ITEM 1. FINANCIAL STATEMENTS.
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) (In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
Operating Revenues:
|
|
|
|
Electric
|
$
|
1,102
|
|
|
$
|
1,143
|
|
Gas
|
332
|
|
|
413
|
|
Total operating revenues
|
1,434
|
|
|
1,556
|
|
Operating Expenses:
|
|
|
|
Fuel
|
203
|
|
|
206
|
|
Purchased power
|
138
|
|
|
139
|
|
Gas purchased for resale
|
152
|
|
|
236
|
|
Other operations and maintenance
|
400
|
|
|
401
|
|
Depreciation and amortization
|
207
|
|
|
193
|
|
Taxes other than income taxes
|
114
|
|
|
125
|
|
Total operating expenses
|
1,214
|
|
|
1,300
|
|
Operating Income
|
220
|
|
|
256
|
|
Other Income and Expense:
|
|
|
|
Miscellaneous income
|
20
|
|
|
19
|
|
Miscellaneous expense
|
7
|
|
|
11
|
|
Total other income
|
13
|
|
|
8
|
|
Interest Charges
|
95
|
|
|
88
|
|
Income Before Income Taxes
|
138
|
|
|
176
|
|
Income Taxes
|
31
|
|
|
66
|
|
Income from Continuing Operations
|
107
|
|
|
110
|
|
Income from Discontinued Operations, Net of Taxes
|
—
|
|
|
—
|
|
Net Income
|
107
|
|
|
110
|
|
Less: Net Income from Continuing Operations Attributable to Noncontrolling Interests
|
2
|
|
|
2
|
|
Net Income Attributable to Ameren Common Shareholders:
|
|
|
|
Continuing Operations
|
105
|
|
|
108
|
|
Discontinued Operations
|
—
|
|
|
—
|
|
Net Income Attributable to Ameren Common Shareholders
|
$
|
105
|
|
|
$
|
108
|
|
|
|
|
|
Earnings per Common Share – Basic and Diluted:
|
|
|
|
Continuing Operations
|
$
|
0.43
|
|
|
$
|
0.45
|
|
Discontinued Operations
|
—
|
|
|
—
|
|
Earnings per Common Share – Basic and Diluted
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
|
|
|
Dividends per Common Share
|
$
|
0.425
|
|
|
$
|
0.41
|
|
Average Common Shares Outstanding – Basic
|
242.6
|
|
|
242.6
|
|
The accompanying notes are an integral part of these consolidated financial statements.
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (In millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
Income from Continuing Operations
|
$
|
107
|
|
|
$
|
110
|
|
Other Comprehensive Income from Continuing Operations, Net of Taxes
|
|
|
|
Pension and other postretirement benefit plan activity, net of income taxes of $1 and $-, respectively
|
(2
|
)
|
|
—
|
|
Comprehensive Income from Continuing Operations
|
105
|
|
|
110
|
|
Less: Comprehensive Income from Continuing Operations Attributable to Noncontrolling Interests
|
2
|
|
|
2
|
|
Comprehensive Income Attributable to Ameren Common Shareholders
|
$
|
103
|
|
|
$
|
108
|
|
The accompanying notes are an integral part of these consolidated financial statements.
AMEREN CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited) (In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
ASSETS
|
|
|
|
Current Assets:
|
|
|
|
Cash and cash equivalents
|
$
|
13
|
|
|
$
|
292
|
|
Accounts receivable – trade (less allowance for doubtful accounts of $21 and $19, respectively)
|
428
|
|
|
388
|
|
Unbilled revenue
|
186
|
|
|
239
|
|
Miscellaneous accounts and notes receivable
|
56
|
|
|
98
|
|
Materials and supplies
|
483
|
|
|
538
|
|
Current regulatory assets
|
215
|
|
|
260
|
|
Other current assets
|
63
|
|
|
88
|
|
Assets of discontinued operations
|
14
|
|
|
14
|
|
Total current assets
|
1,458
|
|
|
1,917
|
|
Property and Plant, Net
|
19,000
|
|
|
18,799
|
|
Investments and Other Assets:
|
|
|
|
Nuclear decommissioning trust fund
|
567
|
|
|
556
|
|
Goodwill
|
411
|
|
|
411
|
|
Regulatory assets
|
1,376
|
|
|
1,382
|
|
Other assets
|
573
|
|
|
575
|
|
Total investments and other assets
|
2,927
|
|
|
2,924
|
|
TOTAL ASSETS
|
$
|
23,385
|
|
|
$
|
23,640
|
|
LIABILITIES AND EQUITY
|
|
|
|
Current Liabilities:
|
|
|
|
Current maturities of long-term debt
|
$
|
135
|
|
|
$
|
395
|
|
Short-term debt
|
581
|
|
|
301
|
|
Accounts and wages payable
|
429
|
|
|
777
|
|
Taxes accrued
|
77
|
|
|
43
|
|
Interest accrued
|
99
|
|
|
89
|
|
Customer deposits
|
98
|
|
|
100
|
|
Current regulatory liabilities
|
87
|
|
|
80
|
|
Other current liabilities
|
305
|
|
|
279
|
|
Liabilities of discontinued operations
|
28
|
|
|
29
|
|
Total current liabilities
|
1,839
|
|
|
2,093
|
|
Long-term Debt, Net
|
6,881
|
|
|
6,880
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
Accumulated deferred income taxes, net
|
3,928
|
|
|
3,885
|
|
Accumulated deferred investment tax credits
|
59
|
|
|
60
|
|
Regulatory liabilities
|
1,931
|
|
|
1,905
|
|
Asset retirement obligations
|
625
|
|
|
618
|
|
Pension and other postretirement benefits
|
581
|
|
|
580
|
|
Other deferred credits and liabilities
|
530
|
|
|
531
|
|
Total deferred credits and other liabilities
|
7,654
|
|
|
7,579
|
|
Commitments and Contingencies (Notes 2, 9, and 10)
|
|
|
|
|
|
Ameren Corporation Shareholders’ Equity:
|
|
|
|
Common stock, $.01 par value, 400.0 shares authorized – shares outstanding of 242.6
|
2
|
|
|
2
|
|
Other paid-in capital, principally premium on common stock
|
5,539
|
|
|
5,616
|
|
Retained earnings
|
1,333
|
|
|
1,331
|
|
Accumulated other comprehensive loss
|
(5
|
)
|
|
(3
|
)
|
Total Ameren Corporation shareholders’ equity
|
6,869
|
|
|
6,946
|
|
Noncontrolling Interests
|
142
|
|
|
142
|
|
Total equity
|
7,011
|
|
|
7,088
|
|
TOTAL LIABILITIES AND EQUITY
|
$
|
23,385
|
|
|
$
|
23,640
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
|
|
|
|
|
|
AMEREN CORPORATION
|
CONSOLIDATED STATEMENT OF CASH FLOWS
|
(Unaudited) (In millions)
|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
Cash Flows From Operating Activities:
|
|
|
|
Net income
|
$
|
107
|
|
|
$
|
110
|
|
(Income) from discontinued operations, net of taxes
|
—
|
|
|
—
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
210
|
|
|
195
|
|
Amortization of nuclear fuel
|
24
|
|
|
23
|
|
Amortization of debt issuance costs and premium/discounts
|
6
|
|
|
5
|
|
Deferred income taxes and investment tax credits, net
|
42
|
|
|
59
|
|
Allowance for equity funds used during construction
|
(8
|
)
|
|
(5
|
)
|
Share-based compensation costs
|
6
|
|
|
8
|
|
Other
|
(3
|
)
|
|
(11
|
)
|
Changes in assets and liabilities:
|
|
|
|
Receivables
|
55
|
|
|
(48
|
)
|
Materials and supplies
|
55
|
|
|
75
|
|
Accounts and wages payable
|
(246
|
)
|
|
(215
|
)
|
Taxes accrued
|
30
|
|
|
35
|
|
Regulatory assets and liabilities
|
81
|
|
|
62
|
|
Assets, other
|
4
|
|
|
14
|
|
Liabilities, other
|
(25
|
)
|
|
(21
|
)
|
Pension and other postretirement benefits
|
9
|
|
|
27
|
|
Counterparty collateral, net
|
3
|
|
|
(2
|
)
|
Net cash provided by operating activities – continuing operations
|
350
|
|
|
311
|
|
Net cash provided by (used in) operating activities – discontinued operations
|
(1
|
)
|
|
1
|
|
Net cash provided by operating activities
|
349
|
|
|
312
|
|
Cash Flows From Investing Activities:
|
|
|
|
Capital expenditures
|
(496
|
)
|
|
(417
|
)
|
Nuclear fuel expenditures
|
(21
|
)
|
|
(17
|
)
|
Purchases of securities – nuclear decommissioning trust fund
|
(130
|
)
|
|
(84
|
)
|
Sales and maturities of securities – nuclear decommissioning trust fund
|
125
|
|
|
79
|
|
Proceeds from note receivable – Marketing Company
|
—
|
|
|
5
|
|
Contributions to note receivable – Marketing Company
|
—
|
|
|
(5
|
)
|
Other
|
(2
|
)
|
|
—
|
|
Net cash used in investing activities – continuing operations
|
(524
|
)
|
|
(439
|
)
|
Net cash provided by investing activities – discontinued operations
|
14
|
|
|
—
|
|
Net cash used in investing activities
|
(510
|
)
|
|
(439
|
)
|
Cash Flows From Financing Activities:
|
|
|
|
Dividends on common stock
|
(103
|
)
|
|
(99
|
)
|
Dividends paid to noncontrolling interest holders
|
(2
|
)
|
|
(2
|
)
|
Short-term debt, net
|
280
|
|
|
241
|
|
Maturity of long-term debt
|
(260
|
)
|
|
—
|
|
Employee payroll taxes related to share-based payments
|
(32
|
)
|
|
(12
|
)
|
Other
|
(1
|
)
|
|
—
|
|
Net cash provided by (used in) financing activities – continuing operations
|
(118
|
)
|
|
128
|
|
Net change in cash and cash equivalents
|
(279
|
)
|
|
1
|
|
Cash and cash equivalents at beginning of year
|
292
|
|
|
5
|
|
Cash and cash equivalents at end of period
|
$
|
13
|
|
|
$
|
6
|
|
The accompanying notes are an integral part of these consolidated financial statements.
UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (In millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
Operating Revenues:
|
|
|
|
Electric
|
$
|
694
|
|
|
$
|
742
|
|
Gas
|
47
|
|
|
58
|
|
Total operating revenues
|
741
|
|
|
800
|
|
Operating Expenses:
|
|
|
|
Fuel
|
203
|
|
|
206
|
|
Purchased power
|
42
|
|
|
39
|
|
Gas purchased for resale
|
21
|
|
|
31
|
|
Other operations and maintenance
|
212
|
|
|
211
|
|
Depreciation and amortization
|
127
|
|
|
118
|
|
Taxes other than income taxes
|
73
|
|
|
80
|
|
Total operating expenses
|
678
|
|
|
685
|
|
Operating Income
|
63
|
|
|
115
|
|
Other Income and Expense:
|
|
|
|
Miscellaneous income
|
15
|
|
|
11
|
|
Miscellaneous expense
|
2
|
|
|
3
|
|
Total other income
|
13
|
|
|
8
|
|
Interest Charges
|
52
|
|
|
55
|
|
Income Before Income Taxes
|
24
|
|
|
68
|
|
Income Taxes
|
9
|
|
|
26
|
|
Net Income
|
15
|
|
|
42
|
|
Other Comprehensive Income
|
—
|
|
|
—
|
|
Comprehensive Income
|
$
|
15
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
Net Income
|
$
|
15
|
|
|
$
|
42
|
|
Preferred Stock Dividends
|
1
|
|
|
1
|
|
Net Income Available to Common Shareholder
|
$
|
14
|
|
|
$
|
41
|
|
The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
BALANCE SHEET
(Unaudited) (In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
ASSETS
|
|
|
|
Current Assets:
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
199
|
|
Advances to money pool
|
—
|
|
|
36
|
|
Accounts receivable – trade (less allowance for doubtful accounts of $6 and $7, respectively)
|
150
|
|
|
174
|
|
Accounts receivable – affiliates
|
16
|
|
|
54
|
|
Unbilled revenue
|
105
|
|
|
128
|
|
Miscellaneous accounts and notes receivable
|
44
|
|
|
78
|
|
Materials and supplies
|
389
|
|
|
387
|
|
Current regulatory assets
|
55
|
|
|
89
|
|
Other current assets
|
29
|
|
|
41
|
|
Total current assets
|
788
|
|
|
1,186
|
|
Property and Plant, Net
|
11,181
|
|
|
11,183
|
|
Investments and Other Assets:
|
|
|
|
Nuclear decommissioning trust fund
|
567
|
|
|
556
|
|
Regulatory assets
|
591
|
|
|
605
|
|
Other assets
|
316
|
|
|
321
|
|
Total investments and other assets
|
1,474
|
|
|
1,482
|
|
TOTAL ASSETS
|
$
|
13,443
|
|
|
$
|
13,851
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
Current Liabilities:
|
|
|
|
Current maturities of long-term debt
|
$
|
6
|
|
|
$
|
266
|
|
Short-term debt
|
165
|
|
|
—
|
|
Accounts and wages payable
|
174
|
|
|
417
|
|
Accounts payable – affiliates
|
59
|
|
|
56
|
|
Taxes accrued
|
64
|
|
|
31
|
|
Interest accrued
|
50
|
|
|
59
|
|
Current regulatory liabilities
|
15
|
|
|
28
|
|
Other current liabilities
|
132
|
|
|
120
|
|
Total current liabilities
|
665
|
|
|
977
|
|
Long-term Debt, Net
|
3,845
|
|
|
3,844
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
Accumulated deferred income taxes, net
|
2,857
|
|
|
2,844
|
|
Accumulated deferred investment tax credits
|
57
|
|
|
58
|
|
Regulatory liabilities
|
1,181
|
|
|
1,172
|
|
Asset retirement obligations
|
619
|
|
|
612
|
|
Pension and other postretirement benefits
|
236
|
|
|
234
|
|
Other deferred credits and liabilities
|
27
|
|
|
28
|
|
Total deferred credits and other liabilities
|
4,977
|
|
|
4,948
|
|
Commitments and Contingencies (Notes 2, 8, 9, and 10)
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
Common stock, $5 par value, 150.0 shares authorized – 102.1 shares outstanding
|
511
|
|
|
511
|
|
Other paid-in capital, principally premium on common stock
|
1,822
|
|
|
1,822
|
|
Preferred stock
|
80
|
|
|
80
|
|
Retained earnings
|
1,543
|
|
|
1,669
|
|
Total shareholders’ equity
|
3,956
|
|
|
4,082
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
13,443
|
|
|
$
|
13,851
|
|
The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
Cash Flows From Operating Activities:
|
|
|
|
Net income
|
$
|
15
|
|
|
$
|
42
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
130
|
|
|
121
|
|
Amortization of nuclear fuel
|
24
|
|
|
23
|
|
Amortization of debt issuance costs and premium/discounts
|
2
|
|
|
2
|
|
Deferred income taxes and investment tax credits, net
|
9
|
|
|
21
|
|
Allowance for equity funds used during construction
|
(7
|
)
|
|
(4
|
)
|
Changes in assets and liabilities:
|
|
|
|
Receivables
|
81
|
|
|
60
|
|
Materials and supplies
|
(2
|
)
|
|
(14
|
)
|
Accounts and wages payable
|
(172
|
)
|
|
(171
|
)
|
Taxes accrued
|
31
|
|
|
40
|
|
Regulatory assets and liabilities
|
45
|
|
|
27
|
|
Assets, other
|
5
|
|
|
3
|
|
Liabilities, other
|
3
|
|
|
(5
|
)
|
Pension and other postretirement benefits
|
5
|
|
|
12
|
|
Net cash provided by operating activities
|
169
|
|
|
157
|
|
Cash Flows From Investing Activities:
|
|
|
|
Capital expenditures
|
(178
|
)
|
|
(145
|
)
|
Nuclear fuel expenditures
|
(21
|
)
|
|
(17
|
)
|
Purchases of securities – nuclear decommissioning trust fund
|
(130
|
)
|
|
(84
|
)
|
Sales and maturities of securities – nuclear decommissioning trust fund
|
125
|
|
|
79
|
|
Money pool advances, net
|
36
|
|
|
—
|
|
Other
|
(2
|
)
|
|
(2
|
)
|
Net cash used in investing activities
|
(170
|
)
|
|
(169
|
)
|
Cash Flows From Financing Activities:
|
|
|
|
Dividends on common stock
|
(140
|
)
|
|
(315
|
)
|
Dividends on preferred stock
|
(1
|
)
|
|
(1
|
)
|
Short-term debt, net
|
165
|
|
|
43
|
|
Money pool borrowings, net
|
—
|
|
|
61
|
|
Maturity of long-term debt
|
(260
|
)
|
|
—
|
|
Capital contribution from parent
|
38
|
|
|
224
|
|
Net cash (used in) provided by financing activities
|
(198
|
)
|
|
12
|
|
Net change in cash and cash equivalents
|
(199
|
)
|
|
—
|
|
Cash and cash equivalents at beginning of year
|
199
|
|
|
1
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
1
|
|
The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.
AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (In millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
Operating Revenues:
|
|
|
|
Electric
|
$
|
392
|
|
|
$
|
390
|
|
Gas
|
285
|
|
|
355
|
|
Total operating revenues
|
677
|
|
|
745
|
|
Operating Expenses:
|
|
|
|
Purchased power
|
104
|
|
|
102
|
|
Gas purchased for resale
|
131
|
|
|
205
|
|
Other operations and maintenance
|
194
|
|
|
202
|
|
Depreciation and amortization
|
77
|
|
|
73
|
|
Taxes other than income taxes
|
38
|
|
|
43
|
|
Total operating expenses
|
544
|
|
|
625
|
|
Operating Income
|
133
|
|
|
120
|
|
Other Income and Expense:
|
|
|
|
Miscellaneous income
|
5
|
|
|
7
|
|
Miscellaneous expense
|
5
|
|
|
5
|
|
Total other income
|
—
|
|
|
2
|
|
Interest Charges
|
35
|
|
|
33
|
|
Income Before Income Taxes
|
98
|
|
|
89
|
|
Income Taxes
|
38
|
|
|
35
|
|
Net Income
|
60
|
|
|
54
|
|
Other Comprehensive Loss, Net of Taxes:
|
|
|
|
Pension and other postretirement benefit plan activity, net of income taxes (benefit) of $(1) and $(1), respectively
|
(1
|
)
|
|
(1
|
)
|
Comprehensive Income
|
$
|
59
|
|
|
$
|
53
|
|
|
|
|
|
|
|
|
|
Net Income
|
$
|
60
|
|
|
$
|
54
|
|
Preferred Stock Dividends
|
1
|
|
|
1
|
|
Net Income Available to Common Shareholder
|
$
|
59
|
|
|
$
|
53
|
|
The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)
BALANCE SHEET
(Unaudited) (In millions)
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
ASSETS
|
|
|
|
Current Assets:
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
71
|
|
Advances to money pool
|
58
|
|
|
—
|
|
Accounts receivable – trade (less allowance for doubtful accounts of $15 and $12, respectively)
|
262
|
|
|
204
|
|
Accounts receivable – affiliates
|
10
|
|
|
22
|
|
Unbilled revenue
|
81
|
|
|
111
|
|
Miscellaneous accounts receivable
|
12
|
|
|
19
|
|
Materials and supplies
|
94
|
|
|
151
|
|
Current regulatory assets
|
156
|
|
|
167
|
|
Other current assets
|
13
|
|
|
15
|
|
Total current assets
|
686
|
|
|
760
|
|
Property and Plant, Net
|
6,956
|
|
|
6,848
|
|
Investments and Other Assets:
|
|
|
|
Goodwill
|
411
|
|
|
411
|
|
Regulatory assets
|
777
|
|
|
771
|
|
Other assets
|
114
|
|
|
113
|
|
Total investments and other assets
|
1,302
|
|
|
1,295
|
|
TOTAL ASSETS
|
$
|
8,944
|
|
|
$
|
8,903
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
Current Liabilities:
|
|
|
|
Current maturities of long-term debt
|
$
|
129
|
|
|
$
|
129
|
|
Accounts and wages payable
|
180
|
|
|
249
|
|
Accounts payable – affiliates
|
55
|
|
|
66
|
|
Taxes accrued
|
12
|
|
|
13
|
|
Interest accrued
|
44
|
|
|
28
|
|
Customer deposits
|
67
|
|
|
69
|
|
Mark-to-market derivative liabilities
|
51
|
|
|
45
|
|
Current environmental remediation
|
38
|
|
|
28
|
|
Current regulatory liabilities
|
55
|
|
|
39
|
|
Other current liabilities
|
82
|
|
|
86
|
|
Total current liabilities
|
713
|
|
|
752
|
|
Long-term Debt, Net
|
2,343
|
|
|
2,342
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
Accumulated deferred income taxes, net
|
1,518
|
|
|
1,480
|
|
Accumulated deferred investment tax credits
|
2
|
|
|
2
|
|
Regulatory liabilities
|
749
|
|
|
732
|
|
Pension and other postretirement benefits
|
271
|
|
|
271
|
|
Environmental remediation
|
187
|
|
|
205
|
|
Other deferred credits and liabilities
|
236
|
|
|
222
|
|
Total deferred credits and other liabilities
|
2,963
|
|
|
2,912
|
|
Commitments and Contingencies (Notes 2, 8, and 9)
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
Common stock, no par value, 45.0 shares authorized – 25.5 shares outstanding
|
—
|
|
|
—
|
|
Other paid-in capital
|
2,005
|
|
|
2,005
|
|
Preferred stock
|
62
|
|
|
62
|
|
Retained earnings
|
854
|
|
|
825
|
|
Accumulated other comprehensive income
|
4
|
|
|
5
|
|
Total shareholders’ equity
|
2,925
|
|
|
2,897
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
8,944
|
|
|
$
|
8,903
|
|
The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)
STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
Cash Flows From Operating Activities:
|
|
|
|
Net income
|
$
|
60
|
|
|
$
|
54
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
77
|
|
|
72
|
|
Amortization of debt issuance costs and premium/discounts
|
4
|
|
|
4
|
|
Deferred income taxes and investment tax credits, net
|
37
|
|
|
13
|
|
Other
|
(3
|
)
|
|
(3
|
)
|
Changes in assets and liabilities:
|
|
|
|
Receivables
|
(22
|
)
|
|
(41
|
)
|
Materials and supplies
|
57
|
|
|
89
|
|
Accounts and wages payable
|
(33
|
)
|
|
(11
|
)
|
Taxes accrued
|
(3
|
)
|
|
24
|
|
Regulatory assets and liabilities
|
32
|
|
|
33
|
|
Assets, other
|
7
|
|
|
5
|
|
Liabilities, other
|
12
|
|
|
4
|
|
Pension and other postretirement benefits
|
4
|
|
|
11
|
|
Net cash provided by operating activities
|
229
|
|
|
254
|
|
Cash Flows From Investing Activities:
|
|
|
|
Capital expenditures
|
(211
|
)
|
|
(174
|
)
|
Money pool advances, net
|
(58
|
)
|
|
(33
|
)
|
Net cash used in investing activities
|
(269
|
)
|
|
(207
|
)
|
Cash Flows From Financing Activities:
|
|
|
|
Dividends on common stock
|
(30
|
)
|
|
—
|
|
Dividends on preferred stock
|
(1
|
)
|
|
(1
|
)
|
Short-term debt, net
|
—
|
|
|
(32
|
)
|
Money pool borrowings, net
|
—
|
|
|
(15
|
)
|
Net cash used in financing activities
|
(31
|
)
|
|
(48
|
)
|
Net change in cash and cash equivalents
|
(71
|
)
|
|
(1
|
)
|
Cash and cash equivalents at beginning of year
|
71
|
|
|
1
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
—
|
|
The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.
AMEREN CORPORATION (Consolidated)
UNION ELECTRIC COMPANY (d/b/a Ameren Missouri)
AMEREN ILLINOIS COMPANY (d/b/a Ameren Illinois)
COMBINED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 2016
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005. Ameren’s primary assets are its equity interests in its subsidiaries, including Ameren Missouri and Ameren Illinois. Ameren’s subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. Dividends on Ameren’s common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries. Ameren’s principal subsidiaries are listed below. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.
|
|
•
|
Union Electric Company, doing business as Ameren Missouri, operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas transmission and distribution business in Missouri.
|
|
|
•
|
Ameren Illinois Company, doing business as Ameren Illinois, operates rate-regulated electric and natural gas transmission and distribution businesses in Illinois.
|
Ameren has various other subsidiaries that conduct activities such as the provision of shared services. Ameren also has a subsidiary, ATXI, that operates a FERC rate-regulated electric transmission business. ATXI is developing MISO-approved electric transmission projects, including the Illinois Rivers, Spoon River, and Mark Twain projects. Ameren is also pursuing projects to improve electric transmission system reliability within Ameren Missouri's and Ameren Illinois' service territories as well as
competitive electric transmission investment opportunities outside of these territories, including investments outside of MISO.
Unless otherwise stated, these notes to Ameren’s financial statements exclude discontinued operations for all periods presented. See Note 12 - Discontinued Operations in this report and Note 16 - Divestiture Transactions and Discontinued Operations under Part II, Item 8, of the Form 10-K for additional information.
Ameren’s financial statements are prepared on a consolidated basis and therefore include the accounts of its majority-owned subsidiaries. All intercompany transactions have been eliminated. Ameren Missouri and Ameren Illinois have no subsidiaries, and therefore their financial statements are not prepared on a consolidated basis. All tabular dollar amounts are in millions, unless otherwise indicated.
Our accounting policies conform to GAAP. Our financial statements reflect all adjustments (which include normal, recurring adjustments) that are necessary, in our opinion, for a fair statement of our results. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The results of operations of an interim period may not give a true indication of results that may be expected for a full year. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K.
Asset Retirement Obligations
AROs at Ameren, Ameren Missouri, and Ameren Illinois increased at March 31, 2016, compared to December 31, 2015, to reflect the accretion of obligations to their fair value, partially offset by immaterial settlements.
Share-based Compensation
A summary of nonvested performance share units at
March 31, 2016
, and changes during the
three months ended March 31, 2016
, under the 2006 Incentive Plan and the 2014 Incentive Plan are presented below:
|
|
|
|
|
|
|
|
Performance Share Units
|
|
Share Units
|
Weighted-average Fair Value per Share Unit
|
Nonvested at January 1, 2016
|
1,024,870
|
|
$
|
46.08
|
|
Granted
(a)
|
580,737
|
|
44.13
|
|
Forfeitures
|
(12,315
|
)
|
45.12
|
|
Vested
(b)
|
(8,265
|
)
|
42.91
|
|
Nonvested at March 31, 2016
|
1,585,027
|
|
$
|
45.39
|
|
|
|
(a)
|
Performance share units granted to certain executive and nonexecutive officers and other eligible employees under the 2014 Incentive Plan.
|
|
|
(b)
|
Performance share units vested due to the attainment of retirement eligibility by certain employees. Actual shares issued for retirement-eligible employees will vary depending on actual performance over the
three
-year measurement period.
|
The fair value of each performance share unit awarded in 2016 under the 2014 Incentive Plan was determined to be
$44.13
, which was based on Ameren’s closing common share price of
$43.23
at
December 31, 2015
, and lattice simulations.
Lattice simulations are used to estimate expected share payout based on Ameren’s total shareholder return for a
three
-year performance period relative to the designated peer group beginning January 1, 2016. The simulations can produce a greater fair value for the performance share unit than the applicable closing common share price because they include the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also included a
three
-year risk-free rate of
1.31%
, volatility of
15%
to
20%
for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period.
Excise Taxes
Ameren Missouri and Ameren Illinois collect certain excise taxes from customers that are levied on the sale or distribution of natural gas and electricity. Excise taxes are levied on Ameren Missouri’s electric and natural gas businesses and on Ameren Illinois’ natural gas business and are recorded gross in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” on the statement of income or the statement of income and comprehensive income. Excise taxes for electric service in Illinois are levied on the customer and are therefore not included in Ameren Illinois’ revenues and expenses. The following table presents excise taxes recorded in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” for the
three months ended March 31, 2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
2016
|
|
2015
|
Ameren Missouri
|
$
|
30
|
|
|
$
|
34
|
|
Ameren Illinois
|
20
|
|
|
23
|
|
Ameren
|
$
|
50
|
|
|
$
|
57
|
|
Earnings Per Share
There were no material differences between Ameren’s basic and diluted earnings per share amounts for the
three months ended March 31, 2016
and 2015. The assumed settlement of dilutive performance share units had an immaterial impact on earnings per share. The calculation of diluted earnings per share reflected the adoption of FASB guidance related to employee share-based payment accounting discussed below.
Accounting and Reporting Developments
Below is a summary of recently issued authoritative accounting standards relevant to the Ameren Companies.
Revenue from Contracts with Customers
In May 2014, the FASB issued authoritative accounting guidance that changes the criteria for recognizing revenue from a contract with a customer. The underlying principle of the guidance is that an entity will recognize revenue for the transfer of promised goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or
services. The guidance also requires additional disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Entities can apply the guidance retrospectively to each reporting period presented or retrospectively by recording a cumulative effect adjustment to retained earnings in the period of initial adoption. The Ameren Companies are currently assessing the impacts of this guidance on their results of operations, financial position, and disclosures, including their accounting for contributions in aid of construction and similar arrangements, as well as the transition method that they will use to adopt the guidance. In August 2015, the FASB deferred the effective date of this revenue guidance to the first quarter of 2018, with an option for entities to early adopt in the first quarter of 2017. The Ameren Companies do not expect to early adopt this guidance.
Amendments to the Consolidation Analysis
In February 2015, the FASB issued authoritative accounting guidance that amends the consolidation analysis for variable interest entities and voting interest entities. The new guidance affects (1) limited partnerships, similar legal entities, and certain investment funds, (2) the evaluation of fees paid to a decision maker or service provider as a variable interest, (3) how fee arrangements impact the primary beneficiary determination, and (4) the evaluation of related party relationships on the primary beneficiary determination. The adoption of this guidance in the first quarter of 2016 did not impact the Ameren Companies’ results of operations, financial position, cash flows, or disclosures.
Leases
In February 2016, the FASB issued authoritative accounting guidance that will require an entity to recognize assets and liabilities arising from a lease. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease will depend primarily on its classification as a finance or operating lease. The guidance also requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. The guidance will be effective for the Ameren Companies in the first quarter of 2019 with an option for entities to early adopt. Upon adoption, the Ameren Companies will recognize and measure operating leases on their respective balance sheets at the beginning of the earliest period presented. The Ameren Companies are currently assessing the impacts of this guidance on their results of operations, financial position, cash flows, and disclosures.
Improvements to Employee Share-Based Payment Accounting
In March 2016, the FASB issued authoritative accounting guidance that simplifies the accounting for share-based payment transactions, including the income tax consequences, the calculation of diluted earnings per share, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Ameren determines for each performance share unit award whether the difference between
the deduction for tax purposes and the compensation cost recognized for financial reporting purposes results in either an excess tax benefit or an excess tax deficit. Previously, excess tax benefits were recognized in "Other paid-in capital" on Ameren’s consolidated balance sheet, and in certain cases, excess tax deficits were recognized in “Income taxes” on Ameren’s consolidated income statement. The new guidance increases income statement volatility by requiring all excess tax benefits and deficits to be recognized in “Income taxes,” and treated as discrete items in the period in which they occur. Ameren adopted this guidance in the first quarter of 2016, which resulted in recognition of a
$21 million
income tax benefit during the period. For the three months ended March 31, 2015, Ameren reclassified, for comparison purposes,
$2 million
of excess tax benefits on the statement of cash flows from financing to operating activity, and
$12 million
of employee payroll taxes related to share-based payments from operating to financing activity.
NOTE 2 - RATE AND REGULATORY MATTERS
Below is a summary of updates to significant regulatory proceedings and related lawsuits. See also Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K. We are unable to predict the ultimate outcome of these matters, the timing of the final decisions of the various agencies and courts, or the impact on our results of operations, financial position, or liquidity.
Missouri
MEEIA 2013
The MEEIA 2013 performance incentive allowed Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy efficiency goals, including
$19 million
if
100%
of the goals were achieved during the
three
-year period, with the potential to earn a larger performance incentive if Ameren Missouri’s energy savings exceeded those goals. In November 2015, the MoPSC issued an order that clarified how an input used in the calculation of the performance incentive would be determined. Ameren Missouri filed an appeal of the order with the Missouri Court of Appeals, Western District. If the Missouri Court of Appeals upholds the MoPSC order, the MEEIA 2013 performance incentive will be significantly less than the performance incentive calculated using Ameren Missouri’s interpretation. A decision from the Missouri Court of Appeals is expected in 2016. Separately, an order from the MoPSC determining the MEEIA 2013 performance incentive is also expected in 2016. Ameren Missouri has not recorded any revenues associated with the MEEIA 2013 performance incentive. Ameren Missouri believes it will ultimately be found to have exceeded
100%
of the customer energy efficiency goals, and it therefore expects to recognize revenues relating to the MEEIA 2013 performance incentive of at least
$19 million
in 2016.
Noranda
Ameren Missouri supplies electricity to Noranda’s aluminum smelter located in southeast Missouri under a long-term power supply agreement.
In the first quarter of 2016, Noranda
idled production at its aluminum smelter. In addition, Noranda filed voluntary petitions for a court-supervised restructuring process under Chapter 11 of the United States Bankruptcy Code.
Noranda stated it would maintain the flexibility to restart operations at the smelter should conditions allow. Ameren Missouri has been working with Noranda, legislators, and other stakeholders on a potential legislative solution to support Noranda’s operations. For utility service through March 31, 2016, Noranda prepaid an amount to Ameren Missouri in excess of its utility service usage. Ameren Missouri expects to be paid in full for utility services provided to Noranda.
In its April 2015 electric rate order, the MoPSC approved a rate design that established
$78 million
in annual revenues, net of fuel and purchased power costs, as Noranda’s portion of Ameren Missouri’s revenue requirement. The portion of Ameren Missouri’s annual revenue requirement reflected in Noranda’s electric rate is based on the smelter using approximately
4.2 million
megawatthours annually, which is almost
100%
of its operating capacity. Ameren Missouri’s rates, including those for Noranda, are seasonal. Noranda’s summer base rate (June through September) is
$45.78
per megawatthour, and its winter base rate (October through May) is
$31.11
per megawatthour.
In 2016, actual sales volumes to Noranda will be significantly below the sales volumes reflected in rates. As a result, Ameren Missouri will not fully recover its revenue requirement until rates are adjusted by the MoPSC in a future electric rate case to accurately reflect Noranda’s actual sales volumes. As a result of Noranda’s idled production described above, Ameren Missouri is applying a provision in its FAC tariff that, under certain circumstances, allows Ameren Missouri to retain a portion of the revenues from any off-system sales it makes as a result of reduced tariff sales to Noranda. The current market price of electricity is less than Noranda’s electric rate, and Ameren Missouri expects market prices to remain below Noranda’s electric rate during 2016. Accordingly, this FAC-tariff provision will not enable Ameren Missouri to fully recover its revenue requirement under current market conditions.
Ameren Missouri expects to file an electric rate case in 2016 to reflect additional infrastructure investments and rising costs, including depreciation, transmission service, and property tax expenses, and expects the resulting new rates to reflect Noranda’s actual sales volumes, which would prospectively eliminate the impact of the current revenue shortfall from Noranda sales levels.
The rate case would take place over a period of up to
11 months
from the date of filing.
Ameren Missouri may seek recovery of lost revenues in a filing with the MoPSC to recover certain costs incurred but not contemporaneously recovered by rate revenues as a result of Noranda's reduced operations. Ameren Missouri will continue to monitor Noranda’s
sales volumes and to evaluate regulatory and legislative options that might mitigate adverse financial impacts.
The reduction in Noranda’s sales volumes have adversely affected and will continue to adversely affect Ameren’s and Ameren Missouri’s results of operations, financial condition, and liquidity until customer rates are adjusted in a future rate case.
ATXI Transmission Projects
The Mark Twain project is a MISO-approved
95
-mile transmission line located in northeast Missouri.
In April 2016, the MoPSC granted ATXI a certificate of convenience and necessity for the Mark Twain project. Starting construction under the certificate is subject to ATXI obtaining assents from the five counties where the line will be constructed.
The Mark Twain project is expected to be completed in 2018. Extended difficulties in obtaining the assents could delay the completion date.
Illinois
IEIMA
Under the provisions of the IEIMA's performance-based formula rate-making framework, which currently extends through 2019, Ameren Illinois’ electric delivery service rates are subject to an annual revenue requirement reconciliation to its actual recoverable costs. Throughout each year, Ameren Illinois records a regulatory asset or a regulatory liability and a corresponding increase or decrease to operating revenues for any differences between the revenue requirement reflected in customer rates for that year and its estimate of the probable increase or decrease in the revenue requirement expected to ultimately be approved by the ICC based on that year's actual recoverable costs incurred. As of
March 31, 2016
, Ameren Illinois had recorded regulatory assets of
$9 million
,
$65 million
, and
$82 million
, to reflect its expected 2016 and 2015 revenue requirement reconciliation adjustments and the approved 2014 revenue requirement reconciliation adjustment, with interest, respectively.
In April 2016, Ameren Illinois filed with the ICC its annual electric delivery service formula rate update to establish the revenue requirement used for 2017 rates. Pending ICC approval, Ameren Illinois’ update filing will result in a
$14 million
decrease in Ameren Illinois’ electric delivery service revenue requirement, beginning in January 2017. This update reflects an increase to the annual formula rate based on 2015 actual costs and expected net plant additions for 2016, an increase to include the 2015 revenue requirement reconciliation adjustment, and a decrease for the conclusion of the 2014 revenue requirement reconciliation adjustment, which will be fully collected from customers in 2016
, consistent with the ICC’s December 2015 annual update filing order. As of December 31, 2015, Ameren Illinois had recorded a regulatory asset of
$103 million
related to the approved 2014 revenue requirement reconciliation adjustment.
Federal
FERC Complaint Cases
In November 2013, a customer group filed a complaint case with the FERC seeking a reduction in the allowed base return on common equity for the FERC-regulated transmission rate base under the MISO tariff from
12.38%
to
9.15%
. In December 2015, an administrative law judge issued an initial decision in the November 2013 complaint case that would lower the allowed base return on common equity to
10.32%
and would require customer refunds to be issued for the 15-month period ending February 2015. The allowed base return on common equity in the initial decision was based on observable market data for the six months ended June 30, 2015.
The FERC is expected to issue a final order on the November 2013 complaint case in the fourth quarter of 2016.
Because the maximum FERC-allowed refund period for the November 2013 complaint case ended in February 2015, another customer complaint case was filed in February 2015. The February 2015 complaint case seeks a reduction in the allowed base return on common equity for the FERC-regulated transmission rate base under the MISO tariff to
8.67%
.
The initial decision from an administrative law judge in the February 2015 complaint case, which will subsequently require FERC approval, is expected to be issued in the second quarter of 2016.
On January 6, 2015, a FERC-approved incentive adder of up to 50 basis points on the allowed base return on common equity for our participation in an RTO became effective. Beginning with its January 6, 2015 effective date, the incentive adder will reduce any refund to customers relating to a reduction of the allowed base return on common equity from the complaint cases discussed above.
As of
March 31, 2016
, Ameren and Ameren Illinois had current regulatory liabilities of
$55 million
and
$37 million
, respectively, representing their estimates of the potential refunds from the November 12, 2013 refund effective date through March 31, 2016. Ameren and Ameren Illinois recorded liabilities to reflect the allowed base return on common equity in the initial decision for the November 2013 complaint case refund period and the observable market data for the six months ended December 31, 2015, for the February 2015 complaint case refund period. Ameren’s and Ameren Illinois’ liabilities also reflect the January 6, 2015 incentive adder discussed above. Ameren Missouri did not record a liability as of
March 31, 2016
, and it does not expect that a reduction in the FERC-allowed base return on common equity for MISO transmission owners would be material to its results of operations, financial position, or liquidity.
NOTE 3 - SHORT-TERM DEBT AND LIQUIDITY
The liquidity needs of the Ameren Companies are typically supported through the use of available cash, drawings under committed credit agreements, commercial paper issuances, or, in the case of Ameren Missouri and Ameren Illinois, short-term intercompany borrowings.
The Missouri Credit Agreement and the Illinois Credit Agreement, both of which expire on December 11, 2019, were not utilized for direct borrowings during the
three months ended March 31, 2016
, but were used to support commercial paper issuances and to issue letters of credit. Based on letters of credit issued under the Credit Agreements, as well as commercial paper outstanding, the aggregate amount of credit capacity available under the Credit Agreements to Ameren (parent), Ameren Missouri, and Ameren Illinois, collectively, at
March 31, 2016
, was
$1.5 billion
.
Commercial Paper
The following table presents commercial paper outstanding at Ameren (parent), Ameren Missouri, and Ameren Illinois as of
March 31, 2016
, and
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
Ameren (parent)
|
$
|
416
|
|
|
$
|
301
|
|
Ameren Missouri
|
165
|
|
|
—
|
|
Ameren Illinois
|
—
|
|
|
—
|
|
Ameren Consolidated
|
$
|
581
|
|
|
$
|
301
|
|
The following table summarizes the borrowing activity and relevant interest rates under Ameren’s (parent), Ameren Missouri’s, and Ameren Illinois’ commercial paper programs for the
three months ended March 31, 2016
and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameren
(parent)
|
Ameren
Missouri
|
Ameren
Illinois
|
Ameren Consolidated
|
2016
|
|
|
|
|
|
|
Average daily commercial paper outstanding
|
|
$
|
349
|
|
|
$
|
68
|
|
$
|
—
|
|
$
|
417
|
|
Weighted-average interest rate
|
|
0.82
|
%
|
|
0.80
|
%
|
—
|
%
|
0.81
|
%
|
Peak commercial paper during period
(a)
|
|
$
|
482
|
|
|
$
|
208
|
|
$
|
—
|
|
$
|
581
|
|
Peak interest rate
|
|
0.95
|
%
|
|
0.85
|
%
|
—
|
%
|
0.95
|
%
|
2015
|
|
|
|
|
|
|
Average daily commercial paper outstanding
|
|
$
|
691
|
|
|
$
|
151
|
|
$
|
10
|
|
$
|
852
|
|
Weighted-average interest rate
|
|
0.55
|
%
|
|
0.49
|
%
|
0.44
|
%
|
0.53
|
%
|
Peak commercial paper during period
(a)
|
|
$
|
815
|
|
|
$
|
243
|
|
$
|
39
|
|
$
|
955
|
|
Peak interest rate
|
|
0.70
|
%
|
|
0.60
|
%
|
0.60
|
%
|
0.70
|
%
|
|
|
(a)
|
The timing of peak commercial paper issuances varies by company, and therefore the peak amounts presented by company might not equal the Ameren Consolidated peak commercial paper issuances for the period.
|
Indebtedness Provisions and Other Covenants
The information below is a summary of the Ameren Companies’ compliance with financial covenants in the Credit Agreements. See Note 4 - Short-term Debt and Liquidity under Part II, Item 8, in the Form 10-K for a detailed description of these provisions. The Credit Agreements also contain nonfinancial covenants, including restrictions on the ability to incur liens, to transact with affiliates, to dispose of assets, to make investments in or transfer assets to its affiliates, and to merge with other entities.
The Credit Agreements require Ameren, Ameren Missouri, and Ameren Illinois to each maintain consolidated indebtedness of not more than
65%
of its consolidated total capitalization pursuant to a defined calculation set forth in the agreements. As of
March 31, 2016
, the ratios of consolidated indebtedness to consolidated total capitalization, calculated in accordance with the provisions of the Credit Agreements, were
52%
,
49%
, and
46%
, for Ameren, Ameren Missouri, and Ameren Illinois, respectively. In addition, under the Credit Agreements, if Ameren does not have a senior long-term unsecured credit rating of at least Baa3 from Moody’s or BBB- from S&P, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of at least 2.0
to 1.0. As of
March 31, 2016
, Ameren’s senior long-term unsecured credit rating exceeded the minimum rating requirements; therefore, the interest coverage requirement was not applicable. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable Credit Agreement.
The Credit Agreements contain default provisions that apply separately to each borrower; provided, however, that a default of Ameren Missouri or Ameren Illinois under the applicable Credit Agreement will also be deemed to constitute a default of Ameren under such agreement. Defaults include a cross-default resulting from a default of such borrower under any other agreement covering outstanding indebtedness of such borrower and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of
$75 million
in the aggregate (including under the other Credit Agreement). However, under the default provisions of the Credit Agreements, any default of Ameren under any Credit Agreement that results solely from a default of Ameren Missouri or Ameren Illinois thereunder does not result in a cross-default of Ameren under the other Credit Agreement. Further, the Credit Agreement default provisions provide that an Ameren default under any of the Credit Agreements does not constitute a default by Ameren Missouri or Ameren Illinois.
None of the Ameren Companies' credit agreements or financing arrangements contain credit rating triggers that would cause a default or acceleration of repayment of outstanding balances. The Ameren Companies were in compliance with the covenants in their credit agreements at
March 31, 2016
.
Money Pools
Ameren has money pool agreements with and among its subsidiaries to coordinate and provide for certain short-term cash and working capital requirements.
Ameren Missouri, Ameren Illinois, and ATXI may participate in the utility money pool as both lenders and borrowers. Ameren and Ameren Services may participate in the utility money pool only as lenders. Surplus internal funds are contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the Credit Agreements and the commercial paper programs. The total
amount available to the pool participants from the utility money pool at any given time is reduced by the amount of borrowings made by participants, but is increased to the extent that the pool participants advance surplus funds to the utility money pool or remit funds from other external sources. The availability of funds is also determined by funding requirement limits established by regulatory authorizations. Participants receiving a loan under the utility money pool must repay the principal amount of such loan, together with accrued interest. The rate of interest depends on the composition of internal and external funds in the utility money pool. The average interest rate for borrowing under the utility money pool for the
three months ended March 31, 2016
and
2015
, was
0.47%
and
0.08%
, respectively.
See Note 8 - Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the
three months ended March 31, 2016
and
2015
.
NOTE 4 - LONG-TERM DEBT AND EQUITY FINANCINGS
Ameren Missouri
In February 2016,
$260 million
principal amount of Ameren Missouri's
5.40%
senior secured notes matured and was repaid with cash on hand and commercial paper borrowings.
Indenture Provisions and Other Covenants
Ameren Missouri’s and Ameren Illinois’ indentures, credit facilities, and articles of incorporation include covenants and provisions related to issuances of first mortgage bonds and preferred stock. Ameren Missouri and Ameren Illinois are required to meet certain ratios to issue additional first mortgage bonds and preferred stock. A failure to achieve these ratios would not result in a default under these covenants and provisions, but would restrict the companies’ ability to issue bonds or preferred stock. The following table summarizes the required and actual interest coverage ratios for interest charges, dividend coverage ratios, and bonds and preferred stock issuable as of
March 31, 2016
, at an assumed annual interest rate of
5%
and dividend rate of
6%
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Required Interest
Coverage Ratio
(a)
|
|
Actual Interest
Coverage Ratio
|
|
Bonds Issuable
(b)
|
|
Required Dividend
Coverage Ratio
(c)
|
|
Actual Dividend
Coverage Ratio
|
|
Preferred Stock
Issuable
|
|
Ameren Missouri
|
|
≥2.0
|
|
3.8
|
$
|
3,809
|
|
≥2.5
|
|
95.8
|
$
|
2,128
|
|
Ameren Illinois
|
|
≥2.0
|
|
6.4
|
|
3,642
|
(d)
|
≥1.5
|
|
2.6
|
|
203
|
(e)
|
|
|
(a)
|
Coverage required on the annual interest charges on first mortgage bonds outstanding and to be issued. Coverage is not required in certain cases when additional first mortgage bonds are issued on the basis of retired bonds.
|
|
|
(b)
|
Amount of bonds issuable based either on required coverage ratios or unfunded property additions, whichever is more restrictive. The amounts shown also include bonds issuable based on retired bond capacity of
$1,206 million
and
$204 million
at Ameren Missouri and Ameren Illinois, respectively.
|
|
|
(c)
|
Coverage required on the annual dividend on preferred stock outstanding and to be issued, as required in the respective company’s articles of incorporation.
|
|
|
(d)
|
Amount of bonds issuable by Ameren Illinois based on unfunded property additions and retired bonds solely under the former IP mortgage indenture. The amount of bonds issuable by Ameren Illinois is also subject to the lien restrictions contained in the Illinois Credit Agreement.
|
|
|
(e)
|
Preferred stock issuable is restricted by the amount of preferred stock that is currently authorized by Ameren Illinois’ articles of incorporation.
|
Ameren Missouri and Ameren Illinois and certain other Ameren subsidiaries are subject to Section 305(a) of the Federal Power Act, which makes it unlawful for any officer or director of a public utility, as defined in the Federal Power Act, to participate in the making or paying of any dividend from any funds “properly included in capital account.” The FERC has consistently interpreted the provision to allow dividends to be paid as long as (1) the source of the dividends is clearly disclosed, (2) the dividends are not excessive, and (3) there is no self-dealing on the part of corporate officials. At a minimum, Ameren believes that dividends can be paid by its subsidiaries that are public utilities from retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on its stock, unless, among other things, its earnings and earned surplus are sufficient to declare and pay a dividend after provision is made for reasonable and proper reserves, or unless Ameren Illinois has specific authorization from the ICC.
Ameren Illinois’ articles of incorporation require dividend payments on its common stock to be based on ratios of common
stock to total capitalization and other provisions related to certain operating expenses and accumulations of earned surplus. Ameren Illinois committed to the FERC to maintain a minimum of
30%
equity in its capital structure. As of
March 31, 2016
, Ameren Illinois had
51%
equity in its capital structure.
In order for the Ameren Companies to issue securities in the future, we have to comply with all applicable requirements in effect at the time of any such issuances.
Off-Balance-Sheet Arrangements
At
March 31, 2016
, none of the Ameren Companies had off-balance-sheet financing arrangements, other than operating leases entered into in the ordinary course of business, letters of credit, and Ameren parent guarantee arrangements on behalf of its subsidiaries. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.
NOTE 5 - OTHER INCOME AND EXPENSES
The following table presents the components of “Other Income and Expenses” in the Ameren Companies’ statements of income for the
three months ended March 31, 2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
2016
|
|
2015
|
|
Ameren:
(a)
|
|
|
|
|
Miscellaneous income:
|
|
|
|
|
Allowance for equity funds used during construction
|
$
|
8
|
|
|
$
|
5
|
|
|
Interest income on industrial development revenue bonds
|
7
|
|
|
7
|
|
|
Interest income
|
4
|
|
|
4
|
|
|
Other
|
1
|
|
|
3
|
|
|
Total miscellaneous income
|
$
|
20
|
|
|
$
|
19
|
|
|
Miscellaneous expense:
|
|
|
|
|
Donations
|
$
|
5
|
|
|
$
|
8
|
|
|
Other
|
2
|
|
|
3
|
|
|
Total miscellaneous expense
|
$
|
7
|
|
|
$
|
11
|
|
|
Ameren Missouri:
|
|
|
|
|
Miscellaneous income:
|
|
|
|
|
Allowance for equity funds used during construction
|
$
|
7
|
|
|
$
|
4
|
|
|
Interest income on industrial development revenue bonds
|
7
|
|
|
7
|
|
|
Other
|
1
|
|
|
—
|
|
|
Total miscellaneous income
|
$
|
15
|
|
|
$
|
11
|
|
|
Miscellaneous expense:
|
|
|
|
|
Donations
|
$
|
1
|
|
|
$
|
2
|
|
|
Other
|
1
|
|
|
1
|
|
|
Total miscellaneous expense
|
$
|
2
|
|
|
$
|
3
|
|
|
Ameren Illinois:
|
|
|
|
|
Miscellaneous income:
|
|
|
|
|
Allowance for equity funds used during construction
|
$
|
1
|
|
|
$
|
1
|
|
|
Interest income
|
4
|
|
|
4
|
|
|
Other
|
—
|
|
|
2
|
|
|
Total miscellaneous income
|
$
|
5
|
|
|
$
|
7
|
|
|
Miscellaneous expense:
|
|
|
|
|
Donations
|
$
|
4
|
|
|
$
|
3
|
|
|
Other
|
1
|
|
|
2
|
|
|
Total miscellaneous expense
|
$
|
5
|
|
|
$
|
5
|
|
|
|
|
(a)
|
Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations.
|
NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS
We use derivatives to manage the risk of changes in market prices for natural gas, power, and uranium, as well as the risk of changes in rail transportation surcharges through fuel oil hedges. Such price fluctuations may cause the following:
|
|
•
|
an unrealized appreciation or depreciation of our contracted commitments to purchase or sell when purchase or sale prices under the commitments are compared with current commodity prices;
|
|
|
•
|
market values of natural gas and uranium inventories that differ from the cost of those commodities in inventory; and
|
|
|
•
|
actual cash outlays for the purchase of these commodities that differ from anticipated cash outlays.
|
The derivatives that we use to hedge these risks are governed by our risk management policies for forward contracts, futures, options, and swaps. Our net positions are continually assessed within our structured hedging programs to determine whether new or offsetting transactions are required. The goal of the hedging program is generally to mitigate financial risks while ensuring that sufficient volumes are available to meet our requirements. Contracts we enter into as part of our risk management program may be settled financially, settled by physical delivery, or net settled with the counterparty.
The following table presents open gross commodity contract volumes by commodity type for derivative assets and liabilities as of
March 31, 2016
, and
December 31, 2015
. As of
March 31, 2016
, these contracts ran through October 2018, March 2021, May 2032, and January 2019 for fuel oils, natural gas, power, and uranium, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantity (in millions, except as indicated)
|
|
2016
|
2015
|
Commodity
|
Ameren Missouri
|
Ameren Illinois
|
Ameren
|
Ameren Missouri
|
Ameren Illinois
|
Ameren
|
Fuel oils (in gallons)
(a)
|
29
|
|
(b)
|
|
29
|
|
35
|
|
(b)
|
|
35
|
|
Natural gas (in mmbtu)
|
29
|
|
150
|
|
179
|
|
30
|
|
151
|
|
181
|
|
Power (in megawatthours)
|
1
|
|
9
|
|
10
|
|
1
|
|
10
|
|
11
|
|
Uranium (pounds in thousands)
|
428
|
|
(b)
|
|
428
|
|
494
|
|
(b)
|
|
494
|
|
|
|
(a)
|
Consists of ultra-low-sulfur diesel products.
|
Authoritative accounting guidance regarding derivative instruments requires that all contracts considered to be derivative instruments be recorded on the balance sheet at their fair values, unless the NPNS exception applies. See Note 7 - Fair Value Measurements for a discussion of our methods of assessing the fair value of derivative instruments. Many of our physical contracts, such as our purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense on NPNS contracts is recognized at the contract price upon physical delivery.
If we determine that a contract meets the definition of a derivative and is not eligible for the NPNS exception, we review the contract to determine whether the resulting gains or losses qualify for regulatory deferral. Derivative contracts that qualify for regulatory deferral are recorded at fair value, with changes in fair value recorded as regulatory assets or regulatory liabilities in the period in which the change occurs. We believe derivative losses
and gains deferred as regulatory assets and regulatory liabilities are probable of recovery or refund through future rates charged to customers. Regulatory assets and regulatory liabilities are amortized to operating income as related losses and gains are reflected in rates charged to customers. Therefore, gains and losses on these derivatives have no effect on operating income. As of
March 31, 2016
, and
December 31, 2015
, all contracts received regulatory deferral.
Authoritative accounting guidance permits companies to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a liability) against fair value amounts recognized for derivative instruments that are executed with the same counterparty under a master netting arrangement or similar agreement. The Ameren Companies did not elect to adopt this guidance for any eligible derivative instruments.
The following table presents the carrying value and balance sheet location of all derivative commodity contracts, none of which were designated as hedging instruments, as of
March 31, 2016
, and
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Location
|
|
Ameren
Missouri
|
|
Ameren
Illinois
|
|
Ameren
|
2016
|
|
|
|
|
|
|
Natural gas
|
Other assets
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Power
|
Other current assets
|
|
6
|
|
|
—
|
|
|
6
|
|
|
Total assets
(a)
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
7
|
|
Fuel oils
|
Other current liabilities
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
Other deferred credits and liabilities
|
|
6
|
|
|
—
|
|
|
6
|
|
Natural gas
|
MTM derivative liabilities
|
|
(b)
|
|
|
36
|
|
|
(b)
|
|
|
Other current liabilities
|
|
7
|
|
|
—
|
|
|
43
|
|
|
Other deferred credits and liabilities
|
|
7
|
|
|
15
|
|
|
22
|
|
Power
|
MTM derivative liabilities
|
|
(b)
|
|
|
15
|
|
|
(b)
|
|
|
Other current liabilities
|
|
—
|
|
|
—
|
|
|
15
|
|
|
Other deferred credits and liabilities
|
|
—
|
|
|
172
|
|
|
172
|
|
Uranium
|
Other current liabilities
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Other deferred credits and liabilities
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Total liabilities
(c)
|
|
$
|
43
|
|
|
$
|
238
|
|
|
$
|
281
|
|
2015
|
|
|
|
|
|
|
Natural gas
|
Other current assets
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Other assets
|
|
1
|
|
|
—
|
|
|
1
|
|
Power
|
Other current assets
|
|
16
|
|
|
—
|
|
|
16
|
|
|
Total assets
(a)
|
|
$
|
17
|
|
|
$
|
1
|
|
|
$
|
18
|
|
Fuel oils
|
Other current liabilities
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
Other deferred credits and liabilities
|
|
7
|
|
|
—
|
|
|
7
|
|
Natural gas
|
MTM derivative liabilities
|
|
(b)
|
|
|
32
|
|
|
(b)
|
|
|
Other current liabilities
|
|
6
|
|
|
—
|
|
|
38
|
|
|
Other deferred credits and liabilities
|
|
8
|
|
|
18
|
|
|
26
|
|
Power
|
MTM derivative liabilities
|
|
(b)
|
|
|
13
|
|
|
(b)
|
|
|
Other current liabilities
|
|
—
|
|
|
—
|
|
|
13
|
|
|
Other deferred credits and liabilities
|
|
—
|
|
|
157
|
|
|
157
|
|
Uranium
|
Other current liabilities
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Total liabilities
(c)
|
|
$
|
44
|
|
|
$
|
220
|
|
|
$
|
264
|
|
|
|
(a)
|
Because all contracts qualifying for hedge accounting receive regulatory deferral, the cumulative amount of pretax net gains on all derivative instruments is deferred as a regulatory liability.
|
|
|
(b)
|
Balance sheet line item not applicable to registrant.
|
|
|
(c)
|
Because all contracts qualifying for hedge accounting receive regulatory deferral, the cumulative amount of pretax net losses on all derivative instruments is deferred as a regulatory asset.
|
Derivative instruments are subject to various credit-related losses in the event of nonperformance by counterparties to the transaction. Exchange-traded contracts are supported by the financial and credit quality of the clearing members of the respective exchanges and have nominal credit risk. In all other transactions, we are exposed to credit risk. Our credit risk management program involves establishing credit limits and collateral requirements for counterparties, using master netting arrangements or similar agreements, and reporting daily exposure to senior management.
We believe that entering into master netting arrangements or similar agreements mitigates the level of financial loss that could result from default by allowing net settlement of derivative assets and liabilities. We generally enter into the following master netting arrangements: (1) the International Swaps and Derivatives Association Agreement, a standardized financial natural gas and electric contract; (2) the Master Power Purchase and Sale Agreement, created by the Edison Electric Institute and the National Energy Marketers Association, a standardized contract for the purchase and sale of wholesale power; and (3) the North American Energy Standards Board Inc. Agreement, a standardized contract for the purchase and sale of natural gas. These master netting arrangements allow the counterparties to net settle sale and purchase transactions. Further, collateral requirements are calculated at the master netting arrangement or similar agreement level by counterparty.
The following table provides the recognized gross derivative balances and the net amounts of those derivatives subject to an enforceable master netting arrangement or similar agreement as of
March 31, 2016
, and
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
|
Commodity Contracts Eligible to be Offset
|
|
Gross Amounts Recognized in the Balance Sheet
|
|
Derivative Instruments
|
|
Cash Collateral Received/Posted
(a)
|
|
Net
Amount
|
2016
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Ameren Illinois
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Ameren
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
$
|
43
|
|
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
33
|
|
Ameren Illinois
|
|
238
|
|
|
1
|
|
|
2
|
|
|
235
|
|
Ameren
|
|
$
|
281
|
|
|
$
|
3
|
|
|
$
|
10
|
|
|
$
|
268
|
|
2015
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
$
|
17
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Ameren Illinois
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Ameren
|
|
$
|
18
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Ameren Missouri
|
|
$
|
44
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
35
|
|
Ameren Illinois
|
|
220
|
|
|
—
|
|
|
3
|
|
|
217
|
|
Ameren
|
|
$
|
264
|
|
|
$
|
1
|
|
|
$
|
11
|
|
|
$
|
252
|
|
|
|
(a)
|
Cash collateral received reduces gross asset balances and is included in “Other current liabilities” and “Other deferred credits and liabilities” on the balance sheet. Cash collateral posted reduces gross liability balances and is included in “Other current assets” and “Other assets” on the balance sheet.
|
Concentrations of Credit Risk
In determining our concentrations of credit risk related to derivative instruments, we review our individual counterparties and categorize each counterparty into groupings according to the primary business in which each engages. We calculate maximum exposures based on the gross fair value of financial instruments, including NPNS and other accrual contracts. These exposures are calculated on a gross basis, which include affiliate exposure not eliminated at the consolidated Ameren level. The potential loss on counterparty exposures may be reduced or eliminated by the application of master netting arrangements or similar agreements and collateral held. As of
March 31, 2016
, if counterparty groups were to fail completely to perform on contracts, the Ameren Companies’ maximum exposure would have been immaterial with or without consideration of the application of master netting arrangements or similar agreements and collateral held.
Derivative Instruments with Credit Risk-Related Contingent Features
Our commodity contracts contain collateral provisions tied to the Ameren Companies’ credit ratings. If we were to experience an adverse change in our credit ratings, or if a counterparty with reasonable grounds for uncertainty regarding our ability to satisfy an obligation requested adequate assurance of performance, additional collateral postings might be required. The following table presents, as of
March 31, 2016
, the aggregate fair value of all derivative instruments with credit risk-related contingent features in a gross liability position, the cash collateral posted, and the aggregate amount of additional collateral that counterparties could require. The additional collateral required is the net liability position allowed under the master netting arrangements or similar agreements, assuming (1) the credit risk-related contingent features underlying these arrangements were triggered on
March 31, 2016
, and (2) those counterparties with rights to do so requested collateral.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Fair Value of
Derivative Liabilities
(a)
|
|
Cash
Collateral Posted
|
|
Potential Aggregate Amount of
Additional Collateral Required
(b)
|
2016
|
|
|
|
|
|
Ameren Missouri
|
$
|
88
|
|
|
$
|
7
|
|
|
$
|
76
|
|
Ameren Illinois
|
77
|
|
|
2
|
|
|
71
|
|
Ameren
|
$
|
165
|
|
|
$
|
9
|
|
|
$
|
147
|
|
|
|
(a)
|
Before consideration of master netting arrangements or similar agreements and including NPNS and other accrual contract exposures.
|
|
|
(b)
|
As collateral requirements with certain counterparties are based on master netting arrangements or similar agreements, the aggregate amount of additional collateral required to be posted is determined after consideration of the effects of such arrangements.
|
NOTE 7 - FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use various methods to determine fair value, including market, income, and cost approaches. With these approaches, we adopt certain assumptions that market participants would use in pricing the asset or liability, including assumptions about market risk or the risks inherent in the inputs to the valuation. Inputs to valuation can be readily observable, market-corroborated, or unobservable. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Authoritative accounting guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value.
All financial assets and liabilities carried at fair value are classified and disclosed in one of three hierarchy levels. See
Note 8 - Fair Value Measurements under Part II, Item 8, of the Form 10-K for information related to hierarchy levels. We perform an analysis each quarter to determine the appropriate hierarchy level of the assets and liabilities subject to fair value measurements. Financial assets and liabilities are classified in their entirety according to the lowest level of input that is significant to the fair value measurement. All assets and liabilities whose fair value measurement is based on significant unobservable inputs are classified as Level 3.
The following table describes the valuation techniques and unobservable inputs utilized by the Ameren Companies for the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the periods ended
March 31, 2016
, and
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
Weighted Average
|
|
|
Assets
|
Liabilities
|
Valuation Technique(s)
|
Unobservable Input
|
Range
|
Level 3 Derivative asset and liability - commodity contracts
(a)
:
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
Natural gas
|
$
|
—
|
|
$
|
(1
|
)
|
Discounted cash flow
|
Nodal basis($/mmbtu)
(b)
|
(0.60) - 0
|
(0.50)
|
|
|
|
|
|
Counterparty credit risk(%)
(c)(d)
|
0.40 - 6
|
0.93
|
|
|
|
|
|
Ameren Illinois credit risk(%)
(c)(d)
|
0.40
|
(e)
|
|
Power
(f)
|
6
|
|
(187
|
)
|
Discounted cash flow
|
Average forward peak and off-peak pricing - forwards/swaps($/MWh)
(g)
|
18 - 37
|
27
|
|
|
|
|
|
Estimated auction price for FTRs($/MW)
(b)
|
(818) - 1,062
|
67
|
|
|
|
|
|
Nodal basis($/MWh)
(g)
|
(10) - (1)
|
(2)
|
|
|
|
|
|
Counterparty credit risk(%)
(c)(d)
|
0.55
|
(e)
|
|
|
|
|
|
Ameren Illinois credit risk(%)
(c)(d)
|
0.40
|
(e)
|
|
|
|
|
Fundamental energy production model
|
Estimated future gas prices($/mmbtu)
(b)
|
3 - 5
|
4
|
|
|
|
|
|
Escalation rate(%)
(b)(h)
|
4
|
(e)
|
|
|
|
|
Contract price allocation
|
Estimated renewable energy credit costs($/credit)
(b)
|
5 - 7
|
6
|
|
Uranium
|
—
|
|
(4
|
)
|
Option model
|
Volatilities(%)
(b)
|
20
|
(e)
|
|
|
|
|
Discounted cash flow
|
Average forward uranium pricing($/pound)
(b)
|
28 - 33
|
31
|
|
|
|
|
|
Ameren Missouri credit risk(%)
(c)(d)
|
0.40
|
(e)
|
2015
|
|
|
|
|
|
|
|
|
Natural gas
|
$
|
1
|
|
$
|
(1
|
)
|
Option model
|
Volatilities(%)
(b)
|
35 – 55
|
45
|
|
|
|
|
|
Nodal basis($/mmbtu)
(c)
|
(0.30) – 0
|
(0.20)
|
|
|
|
|
Discounted cash flow
|
Nodal basis($/mmbtu)
(b)
|
(0.10) – 0
|
(0.10)
|
|
|
|
|
|
Counterparty credit risk(%)
(c)(d)
|
0.40 – 12
|
7
|
|
|
|
|
|
Ameren Missouri credit risk(%)
(c)(d)
|
0.40
|
(e)
|
|
Power
(f)
|
16
|
|
(170
|
)
|
Discounted cash flow
|
Average forward peak and off-peak pricing – forwards/swaps($/MWh)
(g)
|
22 – 39
|
29
|
|
|
|
|
|
Estimated auction price for FTRs($/MW)
(b)
|
(270) – 2,057
|
211
|
|
|
|
|
|
Nodal basis($/MWh)
(g)
|
(10) – (1)
|
(3)
|
|
|
|
|
|
Counterparty credit risk(%)
(c)(d)
|
0.86
|
(e)
|
|
|
|
|
|
Ameren Illinois credit risk(%)
(c)(d)
|
0.40
|
(e)
|
|
|
|
|
Fundamental energy production model
|
Estimated future gas prices($/mmbtu)
(b)
|
3 – 4
|
4
|
|
|
|
|
|
Escalation rate(%)
(b)(h)
|
3
|
(e)
|
|
|
|
|
Contract price allocation
|
Estimated renewable energy credit costs($/credit)
(b)
|
5 – 7
|
6
|
|
Uranium
|
—
|
|
(1
|
)
|
Option model
|
Volatilities(%)
(b)
|
20
|
(e)
|
|
|
|
|
Discounted cash flow
|
Average forward uranium pricing($/pound)
(b)
|
35 – 42
|
37
|
|
|
|
|
|
Ameren Missouri credit risk(%)
(c)(d)
|
0.40
|
(e)
|
6
|
|
(a)
|
The derivative asset and liability balances are presented net of counterparty credit considerations.
|
|
|
(b)
|
Generally, significant increases (decreases) in this input in isolation would result in a significantly higher (lower) fair value measurement.
|
|
|
(c)
|
Generally, significant increases (decreases) in this input in isolation would result in a significantly lower (higher) fair value measurement.
|
|
|
(d)
|
Counterparty credit risk is applied only to counterparties with derivative asset balances. Ameren Missouri and Ameren Illinois credit risk is applied only to counterparties with derivative liability balances.
|
|
|
(f)
|
Power valuations use visible third-party pricing evaluated by month for peak and off-peak demand through 2020. Valuations beyond 2020 use fundamentally modeled pricing by month for peak and off-peak demand.
|
|
|
(g)
|
The balance at Ameren is comprised of Ameren Missouri and Ameren Illinois power contracts, which respond differently to unobservable input changes due to their opposing positions.
|
|
|
(h)
|
Escalation rate applies to power prices 2031 and beyond for March 31, 2016 and to power prices 2026 and beyond for December 31, 2015.
|
In accordance with applicable authoritative accounting guidance, we consider nonperformance risk in our valuation of derivative instruments by analyzing the credit standing of our counterparties and considering any counterparty credit enhancements (e.g., collateral). The guidance also requires that the fair value measurement of liabilities reflect the nonperformance risk of the reporting entity, as applicable. Therefore, we have factored the impact of our credit standing, as well as any potential credit enhancements, into the fair value measurement of both derivative assets and derivative liabilities. Included in our valuation, and based on current market conditions, is a valuation adjustment
for counterparty default derived from market data such as the price of credit default swaps, bond yields, and credit ratings. No gains or losses related to valuation adjustments for counterparty default risk were recorded at Ameren, Ameren Missouri, or Ameren Illinois in the first quarter of
2016
or
2015
. At
March 31, 2016
, and
December 31, 2015
, the counterparty default risk valuation adjustment related to derivative contracts was immaterial for Ameren, Ameren Missouri, and Ameren Illinois.
The following table sets forth, by level within the fair value hierarchy, our assets and liabilities measured at fair value on a recurring basis as of
March 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
or Liabilities
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant Other
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Ameren
|
Derivative assets - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
|
Natural gas
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
Power
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
|
Total derivative assets - commodity contracts
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
|
Nuclear decommissioning trust fund:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. large capitalization
|
|
369
|
|
|
—
|
|
|
—
|
|
|
369
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency securities
|
|
—
|
|
|
121
|
|
|
—
|
|
|
121
|
|
|
|
Corporate bonds
|
|
—
|
|
|
56
|
|
|
—
|
|
|
56
|
|
|
|
Other
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|
|
Total nuclear decommissioning trust fund
|
|
$
|
371
|
|
|
$
|
195
|
|
|
$
|
—
|
|
|
$
|
566
|
|
(b)
|
|
Total Ameren
|
|
$
|
371
|
|
|
$
|
196
|
|
|
$
|
6
|
|
|
$
|
573
|
|
|
Ameren
|
Derivative assets - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Missouri
|
Power
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
|
Nuclear decommissioning trust fund:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. large capitalization
|
|
369
|
|
|
—
|
|
|
—
|
|
|
369
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency securities
|
|
—
|
|
|
121
|
|
|
—
|
|
|
121
|
|
|
|
Corporate bonds
|
|
—
|
|
|
56
|
|
|
—
|
|
|
56
|
|
|
|
Other
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|
|
Total nuclear decommissioning trust fund
|
|
$
|
371
|
|
|
$
|
195
|
|
|
$
|
—
|
|
|
$
|
566
|
|
(b)
|
|
Total Ameren Missouri
|
|
$
|
371
|
|
|
$
|
195
|
|
|
$
|
6
|
|
|
$
|
572
|
|
|
Ameren
|
Derivative assets - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Illinois
|
Natural gas
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Ameren
|
Derivative liabilities - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
|
Fuel oils
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
|
Natural gas
|
|
1
|
|
|
63
|
|
|
1
|
|
|
65
|
|
|
|
Power
|
|
—
|
|
|
—
|
|
|
187
|
|
|
187
|
|
|
|
Uranium
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
|
Total Ameren
|
|
$
|
26
|
|
|
$
|
63
|
|
|
$
|
192
|
|
|
$
|
281
|
|
|
Ameren
|
Derivative liabilities - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Missouri
|
Fuel oils
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
|
Natural gas
|
|
1
|
|
|
13
|
|
|
—
|
|
|
14
|
|
|
|
Uranium
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
|
Total Ameren Missouri
|
|
$
|
26
|
|
|
$
|
13
|
|
|
$
|
4
|
|
|
$
|
43
|
|
|
Ameren
|
Derivative liabilities - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Illinois
|
Natural gas
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
1
|
|
|
$
|
51
|
|
|
|
Power
|
|
—
|
|
|
—
|
|
|
187
|
|
|
187
|
|
|
|
Total Ameren Illinois
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
188
|
|
|
$
|
238
|
|
|
|
|
(a)
|
The derivative asset and liability balances are presented net of counterparty credit considerations.
|
|
|
(b)
|
Balance excludes $
1 million
of receivables, payables, and accrued income, net.
|
The following table sets forth, by level within the fair value hierarchy, our assets and liabilities measured at fair value on a recurring basis as of
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
or Liabilities
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant Other
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Ameren
|
Derivative assets - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
|
Natural gas
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
|
Power
|
|
—
|
|
|
—
|
|
|
16
|
|
|
16
|
|
|
|
Total derivative assets - commodity contracts
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
18
|
|
|
|
Nuclear decommissioning trust fund:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. large capitalization
|
|
364
|
|
|
—
|
|
|
—
|
|
|
364
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency securities
|
|
—
|
|
|
109
|
|
|
—
|
|
|
109
|
|
|
|
Corporate bonds
|
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
|
|
Other
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|
|
Total nuclear decommissioning trust fund
|
|
$
|
368
|
|
|
$
|
189
|
|
|
$
|
—
|
|
|
$
|
557
|
|
(b)
|
|
Total Ameren
|
|
$
|
368
|
|
|
$
|
190
|
|
|
$
|
17
|
|
|
$
|
575
|
|
|
Ameren
|
Derivative assets - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Missouri
|
Natural gas
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
Power
|
|
—
|
|
|
—
|
|
|
16
|
|
|
16
|
|
|
|
Total derivative assets - commodity contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
17
|
|
|
|
Nuclear decommissioning trust fund:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. large capitalization
|
|
364
|
|
|
—
|
|
|
—
|
|
|
364
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and agency securities
|
|
—
|
|
|
109
|
|
|
—
|
|
|
109
|
|
|
|
Corporate bonds
|
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
|
|
Other
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|
|
Total nuclear decommissioning trust fund
|
|
$
|
368
|
|
|
$
|
189
|
|
|
$
|
—
|
|
|
$
|
557
|
|
(b)
|
|
Total Ameren Missouri
|
|
$
|
368
|
|
|
$
|
189
|
|
|
$
|
17
|
|
|
$
|
574
|
|
|
Ameren
|
Derivative assets - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Illinois
|
Natural gas
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Ameren
|
Derivative liabilities - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
|
Fuel oils
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29
|
|
|
|
Natural gas
|
|
1
|
|
|
62
|
|
|
1
|
|
|
64
|
|
|
|
Power
|
|
—
|
|
|
—
|
|
|
170
|
|
|
170
|
|
|
|
Uranium
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
|
Total Ameren
|
|
$
|
30
|
|
|
$
|
62
|
|
|
$
|
172
|
|
|
$
|
264
|
|
|
Ameren
|
Derivative liabilities - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Missouri
|
Fuel oils
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29
|
|
|
|
Natural gas
|
|
—
|
|
|
13
|
|
|
1
|
|
|
14
|
|
|
|
Uranium
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
|
Total Ameren Missouri
|
|
$
|
29
|
|
|
$
|
13
|
|
|
$
|
2
|
|
|
$
|
44
|
|
|
Ameren
|
Derivative liabilities - commodity contracts
(a)
:
|
|
|
|
|
|
|
|
|
|
Illinois
|
Natural gas
|
|
$
|
1
|
|
|
$
|
49
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
|
Power
|
|
—
|
|
|
—
|
|
|
170
|
|
|
170
|
|
|
|
Total Ameren Illinois
|
|
$
|
1
|
|
|
$
|
49
|
|
|
$
|
170
|
|
|
$
|
220
|
|
|
|
|
(a)
|
The derivative asset and liability balances are presented net of counterparty credit considerations.
|
|
|
(b)
|
Balance excludes
$(1) million
of receivables, payables, and accrued income, net.
|
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the
three months ended March 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative commodity contracts
|
|
|
Ameren
Missouri
|
|
Ameren
Illinois
|
|
Ameren
|
Natural gas:
|
|
|
|
|
|
|
Beginning balance at January 1, 2016
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Settlements
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
Ending balance at March 31, 2016
|
$
|
—
|
|
$
|
(1
|
)
|
$
|
(1
|
)
|
Change in unrealized gains (losses) related to assets/liabilities held at March 31, 2016
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Power:
|
|
|
|
|
|
|
Beginning balance at January 1, 2016
|
$
|
16
|
|
$
|
(170
|
)
|
$
|
(154
|
)
|
Realized and unrealized gains (losses) included in regulatory assets/liabilities
|
|
(3
|
)
|
|
(21
|
)
|
|
(24
|
)
|
Settlements
|
|
(7
|
)
|
|
4
|
|
|
(3
|
)
|
Ending balance at March 31, 2016
|
$
|
6
|
|
$
|
(187
|
)
|
$
|
(181
|
)
|
Change in unrealized gains (losses) related to assets/liabilities held at March 31, 2016
|
$
|
—
|
|
$
|
(19
|
)
|
$
|
(19
|
)
|
Uranium:
|
|
|
|
|
|
|
Beginning balance at January 1, 2016
|
$
|
(1
|
)
|
$
|
(a)
|
|
$
|
(1
|
)
|
Realized and unrealized gains (losses) included in regulatory assets/liabilities
|
|
(3
|
)
|
|
(a)
|
|
|
(3
|
)
|
Ending balance at March 31, 2016
|
$
|
(4
|
)
|
$
|
(a)
|
|
$
|
(4
|
)
|
Change in unrealized gains (losses) related to assets/liabilities held at March 31, 2016
|
$
|
(3
|
)
|
$
|
(a)
|
|
$
|
(3
|
)
|
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the
three months ended March 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative commodity contracts
|
|
|
Ameren
Missouri
|
|
Ameren
Illinois
|
|
Ameren
|
Fuel oils:
|
|
|
|
|
|
|
Beginning balance at January 1, 2015
|
$
|
(6
|
)
|
$
|
(a)
|
|
$
|
(6
|
)
|
Realized and unrealized gains (losses) included in regulatory assets/liabilities
|
|
(1
|
)
|
|
(a)
|
|
|
(1
|
)
|
Settlements
|
|
1
|
|
|
(a)
|
|
|
1
|
|
Ending balance at March 31, 2015
|
$
|
(6
|
)
|
$
|
(a)
|
|
$
|
(6
|
)
|
Change in unrealized gains (losses) related to assets/liabilities held at March 31, 2015
|
$
|
(3
|
)
|
$
|
(a)
|
|
$
|
(3
|
)
|
Natural gas:
|
|
|
|
|
|
|
Beginning balance at January 1, 2015
|
$
|
(1
|
)
|
$
|
—
|
|
$
|
(1
|
)
|
Purchases
|
|
—
|
|
|
1
|
|
|
1
|
|
Ending balance at March 31, 2015
|
$
|
(1
|
)
|
$
|
1
|
|
$
|
—
|
|
Change in unrealized gains (losses) related to assets/liabilities held at March 31, 2015
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Power:
|
|
|
|
|
|
|
Beginning balance at January 1, 2015
|
$
|
9
|
|
$
|
(142
|
)
|
$
|
(133
|
)
|
Realized and unrealized gains (losses) included in regulatory assets/liabilities
|
|
(2
|
)
|
|
(25
|
)
|
|
(27
|
)
|
Settlements
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
Ending balance at March 31, 2015
|
$
|
4
|
|
$
|
(164
|
)
|
$
|
(160
|
)
|
Change in unrealized gains (losses) related to assets/liabilities held at March 31, 2015
|
$
|
—
|
|
$
|
(24
|
)
|
$
|
(24
|
)
|
Uranium:
|
|
|
|
|
|
|
Beginning balance at January 1, 2015
|
$
|
(2
|
)
|
$
|
(a)
|
|
$
|
(2
|
)
|
Realized and unrealized gains (losses) included in regulatory assets/liabilities
|
|
1
|
|
|
(a)
|
|
|
1
|
|
Ending balance at March 31, 2015
|
$
|
(1
|
)
|
$
|
(a)
|
|
$
|
(1
|
)
|
Change in unrealized gains (losses) related to assets/liabilities held at March 31, 2015
|
$
|
1
|
|
$
|
(a)
|
|
$
|
1
|
|
The Ameren Companies’ carrying amounts of cash and cash equivalents approximate fair value because of the short-term nature of these instruments. They are considered to be Level 1 in the fair value hierarchy. The Ameren Companies' short-term borrowings also approximate fair value because of their short-term nature. Short-term borrowings are considered to be Level 2 in the fair value hierarchy as they are valued based on market rates for similar market transactions. The estimated fair value of long-term debt and preferred stock is
based on the quoted market prices for same or similar issuances for companies with similar credit profiles or on the current rates offered to the Ameren Companies for similar financial instruments, which fair value measurement is considered to be Level 2 in the fair value hierarchy.
The following table presents the carrying amounts and estimated fair values of our long-term debt, capital lease obligations and preferred stock at
March 31, 2016
, and
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
Ameren:
|
|
|
|
|
|
|
|
Long-term debt and capital lease obligations (including current portion)
|
$
|
7,016
|
|
|
$
|
7,744
|
|
|
$
|
7,275
|
|
|
$
|
7,814
|
|
Preferred stock
(a)
|
142
|
|
|
126
|
|
|
142
|
|
|
125
|
|
Ameren Missouri:
|
|
|
|
|
|
|
|
Long-term debt and capital lease obligations (including current portion)
|
$
|
3,851
|
|
|
$
|
4,280
|
|
|
$
|
4,110
|
|
|
$
|
4,449
|
|
Preferred stock
|
80
|
|
|
75
|
|
|
80
|
|
|
75
|
|
Ameren Illinois:
|
|
|
|
|
|
|
|
Long-term debt (including current portion)
|
$
|
2,472
|
|
|
$
|
2,744
|
|
|
$
|
2,471
|
|
|
$
|
2,665
|
|
Preferred stock
|
62
|
|
|
51
|
|
|
62
|
|
|
50
|
|
|
|
(a)
|
Preferred stock is recorded in “Noncontrolling Interests” on the consolidated balance sheet.
|
NOTE 8 - RELATED PARTY TRANSACTIONS
Ameren (parent) and its subsidiaries have engaged in, and may in the future engage in, affiliate transactions in the normal course of business. These transactions primarily consist of power purchases and sales, services received or rendered, and borrowings and lendings.
Transactions between affiliates are reported as intercompany transactions on their respective financial statements but are eliminated in consolidation for Ameren’s financial statements. For a discussion of our material related party agreements, see Note 14 - Related Party Transactions under Part II, Item 8, of the Form 10-K and the money pool
arrangements discussed in Note 3 - Short-term Debt and Liquidity of this report.
Electric Power Supply Agreement
In April 2016, Ameren Illinois conducted a procurement event, administered by the IPA, to purchase energy products through May 31, 2019. Ameren Missouri was among the winning suppliers in this event. As a result Ameren Missouri and Ameren Illinois entered into an energy product agreement by which Ameren Missouri agreed to sell and Ameren Illinois agreed to purchase
375,200
megawatthours at an average price of
$34.71
per megawatthour during the period of June 1, 2017, through September 30, 2018.
The following table presents the impact on Ameren Missouri and Ameren Illinois of related party transactions for the three months ended March 31, 2016 and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
Agreement
|
Income Statement
Line Item
|
|
|
|
Ameren
Missouri
|
|
Ameren
Illinois
|
Ameren Missouri power supply
|
Operating Revenues
|
|
2016
|
$
|
9
|
|
$
|
(a)
|
|
agreements with Ameren Illinois
|
|
|
2015
|
|
1
|
|
|
(a)
|
|
Ameren Missouri and Ameren Illinois
|
Operating Revenues
|
|
2016
|
|
6
|
|
|
1
|
|
rent and facility services
|
|
|
2015
|
|
6
|
|
|
1
|
|
Ameren Missouri and Ameren Illinois
|
Operating Revenues
|
|
2016
|
|
(b)
|
|
|
(b)
|
|
miscellaneous support services
|
|
|
2015
|
|
(b)
|
|
|
(b)
|
|
Total Operating Revenues
|
|
|
2016
|
$
|
15
|
|
$
|
1
|
|
|
|
|
2015
|
|
7
|
|
|
1
|
|
Ameren Illinois power supply
|
Purchased Power
|
|
2016
|
$
|
(a)
|
|
$
|
9
|
|
agreements with Ameren Missouri
|
|
|
2015
|
|
(a)
|
|
|
1
|
|
Ameren Illinois transmission
|
Purchased Power
|
|
2016
|
|
(a)
|
|
|
(b)
|
|
services with ATXI
|
|
|
2015
|
|
(a)
|
|
|
1
|
|
Total Purchased Power
|
|
|
2016
|
$
|
(a)
|
|
$
|
9
|
|
|
|
|
2015
|
|
(a)
|
|
|
2
|
|
Ameren Services support services
|
Other Operations and Maintenance
|
|
2016
|
$
|
34
|
|
$
|
31
|
|
agreement
|
|
|
2015
|
|
34
|
|
|
29
|
|
Money pool borrowings (advances)
|
Interest Charges/ Miscellaneous Income
|
|
2016
|
$
|
(b)
|
|
$
|
(b)
|
|
|
|
|
2015
|
|
(b)
|
|
|
(b)
|
|
|
|
(b)
|
Amount less than $1 million.
|
NOTE 9 - COMMITMENTS AND CONTINGENCIES
We are involved in legal, tax and regulatory proceedings before various courts, regulatory commissions, authorities and governmental agencies with respect to matters that arise in the ordinary course of business, some of which involve substantial amounts of money. We believe that the final disposition of these proceedings, except as otherwise disclosed in the notes to our financial statements in this report and in our Form 10-K, will not have a material adverse effect on our results of operations, financial position, or liquidity.
Reference is made to Note 1 - Summary of Significant Accounting Policies, Note 2 - Rate and Regulatory Matters, Note 14 - Related Party Transactions, Note 15 - Commitments and Contingencies, and Note 16 - Divestiture Transactions and Discontinued Operations under Part II, Item 8, of the Form 10-K. See also Note 2 - Rate and Regulatory Matters, Note 8 - Related Party Transactions, and Note 10 - Callaway Energy Center.
Callaway Energy Center
The following table presents insurance coverage at Ameren Missouri’s Callaway energy center at
March 31, 2016
. The property coverage and the nuclear liability coverage must be renewed on April 1 and January 1, respectively, of each year. Both coverages were renewed in 2016.
|
|
|
|
|
|
|
|
|
|
Type and Source of Coverage
|
Maximum Coverages
|
|
Maximum Assessments
for Single Incidents
|
|
Public liability and nuclear worker liability:
|
|
|
|
|
American Nuclear Insurers
|
$
|
375
|
|
|
$
|
—
|
|
|
Pool participation
|
13,114
|
|
(a)
|
127
|
|
(b)
|
|
$
|
13,489
|
|
(c)
|
$
|
127
|
|
|
Property damage:
|
|
|
|
|
NEIL
|
$
|
2,750
|
|
(d)
|
$
|
30
|
|
(e)
|
European Mutual Association for Nuclear Insurance
|
450
|
|
(f)
|
—
|
|
|
|
$
|
3,200
|
|
|
$
|
30
|
|
|
Replacement power:
|
|
|
|
|
NEIL
|
$
|
490
|
|
(g)
|
$
|
7
|
|
(e)
|
|
|
(a)
|
Provided through mandatory participation in an industrywide retrospective premium assessment program.
|
|
|
(b)
|
Retrospective premium under the Price-Anderson Act. This is subject to retrospective assessment with respect to a covered loss in excess of
$375 million
in the event of an incident at any licensed United States commercial reactor, payable at
$19 million
per year.
|
|
|
(c)
|
Limit of liability for each incident under the Price-Anderson liability provisions of the Atomic Energy Act of 1954, as amended. A company could be assessed up to
$127 million
per incident for each licensed reactor it operates with a maximum of
$19 million
per incident to be paid in a calendar year for each reactor. This limit is subject to change to account for the effects of inflation and changes in the number of licensed reactors.
|
|
|
(d)
|
NEIL provides
$2.25 billion
in property damage, decontamination, and premature decommissioning insurance for radiation events. NEIL provides
$2.3 billion
in property damage for nonradiation events. An additional
$500 million
is provided for radiation events only. The total provided by NEIL for radiation and nonradiation events is
$2.75 billion
and
$2.3 billion
, respectively.
|
|
|
(e)
|
All NEIL insured plants could be subject to assessments should losses exceed the accumulated funds from NEIL.
|
|
|
(f)
|
European Mutual Association for Nuclear Insurance provides
$450 million
in excess of the
$2.75 billion
and
$2.3 billion
property coverage for radiation and nonradiation events, respectively, provided by NEIL.
|
|
|
(g)
|
Provides replacement power cost insurance in the event of a prolonged accidental outage. Weekly indemnity up to
$4.5 million
for 52 weeks, which commences after the first twelve weeks of an outage, plus up to
$3.6 million
per week for a minimum of 71 weeks thereafter for a total not exceeding the policy limit of
$490 million
. Nonradiation events are sub-limited to
$328 million
.
|
The Price-Anderson Act is a federal law that limits the liability for claims from an incident involving any licensed United States commercial nuclear energy center. The limit is based on the number of licensed reactors. The limit of liability and the maximum potential annual payments are adjusted at least every
five
years for inflation to reflect changes in the Consumer Price Index. The most recent five-year inflationary adjustment became effective in September 2013. Owners of a nuclear reactor cover this exposure through a combination of private insurance and mandatory participation in a financial protection pool, as established by the Price-Anderson Act.
Losses resulting from terrorist attacks on nuclear facilities are covered under NEIL’s policies, subject to an industrywide aggregate policy limit of
$3.24 billion
within a 12-month period, or
$1.83 billion
for events not involving radiation contamination.
If losses from a nuclear incident at the Callaway energy center exceed the limits of, or are not covered by insurance, or if coverage is unavailable, Ameren Missouri is at risk for any uninsured losses. If a serious nuclear incident were to occur, it could have a material adverse effect on Ameren’s and Ameren Missouri’s results of operations, financial position, or liquidity.
Other Obligations
To supply a portion of the fuel requirements of Ameren Missouri’s energy centers, Ameren Missouri has entered into various long-term commitments for the procurement of coal, natural gas, nuclear fuel, and methane gas. Additionally, Ameren Missouri and Ameren Illinois have entered into various long-term commitments for purchased power and natural gas for distribution. At
March 31, 2016
, total obligations related to commitments for coal, natural gas, nuclear fuel, purchased power, methane gas, equipment, and meter reading services, among other agreements, at Ameren, Ameren Missouri, and Ameren Illinois were
$4,566 million
,
$2,786 million
, and
$1,729 million
, respectively. For additional information regarding our obligations and commitments at December 31, 2015, see Note 15 - Commitments and Contingencies under Part II, Item 8 of the Form 10-K.
In April 2016, Ameren Illinois conducted a procurement event, administered by the IPA, to purchase energy products through May 31, 2019. In this event, Ameren Illinois contracted to purchase approximately
3,609,800
megawatthours of energy products for
$105 million
, from June 1, 2016, through May 31, 2019. See Note 8 - Related Party Transactions in this report for additional information regarding the energy product agreement between Ameren Missouri and Ameren Illinois as a result of this procurement event.
Environmental Matters
We are subject to various environmental laws and regulations enforced by federal, state, and local authorities. Such requirements can impact the siting, development and operation of new and existing generation, transmission, distribution and natural gas storage facilities. Such requirements can encompass emissions, discharges to water, water usage, impacts to air, land,
and water, and chemical and waste handling. Complex and lengthy approval processes are required to obtain, modify or renew permits and licenses for new or existing facilities. Additionally, the use and handling of various chemicals or hazardous materials at some of our facilities require release prevention plans and emergency response procedures.
The EPA has promulgated several environmental regulations that will have a significant impact on the electric utility industry. Over time, compliance with these regulations could be costly for Ameren Missouri, which operates coal-fired power plants. Significant new rules include the regulation of CO
2
emissions from existing power plants through the Clean Power Plan and from new power plants through the revised NSPS; the CSAPR, which requires further reductions of SO
2
emissions and NO
x
emissions from power plants; a regulation governing management and storage of CCR; the MATS, which require reduction of emissions of mercury, toxic metals, and acid gases from power plants; revised NSPS for particulate matter, SO
2
, and NO
x
emissions from new sources; new effluent standards applicable to wastewater discharges from power plants; and new regulations under the Clean Water Act that could require significant capital expenditures, such as modifications to water intake structures or new cooling towers at Ameren Missouri’s energy centers. The EPA also periodically reviews and revises national ambient air quality standards, including those standards associated with emissions from power plants, such as particulate matter, ozone, SO
2
and NO
x
. Certain of these new regulations are being or are likely to be challenged through litigation, so their ultimate implementation, as well as the timing of any such implementation, is uncertain. Although many details of future regulations are unknown, the individual or combined effects of new environmental regulations could result in significant capital expenditures and increased operating costs for Ameren and Ameren Missouri. Compliance with all of these environmental laws and regulations could be prohibitively expensive, result in
the closure or alteration of the operation of some of Ameren Missouri’s energy centers, or require capital investment. Ameren and Ameren Missouri expect that these costs would be recoverable through rates, subject to MoPSC prudence review, but the nature and timing of costs and their recovery could result in regulatory lag.
Ameren Missouri's current plan for compliance with existing environmental regulations for air emissions includes burning ultra-low-sulfur coal and installing new or optimizing existing pollution control equipment. Ameren and Ameren Missouri estimate that they will need to make capital expenditures of
$600 million
to
$700 million
in the aggregate from 2016 through 2020 in order to comply with existing environmental regulations. Ameren Missouri may be required to install additional air emissions controls within the next six to 10 years. This estimate includes capital expenditures required for the CCR regulations, the rule applicable to cooling water intake structures at existing power plants under the Clean Water Act, and the effluent limitation guidelines applicable to steam electric generating units under the Clean Water Act, all of which are discussed below. These estimates do not include the impacts of the Clean Power Plan discussed below. Considerable uncertainty remains in these estimates. The actual amount of capital expenditures required to comply with existing environmental regulations may vary substantially from the above estimate due to uncertainty as to the precise compliance strategies that will be used and their ultimate cost, among other things.
The following sections describe the more significant new environmental laws and rules and environmental enforcement and remediation matters that affect or could affect our operations.
Clean Air Act
Federal and state laws require significant reductions in SO
2
and NO
x
through either emission source reductions or the use and retirement of emission allowances. The CSAPR became effective in 2015. There will be further emission reduction requirements in 2017 and potentially more in subsequent years. To achieve compliance with CSAPR, Ameren Missouri burns ultra-low-sulfur coal, operates
two
scrubbers at its Sioux energy center, and optimizes other existing pollution control equipment. Ameren Missouri does not expect to make additional capital investments to comply with the current CSAPR requirements. However, Ameren Missouri expects to incur additional costs to lower its emissions at one or more of its energy centers to comply with the CSAPR in future years. These higher costs are expected to be recovered from customers through the FAC or higher base rates.
CO
2
Emissions Standards
The Clean Power Plan, which sets forth CO
2
emissions standards applicable to existing power plants, was issued by the EPA in August 2015 but stayed by the United States Supreme Court in February 2016 pending the outcome of various appeals, as discussed below.
If upheld, the Clean Power Plan would require Missouri and Illinois to reduce CO
2
emissions from power plants within their states significantly below 2005 levels by 2030. The rule contains interim compliance periods commencing in 2022 that would require each state to demonstrate progress in achieving its CO
2
reduction target. Ameren is evaluating the Clean Power Plan's potential impacts to its operations, including those related to electric system reliability, and to its level of investment in customer energy efficiency programs, renewable energy, and other forms of generation investment. Significant uncertainty exists regarding the impact of the Clean Power Plan, as its implementation will depend upon plans to be developed by the states. Numerous legal challenges are pending, which could result in the rule being declared invalid or the nature and timing of CO
2
emissions reductions being revised. In February 2016, the United States Supreme Court stayed the Clean Power Plan and all implementation requirements until such time as legal appeals are concluded. The District of Columbia Circuit Court of Appeals has scheduled hearings for June 2016 on the legality of the rule. A decision by the District of Columbia Circuit Court of Appeals is expected to be issued in 2016 and subsequent appeals to the United States Supreme Court are likely. Appeals are expected to take several years to conclude. We cannot predict the outcome of such legal challenges or their impact on our results of operations, financial position, or liquidity. If the rule is ultimately upheld and implemented in substantially similar form to the rule when issued, compliance measures could result in the closure or alteration of the operation of some of Ameren Missouri’s coal and natural-gas-fired energy centers, which could result in increased operating costs and require Ameren Missouri to make new or accelerated capital expenditures. Ameren Missouri expects substantially all of these increased costs to be recoverable, subject to MoPSC prudence review, through higher rates to customers, which could be significant.
Also, in 2015, the EPA issued final regulations that set CO
2
emissions standards for new power plants. These new standards establish separate emissions limits for new natural-gas-fired combined cycle plants and new coal-fired plants.
Federal and state legislation or regulations that mandate limits on the emission of CO
2
may result in significant increases in capital expenditures and operating costs, which could lead to increased liquidity needs and higher financing costs. Mandatory limits on the emission of CO
2
could increase costs for Ameren Missouri’s customers or have a material adverse effect on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity if regulators delay or deny recovery in rates of these compliance costs. The cost of Ameren Illinois’ purchased power and gas purchased for resale could increase. However, Ameren Illinois expects these costs would be recovered from customers with no material adverse effect on its results of operations, financial position, or liquidity. Ameren's and Ameren Missouri's earnings might benefit from increased investment to comply with CO
2
emission limitations to the extent that the investments are reflected and recovered on a timely basis in rates charged to customers.
NSR and Clean Air Litigation
In January 2011, the Department of Justice, on behalf of the EPA, filed a complaint against Ameren Missouri in the United States District Court for the Eastern District of Missouri. The EPA's complaint, as amended in October 2013, alleges that in performing projects at its Rush Island coal-fired energy center in 2007 and 2010, Ameren Missouri violated provisions of the Clean Air Act and Missouri law. Ameren Missouri anticipates that a trial of this case will occur in 2016. Ameren Missouri believes its defenses are meritorious and is defending itself vigorously. However, there can be no assurances that it will be successful in its efforts.
The ultimate resolution of this matter could have a material adverse effect on the results of operations, financial position, and liquidity of Ameren and Ameren Missouri. A resolution of this matter could result in increased capital expenditures for the installation of pollution control equipment and increased operations and maintenance expenses. We are unable to predict the ultimate resolution of these matters or the costs that might be incurred.
Clean Water Act
In 2014, the EPA issued its final rule applicable to cooling water intake structures at existing power plants. The rule requires a case-by-case evaluation and plan for reducing aquatic organisms impinged on the facility’s intake screens or entrained through the plant's cooling water system.
All of Ameren Missouri’s coal-fired and nuclear energy centers are subject to this rule. Each of Ameren Missouri’s affected energy centers will become subject to the revised limitations when the energy center renews its water discharge permit. These permits are scheduled to be renewed between 2018 and 2023. The rule could have an adverse effect on Ameren’s and Ameren Missouri’s results of operations, financial position, and liquidity if its implementation requires the installation of cooling towers or extensive modifications to the cooling water systems at our energy centers and if those investments are not recovered on a timely basis in electric rates charged to Ameren Missouri's customers.
In 2015, the EPA issued its final rule under the Clean Water Act to revise the effluent limitation guidelines applicable to steam electric generating units. Effluent limitation guidelines are national standards for water discharges that are based on the effectiveness of available control technology. The EPA's rule prohibits effluent discharges of certain waste streams and imposes more stringent limitations on certain components in water discharges from power plants. All of Ameren Missouri’s coal-fired energy centers are subject to this rule, which will be applied when each energy center renews its water discharge permit beginning as early as 2018. Ameren Missouri is evaluating the final rule, which became effective in January 2016, and the possible effects on its operations. The rule could have an adverse effect on Ameren’s and Ameren Missouri’s results of operations, financial position, and liquidity if its implementation requires extensive changes in the water discharge systems at Ameren Missouri’s energy centers and if these investments are not
recovered on a timely basis through electric rates charged to Ameren Missouri’s customers.
Ash Management
In 2015, the EPA issued regulations regarding the management and disposal of CCR. These regulations will affect CCR disposal and handling costs at Ameren Missouri's energy centers. The regulations allow for the management of CCR as a solid waste, as well as for its continued beneficial uses, such as recycling, which could reduce the amount to be disposed. The regulations also establish criteria regarding the structural integrity, location, and operation of CCR impoundments and landfills. They require groundwater monitoring, and closure of impoundments if the groundwater standards are not achieved. Ameren Missouri's capital expenditure plan includes the cost of constructing landfills as part of its environmental compliance plan.
The new regulations do not apply to ash ponds at plants no longer in operation, such as Ameren’s Meredosia and Hutsonville energy centers.
Remediation
The Ameren Companies are involved in a number of remediation actions to clean up sites impacted from the use or disposal of materials containing hazardous substances. Federal and state laws can require responsible parties to fund remediation actions regardless of their degree of fault, the legality of original disposal, or the ownership of a disposal site. Ameren Missouri and Ameren Illinois have each been identified by federal or state governments as a potentially responsible party at several contaminated sites.
As of
March 31, 2016
, Ameren Illinois owned or was otherwise responsible for
44
former MGP sites in Illinois, which are in various stages of investigation, evaluation, remediation, and closure. Ameren Illinois estimates it could substantially conclude remediation efforts by 2025. The ICC allows Ameren Illinois to recover remediation and litigation costs associated with its former MGP sites from its electric and natural gas utility customers through environmental adjustment rate riders. Costs are subject to annual review by the ICC. As of
March 31, 2016
, Ameren Illinois estimated the obligation related to these former MGP sites at
$224 million
to
$313 million
. Ameren and Ameren Illinois recorded a liability of
$224 million
to represent the estimated minimum obligation for these sites, as no other amount within the range was a better estimate.
The scope and extent to which these former MGP sites are remediated may increase as remediation efforts continue. Considerable uncertainty remains in these estimates because many site specific factors can influence the ultimate actual costs, including unanticipated underground structures, the degree to which groundwater is encountered, regulatory changes, local ordinances, and site accessibility. The actual costs may vary substantially from these estimates.
Ameren Illinois formerly used a third-party owned landfill in connection with the operation of a previously-owned energy
center. While no litigation is pending, Ameren Illinois could be required to perform certain maintenance activities at that landfill, which is now closed. As of
March 31, 2016
, Ameren Illinois estimated the obligation related to this site at
$0.5 million
to
$6 million
. Ameren Illinois recorded a liability of
$0.5 million
to represent its estimated minimum obligation for this site, as no other amount within the range was a better estimate. Ameren Illinois is also responsible for the cleanup of some underground storage tanks and a water treatment plant in Illinois. As of
March 31, 2016
, Ameren Illinois recorded a liability of
$0.7 million
to represent its best estimate of the obligation for these sites.
In 2008, the EPA issued an administrative order to three companies including Ameren Missouri pertaining to a former coal tar distillery in St. Louis, Missouri operated by Koppers Company or its predecessor and successor companies. While Ameren Missouri is the current owner of the site, it did not conduct any of the manufacturing operations involving coal tar or its byproducts. Site investigation activities have been concluded and reports have been submitted to the EPA for review and approval. As of
March 31, 2016
, Ameren Missouri estimated its obligation at
$2 million
to
$5 million
. Ameren Missouri recorded a liability of
$2 million
to represent its estimated minimum obligation for this site, as no other amount within the range was a better estimate.
Ameren Missouri also participated in the investigation of various sites known as Sauget Area 2 located in Sauget, Illinois. In 2000, the EPA notified Ameren Missouri and numerous other companies, including Solutia, Inc., that former landfills and lagoons at those sites may contain soil and groundwater contamination. From about 1926 until 1976, Ameren Missouri operated an energy center adjacent to Sauget Area 2. Ameren Missouri currently owns a parcel of property at Sauget Area 2 that was once used by others as a landfill.
In December 2013, the EPA issued its record of decision for Sauget Area 2 approving the investigation and the remediation alternatives recommended by the potentially responsible parties. Further negotiation among the potentially responsible parties will determine how to fund the implementation of the EPA-approved cleanup remedies. As of
March 31, 2016
, Ameren Missouri estimated its obligation related to Sauget Area 2 at
$1 million
to
$2.5 million
. Ameren Missouri recorded a liability of
$1 million
to represent its estimated minimum obligation for this site, as no other amount within the range was a better estimate.
In December 2012, Ameren Missouri signed an administrative order with the EPA and agreed to investigate soil and groundwater conditions at an Ameren Missouri-owned substation in St. Charles, Missouri. As of
March 31, 2016
, Ameren Missouri estimated and recorded a
$0.6 million
liability related to the site. Although monitoring will continue for some time, no significant remediation measures are anticipated.
Our operations or those of our predecessor companies involve the use of, disposal of, and in appropriate circumstances, the cleanup of substances regulated under environmental laws. We are unable to determine whether such practices will result in
future environmental commitments or will affect our results of operations, financial position, or liquidity.
Ameren Missouri Municipal Taxes
The cities of Creve Coeur and Winchester, Missouri, on behalf of themselves and other municipalities in Ameren Missouri’s service area, filed a class action lawsuit in November 2011, against Ameren Missouri in the Circuit Court of St. Louis County, Missouri. The lawsuit alleges that Ameren Missouri failed to collect and pay gross receipts taxes or license fees on certain revenues. Ameren and Ameren Missouri recorded immaterial liabilities on their respective balance sheets as of
March 31, 2016
and December 31, 2015, representing their estimate of taxes and fees due as a result of this lawsuit. Ameren Missouri believes its defenses are meritorious and is defending itself vigorously; however, there can be no assurances that Ameren Missouri will be successful in its efforts. The ultimate resolution of any unpaid municipal tax or fees could have a material adverse effect on the results of operations, financial position, and liquidity of Ameren and Ameren Missouri.
NOTE 10 - CALLAWAY ENERGY CENTER
Under the NWPA, the DOE is responsible for disposing of spent nuclear fuel from the Callaway energy center and other commercial nuclear energy centers. Under the NWPA, Ameren and other utilities that own and operate those energy centers are responsible for paying the disposal costs. The NWPA established the fee that these utilities pay the federal government for disposing of the spent nuclear fuel at
one
mill, or one-tenth of one cent, for each kilowatthour generated and sold by those plants. The NWPA also requires the DOE to review the nuclear waste fee annually against the cost of the nuclear waste disposal program and to propose to the United States Congress any fee adjustment necessary to offset the costs of the program. As required by the NWPA, Ameren Missouri and other utilities have entered into standard contracts with the DOE. Consistent with the NWPA and its standard contract, Ameren Missouri had historically collected one mill from its electric customers for each kilowatthour of electricity that it generated and sold from its Callaway energy center. Because the federal government is not meeting its disposal obligation, the collection of this fee is currently suspended.
Although both the NWPA and the standard contract stated that the DOE would begin to dispose of spent nuclear fuel by 1998, the DOE is not meeting its disposal obligation. The DOE's delay in carrying out its obligation to dispose of spent nuclear fuel from the Callaway energy center is not expected to adversely affect the continued operations of the energy center.
As a result of the DOE's failure to begin to dispose of spent nuclear fuel from commercial nuclear energy centers and fulfill its contractual obligations, Ameren Missouri and other nuclear energy center owners sued the DOE to recover costs, such as certain NRC fees and Missouri ad valorem taxes, incurred for ongoing storage of their spent fuel. The lawsuit resulted in a settlement agreement that provides for annual recovery of additional spent fuel storage and related costs. Ameren Missouri
will continue to apply for reimbursement from the DOE for allowable costs associated with the ongoing storage of spent fuel.
Electric utility rates charged to customers provide for the recovery of the Callaway energy center's decommissioning costs, which include decontamination, dismantling, and site restoration costs, over the expected life of the nuclear energy center. Amounts collected from customers are deposited into the external nuclear decommissioning trust fund to provide for the Callaway energy center’s decommissioning. It is assumed that the Callaway energy center site will be decommissioned through the immediate dismantlement method and removed from service. Ameren and Ameren Missouri have recorded an ARO for the Callaway energy center decommissioning costs at fair value, which represents the present value of estimated future cash outflows. Annual decommissioning costs of
$7 million
are included in the costs used to establish electric rates for Ameren Missouri's customers. Every three years, the MoPSC requires Ameren Missouri to file an updated cost study and funding
analysis for decommissioning its Callaway energy center. In April 2016, the MoPSC approved no change in electric service rates for decommissioning costs based on Ameren Missouri’s updated cost study and funding analysis filed in April 2015.
The fair value of the trust fund for Ameren Missouri's Callaway energy center is reported as "Nuclear decommissioning trust fund" in Ameren's and Ameren Missouri's balance sheets. This amount is legally restricted and may be used only to fund the costs of nuclear decommissioning. Changes in the fair value of the trust fund are recorded as an increase or decrease to the nuclear decommissioning trust fund, with an offsetting adjustment to the related regulatory liability. If the assumed return on trust assets is not earned, Ameren Missouri believes that it is probable that any such earnings deficiency will be recovered in rates.
NOTE 11 - RETIREMENT BENEFITS
Ameren’s pension plans are funded in compliance with income tax regulations and to meet federal funding or regulatory requirements. As a result, Ameren expects to fund its pension plans at a level equal to the greater of the pension expense or the legally required minimum contribution. Considering Ameren’s assumptions at
March 31, 2016
, the plan’s estimated investment performance through
March 31, 2016
, and Ameren’s pension funding policy, Ameren expects to make annual contributions of
$40 million
to
$70 million
through 2020, with aggregate estimated contributions of
$280 million
. These amounts are estimates which may change with actual investment performance, changes in interest rates, any pertinent changes in government regulations, and any voluntary contributions. Separately, our policy for postretirement benefits is primarily to fund the voluntary employees’ beneficiary association trusts to match the annual postretirement expense.
The following table presents the components of the net periodic benefit cost (benefit) incurred for Ameren’s pension and postretirement benefit plans for the three months ended March 31, 2016 and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
|
Three Months
|
|
Three Months
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Service cost
|
$
|
20
|
|
|
$
|
24
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
Interest cost
|
47
|
|
|
44
|
|
|
12
|
|
|
12
|
|
|
Expected return on plan assets
|
(63
|
)
|
|
(62
|
)
|
|
(18
|
)
|
|
(17
|
)
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
Prior service benefit
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
Actuarial loss (gain)
|
9
|
|
|
18
|
|
|
(3
|
)
|
|
1
|
|
|
Net periodic benefit cost (benefit)
|
$
|
13
|
|
|
$
|
24
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
Ameren Missouri and Ameren Illinois are responsible for their respective shares of Ameren’s pension and postretirement costs. The following table presents the pension costs and the postretirement benefit costs (benefit) incurred for the three months ended March 31, 2016 and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
|
Three Months
|
|
Three Months
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Ameren Missouri
(a)
|
$
|
8
|
|
|
$
|
15
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
Ameren Illinois
|
5
|
|
|
9
|
|
|
(4
|
)
|
|
(1
|
)
|
|
Ameren
(a)(b)
|
$
|
13
|
|
|
$
|
24
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
|
|
(a)
|
Does not include the impact of the regulatory tracking mechanism for the difference between the level of pension and postretirement benefit costs incurred by Ameren Missouri under GAAP and the level of such costs included in rates.
|
|
|
(b)
|
Includes amounts for Ameren registrants and nonregistrant subsidiaries.
|
NOTE 12 - DISCONTINUED OPERATIONS
On January 31, 2014, Medina Valley completed the sale of the Elgin, Gibson City, and Grand Tower gas-fired energy centers to Rockland Capital for a total purchase price of
$168 million
. The agreement with Rockland Capital required a portion of the purchase price to be held in escrow until January 31, 2016, to fund certain indemnity obligations, if any, of Medina Valley. Medina Valley received the amount held in escrow from Rockland Capital in the first quarter of 2016 and paid Genco its portion of the escrow amount in April 2016. See Note 16 - Divestiture Transactions and Discontinued Operations under Part II, Item 8, of the Form 10-K for additional information related to discontinued operations.
NOTE 13 - SEGMENT INFORMATION
Ameren has
two
reportable segments: Ameren Missouri and Ameren Illinois. Ameren Missouri and Ameren Illinois each have
one
reportable segment. The Ameren Missouri segment for both Ameren and Ameren Missouri includes all of the operations of Ameren Missouri’s business as described in Note 1 - Summary of Significant Accounting Policies. The Ameren Illinois segment for both Ameren and Ameren Illinois includes all of the operations of Ameren Illinois’ business as described in Note 1 - Summary of Significant Accounting Policies. The category called Other primarily includes Ameren parent company activities, Ameren Services, and ATXI.
The following table presents information about the reported revenues and net income attributable to Ameren common shareholders from continuing operations for the
three months ended March 31,
2016
and
2015
, and total assets of continuing operations as of
March 31, 2016
, and
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
Ameren
Missouri
|
|
Ameren
Illinois
|
|
Other
|
|
Intersegment
Eliminations
|
|
Ameren
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
External revenues
|
$
|
726
|
|
|
$
|
676
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
1,434
|
|
|
Intersegment revenues
|
15
|
|
|
1
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
Net income attributable to Ameren common shareholders from continuing operations
|
14
|
|
|
59
|
|
|
32
|
|
|
—
|
|
|
105
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
External revenues
|
$
|
793
|
|
|
$
|
744
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
1,556
|
|
|
Intersegment revenues
|
7
|
|
|
1
|
|
|
1
|
|
|
(9
|
)
|
|
—
|
|
|
Net income attributable to Ameren common shareholders from continuing operations
|
41
|
|
|
53
|
|
|
14
|
|
|
—
|
|
|
108
|
|
|
As of March 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
13,443
|
|
|
$
|
8,944
|
|
|
$
|
1,214
|
|
|
$
|
(230
|
)
|
|
$
|
23,371
|
|
(a)
|
As of December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
13,851
|
|
|
$
|
8,903
|
|
|
$
|
1,139
|
|
|
$
|
(267
|
)
|
|
$
|
23,626
|
|
(a)
|
(a) Excludes total assets from discontinued operations of
$14 million
as of
March 31, 2016
, and December 31, 2015.