Dive Brief:
- Ameren reported $97 million in net income from continuing operations for Q1 2014, up from $54 million during the same period last year. The good performance was the result of cold weather-driven sales growth, lower effective interest rates and increased transmission revenue.
- On the earnings call, Ameren said it will not reduce rates in its Missouri territory, and in fact on July 15 plans to file a rate increase with the Missouri Public Utilities Commission. The increase is to cover operational costs, higher net fuel costs, infrastructure investments, and a rebate designed to encourage customers to install rooftop solar.
- In Illinois, the company is filing an update to raise rates by $206 million, reflecting 2013's actual costs and planned investments for 2014. The new rates will be reflected in 2015's bills, which will still be lower than most customers' 2011 rates.
- Looking ahead, the company has begun construction on a $1.1 billion, MISO-approved Illinois Rivers Transmission Project, and expects to begin work on the also MISO-approved Spoon River Project to bolster transmission in Illinois. Taken together, the company plans to invest about $5 billion over the next five years in Illinois, and $3.4 billion in Missouri.
Dive Insight:
Ameren's investment plans are ambitious, but not as ambitious as the company wanted them to be. The Missouri General Assembly is yet to vote on changes to the regulatory process that would reduce the lag between project announcements and approvals, and support more investment in infrastructure for the state. The decision is unlikely to be made this year, said Ameren CEO Warner Baxter, as the legislative session ends next week and other issues took priority.
"One of the things that we have been and will continue to do is continue to educate key stakeholders, not just legislators, but others around the state about the importance of solid energy policy in the state of Missouri about the importance of infrastructure investment, and not only how it's going to lead our customers' energy needs and expectations in the future, but also how we're convinced, it can drive economic development and growth," said Baxter. If the legislation had gone through, Baxter told investors, it would have added $50-100 million of capital investment into Missouri's transmission and distribution system.
"We will continue to be advocating for responsible energy policies," Baxter said. "We will take a very active role within the industry, within the state and federally trying to make sure that we have responsible energy policies that factoring the impacts on customers, the economy, and certainly environment."
Meanwhile, Ameren has made significant headway in Illinois. It has installed larger electricity poles to better weather winter storms, installed smart sensors and switches to reduce demand and prevent outages, as well as planned new overhead and underground lines. The company's commitment to a strong and reliable grid reflects the increasing volatility of weather and variability of new energy resources. The utility is filing an Integrated Resource Plan for Missouri later this year, which should shed light on Ameren's resource strategy for the future.