阿莫林 (AEE) 2009 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Ameren Corporation 2009 earnings conference call.

(Operator Instructions)

And now, I would like to turn the conference over to Mr. Doug Fischer, Director of Investor Relations. Please go ahead.

Thank you and good morning. I'm Doug Fischer, Director of Investor Relations for Ameren Corporation. On the call today with me is our President and Chief Executive Officer, Tom Voss, our Senior Vice President and Chief Financial Officer Marty Lyons, our Vice President and Treasurer, Jerree Birdsong, and our Vice President and Controller Bruce Steinke, and other members of the Ameren management team. Before we begin, let me cover a few administrative details. This call will be available by telephone for one week to anyone who wishes to hear it by dialing a playback number. The announcement you received in our news release, carries instructions on replaying the call by telephone. This call is also being broadcast live on the internet, and the webcast will be available for one year on our website at www.ameren.com. This call contains time-sensitive date that is accurate only as of the date of today's live broadcast. Redistribution of this broadcast is prohibited. I also need to let you know that comments made on this conference call may contain statements that are commonly referred to as forward-looking statements.

Such statements include those about future expectations, beliefs, plans, strategies, objectives, and financial performance. We caution you that various factors could cause actual results to differ materially from those anticipated in the forward-looking statements. For additional information concerning these factors, we ask you to read the forward-looking statements section in the news release we issued today, and the forward-looking statements and risks factors section in our periodic filings with the SEC. To assist in our call this morning, we have posted presentation slides on our website that will -- that we will refer to during this call. To access this presentation, you may look in the Investor sections of our website under presentations, and follow the links for the webcast.

In March, Ameren's Board of Directors announced several changes in executive management, all of which became effective today. Tom Voss has succeeded Gary Rainwater, as Ameren's President and CEO. Gary remains at Ameren as Executive Chairman. Warner Baxter, who was Executive Vice President and CFO has replaced Tom as AmerenUE President and CEO. And Marty Lyons who is -- who was Senior Vice President and Chief Accounting Officer is now Senior Vice President and Chief Financial Officer. Tom brings 40 years of experience at the Company to the position of President and Chief Executive Officer. Prior to serving as President and CEO of AmerenUE, Tom served as president of a generation segment that included all non-nuclear generation, in addition to energy marketing and fuels and transportation procurement. He also previously served as Senior Vice President over the design, construction, operation and maintenance of all gas and electric delivery systems, and also of all customer care activities for Ameren utility companies. Tom will begin this call with an overview of key first quarter 2009 activities. And Marty will follow with a more detailed discussion of our first quarter 2009 financial results, and updated 2009 earnings guidance. We will then open the call for questions. Here's Tom.

Thanks, Doug. Good morning, and thank you for joining us. I am pleased to be here this morning. As Doug indicated, I have been working at this company my entire career. It's a great company with excellent people focused on providing customers with outstanding service, in a safe, reliable, efficient and environmentally responsible manner. I believe that by maintaining that focus, we can deliver solid, long term shareholder value. This morning we reported non-GAAP or core earnings per share of $0.54 in the first quarter of 2009, down from the $0.64 we earned in the same period in 2008. The decline in core earnings in the first quarter of 2009 versus the same period in 2008, was principally due to lower electric and gas sales, higher fuel and related transportation prices, the impact of a severe winter ice storm and the effect of gas rate re-design in the Illinois Utility segment. These items more than offset the benefit to earnings of the new utility service rates in Illinois effective October 1, 2008, and in Missouri effective March 1, 2009, and other positive factors. Milder weather, and the absence of a leap day in 2009, contributed to a 6% decline in kilowatt hour sales to residential customers, and a 2% decline in kilowatt hour sales to commercial customers. Absent these factors, we estimate the first quarter residential and commercial kilowatt hour sales each declined a more modest 1% versus the year ago period.

The weak economy significantly impacted industrial electric sales. They declined 13% from the year-ago quarter, excluding the impact of the loss of operating capacity at AmerenUE's largest customer, the Noranda aluminum smelter plant in New Madrid, Missouri. This decline is certainly significant, but it's important to keep in mind that sales to industrial customers are only 16% of AmerenUE, and only 6% of Ameren Illinois utilities native load electric revenues in 2008. Turning to full year 2009 expectations, we have updated our core earnings guidance range, and now include the effects of the severe January winter ice storm. This includes an estimate of the related full-year impact of the reduced electric margins, due to the loss of operating capacity at our customer, Noranda Aluminum, which were excluded from our original guidance. Our revised core earnings guidance for 2009 is $2.70 to $3.05 per shares, down from our prior range of $2.75 to $3.15 per share issued in mid-February. Marty will provide more details on our updated earnings guidance in his remarks.

From an operational and regulatory perspective, there were several significant developments affecting our business in the first quarter of this year. On the plant operations front, AmerenUE's equivalent availability for its coal-fired generating units, was a solid 90% in the first quarter of 2009. However, AmerenUE's Callaway nuclear unit experienced a 12 day, unplanned outage in late February. At our non-rate regulated generation operations equivalent availability for our coal-fired units, was 81% for the quarter, compared to 85% in the same period a year ago. This decline reflects a planned outage to complete insulation of a multi-pollutant control system and major maintenance at the Duck Creek power plant. The outage was very well managed, meeting our outage duration, safety and cost goals. This planned outage as well as lower market prices for power and reduced generation at another of our plants due to MISO system transmission congestion issues drove a year-over-year decline in generation.

During the first quarter of 2009, our rate regulated -- non-rate regulated segment generated approximately 6.8 million megawatt hours, down from the 8.2 million megawatt hours produced in the year ago quarter. That said though, we continue to believe we're on target to generate approximately 30 million megawatt hours during 2009. While nonrate regulated generation volumes were down in the quarter, our electric margin was only down slightly, due to proactive forward sales of 2009 generation made in prior years, at higher than current market prices. Turning now to the energy delivery portion of our operations, in January 2009 our southeast Missouri and southern Illinois service territories were hit by a severe ice storm that caused devastating damage to our electric distribution systems. We poured substantial resources into the restoration of service, resulting in capital expenditures across our regulated utilities of approximately $75 million, as well as expenses of about $14 million.

The first quarter was also active on the regulatory and legislative front, beyond the Missouri radar we discussed with you on our February 17th call. As many of you know undoubtably know, AmerenUE has been investing in a nuclear combined construction and operating license application, and heavy forgings for a possible second nuclear unit at our Callaway site. We have been doing this to preserve a nuclear option, for meeting our customer's future energy needs towards the end of the next decade. Last week, we suspended those efforts because proposed legislation, that would have allowed utilities to recover financing costs from customers, while building a new plant had been stripped of the provisions we needed most to move forward. AmerenUE will consider all available generation options to meet future customer requirements, as part of an integrated resource plan that UE will file with the Missouri Public Service Commission by June 2010. In the meantime, we are assessing all options to maximize the value of our investment in this project. On a regulatory front in Missouri, on April 22nd, the Public Service Commission approved the environmental cost recovery mechanism, or ECRM rules. These rules provide utilities in Missouri like AmerenUE, the opportunity to request in the context of a rate case, the ability to adjust rates, between rate cases for changes in cost to comply with environmental rules or laws. We expect these rules to become effective in July, and to request the use of them in our next Missouri rate case.

In another regulatory matter, the Illinois Power Agency or IPA is administering the 2009 power procurement for the residential and small commercial customers of our Illinois electric delivery utilities. This is being done for the three year period from June 1, 2009 through May 31, 2012 through a request for proposal, or RFP process. The IPA has announced the winning bids for electric capacity, and will shortly be receiving bids for energy and renewable energy credits for Illinois utilities. On April 15th, the Illinois Commerce Commission approved and made public the average winning capacity bid prices. As a result of this capacity RFP, Ameren Energy Marketing company contracted to supply capacity to the Ameren Illinois utilities that will generate revenue of $21 million for the three years ending May 31, 2012. AmerenUE also contracted to sell capacity as part of this RFP. The energy bids are due May 5th, and the renewable energy credit bids are due May 18th. Moving now to our non-rate regulated generation business and executing on our strategy of optimizing the assets in a segment, we are exploring the possible sale of three of our smaller non rate regulated assets, the coal-fired Meridosia and Hutsonville plants and the Grand Tower combined-cycle natural gas plant. We have only begun the marketing and bidding process and cannot predict the outcome.

Finally, I would like to update you on our request that the Illinois Pollution Control Board approved revisions to the multi-pollutant standard that impact our nonrate regulated generating plants. In preparing this request , we worked with the Illinois EPA to make the variance proposal environmentally neutral. In April, 2009, the Illinois Pollution Control Board approved our requested revisions, within a rule making dealing with mercury regulations. This rule making must now be reviewed and approved by the Illinois Joint Committee of Administrative Rules or JCAR, a committee comprised of General Assembly members with equal representation from each party. This JCAR review is expected in the second quarter of 2009. This rule amendment will allow us to defer an estimated $300 million of environmental capital expenditures at our nonrate regulated operations from the 2009, 2011 time frame to later periods. As I close my formal comments, I want to assure you that I am focused on delivering solid, long term value to our shareholders. I believe the best way to deliver that value is the continued implementation of our strategy of prudently investing in regulated businesses to meet our customers' needs and expectations, achieving constructive regulatory frameworks and returns and optimizing our nonrate regulated generating assets. I will now turn it over to Marty to walk you through our first quarter 2009 and full-year 2009 earnings

Thanks, Tom. I would now like to refer you to the slide presentation on our website that Doug mentioned, as I provide a more detailed discussion of our first quarter 2009 earnings. Turning first to page three of our slide presentation, today we announced first quarter 2009 net income, in accordance with generally accepted accounting principles, of $141 million or $0.66 per share, compared to first quarter 2008 GAAP net income of $138 million or $0.66 per share. Excluding certain items in each year, Ameren recorded first quarter 2009 core net income of $114 million or $0.54 per share, compared with first quarter 2008 core net income of $134 million or $0.64 per share. There are two items in the first quarter of 2009, that we have excluded from our core earnings. These items are the net costs associated with the Illinois comprehensive electric rate relief and customer assistance settlement agreement reached in 2007 which reduced first quarter 2009 GAAP earnings by $0.02 per share, and net effects of mark-to-market activities, which increased first quarter 2009 GAAP earnings by $0.14 per share. Continuing with slide three of the presentation and focusing some of the more significant items, Missouri electric rate increase which took effect March 1, 2009, raised earnings by $0.03 per share, net of amortizations.

The net increase in the Illinois electric and natural gas delivery rates effective October 1, 2008, boosted first quarter 2009 earnings by $0.12 per share. The effect of seasonally re-designed gas distribution rates in Illinois reduced earnings by $0.05 per share compared to the prior year period. You may recall that in it's 2008 rate order, the Illinois Commerce Commission approved an adjustment in the monthly charge for residential gas customers, such that our Illinois utilities now recover 80% of fixed delivery service costs through the monthly charge, versus the prior 53%. The remainder is recovered through volume based charges. The re-designed gas distribution rates will result in a redistribution of earnings during 2009, and this is highlighted on slide four. The redesign reduces the sensitivity of our Ameren Illinois utilities gas margins to volume metric changes, and is expected to have no net impact on full-year 2009 results. But the first quarter decline, offset by higher earnings of $0.01 per share in the second quarter, and $0.04 in the third quarter. Returning to slide three, we estimate milder weather reduced earnings by $0.03 per share, compared to the year-ago quarter and by $0.01 per share versus normal.

Moving to the next line in our first quarter earnings reconciliation, in January 2009, a severe ice storm in southeast Missouri resulted in lower sales to Noranda aluminum, reducing earnings by $0.03 per share compared to the first quarter of 2008. You will recall on January 28th, a devastating ice storm knocked out service to Noranda Aluminum's New Madrid smelter, resulting in significant damage to their plant, and the expectation of a prolonged period of reduced electricity demand. Noranda's power outages related to the failure of non-AmerenUE lines, delivering power to the substations serving the plant. You will also recall, that we previously excluded the impacts of this storm, including its impact on Noranda from our original 2009 guidance, because we were unable to reasonably estimate the impact on earnings. Other electric and gas margins for regulated utility operations, excluding the impact of weather and the lost Noranda sales decreased earnings by $0.17 per share in the first quarter of 2009, compared to the prior year period. This decrease in margins for the regulated businesses was primarily a result of lower electric gas and sales volumes which reduced earnings by $0.12 per share. As Tom mentioned earlier, we experienced a significant decrease in sales to our industrial sector.

It is important to note as Tom also discussed, that the 2009 first quarter 13% decline in electric sales to industrial customers, excluding Noranda, only reduced industrial margins by $5 million, as compared to the year-ago period. The balance of the $0.17 per share decrease, attributed to the other regulated electric and gas margin, was due to higher net fuel costs prior to implementation of the FAC on March 1st. These higher costs included the effect of the unplanned Callaway outage in the first quarter of 2009. Other electric margins from nonregulated operations rose modestly, as a result of higher realized revenue per megawatt hour, partly offset by higher fuel and related transportation costs. While the market price for power fell materially in the quarter, our nonrate regulated segment earnings were not materially impacted, due to proactive forward physical and financial hedges of 2009 generation in prior years at higher than current market prices. Distribution system reliability costs were higher when compared to the 2008 quarter, reflecting the previously mentioned ice storms, which primarily impacted our Missouri regulated operations.

Cost for storms in our Illinois regulated operations, were actually lower compared to the year-ago quarter because of significant storm activity in the 2008 period. Pension and employee benefits expenses, as well as depreciation and amortization expenses, and other taxes, all varied modestly from the year ago quarter. Dilution and financing costs reduced earnings by $0.04 per share, compared to the year ago period, reflecting the refinancing of long term debt, and the issuance of additional long term debt to reduce short term debt, and to enhance liquidity, both at higher rates. The $0.05 per share improvement, in the other net line primarily reflects lower bad debt, and decreased plant operations and maintenance expenses over year-ago levels. Before moving on to full-year earnings guidance, I would like to note that in the first quarter of 2009, our Cilcorp subsidiary recorded a noncash impairment charge of $462 million. Ameren, at the consolidated level, was not required to reflect this impairment charge in its financial statements, because of aggregation of its reporting units.

Moving on to 2009 guidance on slide five, Tom mentioned we have updated our core earnings guidance range for 2009 of $2.70 to $3.05 per share, from our mid-February guidance range of $2.75 to $3.15 per share. The updated 2009 core earnings guidance now includes the effects of the January 2009 severe winter storm, including an estimate of the full-year impact of reduced electric margins, due to the loss of operating capacity at the Noranda Aluminum smelter plant. Prior earnings guidance had excluded these storm-related impacts. In addition to incorporating the severe storm costs, including the impact on electric margins of the related Noranda outage, the revised earnings guidance also incorporates the expected effects of lower sales to industrial customers, and lower power prices, including capacity and ancillary services, on a regulated and nonrate regulated generation margins. The updated earnings guidance also includes higher expected financing costs for renewed credit facilities.

These negatives are offset in part, by higher expected long term sales for resale. Our GAAP earnings guidance includes the estimated $0.07 per share negative impact of the Illinois comprehensive electric rate relief and customer assistance settlement agreement. Any net unrealized mark-to-market activity will impact GAAP earnings, but is excluded from GAAP and core earnings guidance, because the Company is unable to reasonably estimate the impact of any such gains or losses, due to the volatility of markets. We expect our 2009 GAAP earnings to be in the range of $2.63 to $2.98 per share. On slide six of our slide presentation, we have also updated our core earnings guidance by segment. We now expect the Missouri regulated segment core earnings to be in the range of $1.15 to $1.25 per share down from the prior guidance of $1.25 to $1.35 per share. Earnings guidance for the Illinois regulated segment is unchanged. While the lower end of the guidance range for non-rate regulated generation has been increased by $0.05 per share.

Ameren's earnings guidance for 2009 assumes normal weather, and the subject to among other things regulatory decisions and legislative actions, plant operations, energy and capital and credit market conditions, economic conditions, severe storms, unusual or otherwise unexpected gains or losses, and other risks and uncertainties referred to in the forward-looking statements section of the press release we issued today, and the forward-looking statements and risk factor sections in our periodic filings with the SEC. Slide seven summarizes our solid, available liquidity of approximately $1.7 billion at March 31, 2009. This consists of cash on hand, as well as available borrowing capacity under our $2.15 billion of revolving credit facilities. As you know, we have taken agressive and prudent action to manage our available liquidity position since late last year, including significantly reducing planned capital and operating expenditures in 2008 and 2009, as well as reducing our common dividend. These actions are designed to reduce the level of reliance on more costly external financing.

Moving on to slide eight, you will note that we have modest debt maturities over the next three years. As we look ahead in 2009, we will focus on $250 million of long-term debt to be refinanced at Illinois Power company, as well as issuing $500 million at our nonrate regulated generation subsidiaries, and $425 million at Ameren corporation. Our plans may change depending on conditions in the capital markets, and business and operational factors. We are also taking steps to extend or replace our $2.15 billion of credit facility that is expire in 2010. While we will be seeking full extension or replacement of our bank facilities on reasonable terms, we anticipate the possibility that we could reduce the amount of our facilities due to challenging credit markets, and our expectations that the facilities will be more costly. Given this uncertainty, we plan to continue aggressively terming out our short term borrowings under such facilities. To conclude, we remain committed to our straight forward, long term business strategy of investing in our Missouri and Illinois regulated businesses, in order to deliver safe, reliable and affordable energy to our customers. Tom and I look forward to meeting with many of you, at the American Gas Association Financial forum in Las Vegas May 3rd through May 5th. We will now be happy to take your questions.

(Operator Instructions)

Our first question comes from the line of Paul Ridzon from KeyBanc. Please go ahead.

Actually, the question I was going to ask was answered, thank you, in the commentary.

Thank you very much. Our next question comes from the line of Paul Patterson from Glenrock Associates. Please go ahead.

Good morning. Guys.

Good morning, Paul.

The $0.06 -- I'm sorry, I just had a drop off a little bit. What was that? What caused that in the quarter?

Paul, could you repeat the question. You broke up a little bit.

I'm sorry, there's $0.06 for other net, in the reconciliation between 2008 and 2009 for the first quarter.

Pau, are you talking about the variance?

Yes.

A big part of that -- was lower bad debt expense and some lower plant O&M.

Paul, you might recall that last year, that our bad debt expenses -- particularly in our Illinois service territory -- were unusual high. So we did see a bit of a decline versus last year, sort of higher than normal levels.

Okay. Now with respect to 2010 and beyond, last quarter I asked you guys about sort of the outlook there. And at that time you guys were indicating that maybe at the spring meeting, we'd get a little bit more flavor for hedging prices and what have you. I was wondering -- I know we're not going to have a spring meeting -- I was wondering if you could update a little bit in terms of how the hedging, I think you guys were about 60% for 2010, has that changed? And can you give us a little bit more flavor on prices, and what have you?

Yes, Paul. This is Marty. We did not end up, obviously scheduling a spring meeting. And we are certainly going to be looking to, late in the year to potentially have another Analyst's day to provide more guidance. In terms of our hedging, not much changes. In terms of 2010, we're still about 60% hedged on the power side. And as we disclosed in our 10-K, those hedges are about $51 per megawatt hour. As we look ahead, the Illinois Procurement Agency is going to have a RFP process here. And certainly our nonrate regulated generational look to participate in that process. I certainly wouldn't say at what price level or how many megawatts. But I think that will provide us more transparency into the prices going out into '10 and '11. What they're looking to procure there, the IPA, is both on peak and off peak energy for the periods June '09 through May '10, and then again from June '10 to May '11 And so -- that will provide us an opportunity for some price transparency.

What did your guys think about the capacity auction and what the potential impact of that might be? If any commentary on that. And just a recap here, other than what you provided from the 10-K, there hasn't been much of a change, in terms of hedging activity. And I assume that's because the price doesn't look all that attractive I guess right now. But that might change substantially when we get -- depending on the auction results for I guess, energy and what have you. Can you give us just sort of a flavor as to what you think it might come in at? I mean, maybe you don't want to you, but whatever. But if you could just give us a little bit more of -- sort of your outlook on the energy market and the capacity market.

Yes, Paul. I wouldn't comment on what it might come in at. I think in terms of the capacity prices that they realized as part of the IPA process, as you know, the balance of '09 prices came in around $30, but increased to in 2011 about $60 per megawatt day. And of course, those prices are a little bit softer, maybe more than a little bit softer, than what we were seeing summer of last year. But they do -- start kind of low reflecting I think, current soft pricing, but ramp up over the three year period. In terms of power prices right now, that we're seeing around the clock when you look at the (inaudible) pricing which we often refer to, pricing right now that you're seeing for 2010 is in the low to mid-30s type of range, and in 2011, getting more up to the high 30s to $40 per range and around the clock. So, that's just kind of what we're seeing out there in the market. I would note that especially when you get out to 2011 and 2012, the market is just not deep in terms of transactions and that time period.

I know you don't want to specifically comment on exactly what you expect out of the auction. But it sounds like you are thinking there's an opportunity to hedge in, that auction, that you expect that, it may be giving you a better price? Is that correct?

No, I wasn't saying that. I wouldn't say again in the RFP process again, how much we might offer in or at what price. As you know, our hedge programs that we have in place, our risk management policies do provide us flexibility to either put hedges on when we look at prices and believe they're good prices to transact at. Or give us the flexibility to defer out on our hedging. That's-- I'll share that. In terms of 2009 of course, I'd remind you we are 100% hedged for this year. So, we'll be looking out into the future and making decisions about what we think it's prudent to put hedges on for '10 and '11.

Okay, thanks a lot.

Our next question comes from the line of Danielle Seitz from Seitz Research Group. Please go ahead.

Thank you. I was wondering when do you anticipate to file in Missouri? And how much of your environmental expenditures of not being rate based yet?

Danielle, this is Marty. In terms of the UE rate case, we have not still determined when we might file another rate case. As we mentioned on our call, our last call that we would anticipate filing sometime before the end of 2009. And Danielle, I'm sorry, off the top of my head, I don't have the amount that we have invested in environmental construction work in process, that's not yet in rates. I'm sorry.

The last rate case was based on what year, just so that I can --

It would have been updated through some time, kind of last year, September of last year.

Okay. Thank you.

Thank you, Danielle.

Thank you. And our next question comes from the line of Reza Hatefi from Decades. Please go ahead.

Thank you very much. What is your current expectation for total generation in 2009 and 2010?

Yes, we are -- I suppose you're speaking about the nonrate regulated generation.

Correct.

And despite the fact that our generation was lower in the first quarter, as Tom mentioned in his talking points that much of that was due to a planned outage. So as far as the year-end estimates go, we still believe we're on track to generate about 30 million megawatt hours.

And I think if I'm not mistaken on your last call, you expected a little higher in 2010. Is that still is expectation?

I wouldn't at this point comment on expected 2010 generation levels.

And I think on the last call you had talked about potential debt financings at the unregulated segments, something like $500 million. Is that still the expectation at some point this year, you'll issue something like $500 million at the unregulated segment?

That is correct. We are looking at $500 million at the non-regulated segment, haven't disclosed exactly which subsidiary we would look -- be looking to issue that from.

Okay. Thank you very much.

Thank you. And our next question comes from the line of David Frank from Catapult. Please go ahead.

Hi, good morning. I was just wondering if you guys could comment or maybe update the guidance, your longer term growth guidance you gave on the fourth quarter. I know we've seen power markets obviously come in a lot. Are your still standing behind the at least 5% long term growth?

David, that 5% is a long term objective or target of ours. But certainly couldn't comment, given the state of the economy as well as the power prices that we're facing, in terms of near term growth.

Okay. And I guess just on the financing, you guys have done some fairly costly debt financing recently. And I'm sure if you improve your balance sheet that, that is likely to get better for future offerings I would think. Is this sale of the coal plants, is that going to be enough to you think improve or help you credit quality? Help the cost of financings? Do you envision having to issue equity in, what are your plans dealing with the cost of financing going forward?

Well Dave, this is Marty. When you look at our overall plans, obviously you look at some of the actions we've taken this past year to enhance our financial strength and flexibility, both the capital reductions, the operating expense reductions, the reduction in our dividend, all of those things were done to enhance the financial flexibility and strength of the organization. And as we talked about on the last call, we don't currently have plans for equity or hybrid equity issuances in 2009, but we do remain committed to having that strong ambulance sheet and financial flexibility. And over time, we'll target with 50% to 55% equity as a percentage of the total capital structure. And as you know, we're going to be focused on having more frequent rate cases to try to close the gap between our earned ROE and allowed ROE, which we believe will again help to strengthen our financial position and in our credit metrics.

So as you look out, while we are working at taking a look at potentially selling these power plants, I would say that's just one element of a broader plan on how to improve credit metrics.

Okay. Alright, well thanks a lot guys.

Thank you. And our next question comes from the line of Yiktat Fung with Zimmer Lucas Partners. Please go ahead.

Thank you and good morning. My first question pertains to the Illinois Power Authority, the RFP that's coming up. I was wondering if the bidders to this FRP, just gets the around the clock energy price or do they also get a load shipping premium on top of that?

I think what you recall is that, when we went through the auction a couple years ago, it was more of a vertical slice of the system. It was more of a load following kind of a product. As part of the IPA process, what you actually bid on, is more horizontal slices of requirements, so its more of a building blocks approach, where people would be bidding on those elements that were required.

I see. And the IP, I guess does the shaping themselves.

That's correct.

Okay. In terms of --the customer loads in Missouri and Illinois, can you kind of break down what the trends are, for commercial and industrial in both states.

Sure. I'll talk about that a little bit. On the call we mentioned that industrial sales were down about 13%. And that holds true pretty much in both states, Missouri and Illinois. Missouri's down about 13%, excluding Noranda that is. And Illinois is down about 14%. And we expect these kind of weak demand conditions to exist really through the end of the third quarter, and we're looking to see some improvements hopefully in the fourth quarter of this year. Overall, our assumption is that industrial could end up down as much as 10% at the end of the year, versus prior year levels. And I think what you'll see is that the comparisons in the early part of this year to last year will look weak.

And then as we get into the second half, we'll see some improvement in those comparisons. Because of course, in the second half of last year, we began to see weakness in the industrial sector, and particularly in the fourth quarter, industrial demand dropped off. So that's kind of what we're looking at potentially happening in terms of the industrial load. When it comes to residential and commercial sales, we're a bit more optimistic. We're not seeing what we consider to be meaningful, negative trends in those categories. And so we expect residential and commercial sales to be flat with the prior year, or potentially even up as much as a percent or so overall.

Okay. Would you mind giving us the impact of Noranda on industrial load?

Well, what we've actually broken out in our guidance.

It's the $0.10, I understand.

Excuse me?

You already broken out the earnings impact?

Yes. And let me say what we have done there, what we have assumed there is that Noranda would sort of ratable ramp up their use of electricity between now and the end of the year.

I see.

So that's an assumption that we've made, and certainly actual results could come out different. But it's worth mentioning that that's the assumption thats baked into our estimate.

So it's likely that Noranda would come back online by the end of next year.

I wouldn't really comment on whether it's likely or not. What we have done is gone back, and we've looked at their public disclosures, and the public disclosures have indicated that it might be back on by the end of 2009. And we've just sort of assumed a ratable progression.

I see. Could you give us some color as to timing of when we'll hearing is about the generation asset sales?

I think that probably by late to end of summer, we'd have something to announce on that.

And a last question with regards to the Cilcorp debt maturity in 2009, how will the company refinance that? Would that be at the parent or would that be at Cilcorp?

That will be done at the Ameren parent level. And that was included in the anticipated long term debt issuances I spoke about earlier.

And does the company still intend to tender for 2029 bonds at Cilcorp?

We're preserving that option at this time.

Thank you very much.

Thank you. And our next question comes from the line of Carrie St. Louis from Fidelity. Please go ahead.

Hi. I wanted to go back to Tom Voss's comments regarding with respect to enhancing shareholder value. As a large bondholder, one thing I've been concerned about is the -- I know you've taken steps to preserve liquidity. But clearly the company is in a challenging situation, especially with the bank line being up for renewal. And I believe that Marty, you answered the question about the equity issuance. So I was curious to hear Tom's views on potential equity issuance, and also to hear what you view is regarding the sale of the coal assets. From my perspective, it doesn't seem like the coal assets are tremendously valuable. I can't imagine that they're going to raise a tremendous amount of capital, but maybe I am mistaken. Could you talk to me about what is the goal of the coal asset sale? Is it for cash proceeds? Or is it to reduce business risk or a combination of the two?

I guess at the start with -- I think Marty outlined our position on equity issuance. I think we'll -- the conditions we've taken so far we think, have put us in a strong position right now with cash as far as reducing the dividend, and cutting back capital expenditures, and things, and so we don't see a need for that this year.

Well, could I ask you specifically with respect to your investment grade rating. I mean you do have a below investment grade rating already at the parent. How much more credit deterioration are you willing to sacrifice?

I think Carrie, this is Marty, as you know, one of the targets we've had in terms of Ameren issuer rating is to have some of the BBB flat kind of ratings. And we recognize we're not there right now. But that is a target of ours and something that over time, we would seek to work towards.

Okay. But what I'm saying is if there's more pressure on results, and agencies get concerned, is equity issuance a tool that would be used to defend the investment grade rating -- or the current rating as is?

Carrie, I think that as we look ahead, we're going to be looking at all portions of our business, both the expenditures that we have, the capital expenditures that are required, as well as our financings. And working again towards that target in terms of credit ratings. So we're going to be looking at all aspects of our business with the operations and the financing side to manage towards that. Certainly, equity is a tool. We recognize that. And as we said in the past, one of our goals that we think aligns with our credit rating objectives is having strong balance sheets. And we've talked about in the regulated business as I did earlier. Over time seeking to have to equity content as a percentage of total cap at 50% to 55%. Now the dividend reduction that we made does help to build the equity content of the balance sheet. But as we look at those capital expenditures, the extent that we got to go out and finance those capital expenditures, we're certainly going to do that with a blend of debt and equity financing. And again, we'll be looking to target cap structures as I indicated.

With respect to the asset sales, so is it a cash driver, business risk reducer? What is the goal there?

I think it's really a blend of both, Carrie. I think what we're looking to do is over time, is to focus on growth of earnings coming from our regulated business. I think in terms of these plant assets, it certainly decreases a little bit our nonrate regulated footprint. And it would also provide us with cash, as you indicated which would help to fund some of the investments we're making in some of our other core nonrate regulated assets.

Can you give a more specific update on the bank line renegotiation? It was notable yesterday that DTE Energy had made significant progress on their bank line renegotiation, which is highly commendable considering the situation in Detroit. And I'm curious how far along your guys are?

Yes, sure Carrie. We're encouraged by DTE's announcement as well. And we have been in discussions with our lead banks, as well as other banks that are in our facilities, or that might be new lenders as we go to renew those credit facilities. And so we are actively in those discussions, seeking to renew is $2.15 billion of revolving credit facilities that we have today. We're frankly encouraged by the discussions we're having. We're optimistic that we're going to be able to successfully renew the facilities, both in terms of amounts and in terms and conditions that are acceptable to us. So we're optimistic. One of the things that we're looking to do, is to get into multi-year facilities, two year term type facilities. And again, we think we'll -- we're optimistic that we'll be able to get facilities adequate for our needs.

Do you think this would be contemplated being resolved in the second quarter?

I think so, Carrie. Again, we're in discussions with the lead banks. But I would imagine by the end of the second quarter, we should be there.

Okay. And then I'm assuming that the financing would come after that? The parent and the --

I wouldn't really comment on whether it would be before that or after that.

Okay, thank you.

Thank you.

Thank you. Our next question comes from the line of Steve Gambuzza from Longbow Capital. Please go ahead.

Good morning.

Hi, Steve.

I think on the last call you mentioned that you'd be providing some updates on your coal prices for 2010 towards this time of year. I was wondering if you might be able to share that with us, now for the unregulated generation. You provide an estimate in 2009 but not 2010.

I don't have that to share here at this time. Sorry.

When do you think you will be in a position to share that?

I think that, Steve, I don't have a specific date. I think we'll be taking a look at our overall thoughts about 2010, at some point coming out with guidance in terms of overall 2010 expectations.

Okay. When do you expect, sorry if you covered this already,but when do you expect to file distribution rate cases in Illinois?

No. We hadn't covered that yet. And consistent with what we said on our last call, we would expect to be doing that late in the second quarter, or early in the third quarter.

Okay. It seems that there's quite a bit of debt financing that needs to take place this year still, and given the huge window that's opened up in the capital markets, with the number of financings you need to do, I guess I am just surprised that we haven't seen any activity yet. Is it -- just -- you're looking at -- can you just talk about some of the things you're evaluating and the timing of financings?

Well, I think that -- notably, we did issue debt at our Union Electric subsidiary in the first quarter. And then, of course right now we're in a bit of a blackout period, until we get our 10-Q filed.

Okay.

But as we look ahead to next quarter, we have both got a maturity at Illinois power, as well as maturity of a term loan at the Ameren Corp level.

Okay. And looking -- I guess reflecting on the commentary in the previous discussion, do you expect the credit profile of the company to improve in 2010, absent equity issuance?

Again, we're not really commenting. I think right now in terms of 2010 guidance in any way. And again, I'd go back to my earlier statement that over time, we're targeting those in BBB flat kind of issuer credit ratings at Ameren Corp and we'll be working towards that.

Okay. And finally, on your 2000 -- this Illinois power auction that's going to happen. Would you anticipate filling out a piece of your 2010 and 2011 open position? Or how far out does the procurement extend? Does it go beyond 2011?

Well what it does is, it's really for 2 MISO planning years so it does extend out for the first half of 2011 . But again, I wouldn't comment again, on either how many megawatt hours, or at what price we'd offer in for those planning

So, you have the opportunity to lock in some of your position for the first half of 2011, but not the second half of 2011?

That is correct.

Can you remind us your open position for 2011?

The major significant hedges we have out there Steven, is the swaps that were done as part of the settlement, which was about 8.8 million megawatt hours.

Thank you very much. Appreciate your time.

Thank you and our next question comes from the line of John Cowen from Citi. Please go ahead.

Hi, thinks. I just had a question about your environmental spending in Illinois. Specifically, what was requested from the ICB and what is left to spend?

John, you're breaking up.

Sorry. The request of the ICB, what was approved, and what is left to spend in in order for you to comply with the combined pollutant standard in Illinois?

John, repeat the question. I think you're asking something about the Illinois MPS.

I think the question is the capitalization of--

So 300 is deferred. What is left to spend in order to be in compliance with the multi, the MPS?

We have -- I guess I'd point you to the 10-K and our 10-Q which will be filed in a week or so here. We'll have the numbers related to our environmental expenditures. We have a separate table, in both by legal entity. And those numbers are pretty current. They do include the amount that we, to the extent that we're successful the variance we're requesting, we would be able to remove those numbers from those estimates. But the 10-K numbers, I would again refer you back to those. And hopefully, we'll be able to take as Marty mentioned 300 million out of that for the variance request.

Thanks.

Thank you. And our next question comes from the line of Gregg Orrill from Barclays Capital. Please go ahead.

Thanks a lot. In the event that the sale of the Illinois coal plants went well, would it be in your strategy to continue to look at divesting out of unregulated generation? Or is that not really the approach here?

Greg, we wouldn't generally comment on potential sales or purchases of assets. We wouldn't answer that question.

Okay. Related to those assets, how much was in your environmental CapEx budget that you could potentially be divesting?

I think the answer to that is it's probably a minimal amount. I don't have the numbers right in front of me. But I think it's a minimal amount.

Okay. Thanks a lot.

Thank you. And our next question comes from the line of Michael Lapides from Goldman Sachs. Please go ahead.

Hey, guys. Real quick, what are you seeing in terms of coal to gas switching in the Midwest right now?

In what respect? I'm not really sure. I mean -- the question -- right now gas is at a very low level and it looks like it's going to stay at a low level. I think its going to be on the margin more than it has been in the past. But other than that, all the commodities are dropping right now. So I really couldn't speculate right now, how much switching there would be.

I was curious whether you're seeing reduced capacity factors out of your nonrate regulated coal plants.

I think we are seeing reduced capacity factors. I think thats due to a lot of -- it's not necessarily due to gas switching. Some of it is just due to less loads that we are seeing on the system. And generally, people taking less units out for maintenance activities because of the economic conditions right now.

Got it. Okay. I appreciate it, guys. Thank you.

Thanks, Mike.

Our next question comes from the line of Phyllis Gray Dwight Asset Management. Please go ahead.

Good morning.

Good morning, Phyllis.

The Noranda plant that has been down, do you know if repairs have been made such that the plant could be online if they chose to ramp up?

This is Tom Voss. I guess it's hard to comment exactly what they're doing. But they are making repairs. We are seeing improvements in their load as time goes on incrementally, month by month. How far they go and how quickly they go, is really -- we have no control over that. We're just watching what they're doing. But they are continuing to grow their load as we speak.

Okay. So they are able to take power.

They've been taking power through the whole process. It's just that it's been a reduced level. And then they started ramping up from the reduced level incrementally, day by day, week by week.

I see. And I had seen in the press that they had opposed the CWIP bill in Missouri. And wondered if there was any economic connection between the delay and them starting back up again.

It is correct. They have opposed that bill in Missouri. They were very active in opposing it. Since really, it wouldn't --none of the costs would have taken effect until way out in the 2013 to '15 time frames, we dont think it should have any relationship to current economic conditions. But otherwise, the reasons for opposing it, you'd have to ask them. I really don't know. Their lines, by the way, were made up of a lot of little pods. They have three major lines and 100 pods in each line. And one line wasn't damaged, and one line was partially damaged, and one line was badly damaged. So that's kind of how they're moving things back.

I see. And you mentioned during the prepared remarks or someone mentioned during the prepared remarks an impairment. And could you expand on what that was? A noncash impairment.

Yes, Phyliss, this is Bruce. We, at the Cilcorp level had an impairment of goodwill of $462 million. And of course, that's noncash. And typically, the review process for that is an annual process. But at year-end we indicated in our 10-K that we were only, the fair value of those was only nominally exceeding the carrying values. So we continue to monitor possible impairment triggers. And in the first quarter we determined with falling stock prices and falling power prices that we needed to take another look at it. So at Cilcorp level, we did determine that Cilcorp's Illinois regulated segment and competitive generation segment goodwill was impaired. We fully impaired the competitive generation segment and partially impaired the Illinois regulated segment.

Thank you, Bruce. I think our allotted time has expired. So I just want to thank everyone for participating in this call. Let me remind you again that this call is available through May 7th on playback and for one year on our website. The announcement carries instructions on listening to the playback. You will also, you can also call the contacts listed on our news releases. Financial analysts can call me, Doug Fischer. Media should call Susan Gallagher. Our numbers are on the press release we issued. Once again, I want to thank you and we look forward to seeing a number of you at the AGA financial forum. Thank you.

Thank you. And our next question comes from the line of Yiktat Fung. Please go ahead.

Operator, I think our time has expired.

Okay. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.