Q2 2023 Ameren Corporation Earnings Call
Greetings and welcome to Amarin Corporation's second quarter 2023 earnings call. At this time all participants are in a listen only mode. A brief 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 as a reminder, this conference is being recorded it is now my pleasure to introduce your host Andrew Kirk Director of Investor Relations for Ameren Corporation. Thank you Mr. Kirk you may begin.
On the call with me today are Marty Lyons, our President and Chief Executive Officer, and Michael <unk>, Our senior Executive Vice President and Chief Financial Officer, as well as the other members of the Ameren management team.
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 we have posted a presentation on the ameren investors dot com homepage that will be referenced by our speakers as noted on page two of the presentation comments made during this conference call may contain statements.
Future expectations plans projections financial performance and similar matters, which are commonly referred to as forward looking statements.
Please refer to the forward looking statements section in the news release, we issued yesterday as well as our SEC filings for more information about the various factors that could cause actual results to differ materially from those anticipated now here's martie, who will start on page four.
Thanks, Andrew.
Everyone and thank you for joining us today.
Before we cover our second quarter earnings results I would like to discuss a series of major storm events, which occurred in late June and July and disrupted power to a significant number of our electric customers across Illinois and Missouri.
<unk>.
This was the worst month for storm events Ameren has experienced an approximately 15 years.
I'd like to thank our customers for their patience as we worked to restore their power.
I'm also grateful for and proud of the Ameren team importantly, our team or hundreds of thousands of man hours in challenging conditions with no significant employee injuries.
These outages emphasize why we believe continued investment in grid reliability, and resiliency remains as important and necessary as ever for our customers.
Which brings me to page four.
Our dedicated team will continue to execute our strategic plan across all of our business segments, which entails proactively investing in energy infrastructure to deliver safe reliable clean and affordable electric and natural gas services to our customers.
And moving to page five our.
Our strategic plan integrates our strong sustainability value proposition balancing the four pillars of environmental stewardship positive social impact strong governance and sustainable growth.
Here, we summarized some of the many things we are doing for our customers communities co workers and shareholders.
And today, we published our updated sustainability investor presentation called leading the way to a sustainable energy future available at Ameren investors Dot com, which more fully details how we have been effectively integrating our sustainability values and practices into our corporate strategy.
Encourage you to take some time to read more about our strong sustainability value proposition.
Turning to page six.
Yesterday, we announced second quarter 2023 earnings of <unk> 90 per share compared to earnings of <unk> 80 per share in the second quarter of 2022.
The key drivers of our second quarter results are outlined on this slide.
As a result of our strong execution in the first half of the year I am pleased to report that we remain on track to deliver within our 2023 earnings guidance range of $4 25 per share to $4 45 per share.
Moving to page seven.
On our call in February I highlighted some of our key strategic business objectives for 2023.
We continue to make great progress as a result of our team's dedication.
Outlined on page eight are a few key accomplishments this quarter.
As you can see on the right side of this page we've invested significant capital in each of our business segments. During the first half of this year, increasing spending nearly 20% compared to the year ago period.
These investments will continue to improve the reliability resiliency safety and efficiency of our system.
As we make a clean energy transition for the benefit of our customers.
During these first six months of the year Ameren, Missouri installed over 175000 smart meters 147, smart switches in 32 underground cable miles and energized eight upgraded substations.
Over 75% of our Ameren, Missouri electric customers now have smart meters, allowing for better understanding of energy usage and choice amongst several time of use rates offered.
In Illinois, our customers are benefiting from over 3700, new or reinforced electric poles.
91, new smart switches on electric distribution circuits year to date, and we continue to focus on replacing mechanically coupled gas service pipes.
Further our transmission business completed a total of 117 projects in the first half of the year, including line rebuilds, new transmission circuits transformer replacements generator interconnections and other upgrades to ageing infrastructure supporting the economic delivery of renewable energy resources for our customer.
<unk> as well as the overall resiliency of the transmission system.
This includes the transmission portion of our intelligence program, which was completed this spring.
Ameren <unk> network is a safe and secure private telecommunications network, which enables the full functionality of smart grid technologies, giving ameren greater awareness of system conditions, potentially reducing outage frequencies and durations to mill of seconds instead of minutes or hours.
As a result, it will reduce costs and wait times for customers.
I'd like to express my appreciation for the Ameren team's dedication hard work and collaboration so far this year to deliver value for our customers.
Moving on to regulatory matters.
In June the Missouri Public Service Commission approved constructive settlement terms of the Ameren, Missouri Electric rate review, which call for a $140 million annual revenue increase.
New customer rates were effective July 9th representing an increase of approximately 2% compounded annually. Since April one 2017 prior to Ameren, Missouri adopting plant in service accounting or Pisa.
Pizza, which is effective through at least 2028 allows ameren, missouri to make meaningful and timely infrastructure investments, providing significant benefits to our customers.
We also continue to make progress on the clean energy transition through the addition of solar to our generation portfolio.
Our team has been working diligently with key stakeholders in our ongoing electric distribution multiyear rate plan or NY, RP and natural gas rate reviews.
We filed rebuttal answer rebuttal testimony in June and July respectively, and are encouraged by the constructive progress made to date Michael.
Michael will discuss these in more detail in a moment.
In June the Ameren, Illinois beneficial electrification plan approved by the Commission in March was updated to include $65 million through 2025 for programs incentives and rates encouraging electric vehicle adoption and infrastructure development.
This bill would support timely and cost effective construction of transmission projects, which I will touch on more on the next slide.
Moving on to operational matters.
We remain focused on keeping customer bills as low as possible through disciplined cost management continuous improvement and optimizing our operating performance as we transform our business through investment to ensure we sustainably provide safe reliable and cleaner energy for our customers.
Finally in early May the Callaway Energy Center was brought back online following a brief planned maintenance outage, which was completed safely and on schedule.
The next scheduled Callaway refueling and maintenance outage is planned for this fall.
Turning to page nine.
As I just mentioned in May the Illinois General Assembly passed house, Bill 344, or five or the transmission efficiency and cooperation law, which if enacted would provide incumbent utilities, including amarin. The writer first refusal to build MISO long range transmission planning projects approved by.
Year end 2024.
If enacted HB 344, or five will support the clean energy transition benefiting our Illinois customers and communities and the broader MISO region.
As the local utility we believe we are well positioned to efficiently build operate and maintain these transmission assets over time.
The right of first refusal allows for the construction process to begin sooner and the resulting customer benefits to be realized much quicker.
Importantly, we competitively bid each component of our projects and utilized local suppliers and contractors, who support the local economy.
In addition, we have long term relationships with key stakeholders in the region and work closely with landowners and communities when citing transmission lines.
The bill supports the timely and cost effective construction of the MISO long range transmission projects, including one tranche. One project approved in July 2022, and tranche two projects expected to be approved in the first half of 2024.
The legislation was sent to the governor for signature on June 22nd.
Who has until August 21 to sign veto or abstained from acting on the bill.
Should the governor abstain the bill will automatically become law.
Turning to page 10.
As we've discussed in the past MISO completed a study outlining the potential roadmap of transmission projects through 2039.
Detailed project planning design work and procurement for the tranche one projects assigned to Amarin is underway and we expect construction to begin in 2026.
MISO request for proposal for its estimated $700 million of tranche, one competitive projects have been issued.
We submitted our first bid related to the Orient Denny Fairport project in May.
The remaining two bids are due in October and November of this year.
The proposal and evaluation process for the competitive projects is expected to take place over the course of 2023 and into mid 2024.
Looking ahead to tranche to MISO analysis of potential projects is well underway and will continue for the remainder of the year and into next year.
MISO anticipates the tranche two portfolio of projects will be approved in the first half of 2024.
Continued investment in transmission is needed to facilitate the transfer capability of energy across the region is more dispatch will generation retires and renewables come online.
On another matter related to MISO and independent review was completed in July at the request of the ICC, which evaluated the benefits of Ameren, Illinois continued participation in MISO compared to the PJM interconnection regional transmission organization.
The study considered reliability resource adequacy, resiliency affordability equity environmental impact and general health safety and welfare of Illinois residents.
In conclusion, the independent consultant determined that Ameren, Illinois remaining in MISO avoids significant economic cost for the customers of Ameren, Illinois, and Illinois residents more broadly.
Before moving on I'm happy to say that the Illinois power agencies procurement events. This past may which set energy and capacity prices from June one 2023 through May 31, 2024 resulted in significantly lower prices compared to last year. In fact, we expect a decline of over 25.
<unk> in Ameren, Illinois basic generation service rate.
For customers, taking power from Ameren, Illinois, assuming normal weather. This could result in double digit percentage decreases on their overall electric bill providing welcome relief for customers.
Moving now to page 11.
As laid out in our June 2022, Missouri integrated resource plan or IR, Pete we are taking a thoughtful and measured approach to investing in new generation as our older energy centers near retirement.
In support of this transition we were pleased with the Missouri PSC approvals of certificates of convenience and necessity or CCN for the Huck Finn Solar project in February and the Boomtown Solar project in April .
Construction of Boomtown began in July and construction of Huck Finn is expected to begin in October .
In June we filed with the Missouri PSC for four additional <unk> totaling 550 megawatts of new solar generation across our service territory.
These projects support our ongoing generation transformation, which calls for adding 2800 megawatts of renewable generation by 2030, while maintaining the reliability and affordability our customers expect.
These projects will bring over 900, new construction jobs and additional tax revenues and other payments to the area.
Subject to approval. These solar projects are expected to go in service between 2024 and 2026.
While the Missouri PSC is under no deadline to issue an order on the CCN filings, we expect decisions in the first quarter of 2024.
Ameren, Missouri is in the process of finalizing its next IRB and we look forward to filing it with the Missouri PSC by the end of September .
We believe the plan filed in 2022 includes a balanced and measured approach to adding renewables over time as.
As we continue the transition to a cleaner more diverse generation portfolio. We are focused on reliability of the system in particular in the hot summer and colder winter months. As a result, we are evaluating the need for more dispatch will energy prior to 2030, which is also consistent with MISO view of future.
<unk> capacity needs in our region.
On page 12, we look ahead to the next decade.
We have a robust pipeline of investment opportunities totaling more than $48 billion.
That will deliver significant value to all of our stakeholders by making our energy grid stronger smarter and cleaner.
Constructive energy policies that support robust investment in energy infrastructure, and a transition to a cleaner future in a responsible fashion will be critical to meeting our country's energy needs and delivering on our customers' expectations.
Turning to page 13.
In February we updated our five year growth plan, which included our expectation of a 6% to 8% compound annual earnings growth rate from 2023 through 2027.
This earnings growth is primarily driven by our strong compound annual rate base growth of eight 4% supported by strategic allocation of infrastructure investment to each of our operating segments based on their constructive regulatory frameworks.
Bind we expect to deliver strong long term earnings and dividend growth, resulting in an attractive total return that compares favorably with our regulated utility peers.
I'm confident in our ability to execute our investment plans and strategies across all four of our business segments. As we have an experienced and dedicated team to get it done.
Again, thank you all for joining us today, and I will now turn the call over to Michael.
Thanks, Marty and good morning, everyone. Turning now to page 15 of our presentation yesterday, we reported second quarter 2023 earnings of <unk> 90 per share compared to <unk> 80 per share for the year ago quarter.
This page summarizes key drivers impacting earnings at each segment.
As you can see under our constructive regulatory frameworks, we experience earnings growth driven by increased investments in infrastructure and all of our business segments.
And Missouri earnings were negatively impacted by normal temperatures in the quarter compared to a warmer than normal temperatures in the year ago period.
We were still able to deliver a strong earnings performance during the quarter as a result of our diverse business mix and disciplined cost management.
Before moving on I'll touch on sales trends for Ameren, Missouri, and Ameren, Illinois electric distribution.
The modest decline in residential sales year over year were expected as more people return to the office yet there's been nearly a 4% increase in residential sales as compared to pre pandemic levels.
Year to date weather normalized kilowatt hour sales to Illinois customers have declined about three 5% compared to last year.
Recall that changes in Illinois electric sales no matter the cause do not affect our earnings since we have full revenue decoupling.
On the economic development front, there have been several announcements to build or expand within our territory.
In Missouri, Boeing plans for nearly $2 billion expansion of the aerospace program and we create 500 new jobs. In addition, ICL group plans to expand their lithium battery material manufacturing plant in St. Louis, which will support the production of EV batteries and be the first large scale plant of its type in the country, creating an it.
Additional 165 jobs.
I am pleased to say that we continue to see a strong labor market, Missouri with an unemployment rate of two 6% well below the national average.
And in Illinois manner polymers, and the prisoner and group announced plans to build facilities manufacturing electric bill components, and renewable energy cable, which collectively would create nearly 150 jobs in the state.
Moving to page 16 yesterday, we reaffirmed our 2023 earnings guidance range of $4 25.
To $4 45 per share.
On this page we have highlighted select considerations impacting our 2023 earnings guidance for the remainder of the year.
These are supplemental to the key drivers and assumptions discussed on our earnings call in February .
I encourage you to take these into consideration as you develop your exit expectations for quarterly earnings results for the remainder of the year.
Turning now to page 17, I will provide an update on our regulatory rate proceedings.
In June the Missouri, PSC approved a stipulation and agreement and are in Ameren, Missouri Electric rate review for $140 million annual revenue increase.
The agreement was a black box settlement did not specify certain details, including return on equity capital structure or a rate base.
The agreement provides for the continuation of key trackers and riders, including the fuel adjustment clause.
New electric service rates were effective July 9th.
And other Missouri regulatory matters in preparation for the planned retirement of our Rush Island Energy Center.
Week, Ameren, Missouri filed a 60 day notice with the Missouri PSC for the securitization on costs associated with the Rush Island Energy Center.
We will seek to finance the costs associated with the retirement, including the remaining net book value of the Rush Island Energy Center through securitization.
As of June 32023, the net book value was approximately $550 million.
We expect to file a petition seeking commission approval and the securitization as early as the fourth quarter of this year.
<unk> filed a regulatory proceeding is expected to take up to seven months to complete.
Moving to page 18 in January Ameren, Illinois Electric distribution filed its first multi year rate plan or <unk> with the ICC.
Our <unk> is designed around three key elements, providing safe and reliable energy to our customers.
Deploying capital in a way that achieves the climate Inequitable jobs Act objectives is included in our performance metrics.
And fulfilling the clean energy transition by preparing our system to accept more renewables and electric vehicles over time.
The MRP details of grid modernization plan that includes our planned electric distribution investments and supports our annual revenue increase request for the next four years.
On July 13th the ICC staff rebuttal testimony recommending a cumulative increase of $317 million in revenue for 2024 through 2027.
This includes a return on equity of eight 9%, reflecting the 2022 average 30 year treasury rate plus 580 basis points.
If adopted staff suggested the return on equity would be updated annually.
It also includes a 50% equity ratio.
On July 27th Ameren, Illinois updated its request for a cumulative increase of $448 million in revenues. This.
This increase includes a return on equity of 10, 5% and an equity ratio of 54%.
The variance in Ameren, Illinois cumulative requests in the staff's recommended accumulative increase is driven primarily by the return on equity and a common equity ratio, which makes up $81 million of the $131 million variance.
And ICD seed decision is required by December 2023, with new rates effective by January 2024.
Turning to page 19, and April we filed our electric distribution annual rate reconciliation falling to reconcile the 2022 revenue requirement to actual cost.
In late June the ICC staff recommended a $109 million base rate increase compared to our updated request of $125 million base rate increase.
The $16 million variance is primarily driven by a difference in the common equity ratio as we have proposed 54% compared to the ICC staff's recommended 50%.
An ICC decision is required by December 2023, and the full amount will be collected from customers in 2024.
Earlier this year, we also filed with the ICC for an annual increase in Ameren, Illinois natural gas distribution rates using a 2020 for future test year.
In July we filed Surrebuttal testimony requesting a $148 million increase based on a 10, 3% ROE a 54% equity ratio and a $2 9 billion rate base.
Staff has recommended a $128 million increase reflecting a nine 9% return on equity and a 50% equity ratio.
Other intervenors had recommended an increase of $98 million to $106 million, reflecting a nine 5% return on equity and a 52% equity ratio.
An ICC decision is required by late November 2023 with rates expected to be effective in early December of this year.
On page 20, we provide a financing update we continue to feel very good about our financial position on May 31st Ameren, Illinois issued $500 million of 495% first mortgage bonds due in 2033.
Proceeds of this offering were used to repay a portion of the short term debt and to repay $100 million of 375% first mortgage bonds that matured June 15.
Further in order for us to maintain our credit ratings and our strong balance sheet, while we fund our robust infrastructure plan, we expect to issue approximately $300 million of common equity consisting of approximately $3 2 million shares by the end of this year.
These shares were previously sold forward under our ATM equity program.
Additionally, we have begun to enter into forward sales agreements to support our 2020 for equity needs.
As of June 30, approximately $92 million of the $500 million of equity outlined for 2024 has been sold forward under the program.
Together with the issuance under our 401, K and dripped plus programs. Our ATM equity program is expected to support our equity needs in 2024 and beyond.
And turning to page 21, we're off to a strong start and well positioned to continue executing our plan, we expect to deliver strong earnings growth in 2023 and over the long term driven by robust rate base growth and disciplined cost management.
Further we believe this growth will compare favorably with the growth of our peers Ameren shares continue to offer investors an attractive dividend and total shareholder return story. This concludes our prepared remarks, we now invite your questions.
We ask that you limit your questions to wanted to follow up so that others may have an opportunity to ask questions for participants using speaker equipment. It may be necessary to pick up your handset before pressing the starkey.
One moment, please while we poll.
Fair question.
Our first question comes from Julien Dumoulin Smith with Bank of America. Please proceed with your question.
Hey, good morning team. Thanks, so much at the time I appreciate it thanks for all the comments.
Maybe just kicking this thing off on the Rush island side of the equation.
The book value. It seems like that's $550 million can you comment a little bit on the size of the securitization and maybe.
Offset to that if you will when you think about the additional training.
Admission rate base opportunities and otherwise you articulated just thinking about the timing and the puts and takes here if you will.
Yeah, Hey, good morning, Julien I. Appreciate the question. This is Michael yes from an overall amount I mean again, we provide that book value of $5 50 again this will be.
A year from now, but you should think roughly in those lines I mean around $500 million would be some depreciation et cetera that'll occur. There is in the other couple of items that get incorporated into that inventory et cetera, but around $500 million.
Indoor competitive pieces from tranche, one just trying to think about again, the emphasis on the puts and especially given the opportunities.
Hey, Julien this is Marty hey, Thanks again for your questions just the first tack onto what Michael said and then answer some of your specific questions, but when we planned out our capital expenditures for this five years and we looked at the timing and amount on a year by year basis.
We were thoughtful about the potential timing of this.
Rush Island closure and securitization filing and so within that we had already.
<unk> some of our capital expenditures.
In a thoughtful manner to as Michael said ensure that as Rush Island comes out of rate base that we don't have any.
<unk>, if you will and the trajectory of our rate base growth at our earnings growth. So some of thats already baked into our.
Our plan Julien I guess first and foremost now you did ask about some of the transmission.
Investment and specifically about.
The legislation coming through Illinois, the transmission efficiency and cooperation law, which was HB 3445 that you referenced.
As we explained in our prepared remarks, the general Assembly passed.
That legislation in May of this year and now it's really on the Governor's desk for his potential signature. So it got to the governor on in late June June 20, <unk> 60 days, which means the decision deadline for the governors.
'twenty one.
If you were to sign that that would mean then that the.
One tranche one project in Illinois.
Would come to us and then any tranche two projects that were approved in the first half of 'twenty four thats, our expectation, but anytime in 2024.
Would also come to us as the incumbent transmission owner now.
The Governor has expressed some concerns about what that legislation. So it's unsure what action. He will take I will tell you that supporters of the bill including ourselves continue to share the benefits of the legislation and hopefully address those concerns.
If he signs the law, obviously build obviously becomes law.
And as we mentioned in our prepared remarks, we it takes no action.
Bill becomes law as well so we will see what action he ultimately takes but.
We continue to believe that that writer first refusal is really in the best interests of all.
Our customers and the residents of the state of Illinois.
Then you just mentioned on the.
Overall, what MISO is doing in terms of these projects.
Again as you know MISO is evaluating what projects might come out of tranche two.
We'll say there that we continue to believe that the work that they're doing points too.
Overall portfolio that would be larger than what they approved and part of tranche, one and that's really because as they've gone through this analysis.
One of the things, obviously that has come to fruition as the the <unk> legislation in DC, which means that we expect more renewables then.
Had previously been expected and so.
MISO is planning towards something that's between sort of a future two and future three.
And again, we expect that they'll continue to work through that it's premature to say exactly how large that portfolio will be or exactly what transmission projects may fall into our service territories in Illinois, and Missouri, but MISO continues to believe that they will approve those projects in the first half of next year.
Got it excellent. Thank you for the thoughtful response guys really appreciate it. Thank you. Thanks Julian.
Our next question comes from Paul Patterson with <unk> Associates. Please proceed with your question.
Hey, good morning, guys.
Good morning, Paul.
So just to follow up on Julians questions about the ROE for.
I know that you guys are.
Bob.
<unk>.
I apologize.
But I was wondering if the Supreme Court.
And.
Okay.
Decision regarding.
The Roper in Texas do you think that.
If you'd have any wider implications.
The country.
Throughout the state.
J, Paul I apologize Paul.
I apologize again, but.
Look at.
Some of the actions that have been taken in various states seem to be particular to the way that legislation was passed or.
And so look we're going to continue to pursue it we think that if the governor were to sign this into law it would.
It would be applicable and applicable to as I've said before both the MISO tranche, one projects as well as tranche two projects that.
So look I guess time will tell but I think that as we sit here today, we think this wood.
Would stand.
Okay.
I gotcha, so in other words.
Okay, which is the Texas situation.
I hope it would apply to two Illinois because of the individuals that were.
Because of the differences.
I understand you correctly, the only if I'm wrong because of the differences between the Texas law and what.
What past and Illinois, assuming that side is that right.
I do believe that.
Okay. That's great. Thanks, so much.
Thanks, Paul.
Our next question comes from Jeremy Tonet JP Morgan. Please proceed with your question.
Hi, good morning.
Hey, good morning, Jeremy Hey, Jeremy.
Just wanted to dial into Illinois, a little bit more because I know that you touched on your commentary, but just wondering if it's possible to provide any more color on updates in the Illinois electric rate case.
Just maybe how the tone of conversations with regulators and stakeholders have been trending.
Singly.
Yes, I think that maybe I'll start and perhaps Mike would want to tack on here as well. This is Marty I think what you heard in our prepared remarks again is that we really feel like we're working constructively with stakeholders as we work through this process of course. This is the first <unk>.
Altria grid.
Grid and multiyear rate filing and so as to be expected youre going to have to work through some of the mechanics, but ultimately I still believe that we're going to get to a constructive outcome something that accomplishes the policy goals that <unk> had.
For the state.
Youll notice that when we started this down this path and direct testimony.
The ICC staff's recommendation.
Was about 56% of our overall asking.
Through the rounds of testimony and additional support that we've been able to provide.
With the staff, we've been able to work constructively with them too where there.
Suggested revenue.
Increase now is about 70% of our request. So we've made positive progress there on our slides we detailed that there's still a difference between our recommended or requested cumulative increase in that recommended by the staff and that difference is about $131 million over that four.
Our year period, and we broke down some of the components for you. So look we're going to continue to.
Work constructively with stakeholders and like I said, I think we'll be able to get to a constructive outcome and importantly that accomplishes the policy goals of seizure. So I don't know if you have any more specific questions or Michael you want to add something to just a couple of comments.
Good overview and I look I do think the teams collectively between us and staff and others continue to work very collaboratively trying to really work through these issues and I think we all want the best answer obviously for the for our customers, making sure that we're delivering on all of the policy objectives that Mario talked about the <unk> really.
Versus we really think the law says look it's.
Our cost of equity determined by the commission under their authority under the laws of the state that govern these.
These rate reviews, but.
But I mean, even putting that aside I think the important thing to remember too. If you took our current mark on that ROE today at 580 basis points.
It's something approaching 10.
And I think the only other point I would make too is I think an under our kind of traditional cost of capital under our market cap and our DCF staff did also point out I think they would have been at about 10 point out too, but then reverted back to the formula. So anyway I give you those details because I think it does kind of narrow a lot of the issues in terms of where the differences Jeremy.
Got it Thats very helpful and maybe to follow up to Peel back a little bit more if I can if there is anything left that can be said here just specifically with regards to your rebuttal rebuttal strategy on.
Notably lower than expected are we the $700 million capital discrepancy $100 million medical OPEC overfunded balance.
Just wondering if you could speak to any changes risks receptivity overall, given ameren for bottle alright.
I think that receptivity is shown in fact, I think we've closed that gap. So you continue you referred to the $700 million gap I would say that gap is about $350 million today. So I mean, there's been some good work that's been done on both sides to agree that look here's some additional support and go ahead and accept those that really ultimately Marty mentioned going from <unk>.
56% to 70% of the asset that was really a large part of that the.
With the decrease in energy prices as we've seen has built pressure kind of faded from the conversation with Republican policymakers or is it still front of mine and discussion.
No look I mean, I think the overall backdrop is much better today I mean, just given what's happened with commodity prices both on the natural gas side. So you've actually already seen some of those benefits start rolling through on the PGA is et cetera, I think we've talked about that and then certainly.
Some of these capacity auctions and the corresponding energy energy auctions are certainly providing relief to customers. That's always a good thing to see right and in terms of just making sure that we're trying to get the lowest possible bill for customers. So I'd say, it's less of a conversation today and it's a good tailwind as we think about the future.
Got it that makes sense that's helpful. I'll leave it there. Thanks, okay. Thanks Jeremy.
Our next question comes from Sophie Karp with Keybanc capital markets proceed with your question.
Hi, Good morning, and thank you for taking my question.
Hey, good morning.
The Illinois situation, though more.
And you provided a lot of color around you for them.
Legal argument as to why.
The old Formula should be used in the new framework.
Why.
Sticking to that.
The old Formula here.
Yes. So this is Marty.
One of the things CJ called for.
In the legislation was that the cost of equity would be determined consistent.
Use of traditional methods like capital asset pricing model discounted cash flow analysis.
Methodology.
And I would note there that.
Staff in their testimony as part of the multiyear rate plan set of that traditional cap M. In DCF kind of analysis was used that.
They would get an ROE of about 10 point out too as a recommendation and of course in our gas rate case, that's pending the staff, they're recommending a $9 eight 9% so.
At the end of the day, that's that's what we're hanging our head on is that we believe that <unk> called for the use of that kind of methodology.
Maybe if I can ask a question.
Just curious on your misery solar projects, particularly the ones that <unk>.
So building or.
Great and then building them.
How are you thinking about your procurement strategy with respect to potentially get an adverse four domestic content and things like that does that influence your decision as to whether equipment to your ability to procure for these.
Okay.
Yes associate it certainly does so as you saw in our slides in terms of our.
Procure them and finalize the construction ourselves.
And then some self build and.
Build a portfolio of projects that really provides good diversity low cost for our customers reliability for our customers.
And we will look to maximize those tax credits to the extent possible to again deliver the lowest present value revenue requirements for our customers.
Great. Thank you and do you expect to sell consumables tax credits or would you be looking to monetize them.
I mean, we're not sitting on a lot of credits today, but as we build into these certainly again, we'll be very thoughtful about we've been very involved in these issues on transferability.
And getting clarification working through some of these rating agency issues et cetera.
Absolutely.
A combination of both as we move forward.
Thank you so much you bet. Thanks.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Julien.
Smith with Bank of America. Please proceed with your question.
Hey, guys I was where it was going to end early I wanted to squeeze in a couple of here.
I wanted to come back.
So what was being discussed on the Illinois real quickly do you have any thoughts about Illinois gas here I know, it's very preliminary but it seems like there could be some conversations going into 'twenty four.
Perhaps reform that might look at kinder, Colorado, or something like that but or Minnesota at that but you guys tell me what are you guys hearing or seeing.
Yeah Julian in terms of.
Legislation for next year.
Say that Theres anything percolating right now that.
We are aware of are involved and I think that right now our focus obviously is on this illinois multiyear rate plan and the electric side.
That's our focus right now.
I know in the past there was some discussion around Q IP, but of course, that's expiring at the end of this year.
Now, we think we're positioned well as we utilized the forward rate cases.
<unk> side, just any any lessons learned from.
Receive the commission's authorization to move forward with Huck Finn and Boomtown and.
I wouldn't say, there's any specific lesson learned we think all four of the projects that we have proposed or excellent projects for the for the benefit of our customers and move us along the path towards the.
Investments that were laid out in our 2022 <unk>.
We've got another ERP that we plan to file this September and certainly we think those projects are consistent with the path that will lay out as part of that ERP as well.
Alright, guys. Thank you alright.
Alright, Thanks John .
It appears that there are no further questions at this time I would now like to turn the floor back over to Marty Lyons for closing.
Terrific well. Thank you all for joining US today, we had a strong first half of 2023, and we remain absolutely focused on strong execution for the remainder of this year. So we look forward to seeing many of you at conferences in the coming months and thanks again have a great day.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Okay.