoPSC staff’s position. If Ameren Missouri were to determine that these sales were probable of refund to Ameren Missouri’s electric customers, a charge to earnings would be recorded for the refund in the period in which that determination was made. Ameren Missouri does not currently believe these amounts are probable of refund to customers.

 

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Illinois

IEIMA

On January 3, 2012, Ameren Illinois elected to participate in the performance-based formula ratemaking process established pursuant to the IEIMA by filing initial performance-based formula rates with the ICC. The initial filing, based on 2010 recoverable costs and expected net plant additions for 2011 and 2012, will result in new electric delivery service rates in October 2012. In its initial filing, if approved by the ICC, Ameren Illinois’ calculation would result in a decrease of $19 million in its annual electric delivery service revenues. In April 2012, the ICC staff submitted its calculation of Ameren Illinois’ initial filing’s revenue requirement and recommended a decrease of $25 million in Ameren Illinois’ annual electric delivery service revenues. The ICC deadline to approve the initial formula rates is September 28, 2012, with the rates becoming effective no later than 30 days after the ICC’s decision. The rates resulting from the initial filing will be effective from October through the end of 2012.

On April 20, 2012, Ameren Illinois filed a request with the ICC to update its electric delivery service revenue requirement based on 2011 recoverable costs and expected net plant additions for 2012. The update filing will result in new electric delivery service rates on January 1, 2013. Pending ICC approval, the update filing will result in an annual decrease of $15 million in Ameren Illinois’ revenues for electric delivery service below the amount Ameren Illinois requested in its January 3, 2012 initial filing. The reduction primarily reflects rate base reductions due to increases in accumulated deferred income taxes, as well as a lower return on equity due to decreases in the average 30-year United States treasury bond rates.

The IEIMA provides for an annual reconciliation of the revenue requirement necessary to reflect the actual costs incurred in a given year with the revenue requirement that was in effect for that year. Consequently, Ameren Illinois’ 2012 electric delivery service revenues will be based on its 2012 actual recoverable costs, rate base, and return on common equity as calculated under the IEIMA’s performance-based formula ratemaking framework. As a result, throughout the year, Ameren Illinois will estimate the expected future recovery or return of revenue as a regulatory asset or liability. As of March 31, 2012, Ameren Illinois recorded a regulatory asset of $12 million with a corresponding increase in electric revenues for the estimated first quarter portion of the 2012 revenue requirement reconciliation adjustment. By the end of 2012, this regulatory asset will represent Ameren Illinois’ estimate of the probable increase in electric delivery service rates, compared to current and proposed rates, expected to be approved by the ICC to provide Ameren Illinois recovery of all prudently and reasonably incurred costs in 2012 and an earned rate of return on common equity for 2012. The regulatory asset relating to the 2012 revenue requirement reconciliation will be recovered from customers during 2014.

Federal

Electric Transmission Investment

In February 2012, FERC approved ATXI’s request for a forward-looking rate calculation with an annual reconciliation adjustment as well as ATXI’s request for the implementation of the incentives FERC approved in its May 2011 order for the Illinois Rivers project and the Big Muddy project.

2011 Wholesale Distribution Rate Case

In January 2011, Ameren Illinois filed a request with FERC to increase its annual revenues for electric delivery service for its wholesale customers by $11 million. These wholesale distribution revenues are treated as a deduction from Ameren Illinois’ revenue requirement in retail rate filings with the ICC. In March 2011, FERC issued an order authorizing the proposed rates to take effect, subject to refund when the final rates are determined. Ameren Illinois reached an agreement with two of its nine wholesale customers in 2011. The impasse with the remaining seven wholesale customers has resulted in FERC litigation. An initial decision by the FERC administrative law judge is expected in 2012, and a final FERC decision may be received after 2012. We cannot predict the ultimate outcome of this proceeding or its impact on Ameren’s or Ameren Illinois’ results of operations, financial position, or liquidity.

Regional Transmission Organization

Ameren Missouri is a transmission owning member of MISO. In April 2012, the MoPSC authorized Ameren Missouri’s continued participation in MISO through May 31, 2016, subject to certain conditions. By November 2015, Ameren Missouri will have to file an updated cost benefit study with the MoPSC evaluating the costs and benefits of Ameren Missouri’s continued participation in MISO.

Combined Construction and Operating License

In 2008, Ameren Missouri filed an application with the NRC for a COL for a new 1,600-megawatt nuclear unit at Ameren Missouri’s existing Callaway County, Missouri, nuclear energy center site. In 2009, Ameren Missouri suspended its efforts to build a new nuclear unit at its existing Missouri nuclear energy center site, and the NRC suspended review of the COL application.

In March 2012, the DOE announced the availability of $452 million of investment funds for the design, engineering, manufacturing, and sale of American-made small modular reactors. In April 2012, Ameren Missouri entered into an agreement with Westinghouse to exclusively support Westinghouse’s application for the DOE’s small modular reactor investment funds. The DOE investment funding is

 

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intended to support engineering and design certifications and a COL for up to two small modular reactor designs over five years. Westinghouse expects to submit its application to the DOE in May 2012. The DOE is expected to issue a decision on awarding the investment funds in the summer of 2012.

If Westinghouse is awarded DOE’s small modular reactor investment funds, Ameren Missouri will seek a COL from the NRC for a Westinghouse small modular reactor at its Callaway County, Missouri nuclear energy center site. A COL is issued by the NRC to permit construction and operation of a nuclear power plant at a specific site in accordance with established laws and regulations. Obtaining a COL from the NRC does not obligate Ameren Missouri to build a small modular reactor at the Callaway site; however, it does preserve the option to move forward in a timely fashion should conditions be right to build a small modular reactor in the future. A COL is valid for at least 40 years.

Ameren Missouri estimates the total cost to obtain the small modular reactor COL will be in the range of $80 million to $100 million. Ameren Missouri expects its incremental investment to obtain the small modular reactor COL will be minimal due to several factors, including the company’s capitalized investments of $69 million as of March 31, 2012, in new nuclear energy center development, the DOE investment funds that would help support the COL application, and its agreement with Westinghouse. If the DOE does not approve Westinghouse’s application for the small modular reactor investment funds, Ameren Missouri is not obligated to pursue a COL for the Westinghouse small modular reactor design and may terminate its agreement with Westinghouse.

All of Ameren Missouri’s costs incurred to construct a new nuclear unit will remain capitalized while management pursues options to maximize the value of its investment in this project. If efforts are permanently abandoned or management concludes it is probable the costs incurred will be disallowed in rates, a charge to earnings would be recognized in the period in which that determination was made.

NOTE 3 - SHORT-TERM DEBT AND LIQUIDITY

The liquidity needs of the Ameren Companies are typically supported through the use of available cash, short-term intercompany borrowings, drawings under committed bank credit facilities, or commercial paper issuances.

Ameren, Ameren Missouri, Ameren Illinois and Genco had no borrowings under the 2010 Credit Agreements during the three months ended March 31, 2012. Based on letters of credit issued under the 2010 Credit Agreements as of March 31, 2012, as well as commercial paper outstanding as of such date, the aggregate amount of credit capacity available at March 31, 2012, was $1.96 billion.

Commercial Paper

At March 31, 2012, and December 31, 2011, Ameren had $126 million and $148 million of commercial paper outstanding, respectively. During the three months ended March 31, 2012, and 2011, Ameren had average daily commercial paper balances outstanding of $84 million and $321 million, respectively, with a weighted-average interest rate of 0.94% for both periods. The peak short-term commercial paper balances outstanding during the three months ended March 31, 2012, and 2011, were $186 million and $377 million, respectively. The peak interest rates during the three months ended March 31, 2012, and 2011, were 1.25% and 1.46%, respectively.

Indebtedness Provisions and Other Covenants

The information below presents a summary of the Ameren Companies’ compliance with indebtedness provisions and other covenants within the 2010 Credit Agreements. See Note 4 - Credit Facility Borrowings and Liquidity in the Form 10-K for a detailed description of those provisions.

The 2010 Credit Agreements contain conditions about borrowings and issuances of letters of credit, including the absence of default or unmatured default, material accuracy of representations and warranties (excluding any representation after the closing date as to the absence of material adverse change and material litigation), and obtaining required regulatory authorizations. In addition, solely as it relates to borrowings under the 2010 Illinois Credit Agreement, it is a condition for any such borrowing that, at the time of and after giving effect to such borrowing, the borrower not be in violation of any limitation on its ability to incur unsecured indebtedness contained in its articles of incorporation. The 2010 Credit Agreements also contain nonfinancial covenants, including restrictions on the ability to incur liens, to transact with affiliates, to dispose of assets, to make investments in or transfer assets to its affiliates, and to merge with other entities.

The 2010 Credit Agreements require each of Ameren, Ameren Missouri, Ameren Illinois and Genco to maintain consolidated indebtedness of not more than 65% of its consolidated total capitalization pursuant to a defined calculation set forth in the agreements. As of March 31, 2012, the ratios of consolidated indebtedness to total consolidated capitalization, calculated in accordance with the provisions of the 2010 Credit Agreements, were 49%, 48%, 41% and 45%, for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. In addition, under the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of 2.0 to 1, to be calculated quarterly, as of the end of the most recent four fiscal quarters then ending, in

 

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accordance with the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, as applicable. Ameren’s ratio as of March 31, 2012, was 5 to 1. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable 2010 Credit Agreement.

None of the Ameren Companies’ credit facilities or financing arrangements contains credit rating triggers that would cause an event of default or acceleration of repayment of outstanding balances. Management believes that the Ameren Companies were in compliance with the provisions and covenants of their credit facilities at March 31, 2012.

Money Pools

Ameren has money pool agreements with and among its subsidiaries to coordinate and provide for certain short-term cash and working capital requirements. Separate money pools are maintained for utility and non-state-regulated entities. Ameren Services is responsible for the operation and administration of the money pool agreements.

Utility

Ameren Missouri, Ameren Illinois and Ameren Services may participate in the utility money pool as both lenders and borrowers. Ameren and AERG may participate in the utility money pool only as lenders. Ameren Services administers the utility money pool and tracks internal and external funds separately. Internal funds are surplus funds contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the 2010 Credit Agreements and the commercial paper programs. The total amount available to the pool participants from the utility money pool at any given time is reduced by the amount of borrowings by participants, but increased to the extent that the pool participants advance surplus funds to the utility money pool or remit funds from other external sources. The availability of funds is also determined by funding requirement limits established by regulatory authorizations. The utility money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the utility money pool agreement must repay the principal amount of such loan, together with accrued interest. The rate of interest depends on the composition of internal and external funds in the utility money pool. The average interest rate for borrowing under the utility money pool for the three months ended March 31, 2012, was 0.11%. There were no utility money pool borrowings during the three months ended March 31, 2011.

Non-state-regulated Subsidiaries

Ameren, Ameren Services, AER, Genco, AERG, Marketing Company, and other non-state-regulated Ameren subsidiaries have the ability, subject to Ameren parent company authorization and applicable regulatory short-term borrowing authorizations, to access funding from the 2010 Credit Agreements and the commercial paper programs through a non-state-regulated subsidiary money pool agreement. All participants may borrow from or lend to the non-state-regulated money pool, except for Ameren Services, which may participate only as a borrower. The total amount available to the pool participants at any given time is reduced by the amount of borrowings made by participants, but is increased to the extent that the pool participants advance surplus funds to the non-state-regulated subsidiary money pool or remit funds from other external sources. The non-state-regulated subsidiary money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the non-state-regulated subsidiary money pool agreement must repay the principal amount of such loan, together with accrued interest. The rate of interest depends on the composition of internal and external funds in the non-state-regulated subsidiary money pool. The average interest rate for borrowing under the non-state-regulated subsidiary money pool for the three months ended March 31, 2012, was 0.76% (2011-1.14%).

See Note 8 - Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the three months ended March 31, 2012, and 2011.

NOTE 4 - LONG-TERM DEBT AND EQUITY FINANCINGS

Indenture Provisions and Other Covenants

Ameren Missouri’s and Ameren Illinois’ indentures and articles of incorporation include covenants and provisions related to issuances of first mortgage bonds and preferred stock. Ameren Missouri and Ameren Illinois are required to meet certain ratios to issue additional first mortgage bonds and preferred stock. However, a failure to achieve these ratios would not result in a default under these covenants and provisions, but would restrict the companies’ ability to issue bonds or preferred stock. The following table summarizes the required and actual interest coverage ratios for interest charges and dividend coverage ratios and bonds and preferred stock issuable for the 12 months ended March 31, 2012, at an assumed interest rate of 6% and dividend rate of 7%.

 

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      Required Interest
Coverage Ratio (a)
   Actual Interest
Coverage Ratio
     Bonds Issuable (b)     Required Dividend
Coverage Ratio(c)
   Actual Dividend
Coverage Ratio
     Preferred Stock
Issuable
 

Ameren Missouri

   ³2.0      3.2       $ 2,004      ³2.5      85.1       $ 1,614   

Ameren Illinois

   ³2.0      7.2         3,373 (d)    ³1.5      3.1         203   

 

(a) Coverage required on the annual interest charges on first mortgage bonds outstanding and to be issued. Coverage is not required in certain cases when additional first mortgage bonds are issued on the basis of retired bonds.
(b) Amount of bonds issuable based either on required coverage ratios or unfunded property additions, whichever is more restrictive. The amounts shown also include bonds issuable based on retired bond capacity of $89 million and $765 million at Ameren Missouri and Ameren Illinois, respectively.
(c) Coverage required on the annual dividend on preferred stock outstanding and to be issued, as required in the respective company’s articles of incorporation.
(d) Amount of bonds issuable by Ameren Illinois based on unfunded property additions and retired bonds solely under the former IP mortgage indenture.

Ameren’s indenture does not require Ameren to comply with any quantitative financial covenants. The indenture does, however, include certain cross-default provisions. Specifically, either (1) the failure by Ameren to pay when due and upon expiration of any applicable grace period any portion of any Ameren indebtedness in excess of $25 million or (2) the acceleration upon default of the maturity of any Ameren indebtedness in excess of $25 million under any indebtedness agreement, including the 2010 Credit Agreements, constitutes a default under the indenture, unless such past due or accelerated debt is discharged or the acceleration is rescinded or annulled within a specified period.

Ameren Missouri, Ameren Illinois, Genco and certain other nonregistrant Ameren subsidiaries are subject to Section 305(a) of the Federal Power Act, which makes it unlawful for any officer or director of a public utility, as defined in the Federal Power Act, to participate in the making or paying of any dividend from any funds “properly included in capital account.” The meaning of this limitation has never been clarified under the Federal Power Act or FERC regulations. However, FERC has consistently interpreted the provision to allow dividends to be paid as long as (1) the source of the dividends is clearly disclosed, (2) the dividends are not excessive, and (3) there is no self-dealing on the part of corporate officials. At a minimum, Ameren believes that dividends can be paid by its subsidiaries that are public utilities from net income and retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on its stock, unless, among other things, its earnings and earned surplus are sufficient to declare and pay a dividend after provision is made for reasonable and proper reserves, or unless Ameren Illinois has specific authorization from the ICC.

Ameren Illinois’ articles of incorporation require its dividend payments on common stock to be based on ratios of common stock to total capitalization and other provisions related to certain operating expenses and accumulations of earned surplus. Ameren Illinois committed to FERC to maintain a minimum 30% ratio of common stock equity to total capitalization after the Ameren Illinois Merger and AERG distribution. As of March 31, 2012, Ameren Illinois’ ratio of common stock equity to total capitalization was 58%.

Genco’s indenture includes provisions that require Genco to maintain certain interest coverage and debt-to-capital ratios in order for Genco to pay dividends, to make principal or interest payments on subordinated borrowings, to make loans to or investments in affiliates, or to incur additional external, third party indebtedness. The following table summarizes these ratios for the 12 months ended and as of March 31, 2012:

 

      Required Interest
Coverage Ratio
  Actual Interest
Coverage Ratio
     Required Debt-to-
Capital Ratio
  Actual Debt-to-
Capital Ratio
 

Genco

   ³1.75(a) /2.50(b)     3.66       £60%(b)     43

 

(a) A minimum interest coverage ratio of 1.75 is required for Genco to make certain restricted payments, as defined, including specified dividend payments and, principal and interest payments on subordinated borrowings. As of the date of the restricted payment, the minimum ratio must have been achieved for the most recently ended four fiscal quarters and projected by management to be achieved for each of the subsequent four six-month periods. Investments in the non-state-regulated subsidiary money pool and repayments of non-state-regulated subsidiary money pool borrowings are not subject to this incurrence test.
(b) A minimum interest coverage ratio of 2.50 for the most recently ended four fiscal quarters and a debt-to-capital ratio of no greater than 60% are required for Genco to incur additional indebtedness, as defined, other than permitted indebtedness, as defined, for borrowed money. The ratios must be computed on a pro forma basis considering the additional indebtedness to be incurred and the related interest expense. Non-state-regulated subsidiary money pool borrowings are defined as permitted indebtedness and are not subject to these incurrence tests. Credit facility borrowings, including borrowings under the 2010 Genco Credit Agreement, and other borrowings from third-party, external sources are included in the definition of indebtedness and are subject to these incurrence tests.

Genco’s debt incurrence-related ratio restrictions under its indenture may be disregarded if both Moody’s and S&P reaffirm the ratings of Genco in place at the time of the debt incurrence after considering the additional indebtedness.

In order for the Ameren Companies to issue securities in the future, they will have to comply with all applicable requirements in effect at the time of any such issuances.

Off-Balance-Sheet Arrangements

At March 31, 2012, none of the Ameren Companies had any off-balance-sheet financing arrangements, other than operating leases entered into in the ordinary course of business. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.

 

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NOTE 5 - OTHER INCOME AND EXPENSES

The following table presents the components of “Other Income and Expenses” in Ameren’s, Ameren Missouri’s, and Ameren Illinois' statement of income (loss) and statements of income and comprehensive income for the three months ended March 31, 2012, and 2011:

 

XXXXX XXXXX
      Three Months  
      2012      2011  

Ameren:(a)

     

Miscellaneous income:

     

Allowance for equity funds used during construction

   $ 9       $ 6   

Interest income on industrial development revenue bonds

     7         7   

Interest and dividend income

     -         1   

Other

     1         2   

Total miscellaneous income

   $ 17       $ 16   

Miscellaneous expense:

     

Donations(b)

   $ 12       $ 2   

Other

     3         3   

Total miscellaneous expense

   $ 15       $ 5   

Ameren Missouri:

     

Miscellaneous income:

     

Allowance for equity funds used during construction

   $ 8       $ 6   

Interest income on industrial development revenue bonds

     7         7   

Total miscellaneous income

   $ 15       $ 13   

Miscellaneous expense:

     

Donations

   $ 2       $ 1   

Other

     1         2   

Total miscellaneous expense

   $ 3       $ 3   

Ameren Illinois:

     

Miscellaneous income:

     

Allowance for equity funds used during construction

   $ 1       $ -   

Interest and dividend income

     -         1   

Other

     -         1   

Total miscellaneous income

   $ 1       $ 2   

Miscellaneous expense:

     

Donations(b)

   $ 10       $ -   

Other

     1         1   

Total miscellaneous expense

   $ 11       $ 1   

 

(a) Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations.
(b) Includes Ameren Illinois’ one-time $7.5 million donation and $1 million annual donation to the Illinois Science and Energy Innovation Trust and $1 million annual donation for customer assistance programs pursuant to the IEIMA as a result of Ameren Illinois' participation in the formula ratemaking process.

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

We use derivatives principally to manage the risk of changes in market prices for natural gas, coal, diesel, electricity, and uranium. Such price fluctuations may cause the following:

 

   

an unrealized appreciation or depreciation of our contracted commitments to purchase or sell when purchase or sale prices under the commitments are compared with current commodity prices;

 

   

market values of coal, natural gas, and uranium inventories that differ from the cost of those commodities in inventory; and

 

   

actual cash outlays for the purchase of these commodities that differ from anticipated cash outlays.

The derivatives that we use to hedge these risks are governed by our risk management policies for forward contracts, futures, options, and swaps. Our net positions are continually assessed within our structured hedging programs to determine whether new or offsetting transactions are required. The goal of the hedging program is generally to mitigate financial risks while ensuring that sufficient volumes are available to meet our requirements. Contracts we enter into as part of our risk management program may be settled financially, settled by physical delivery, or net settled with the counterparty.

 

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The following table presents open gross derivative volumes by commodity type as of March 31, 2012, and December 31, 2011:

 

      Quantity (in millions, except as indicated)  
Commodity    NPNS Contracts(a)     Cash Flow Hedges(b)     Other Derivatives(c)     Derivatives That Qualify for
Regulatory Deferral(d)
 
     2012     2011     2012     2011     2012     2011     2012     2011  

Coal (in tons)

                

Ameren Missouri

                     111                        116                        (e                     (e                     (e                     (e                     (e                     (e

Genco

     22        24        (e     (e     3        (e     (e     (e

Other(f)

     7        7        (e     (e     1        (e     (e     (e

Ameren

     140        147        (e     (e     4        (e     (e     (e

Fuel oils (in gallons)(g)

                

Ameren Missouri

     (e     (e     (e     (e     (e     (e     45        53   

Genco

     (e     (e     (e     (e     39        27        (e     (e

Other(f)

     (e     (e     (e     (e     12        9        (e     (e

Ameren

     (e     (e     (e     (e     51        36        45        53   

Natural gas (in mmbtu)

                

Ameren Missouri

     7        8        (e     (e     14        9        22        19   

Ameren Illinois

     34        42        (e     (e     (e     (e     163        174   

Genco

     (e     (e     (e     (e     5        7        (e     (e

Other(f)

     (e     (e     (e     (e     1        1        (e     (e

Ameren

     41        50        (e     (e     20        17        185        193   

Power (in megawatthours)

                

Ameren Missouri

     1        1        (e     (e     1        1        12        6   

Ameren Illinois

     23        11        (e     (e     (e     (e     21        24   

Genco

     (e     (e     (e     (e     -        -        (e     (e

Other(f)

     66        61        19        17        43        30        (7     (9

Ameren

     90        73        19        17        44        31        26        21   

Uranium (pounds in thousands)

                

Ameren Missouri & Ameren

     5,553        5,553        (e     (e     (e     (e     148        148   

 

(a) Contracts through December 2017, March 2015, September 2035, and October 2024 for coal, natural gas, power, and uranium, respectively, as of March 31, 2012.
(b) Contracts through December 2016 for power as of March 31, 2012.
(c) Contracts through December 2014, October 2015, January 2013, and November 2016 for coal, fuel oils, natural gas, and power, respectively, as of March 31, 2012.
(d) Contracts through October 2014, October 2016, May 2032, and December 2013 for fuel oils, natural gas, power, and uranium, respectively, as of March 31, 2012.
(e) Not applicable.
(f) Includes AERG contracts for coal and fuel oils, Marketing Company contracts for natural gas and power, and intercompany eliminations for power.
(g) Fuel oils consist of heating and crude oil.

Authoritative guidance regarding derivative instruments requires that all contracts considered to be derivative instruments be recorded on the balance sheet at their fair values, unless the NPNS exception applies. See Note 7 - Fair Value Measurements for our methods of assessing the fair value of derivative instruments. Many of our physical contracts, such as our coal and purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense on NPNS contracts is recognized at the contract price upon physical delivery.

If we determine that a contract meets the definition of a derivative and is not eligible for the NPNS exception, we review the contract to determine if it qualifies for hedge accounting. We also consider whether gains or losses resulting from such derivatives qualify for regulatory deferral. Contracts that qualify for cash flow hedge accounting are recorded at fair value with changes in fair value charged or credited to accumulated OCI in the period in which the change occurs, to the extent the hedge is effective. To the extent the hedge is ineffective, the related changes in fair value are charged or credited to the statement of income or the statement of income and comprehensive income in the period in which the change occurs. When the contract is settled or delivered, the net gain or loss is recorded in the statement of income or the statement of income and comprehensive income.

Derivative contracts that qualify for regulatory deferral are recorded at fair value, with changes in fair value recorded as regulatory assets or regulatory liabilities in the period in which the change occurs. Ameren Missouri and Ameren Illinois believe derivative gains and losses deferred as regulatory assets and regulatory liabilities are probable of recovery or refund through future rates charged to customers. Regulatory assets and regulatory liabilities are amortized to operating income as related losses and gains are reflected in rates charged to customers. Therefore, gains and losses on these derivatives have no effect on operating income.

 

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Certain derivative contracts are entered into on a regular basis as part of our risk management program but do not qualify for the NPNS exception, hedge accounting, or regulatory deferral accounting. Such contracts are recorded at fair value, with changes in fair value charged or credited to the statement of income or the statement of income and comprehensive income in the period in which the change occurs.

Authoritative accounting guidance permits companies to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a liability) against fair value amounts recognized for derivative instruments that are executed with the same counterparty under the same master netting arrangement. The Ameren Companies did not elect to adopt this guidance for any eligible financial instruments or other items.

The following table presents the carrying value and balance sheet location of all derivative instruments as of March 31, 2012, and December 31, 2011:

 

      Balance Sheet Location   

Ameren(a)

    Ameren Missouri     Ameren Illinois     Genco  

2012:

        

Derivative assets designated as hedging instruments

        

Commodity contracts:

           

Power

   MTM derivative assets    $ 19      $ -      $ (b   $ -   
  

Other assets

     30        -        -        -   
    

Total assets

   $ 49      $ -      $ -      $ -   

Derivative liabilities designated as hedging instruments

        

Commodity contracts:

           

Power

   MTM derivative liabilities    $ 1      $ (b   $ -      $ (b
    

Total liabilities

   $ 1      $ -      $ -      $ -   

Derivative assets not designated as hedging instruments(c)

        

Commodity contracts:

           

Fuel oils

   MTM derivative assets    $ 36      $ 22      $ (b   $ 11   
  

Other assets

     9        5        -        2   

Natural gas

   MTM derivative assets      5        2        (b     2   
  

Other current assets

     -        -        1        -   
  

Other assets

     1        -        -        -   

Power

   MTM derivative assets      107        35        (b     -   
  

Other assets

     29        -        -        -   
    

Total assets

   $ 187      $ 64      $ 1      $ 15   

Derivative liabilities not designated as hedging instruments(c)

        

Commodity contracts:

           

Coal

   MTM derivative liabilities    $ 2      $ (b   $ -      $  (b
  

Other current liabilities

     -        -        -        1   
  

Other deferred credits and liabilities

     2        -        -        2   

Fuel oils

   Other deferred credits and liabilities      1        1        -        -   

Natural gas

   MTM derivative liabilities      120        (b     102        (b
  

Other current liabilities

     -        15        -        1   
  

Other deferred credits and liabilities

     95        13        82        -   

Power

   MTM derivative liabilities      97        (b     20        (b
  

MTM derivative liabilities - affiliates

     (b     (b     183        (b
  

Other current liabilities

     -        15        -        -   
  

Other deferred credits and liabilities

     112        -        81        -   

Uranium

   Other deferred credits and liabilities      1        1        -        -   
    

Total liabilities

   $ 430      $ 45      $ 468      $ 4   

2011:

           

Derivative assets designated as hedging instruments

        

Commodity contracts:

           

Power

   MTM derivative assets    $ 8      $ -      $ (b   $ -   
  

Other assets

     16        -        -        -   
    

Total assets

   $ 24      $ -      $ -      $ -   

Derivative liabilities designated as hedging instruments

        

Commodity contracts:

           

Power

   Other deferred credits and liabilities    $ 1      $ -      $ -      $ -   
    

Total liabilities

   $ 1      $ -      $ -      $ -   

Derivative assets not designated as hedging instruments(c)

        

Commodity contracts:

           

Fuel oils

   MTM derivative assets    $ 29      $ 17      $ (b   $ 10   
    

Other assets

     8        6        -        1   

 

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      Balance Sheet Location   

Ameren(a)

    Ameren Missouri     Ameren Illinois     Genco  

Natural gas

   MTM derivative assets      6        2        (b     2   
  

Other current assets

     -        -        1        -   
  

Other assets

     -        -        1        -   

Power

   MTM derivative assets      72        30        (b     -   
  

Other assets

     99        -        77        -   
    

Total assets

   $ 214      $ 55      $ 79      $ 13   

Derivative liabilities not designated as hedging instruments(c)

        

Commodity contracts:

           

Fuel oils

   MTM derivative liabilities    $ 2      $ (b   $ -      $ (b
  

Other current liabilities

     -        1        -        1   

Natural gas

   MTM derivative liabilities      106        (b     90        (b
  

Other current liabilities

     -        13        -        2   
  

Other deferred credits and liabilities

     92        13        79        -   

Power

   MTM derivative liabilities      53        (b     9        (b
  

MTM derivative liabilities - affiliates

     (b     (b     200        (b
  

Other current liabilities

     -        9        -        -   
  

Other deferred credits and liabilities

     26        -        8        -   

Uranium

   Other deferred credits and liabilities      1        1        -        -   
    

Total liabilities

   $ 280      $ 37      $ 386      $ 3   

 

(a) Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations.
(b) Balance sheet line item not applicable to registrant.
(c) Includes derivatives subject to regulatory deferral.

The following table presents the cumulative amount of pretax net gains (losses) on all derivative instruments in accumulated OCI and regulatory assets or regulatory liabilities as of March 31, 2012, and December 31, 2011:

 

      Ameren     Ameren Missouri     Ameren Illinois     Genco     Other(a)  

2012:

          

Cumulative gains (losses) deferred in accumulated OCI:

          

Power derivative contracts(b)

   $ 41      $ -      $ -      $ -      $ 41   

Interest rate derivative contracts(c)(d)

     (8     -        -        (8     -   

Cumulative gains (losses) deferred in regulatory liabilities or assets:

          

Fuel oils derivative contracts(e)

     24        24        -        -        -   

Natural gas derivative contracts(f)

     (209     (26     (183     -        -   

Power derivative contracts(g)

     (81     20        (284     -        183   

Uranium derivative contracts(h)

     (1     (1     -        -        -   

2011:

          

Cumulative gains (losses) deferred in accumulated OCI:

          

Power derivative contracts(b)

   $ 19      $ -      $ -      $ -      $ 19   

Interest rate derivative contracts(c)(d)

     (8     -        -        (8     -   

Cumulative gains (losses) deferred in regulatory liabilities or assets:

          

Fuel oils derivative contracts(e)

     19        19        -        -        -   

Natural gas derivative contracts(f)

     (191     (24     (167     -        -   

Power derivative contracts(g)

     81        21        (140     -        200   

Uranium derivative contracts(h)

     (1     (1     -        -        -   

 

(a) Includes amounts for Marketing Company and intercompany eliminations.
(b) Represents net gains associated with power derivative contracts at Ameren. These contracts are a partial hedge of electricity price exposure through December 2016 as of March 31, 2012. Current gains of $14 million and $5 million were recorded at Ameren as of March 31, 2012, and December 31, 2011, respectively.
(c) Includes net gains associated with interest rate swaps at Genco that were a partial hedge of the interest rate on debt issued in June 2002. The swaps cover the first 10 years of debt that has a 30-year maturity, and the gain in OCI is amortized over a 10-year period that began in June 2002. The carrying value at March 31, 2012, and December 31, 2011, was less than $1 million and less than $1 million, respectively. The balance of the gain will be amortized by June 2012.
(d) Includes net losses associated with interest rate swaps at Genco. The swaps were executed during the fourth quarter of 2007 as a partial hedge of interest rate risks associated with Genco’s April 2008 debt issuance. The loss on the interest rate swaps is being amortized over a 10-year period that began in April 2008. The carrying value at March 31, 2012, and December 31, 2011, was a loss of $8 million and $9 million, respectively. Over the next twelve months, $1.4 million of the loss will be amortized.
(e) Represents net gains on fuel oils derivative contracts at Ameren Missouri. These contracts are a partial hedge of Ameren Missouri’s transportation costs for coal through October 2014 as of March 31, 2012. Current gains deferred as regulatory liabilities include $20 million and $20 million at Ameren and Ameren Missouri as of March 31, 2012, respectively. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of March 31, 2012, respectively. Current gains deferred as regulatory liabilities include $16 million and $16 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current losses deferred as regulatory assets include $1 million and $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively.
(f)

Represents net losses associated with natural gas derivative contracts. These contracts are a partial hedge of natural gas requirements through October 2016 at Ameren, Ameren Missouri, and Ameren Illinois, in each case as of March 31, 2012. Current gains deferred as regulatory liabilities include $1 million and $1 million at Ameren and Ameren Illinois, respectively, as of March 31, 2012. Current losses deferred as regulatory assets include $115 million,

 

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  $13 million, and $102 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of March 31, 2012. Current gains deferred as regulatory liabilities include $1 million and $1 million at Ameren and Ameren Illinois, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $101 million, $11 million, and $90 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011.
(g) Represents net losses associated with power derivative contracts. These contracts are a partial hedge of power price requirements through May 2032 at Ameren and Ameren Illinois and through December 2015 at Ameren Missouri, in each case as of March 31, 2012. Current gains deferred as regulatory liabilities include $34 million and $34 million at Ameren and Ameren Missouri, respectively, as of March 31, 2012. Current losses deferred as regulatory assets include $32 million, $13 million, and $203 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of March 31, 2012. Current gains deferred as regulatory liabilities include $29 million and $29 million at Ameren and Ameren Missouri, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $17 million, $8 million, and $209 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011.
(h) Represents net losses on uranium derivative contracts at Ameren Missouri. These contracts are a partial hedge of our uranium requirements through December 2013 as of March 31, 2012. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of March 31, 2012, respectively. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively.

Derivative instruments are subject to various credit-related losses in the event of nonperformance by counterparties to the transaction. Exchange-traded contracts are supported by the financial and credit quality of the clearing members of the respective exchanges and have nominal credit risk. In all other transactions, we are exposed to credit risk. Our credit risk management program involves establishing credit limits and collateral requirements for counterparties, using master trading and netting agreements, and reporting daily exposure to senior management.

We believe that entering into master trading and netting agreements mitigates the level of financial loss that could result from default by allowing net settlement of derivative assets and liabilities. We generally enter into the following master trading and netting agreements: (1) International Swaps and Derivatives Association Agreement, a standardized financial natural gas and electric contract; (2) the Master Power Purchase and Sale Agreement, created by the Edison Electric Institute and the National Energy Marketers Association, a standardized contract for the purchase and sale of wholesale power; and (3) the North American Energy Standards Board Inc. agreement, a standardized contract for the purchase and sale of natural gas. These master trading and netting agreements allow the counterparties to net settle sale and purchase transactions. Further, collateral requirements are calculated at a master trading and netting agreement level by counterparty.

Concentrations of Credit Risk

In determining our concentrations of credit risk related to derivative instruments, we review our individual counterparties and categorize each counterparty into one of eight groupings according to the primary business in which each engages. The following table presents the maximum exposure, as of March 31, 2012, and December 31, 2011, if counterparty groups were to completely fail to perform on contracts by grouping. The maximum exposure is based on the gross fair value of financial instruments, including NPNS contracts, which excludes collateral held, and does not consider the legally binding right to net transactions based on master trading and netting agreements.

 

      Affiliates(a)     

Coal

Producers

    

Commodity

Marketing

Companies

    

Electric

Utilities

    

Financial

Companies

    

Municipalities/

Cooperatives

    Oil and Gas
Companies
    

Retail

Companies

     Total  

2012:

                         

AMO

   $ 1       $ -       $ 1       $ 9       $ 35       $ 4      $ -       $ -       $ 50    

AIC

     -         -         2         1         1         -        4         -           

Genco

     -         -         -         -         8         -        2         -         10    

Other(b)

     266         -         2         20         74         461 (c)      2         111         936    

Ameren

   $ 267       $ -       $ 5       $ 30       $ 118       $ 465      $ 8       $ 111       $     1,004    

2011:

                         

AMO

   $ 1       $ 35       $ 1       $ 4       $ 26       $ 4      $ -       $ -       $ 71    

AIC

     -         -         84         -         1         -        -         -         85    

Genco

     -         1         1         2