Q1 2021 Ameren Corp Earnings Call
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Greetings and welcome to Ameren Corporation's first quarter 2021 earnings conference call. At this time all participants are on a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
It is now my pleasure to turn the conference over to your host Andrew Kirk director of Investor and.
Investor Relations for Ameren Corporation. Thank you Mr. Kirk you may begin.
Thank you and good morning on the call with me today are Warner Baxter, Our chairman, President and Chief Executive Officer and me.
Michael made our executive Vice President and Chief Financial Officer, as well as the other members of the Ameren management team joining us remotely.
Warner and Michael will discuss our earnings results and guidance as well as provide a business update then.
When we open we will open the call for questions.
Before we begin let me cover a few administrative details. This call contains time sensitive data that is accurate only as of the date of today's live broadcast and redistribution of this broadcast is prohibited to assist with our call. This morning, we have posted a presentation on the ameren investors dot com homepage that will be referenced by our speakers and.
As noted on page two of this presentation comments made during this conference call may contain statements that are commonly referred to as forward looking statements.
Such statements include those about future expectations beliefs plans and projections strategies targets estimates objective events conditions and financial performance.
We caution you that various factors could cause actual results to differ materially from those anticipated.
For additional information concerning these factors. Please read the forward looking statements sections and the news release, we issued a day.
And the forward looking statements and risk factors sections in our filings with the SEC Lastly, all per share earnings amounts discussed during today's presentation include earnings guidance.
Are presented on a diluted basis, unless otherwise noted here's Warner.
Thanks, Andrew Good morning, everyone and thank you for joining us.
And you your families and colleagues are safe and healthy.
Probably begin my discussion of our first quarter results and related business matters I want to begin with a few comments on COVID-19.
And it's hard to believe that we have now been addressing the challenges associated with this pandemic for over a year now.
And it's the same much has changed.
However, one thing that has not changed and as a relentless focus on delivering safe reliable and cleaner and affordable electric and natural gas service for the millions of people and Missouri, and Illinois are depending on us.
As I said during our year end conference call and February despite.
Despite the significant challenges presented by COVID-19.
I look to the future with optimism.
And part of this was due to the aggressive distribution and vaccines throughout our country.
I'm pleased to say that we are beginning to see the fruits of the incredible efforts by so many on the health care government public and private sectors.
COVID-19 cases are down significantly from earlier in the year and restrictions have lessened.
As a result, we are.
Clearly seeing signs that the economy is improving on our service territory and across the country.
And the optimism was also driven by our coworkers have consistently stepped up and addressed a multitude of challenges and capitalize on opportunities and a strong execution of our strategy that is delivering value to our customers communities and shareholders.
Together these factors contributed to our ability to get off to a strong start in 2021.
Which brings me to a discussion of our first quarter results starting on page four.
Yesterday, we announced first quarter 2021 earnings.
<unk> per share compared to earnings of 59 per share and the first quarter of 2020.
Year over year increase of 32 per share reflected increased infrastructure investments across all of our business segments that will drive significant long term benefits for our customers.
The key drivers and first quarter results per outlined on this slide.
And I'm also pleased to report and we continued to effectively execute our strategic plan and remain on track to deliver within our 2021 earnings guidance range of $3 65 per share to $3.85 per share.
Michael will discuss our first quarter earnings 2021 earnings guidance and up.
And it related items and more detail later.
Moving to page five here, we reiterate our strategic plan.
The first pillar of our strategy stresses investing in and operating and our utilities and a manner consistent with existing regulatory frameworks.
This has driven our multiyear focus on investing and energy infrastructure for the long term benefit of customers.
As a result, and as you can see on the right side of this page during the first three months of this year.
This significant capital and each of our business segments, including our investment and wind generation.
Regarding regulatory matters and late March and.
And our Missouri filed a request for a $299 million increase and annual electric service revenue with the Missouri Public Service Commission.
In addition, Ameren, Missouri filed a request for a $9 million increase and annual natural gas revenue with the PSC.
While Michael will discuss the details of your question a moment I'd like to briefly touch on some of the key benefits, our electric and natural gas customers and Missouri are seen as a results with new investments reflected and these rate requests.
We are now on the third year of Ameren, Missouri's Smart energy plan, which is focused on strengthening and the grid infrastructure upgrades and a more renewable generation and creating programs to stimulate economic growth for communities across the state.
Our grid monetization investments incorporate smart technology.
Moving now to detection and restoration switches, so on smart meters, which allow customers to take advantage of new rate options.
These investments are delivering results through improved reliability and resiliency.
For example on circuits with new Smart technology upgrades, we have seen up to a 40% improvement and the liability.
Of course, we also remain committed to our clean energy transition for our customers and state.
This is demonstrated through our recent acquisitions of two wind generation facilities located in northern Missouri.
700 megawatts.
In addition, our investments are stimulating economic growth for communities across the state.
I am pleased to say that 57% and Ameren, Missouri suppliers, and 2020, where Missouri based and 32% of a source book capital spend with diverse suppliers.
And we're doing all of these things, while keeping our customers' electric rates approximately 20% below the average and on the Midwest states and across the country.
At the same time, we remain very disciplined and managing our costs.
As a result, if approved the new electric rate request, we represent a five 4% total increased over and almost five year period the.
And the yearly average of approximately 1%.
We will remain disciplined and managing our costs, while we build a stronger smarter and cleaner energy system for our customers now and in the future.
Moving on to Ameren, Illinois regulatory matters.
In January we received a constructive rate order from the ICC and resulted in a $76 million annual increase and gas distribution rates.
New rates went into effect in late January.
Illinois Electric business, we made our required annual electric distribution link filing requesting a $64 million base rate increase.
This fall and is only the second requested increase and delivery service rates and six years.
And Michael I'll touch on the details of our filing and a bit later I think it is important to note that for years and our Illinois customers have realized the benefits of our significant investments and energy infrastructure.
So as performance based ratemaking began in 2012.
Liability has improved by 20% and over 1400 jobs have been created.
At the same time electric rates are among the lowest in the country and Midwest and are approximately 3% below 2012 levels.
This performance based framework has been a win win for our customers and the state of Illinois that is why we continue to strongly advocate for performance based regulatory framework and the Illinois legislature.
Which brings me to our discussion on our second pillar of our strategy enhancing regulatory frameworks and advocating for responsible energy and economic policies on page six.
As I discussed on our conference call in February and enhanced version of the Downstate Clean Energy Affordability Act legislation was filed earlier this year.
<unk> the past when applied to both the Ameren, Illinois electric and natural gas distribution businesses.
This legislation would allow ameren, Illinois to make significant investments in solar energy.
Storage and electric and gas infrastructure to continue to enhance safety and reliability as well as and the transportation electrification and.
In order to benefit customers and the economy across central and southern Illinois.
This important piece of legislation, but also required diverse supplier spin reporting for all electric renewable energy providers.
Another key component on the downstate clean energy Affordability Act.
Is that it will allow for a performance based ratemaking for Ameren, Illinois natural gas.
Distribution businesses through 2032.
The proposed performance metrics and ensure investments are aligned with and are contributing to the safety and reliability of the energy grid and natural gas systems 12 States vision for the transition to clean energy.
Further this legislation would modify the allowed return on equity methodology and each business to align with the average returns earned by other gas and electric utilities across the nation.
And as I noted a moment ago. This legislation and builds on Ameren Illinois' efforts to invest and critical energy infrastructure and are transparent and stable regulatory framework that has supported significant investment.
Safety and reliability and created significant new jobs, all while keeping electric rates well below the Midwest and national averages.
This bill would also move the state of Illinois closer to reaching its goal of 100% clean energy by 2015.
All of these benefits and mind, we're focused on working with key stakeholders and get this important legislation passed.
To date, the downstate clean energy Affordability Act as received strong bipartisan support from members of the Senate and house.
Currently House Bill 17, 34 is 49 sponsors and Senate Bill 311 is 'twenty one sponsors.
As I'm sure you know there are also several other energy related bills being considered by the legislature.
We will continue to be actively engaged with key stakeholders throughout the legislative session on this important energy policy matters.
Spring session is currently set to end May 31.
Turning to page seven four and update on FERC regulatory matters.
And April PRC issued a supplemental notice of proposed rulemaking on electric transmission return on equity incentive adder for participation and a regional transmission organization Archie M.
And the supplemental notice the FERC proposal to limit the duration of the 50 basis point ROE incentive adder for companies that joined and RTL to three years.
FERC also proposes to eliminate the adder for utilities, and then part of and <unk> for three years or more which would include Ameren, Illinois and <unk> Si.
Without this incentive adder, Ameren, Illinois, and <unk> side, what are and the current allowed base Roe of 10.0% to 2%.
Core perspective, every 50 basis point change and FERC Roe and.
And <unk> annual earnings per share by approximately <unk> <unk>.
Needless to say, we are disappointed with the direction to FERC has taken and supplemental notice and strongly oppose to remove all the adder.
From our perspective, there are <unk> participation adder is needed to compensate companies pursuing and risk associated with turning over operational control of assets to the RTL.
The proposal is also and consistent with the first stated policy goals and the intent on existing models to encourage our channel participation.
We will continue to advocate for the <unk> incentive adder and other project incentive adders proposed and the March 2020 per.
We will file comments on the supplemental mill per kind of may 26th deadline.
Of course, we are unable to predict the ultimate outcome or timing of this matter.
<unk> is under no timeline to issue a decision.
Moving now to page eight.
Per policy managed are important because transmission investment is going to play a critical role and our country's clean energy transition.
As we have discussed before MISO and other key stakeholders, including Ameren and and carefully assessing the transmission needs and the MISO footprint to ensure the overall reliability and resiliency and the energy grid is maintained on companies execute the clean energy transition plans.
Recently.
Published several reports that outlines some of the preliminary thoughts on MISO transmission needs and the future.
This page summarizes our recent study that outlines the potential roadmap and transmission projects through 2039.
Taking into consideration and rapidly evolving generation mix and includes significant levels of renewable generation based on announced utility integrated resource plans and state mandates and goals for clean energy and carbon emission reduction reductions among other things.
I would also note that MISO and the southwest power pool. We're also working together to develop a similar valuation of transmission needed to support the transition across both regions.
The bottom line is that significant regional and local transmission investments will be needed for the clean energy transition over the next 10 to 20 years.
For example on the MISO future, one scenario, which is the scenario that resulted in an approximate 60% carbon emission reduction below 2005 levels by 2039.
So estimates future transmission investment could amount to an estimated $30 billion and the MISO footprint.
Further future free resulted in on approximately 80% reduction and carbon emission levels below 2005 levels by 2039.
Mitral is estimated future three could result, and an estimated $100 billion.
Transmission investment and the MISO footprint.
To provide some context to this during matches last regional transmission planning process approximately six $5 billion multi value project investments were made over the last 10 years or so.
And in light of the continued focus on the clean energy transition and our country. We are actively working with MISO and other key stakeholders to moving assessment and project approval process, along with an appropriate sense of urgency to ensure we maintain a safe reliable and resilient energy grid.
And do so and and affordable fashion.
Given our past success and executing large regional transmission projects. We believe we are well positioned to plan and execute potential projects and the future for the benefit of our customers and country.
We believe certain projects outlined and future one.
Included in this year's MISO transmission planning process, which is scheduled to be completed and the fourth quarter of 2021.
We look forward to working with MISO and key stakeholders on this important planning process.
Speaking of clean energy transitions, let's move now to page nine four and update on our $1 $1 billion wind generation investment plans to achieve compliance with Missouri's renewable energy standard through the acquisition of 700 megawatts, new wind generation at two sites and Missouri.
And Missouri closed on the acquisition of first wind Energy Center.
On a megawatt project and northeast, Missouri and December.
And January and Missouri acquired and second wind generation project, the 300 megawatt interest and renewable energy center located in northwest, Missouri.
Approximately half the megawatts and the interest and renewable energy center are and service.
We expect the remaining megawatts to be placed and serviced by September 30.
Turning now to page 10, and an update on Ameren Missouri's Callaway Energy Center.
Turning to returned to full power this quarter was 24th refueling and maintenance outage in late December 2020.
Kelly and experience and non nuclear operating issue related to his generator.
And thorough investigation on this matter was conducted and the decision was made to rewind the generator standard and rotor and order to safely and sustainably return on the energy Center to service.
The project is going well and we continue to expect the capital project to cost approximately $65 million.
And I'm also pleased to report that the insurance claims with a capital project and replacement power and been accepted by insurance carrier, which will mitigate the impacts of this outage for our customers.
We expect the Callaway Energy center and to return to service in July.
As we have said previously we do not expect this managed to have a significant impact on Ameren financial results.
Turning to page 11, and we are focused on delivering a sustainable energy future for our customers communities and our country.
This page summarizes our strong sustainability value proposition for environmental social and governance matters and is consistent with our vision and.
The way to a sustainable energy future.
And discuss several elements of our strong and sustainability value proposition with you and the past so on the interest of time and will not go through all of these points again this morning.
Having said that and moving to page 12, you should know that we have already made significant progress and our sustainability efforts in 2021.
Here, we highlight several key achievements to date this year.
Beginning with environmental stewardship and September Ameren announced this transformational plan to achieve net zero carbon emissions by 2050 across all of our operations and Missouri and Illinois.
This plan includes strong and on carbon emission reduction targets, and 50% and 85% below 2005 levels and 2013 and 2014, respectively.
This plant is also at the heart of our updated climate risk report, which is based on the recommendations of the task force climate related financial disclosures, which we issued last week.
I am pleased to report our plant is consistent with the objectives of the Paris agreement and limiting global temperature rise to one five degrees Celsius.
In terms of social impact I am very excited to say that our efforts in this area continue to be recognized by leading organizations.
Last week diversity, Inc announced Ameren is once again named number one on the top utilities lists for diversity and inclusion unless we have been probably a part of since 2009.
Progressing also ranked Ameren second on the top 10 regional companies and as a top company for ESG among all industries.
In addition for the fifth year in a row, we have been certified by a great place to work.
And finally, we were recognized as a bunch of place to work for LG, <unk> Q and human rights campaign.
Moving on governance, our board and management have established covenant structures that enable a focus on ESG manage that drive Ameren strategy mission and vision.
Crude and the addition of ESG metrics and to our executive compensation programs.
In particular, our board of directors refined our executive compensation program by adding workforce and supplier diversity metrics of our short term incentive plan for 2021.
In addition, we recently issued several social impact policies.
Since our call in February we have also issued several reports, reflecting our sustainability efforts and advances.
Just last week, we posted our 2021 sustainability report, which expands on many ESG and sustainability topics.
2020, ESG and sustainability template.
And for the first time, we published information using the sustainability accounting standards Board reporting framework and mapped our business activities to the United Nations sustainable development goals.
I encourage you to take some time to read more about our strong sustainability and value proposition.
You can find all of our ESG related reports and Ameren investors Dot com.
Turning now to page 13.
Environmental stewardship, social impact and governance on three pillars of our strong sustainability value proposition.
Our final pillar and sustainable growth.
Looking ahead, we have a strong sustainable growth proposition, which will be driven by our robust pipeline of investment opportunities and over $40 billion over the next decade that will deliver significant value to all of our stakeholders and making our energy grid stronger smarter and cleaner.
Importantly, these investment opportunities exclude any new regionally beneficial transmission projects that I described earlier on.
All of which would increase the reliability and resiliency of the energy grid as well as enable additional renewable generation projects.
In addition, we expect to see greater focus from a policy perspective and infrastructure investments to support the electrification of the transportation sector.
Our outlook through 2030 does not include significant infrastructure investments for electrification. It this time either.
Of course on investment opportunities not only create a stronger and cleaner integrin and to meet our customers' needs and exceed their expectations, but they will also create thousands of jobs for our local economies.
Maintaining constructive energy policies that support robust investment and energy infrastructure, and a transition to a cleaner future and it.
Safe reliable and affordable fashion will be critical to meeting our country's future energy needs and delivering on our customers' expectations.
Moving to page 14 to sum up our value proposition, we remain firmly convinced that the execution of our strategy in 2021, and beyond and deliver superior value to our customers shareholders and the environment.
In February we issued our five year growth plan, which included our expectation.
On a 6% to 8% compound annual earnings growth rate from 2021 through 2025.
This earnings growth is primarily driven by strong rate base growth and <unk>.
Compares very favorably with our regulated utility peers.
Importantly, our five year earnings and rate base growth and projections do not include 500 megawatts of incremental renewable investment opportunities outlined and Ameren Missouri's integrated resource plan.
Our team continues to assess several renewable generation proposals from developers.
We expect to file this year with the Missouri PSC for certificates of convenience and necessity for a portion of these planned renewable investments.
And I'm confident and our ability to execute our investment plans and strategy team to get it done.
That fact, coupled with our sustained past execution of our strategy on many fronts.
Position us well for future success.
Further our shares continue to offer investors.
Simply put we.
Outlook results in a very attractive.
Again, thank you.
You all for joining us today, and I will now turn the call over to Michael.
Thanks, Warner and good morning, everyone, turning now to page 16 of our free.
And one per share compared to <unk>.
Quarter.
Earnings and Ameren, Missouri.
<unk> per share due to several favorable factors.
The earnings comparison reflected new electric service rates effective April one 2020, which increased earnings by <unk> 10 per share and.
In addition earnings benefited from lower operations, and maintenance expenses, which increased earnings and <unk> per.
<unk> per share.
This was primarily driven by the absence on unfavorable market returns that occurred in 2020 on the cash surrender value of our company owned life insurance as well as disciplined cost management.
Earnings also benefited by approximately <unk> <unk> per share from higher electric retail sales driven by near normal winter temperatures compared to milder than normal winter temperatures and the year ago period.
We've included on this page the year over year weather normalized sales variances for the quarter that showed total sales to be comparable with Q1, and 2020, which was largely unaffected by COVID-19.
We continue to see improvements in sales and schools and businesses reopen and begin to increase their levels and operation.
Earnings were positively impacted by the timing of income tax expense, which we do not expect to impact full year results as well as and the absence of charitable donations that were made pursuant to the Missouri rate review settlement in March 2020.
And finally these favorable factors were partially offset by the amortization of deferred expenses related to the fall 2020, and Callaway Energy Center.
Scheduled refueling and maintenance outage.
Moving to other segments.
Earnings for Ameren, Illinois, natural gas were up eight reflecting higher delivery service rates that were effective January 2005 2021.
Incorporating a change and rate design as well as the increased infrastructure investments and a lower allowed Roe.
The first quarter 2021, and benefit from the change and rate design is not expected to impact full year results.
Ameren, Illinois electric distribution earnings increased <unk> <unk> per share, which reflected increased infrastructure investments and a higher allowed ROE and our performance based ratemaking of approximately eight 5% compared to seven 4% to 5%.
And for the year ago quarter.
Ameren transmission earnings were comparable year over year, which reflected increased infrastructure investment that were offset by unfavorable <unk> and impact of a March 2021 FERC order.
This order related to and Intervenor challenge regarding the historical recoveries and material and supplies inventories and rates and will have no impact on the current return and rate calculation prospectively.
And finally, Ameren parent and other results were down <unk> <unk> per share compared to the first quarter of 2020 due to increased interest expense, resulting from higher long term debt outstanding offset by the timing and income tax expense, which is not expected to impact full year results.
Finally, 2021 earnings per share reflected higher weighted average shares outstanding.
Before moving on I'll touch on sales trends for Ameren, Illinois electric distribution and a quarter.
Weather normalized kilowatt hour sales to Illinois residential customers increased one 5%.
And weather normalized kilowatt hour sales to Illinois, commercial and industrial customers decreased one, 5% and two 5% respectively.
Recall that changes on electric sales and Illinois, and no matter the cause do not affect our earnings since we have full revenue decoupling.
Turning to page 17, I would now like to briefly touch on key drivers impacting our 2021 earnings guidance.
And we're off to a strong start in 2021 as Warner stated, we continue to expect 2021 diluted earnings to be and the range of $3 65.
And $3 85 per share.
Select earnings considerations for the balance of year and listed on this page and our supplemental and to the key drivers and assumptions discussed and on our earnings call on February.
I will note that our second quarter earnings comparison will be negatively impacted due to a seasonal rate design change effective for 2021 and Ameren, Missouri as part of the March 2020 electric rate order.
This order and cultural winter rates and May and summer rates and September rather than the blended rates used in both months and 2020.
The second quarter results were also be negatively impacted by the absence of the impact of the 2020 FERC order approving the MISO allowed base ROE at Ameren transmission.
Together these two and are expected to reduce second quarter earnings by approximately <unk> 25 year over year I encourage you to take this into consideration as you did on your expectations for our second quarter earnings results.
Turning now to page 18, and here, we outline in more detail on our recently filed and Missouri Electric rate review that Warner mentioned earlier.
This reflects many benefits, including major upgrades to the electric system reliability and resiliency for customers as well as investments and support the transition to a cleaner energy for the benefit of customers and local communities.
Now, let me take a moment to go through the details of those filings.
The request includes a nine 9% return on equity a 51, 9% equity ratio and at September 32021 estimated rate base of $10 billion.
This includes a test year ended December 31, 2020, with certain pro forma adjustments through September 32021.
The request includes a continuation of the existing SEC and other regulatory mechanisms along with a request to recover certain costs associated with the Meramec Energy Center, which is expected to retire and 2022 over a five year period from the data and new rates become effective.
As outlined on this page the key drivers of our $299 million annual rate increase include and.
Increased infrastructure investments made under Missouri Smart energy plan.
Impact and the transition to a cleaner generation portfolio.
Decrease weather normalized customer sales volumes, and a higher pension and OPEC and tax amortization and expenses, partially offset by lower operation and maintenance expenses.
Moving to page 19 for an update on other and Missouri regulatory matters.
And March 2021, and we also filed on natural gas rate review the.
And the details for the $9 million annual revenue increase request are outlined on this page.
We expect the Missouri, PSC decision and both our electric and natural gas rate reviews by February 2022, with new rates expected to be affected by March.
Further last October we filed a request with the Missouri, PSC to track and defer and a regulatory asset certain COVID-19 related costs incurred net of any COVID-19 related cost savings.
And March 2021, and the Missouri PSC approved this request $9 million of net costs were incurred through March 31 2021.
We recognized $5 million and the first quarter of this year and expect the remaining portion relating to late fees and we recognized realized and rates beginning in early 2022.
The timing and recover these costs will be determined as part of our pending electric and gas rate reviews.
Moving now to page 24, and update on Ameren, Illinois regulatory matters.
Last month, we made our required annual electric distribution performance based rate update filing requesting a $64 million base rate increase.
And under Illinois performance based Ratemaking, Ameren, Illinois is required to make annual rate updates to systematically adjust cash flows overtime for changes and cost of service and it drove any prior period over or under recovery of such costs.
Since this constructive framework began ameren, Illinois made prudent investments to strengthen the grid and reduced outages and you and continues to do so.
Major investments, including the request or the installation of outage avoidance and detection technology integration of storm hardening equipment adoption of clean energy technologies, and the implementation and new energy efficiency measures, including mobile and enhanced communications and assessment capabilities for electric field workers.
The ICC will review of our request and the months ahead with a decision unexpected and December of this year and new rates effective in January and next year.
Turning to page 21 for a financing and liquidity update.
We continue to feel very good about our liquidity and financial position.
And February Ameren Corporation issued $450 million of 175% senior unsecured notes due in 2028.
The proceeds were used for general corporate purposes, including to repay short term debt.
We also expect both and Missouri, and Ameren, Illinois to issue long term debt and 2021.
In addition, as we mentioned on the call in February during the during the quarter. We physically settled the remaining shares under our forward equity sales agreement to generate approximately 150 $15 million.
And in order for us to maintain our credit ratings and a strong balance sheet, while we fund our robust infrastructure plan, we expect to issue of approximately $150 million of additional common equity during the balance of 2021, which is consistent with the guidance we provided in February.
To that end and May we expect to establish and at the market or ATM equity program to support our equity needs through 2023.
These feature equity issuance will enable us to maintain and consolidated capital structure, consisting of approximately 45% equity over time.
The incremental natural gas and power purchases incurred due to the extreme cold and mid February this year did not have a significant impact on on liquidity or ability to fund our future operations and investment.
And available liquidity as of April 30 was approximately $1 3 billion balance, which includes $2 $3 billion on a combined credit facility capacity net of approximately $1 billion of commercial paper borrowings at the end of the month.
Finally, turning to page 22, and we're well positioned to continue executing on our plan we're on.
Off to a solid start and we expect to deliver strong earnings growth and 2021 as we continue to successfully execute our strategy.
As we look to the longer term, we continue to expect strong earnings per share growth driven by robust rate base growth and disciplined cost management.
Further we believe this growth will compare favorably with the growth of our regulated utility peers and Ameren shares continue to offer investors an attractive dividend in total we have an attractive total shareholder return story that compares very favorably to our peers that concludes our prepared remarks, we now invite your questions.
Thank you at this time, we'll be conducting a question and answer session.
I'd like to ask a question. Please press star one on your telephone keypad and.
Confirmation tone will indicate your line is and the question queue. You May Press Star two if you like to remove your question from the queue.
For participants using speaker equipment.
And may be necessary to pick up your handset before pressing the star keys one.
One moment, please while we poll for questions.
Our first question comes from Jeremy Tonet with Jpmorgan. Please proceed with your question.
Hi, good morning.
Jeremy how are you doing.
Good good thank you.
Thanks for all the color today very helpful.
Maybe just starting off with regards to the Illinois legislative session here.
Do you have any sense for the relative priority of utility issues within the overall clean energy legislation discussions and do you see any potential for kind of a grand bargain here to be reached on energy.
And thanks Jeremy.
Couple of things there one I do think clean energy legislation is a focus for the legislature I think just by the fact that you see so many bills that are being discussed out there and rightfully so.
The clean energy transition is obviously very important not just for Illinois, but across the country.
And certainly as I said on my prepared remarks, there is no doubt that there are several bills that are being considered whether theres a grand bargain. If you will or whether these bills are put together look it's too early to say the only thing I can say is this.
Is that is that we are at the table with key stakeholders trying to find the solution and to advocate for the downstate clean energy Affordability Act because as you heard me say many times at act that those provisions are performance based ratemaking approach.
Really delivered significant benefits for our customers and the entire state of Illinois, So we have and until the end of the month to try and get something across the finish line, Richard Mark and his team and working tirelessly at that and I will say their tireless work and the work that we've been doing for many years has already elicited strong bipartisan support so we're hopeful to get the proper provisions and.
And a final piece of legislation.
Got it that's very helpful. Thanks sure maybe.
Pivoting over to transmission it seems like an exciting time for transmission, if you will and.
And do you have any sense of the magnitude of specific projects that could be identified by MISO before yearend or and the not too distant future and.
What do you see separately as the potential for large scale.
E D C transmission opportunities outside or beyond the MISO process.
And then finally, I guess with transmission and trying to scale the opportunity set here I was wondering if you could help us think through roughly how much capex did ameren deploy over the years, where MISO brought renewable penetration from very little to the higher levels that it is today and is there any rules and.
Measures, we can think of like $10 billion to accommodate 10% just trying to scale and the opportunity that cash.
Jeremy and lots of impact and let me see if I'll try to respond to those things and Michael and Andrew will help me if I Havent had a point, but certainly come back on let me answer your first question and your last question, perhaps first.
As I said in my prepared remarks.
And there was about $6 $5 billion of regional transmission projects that really were and deployed across the MISO footprint over the last decade. If you will we did about $2 billion of that now that doesn't mean is different time different place.
Obviously, we did 25, 30% almost of those and it's because of our location and the MISO footprint and so.
Number one.
To what you said at the outset I agree with it is a very exciting time to be and the transmission business and and especially one and the MISO footprint when you're sitting in the center of the country by what MISO does with its transmission is integral to the clean energy trans position for our country.
And so what youre seeing today or is obviously or is there a preliminary list of projects.
And there were informed certainly by stakeholder conversations as well as integrated resource plans and state energy policies among many other things.
Hard to say just exactly what will ultimately come out of lets just call. The transmission plan that will be filed later this year.
The way, we look at it and we look at the future one which we showed on that slide we think that there are a lot of projects and <unk>.
Contained and that that we think are really kind of no regrets types of projects is premature to put a number on it and which projects. We go because what MISO does now is not they've put out this road map, they're basically looking for input from stakeholders and so you can expect throughout 2021 stakeholders providing input into that.
Roadmap and with that input MISO will ultimately prepare their long range plan and tap is what they call it.
And we expect that to be filed and the fourth quarter Ultra.
Ultimately and process from there Jeremy has been there is some more input but ultimately the intent is put before the MISO board of directors for for vote and hopefully approval by the end of the year.
So it's not too far away, but that future. One is I would say the first step, but then as you look beyond that as we said and future three obviously those investments continue to grow over time and as we said they range from $30 billion to $100 billion. Those are MISO is preliminary estimates that will continue to be refined.
So hopefully that gives you some of the sense I'm not sure if I missed if I've addressed all of your questions and there, but I think I got them all there.
I think that's very helpful. Maybe just a follow up on anything on that HV DC front.
Might have a bit more leverage.
It's a little premature to say that these are things we've looked at obviously there is some opportunities that we're looking and even in connection with our Missouri integrated resource plan. So a little early to be making those kind of judgment calls, but stay tuned.
Got it and if I could just do one quick last one as far as what's coming out of the Biden and infrastructure plan early stages here, but is there anything that youre focused on D C invest and upside or benefits from lower rate payer costs or anything else that could really kind of get things moving with the transmission and kind of permitting and planning process here.
Sure well I'll say one thing that we are encouraged by in terms of what the buyer and administration as tonnage number one.
And very focused on providing significant funding for new clean energy technologies, which we think is going to be so important for our industry for our country to get to a net zero carbon and future by 2050 is which is certainly our goal.
And maybe the other thing that you've seen and human Senator Wyden put out a bill that really have some I think some very good incentives.
To invest and clean energy technologies and those.
And it has ranged from from tax credits.
And they range from tax normalization policies to give opt out provisions include cash credits also for transmission and so.
And we look at the provisions you have done and I'm not I won't go through all the details here net.
Bill will really have a direct impact on the overall cost to our customers and so we're obviously very encouraged and enthused about that so a lot going on and Washington D. C. We are at the table and working with stakeholders and we are hopeful that we will continue to see progress and and incentives for clean energy technologies here and.
The next several months.
Great. That's all Super helpful. I'll stop there. Thank you alright, thanks, Jeremy and good day.
You too.
Our next question is from Shar <unk> with Guggenheim Partners. Please proceed with your question.
Morning, Shar, how are you doing.
Good morning, Warner How're you doing.
Excellent. So just a quick follow up on Illinois.
If something doesn't pass.
And the next couple of weeks Warner do you sort of and tend to push over the summer what are your thoughts on getting something done during the veto session and there's obviously a lot of competing interest. There's a lot of bills you highlighted that some of them are outside of energy is the new legislators and politician and so there is also.
A question Mark with many.
And <unk> Energy's, even a priority right now so just trying to get a bit of a sense if something doesn't get done in two weeks, how do we sort of price this and the veto session.
Sure.
One of the things you're talking about the veto session, and Illinois, and Illinois is a bit unique perhaps compared to other states whereby the veto session isn't really just there to address bills that have been and Vito, but also can address bills that have been presented during the regular session. So so to be clear I will say this first.
We're very focused on trying to get something across the finish line for the benefit of our customers and the state of Illinois on energy policy here by May 31 price. Youre question is you know what what if it doesn't happen and here in the next several weeks with and it could be strongly advocate for the downstate clean energy Affordability Act and and the reason why we will continue to strongly.
Advocate for it is because it has strong bipartisan support we are house bills and Senate bills with strong bipartisan support as well as supported from North and the south part of the state and.
And so we're going to continue to push for that because we are and we strongly believe is the best policy going forward for the state of Illinois and isn't just because we believe it is because we can deliver results for almost a decade now and as such we're going to continue to advocate for so I do think people say, whether its a priority I will tell you, though a conversation going on and the state of Illinois around energy.
So I know they have other priorities that they have the balance but I do believe energy policy is one of them.
Got it perfect. That's helpful wondering just lastly, shifting maybe Sal.
Obviously, it's not a major priority for you guys are essential to occur on the growth plan that obviously youre highlighting today, but any thoughts on securitization and legislation as it makes its way through the chambers and <unk>.
Any sort of expectations, you can provide us and to get to the homestretch.
You bet we are.
We are and the homestretch and the state of Missouri at the end of this week and Marty Lyons and his team and they've been working hard on that and we provided some perspective, Marty EBIT and the middle of that and there's going to turn it over to you and maybe give us the latest update if you don't mind share.
Sure Warner.
Absolutely right.
Iridization isn't something that we see is required to be able to carry out our integrated resource plan, but we do think it would be a good tool to have and the toolbox of the commission, especially as crafted and Missouri. So you're right there have been aversion and scaling through the house and the Senate.
And they're very very similar at this point last night actually the Senate passed the house securitization, Bill, which is H B 734.
And.
And they did make some slight modifications to that so now that goes back to the house to the.
Fiscal review Committee, and we'll see whether that.
It can be then voted on in the house, we may see actually some action is as early as today, but.
But in any event what has to happen over the remainder of the week is that the language needs to get conformed between the two the Senate Bill and House Bill like I said, they're very very similar at this point and ultimately needs to be passed by the end of the week as Warner indicated the legislative session ends on May 14th This Friday.
And the Friday afternoon, and so in any event and we're very close can't predict whether it will actually get done, but it's really positioned pretty well for success.
Keep our fingers crossed for the remainder of this week.
And then just Marty.
Assuming you get securitization. Obviously this is the message and so you don't need it.
But curious if you get securitization is there and acceleration of the plan under the IRB or any opportunities to potentially accelerate per plant.
No Theres really no change to the integrated resource plan you know when we filed that last September we filed and believing that it was.
And the most affordable.
Process and most reliable process for transitioning our fleet overtime and so we stand by the integrated resource plan that we filed.
Of course, we have been getting comments on that we expect that ultimately the commission will.
Rule on whether that process that we went through was appropriate and we certainly believe it was and it.
And it would only be through consideration of changes that might occur over time that would cause us to modify the IRB and we still believe the preferred plan that we filed is the appropriate path and now.
Securitization passes there would not be any immediate impact on the integrated resource plan, but like.
And I said conditions changed through times, and we do believe having securitization in the toolkit and the commission would be a good thing to have.
Terrific. Thank you guys I'll pass it to someone else congrats and thanks, John I appreciate it.
Our next question comes from Julien Dumoulin Smith with Bank of America. Please proceed with your question.
Hey, good morning team.
Take the time quite well. Thank you you guys have a lot on your plate and congrats on the continued success and Derisking.
Net.
And I would say I mean, Warner you made some interesting comments on transmission earlier I would ask.
Obviously future one two and three and a big numbers long timeline.
And you've already tried the pieces and parts on how would you characterize the current and tap.
And as best you see it coming together against some of those bigger projects.
How much should we be expecting here right. If you wanted to sort of expect.
Vacations and considering that obviously, you think they're going to use them.
And Julien so.
A couple of comments there.
It is really premature to really say exactly which of those projects will ultimately show up in the <unk> and <unk>.
So did a fine job of putting together this long range plan, which gives us collectively and opportunity to weigh in on it.
And due to try and keep our finger on the pulse of all the things that are going on around the country not just in the states, but around the country. So on.
It just is too premature, but I will say this that we.
And as wells MISO and other stakeholders and Theres a sense of urgency to address this these managed because we see the clean energy transition come in and we know that transmission is critical to its success and so consequently, there is a there's a.
Significant amount of interest a significant amount of work being done and so we're not too far away from really hearing what that's going to be the fourth quarter.
For all practical purposes right around the corner.
And as you know some of these projects as you said you know they take time to plan and get approval and ultimately to execute so again as we see it as and I've said. This in the past was really just started and transmission opportunities and should they come and performance and tap or otherwise.
And there are probably if there if there are any will come towards the back end of a five year current capital expenditure plan, but especially on the second half of this decade, you see some of these transmission projects really come to fruition and.
And before we are well positioned well positioned to execute on many of those projects. So we're looking forward to it.
Got it excellent sorry to follow up on logistics and very narrowly here on how do you feel the pinch of moving into June and demand of this some latitude and Mickey there and then also more importantly.
And the contract of a grand bargain and would be potentially carving out this issue and the question on the utility front and separately from an even bigger is that feasible in your mind or does it need to be done.
Bigger deal.
Julia and Michael I'm not sure. We got your whole question, you're talking about moving from outside of the May 31, and and the session ended June so if on a special session.
Yes, yes, exactly that was.
Oh, sorry.
Total faint look like everything else.
We serve and can't predict whether there would be a special session of sorts and.
We said before we're focused on on.
And that should that.
The next steps are and and we talked a little bit earlier about the veto session. So premature to speculate whether a special session would be call.
Fair enough, but you don't need to necessarily get this grant grant deal to get this.
And instead address.
No I'm sorry, thank you at the end of the day, so just to be clear.
And just expires in 2022 right. So this is this is not a piece of legislation has to be done this year. It expires in 2022, and let's not forget that the overall regulatory framework that we have which we which would go to <unk>.
Some things and there that are that are solid as a forward test year.
Decoupling and bad debt writers and all these other things and return on equity that will be done and the normal course of our return on equity setting and by the Illinois Commerce Commission and so so.
Bottom line is as.
Strongly believe that the downstate clean energy Affordability Act and all the provisions in there.
Clearly.
And the best interest of our customers and the state of Illinois were going to continue to advocate for that but it doesn't have to be done here and the next week.
And the veto session, but having said that we think having that certainty and sustainability is the right way to go and Thats why were pushing price.
Excellent. Thank you guys and.
Thanks Julie.
Our next question comes on Duress Chopra with Evercore ISI. Please proceed with your question.
Hey, good morning, and great quarter. Thank you for taking my question.
Yes.
Thank you.
Michael quick clarification on the equity income.
And before you said 300, you guys said 300 million year, two and 2025.
The ADM goes to 2023.
It's still $300 million per year, a good sort of.
Number to model two and 25.
Yes, yes, and I. Appreciate the question you had so if you go back to February and yes.
On the same metrics that we gave we're doing $150 million year, and 2021, and then $300 million in 2022 through 2025 on.
And all of those assumptions still stand today and the <unk>.
And there's going to allow us to execute against that.
On it so thank you and then maybe just.
And what to get into a limit on detail on the on the Missouri securitization.
And just clearly youre seeing and it doesn't impact your IRB.
Good sort of your assets would be at risk I'm thinking about.
And early retirement of coal plants.
Capacity factors of your generation assets.
And whether sort of the legislation now sort of.
Accelerates the recovery of coal plants and and.
And impacts of rate base growth profile, just any color there would be great. Thank you Laura.
And thank you Kash and Marty.
Marty way and I'm on book.
As we've said before we're very fortunate and we have.
A strong base low coal fleet that runs and runs a lot and it.
It's because of some of the actions and things that we've done really over the past several years decades frankly.
And so and so we laid out our integrated resource plan and you see that systematically we're retiring our coal fired energy centers overtime.
And it's because number one we think it is and the best interest and our customers from a reliability and affordability perspective, and and so as Marty said.
We don't see that changing but conditions could change.
Whether it's at the state level or federal level and so.
Securitization is not going to drive us to do anything different.
Other and absent changes that may happen.
As I said from a policy perspective or otherwise.
But it is a good tool to have on our toolbox showed those changes occur. So we you know our coal plants are valuable assets to us today over time, we will retire them.
But we don't see any near term changes to how we plan on operating or certainly risks to those assets commodity would you have anything to add to that.
Well, firstly I firmly agree with everything that you conveyed and when you look at the integrated resource plan that we filed we have got four coal fired energy centers as Warner said.
We get very efficient coal plants, they operate very well, but with that said and our integrated resource plan. We did lay out that we're retiring our meramec facility here in 2022, we expect that that will be fully recovered at that point in time.
We did propose the accelerated.
Closure of both the <unk> and the Rush Island plants.
<unk> by about five years and Rush island by about six years, So Sue and Canada.
Close in 2020, a rush island in.
In 2039, and then <unk>, which is our largest plant and most efficient plant would close in two stages and 2036 and 2042. So you know again, we've accelerated.
And expected closure of two of our plants and those acceleration and how the recovery of those are actually reflected and the rate review filing that we made here in March. So we're looking to accelerate the recovery of those plants and then of course the rates are also positively impacted by the expectation.
Merrimack closely and so those things are reflected there that's historically the way we've handled things in Missouri and again as Warner said, we filed the ERP, we made a host of assumptions.
Conditions can change and vary from the assumptions that we made through time for a variety of reasons and as I said before.
Securitizations and not going to change the integrated resource plan preferred plan that we have today.
But if conditions change versus the assumptions, we've made through time again securitization will be a good tool to have on the toolbox.
Understood I appreciate it.
The color it sounds like it's more of an opportunity and then a risk for you guys. Thanks for taking my question.
Got it thank you.
Our next question comes.
Stanley. Please proceed with your question.
Good morning, Stephen how are you doing doing great and doing great. Thanks, So much for your time.
Lots been covered and Q&A I guess it was I was stepping back and thinking about kind of key areas of growth upside for you all over I mean, you have a very impressive growth plan as it is but I'm, just thinking especially that incremental renewables.
Elements of your ERP, but just other dynamics and just wanted to step way back and think about those kind of key categories.
Additional growth upside and wondering if you could just comment on that you bet. You bet I think there are a couple of them one we've probably more than a couple of frankly there are several.
When we talk quite a bit about already today and thats transmission.
So as you know we presents.
Investment opportunities through 2030.
<unk> 40 billion plus.
And on investment opportunities and one of the reasons, we put that plus there is because transmission. So that $40 billion number that we have on investment opportunities does not does not include any of the regional transmission projects that we spend quite a bit of time talking about already so steven that would be certainly one meaningful upside to our to our <unk>.
<unk>.
Profile that we have prospectively.
And second one and another one that we've talked about and again I mentioned this a little bit earlier.
And as electrification and the infrastructure that has to go for the greater electrification, especially on the transportation sector.
And our country.
Our long term plan has really no meaningful investments associated with the electrification of the transportation sector and as you listen to the policymakers discuss the needs for a cleaner energy Trans department of motor and our country today and so you've heard.
Certainly the automakers and others.
June and lean further and where we're going to lean further into and we have been.
That too is a significant opportunity and I'll tell you just to be clear we're not.
And John with all of our investments and grid modernization and we knew.
Need to continue to make investments and the grid and both Missouri, and Illinois to ensure that the grid continues to be a reliable and resilient.
So as we look at those investment opportunities, which could also include.
Renewable greater levels of renewable energy overtime, we have quite a bit and they're both times as we've said could change if policies change those two could be investment opportunities that and put a specific number on those but they're sizable sizable.
Sizable and so we see our robust infrastructure plan that we have already today continuing for some time.
Really helpful. And then maybe just one additional question on transmission.
A lot of questions already on on this but thinking about sort of FERC FERC is our objective to eliminate barriers to to executing on transmission and how do you see that factoring into the existing RTL processes is that more of a just a long term objective of FERC or could that yield particular impacts too to the outlook for transmission.
And growth.
And thanks, Steve and yet.
I would say, it's a bit too early to say to what extent FERC will.
We'll get more engaged and yard shield processes, which have obviously been very well defined over the years and whether FERC low engaged and that it's just premature to say, but I will say is that certainly the clean energy transition and the importance on policies to support that claim and she transition are important issues for per we certainly are.
Transmission owners, but also for FERC, and I think chairman and Glenn and the commission as they recognize that and I think youre going to continue to see greater levels of attention and focus and.
Work on things that they can do to accelerate safe reliable and affordable transmission build around the country.
Very good that's all I had thanks, so much thanks, Steve and take care.
Our next question comes from Paul Patterson with <unk> Associates. Please proceed with your anyway good morning.
And I'm one.
So quick.
Technical question for Marty.
And the Missouri securitization Bill.
It sounded to me that you and I.
And following it.
House version, that's been and net excuse me that the house Bill has been amended and the Senate and the House and committee.
If it passes out of balance without any changes does it go straight to the governor or does it was a little confusing to me or does it have to be we would have to be some changes does that have to go back to the Senate.
Assuming there is no change is made and the house.
Yes, if there are no changes made in house and then it will go to the governor so.
They make the Senate voted it out last night and if the house makes no changes and boats. It out then we'll be done and after the governor.
Okay.
And then.
With respect to the Illinois legislation and I know this doesn't pertain specifically to you guys, but sort of an element I think potentially if the PJM auction.
Do you think thats going to play any role and.
And the timing here because as you know.
And that's coming up a little bit sooner than the.
Beginning a little sooner than the at the end of the month.
And I think Congress is.
This is juan.
And I simply can't predict that.
And obviously youre right its not something thats directly correlated to us, but obviously, we keep an eye on all things that could have an impact but that so it wouldn't be it wouldn't be appropriate for me to comment on that okay. I'll leave that one alone.
The Crystal ball question, so just moving on to the.
Very quickly on the on the MISO issue and the ROE and.
And so you're being part of and RTL.
This.
FERC takes action.
That could be that you perceive to be negative with respect to the.
And the transmission Roe.
And being part of and <unk> is there any.
Is there anything we should think as being potentially an outcome from that.
Guys might take that.
Or how should we think I mean, I just noticed you guys, bringing that up and the in the slide presentation and I just wanted to.
<unk>.
And was wondering are you guys is there any how should we think about it that if they do reverses.
And we versus 50 basis points or do other acts and that might lower the Ireland.
Sure Paul.
And the reason we bring it up certainly and are and are.
Our prepared remarks, just because we.
We believe that the.
Potential direction that FERC is taking is inconsistent with FERC policy.
And consistent with the intention of the law and and we think right now is the time, where FERC should be doing everything it can to incent companies to join and remain and <unk> and so we bring that up simply because of that and certainly we think that 50 basis points adder is absolutely positively appropriate for us to have because we've given them control of our system.
So I think thats and the first and so we're not trying to be any more specific than that and.
We are going to work very hard here between now and the dam and the month and put together our comments like others and the industry to two stayed on our position very clearly to FERC.
Okay.
Thanks, So much have a great one for you bet.
Yes.
Our next question comes from into Kim with Goldman Sachs. Please proceed with your question.
Hello, and Sue how are you.
Good Hey, Warner.
One question for me and.
Just wanted your update on the latest on the clean Air Litigation regarding your Rush Island plant and I think commodity as well. Thank you are expecting a and <unk>.
A ruling from the Appeals court on Pankratz here.
On your expectation and I guess, depending on what comes out of that if there is day. If it goes against you on the appeal side, how do you think about the next step as it relates to that.
Timing on.
Yes potential capex or just the fate of these claims.
And Im sure a couple of things just to refresh everyone's memory. So our argument was held in December of last year, and so that case and new source review of cases simply before the appellate court now.
And you said, we expected and decision this year, but I will tell you that the appellate court has no timeline in terms of when they must issue a decision, but we would think and the normal course, we would expect to see something this year. So we simply don't know.
Look if the question is whether we can get and unfavorable ruling on I'll start with this we believe we presented a very strong cash to the courts on this matter and December.
And should they ultimately ruled against US, we'll step back and assess what actions we can take at that time and seward's. It would be really premature to speculate on what actions, we would take and what impact it might have on our overall plan. So.
If and when we come to that we'll address that in due course, so stay tuned is probably the best message here.
Got it.
But I guess in terms of and in relation to the.
Current securitization bill.
Do you think that could provide one avenue.
Helping you on map it.
The biggest matter.
Certainly as Marty stated before and securitization as a tool for several things whether it would be something that would apply here, we'll just have to wait and see.
But first things first we're focused on winning in that case before the appellate court and then continuing to execute the plan that we laid out before the Missouri Public Service Commission and our integrated resource plan.
Understood. Thank you so much.
And so.
Sure.
We have reached the end of the question and answer session. At this time I would like to turn the call back over to Andrew Kirk for closing comments.
Thank you for participating in this call a replay of this call will be available for one year on our website. If you have any questions. You may call. The contacts listed on our earnings release financial analyst inquiries should be directed to me Andrew Kirk Media should call Tony per Ano again, Thank you for your interest and Ameren and have a great day.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
Yes.
Yeah.