Ameren Corporation (AEE) Q4 2022 Earnings Call Transcript

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Ameren Corporation (NYSE:AEE) Q4 2022 Earnings Conference Call February 16, 2023 10:00 AM ET

Company Participants

Andrew Kirk – Director-Investor Relations

Marty Lyons – President and Chief Executive Officer

Michael Moehn – Senior Executive Vice President and Chief Financial Officer

Conference Call Participants

Nicholas Campanella – Credit Suisse

Jeremy Tonet – JPMorgan

Julien Dumoulin-Smith – Bank of America


Greetings, and invited to Ameren Corporation's Fourth Quarter 2022 Earnings Conference Call. At this time, each participants are successful a listen-only mode. A little question-and-answer convention will travel nan general presentation. [Operator Instructions] As a reminder, this convention is being recorded.

It is now my pleasance to present your big for today's call, Andrew Kirk, Director of Investor Relations for Ameren Corporation. Thank you, Mr. Kirk. You whitethorn begin.

Andrew Kirk

Thank you, and bully morning. On nan telephone pinch maine coming are Marty Lyons, our President and Chief Executive Officer; and Michael Moehn, our Senior Executive Vice President and Chief Financial Officer; arsenic good arsenic different members of nan Ameren guidance team.

This telephone contains time-sensitive information that is meticulous only arsenic of nan day of today's unrecorded broadcast, and redistribution of this broadcast is prohibited. We person posted a position connected nan homepage that will beryllium referenced by our speakers.

As noted connected Page 2 of nan presentation, comments made during this convention telephone whitethorn incorporate statements astir early expectations, plans, projections, financial capacity and akin matters, which are commonly referred to arsenic forward-looking statements. Please mention to nan forward-looking statements conception successful nan news merchandise we issued yesterday arsenic good arsenic our SEC filings. For much accusation astir various factors that could origin existent results to disagree materially from those anticipated.

Now here's Marty, who will commencement connected Page 4.

Marty Lyons

Thanks, Andrew, and invited back. We're thrilled that you're patient again and present pinch america for this telephone and fresh to afloat prosecute pinch our investors and nan analysts. Good morning, everyone, and convey you for joining america coming arsenic we bespeak connected our 2022 capacity and look up to 2023 and beyond. I'd for illustration to commencement by expressing appreciation for nan Ameren team's dedication and difficult activity complete nan past year. In 2022, we continued to successfully execute our semipermanent strategy, arsenic shown connected Page 4, which is delivering beardown results coming while laying a beardown instauration for nan future.

Shown connected Page 5 are immoderate breathtaking strategical achievements from nan past twelvemonth for Ameren, our customers, shareholders, nan situation and nan manufacture arsenic a whole. Let maine touch connected a fewer cardinal accomplishments. We made $3.4 cardinal of infrastructure investments successful 2022 that resulted successful a much reliable, resilient, unafraid and cleaner power grid, arsenic good arsenic contributed to beardown maturation astatine each of our business segments.

For example, arsenic portion of our Ameren Missouri Smart Energy Plan, complete 400 smart switches were installed to trim outages from hours to minutes and moreover seconds, and 34 substations were upgraded aliases built caller to amended service communities. In addition, complete 300,000 smart meters were installed for our Missouri customers, enabling amended visibility into their power usage.

In Illinois, our customers are benefiting from nan replacement of much than 3,000 electrical poles, 64 miles of coupled alloy distribution pipelines and 24 miles of state transmission pipelines. Further, our transmission business placed successful work 19 caller aliases upgraded transmission substations and astir 200 miles of caller aliases upgraded transmission lines.

These are conscionable a fewer of nan galore projects completed successful 2022. As a consequence of these and akin investments, I'm proud to opportunity that Ameren's astir caller strategy mean interruption wave reliability scores person classed successful nan apical quartile of our industry.

We besides had respective achievements connected nan regulatory and legislative front. In February, caller Ameren Missouri Electric Service rates took effect arsenic a consequence of our 2021 complaint review, which was constructively settled.

In June, we revenge a alteration to our integrated assets plan, accelerating our planned cleanable power investments, c emanation simplification goals and our scheme to execute net-zero by 2045 while thoughtfully considering customer affordability and power grid reliability.

In July, our pipeline of investments was importantly enhanced erstwhile nan Mid-Continent Independent System Operator, aliases MISO, approved a portfolio of long-range transmission projects, including important projects successful our operating footprint.

And successful August, Senate Bill 745 was enacted successful Missouri, extending nan constructive smart power scheme authorities that became rule successful 2018 retired done 2028, pinch imaginable hold to 2033.

I’m pleased to opportunity that a consequence – arsenic a consequence of these developments, successful 2022, we were capable to summation our 10-year finance opportunity pipeline from $40 cardinal to $48 billion. Further, successful our Ameren Illinois Electric Distribution business, successful September, nan Illinois Commerce Commission, aliases ICC, approved constructive capacity metrics, which paved nan measurement for our multiyear complaint scheme filing this January.

And finally, astatine nan national level, transition of nan ostentation Reduction Act will support nan cleanable power transition, reducing nan costs of related infrastructure investments for some our customers successful some Missouri and Illinois.

I would for illustration to definitive appreciation for each nan difficult activity of nan full Ameren squad to beforehand these important achievements. At nan aforesaid time, crossed Ameren, we are each moving to support customer bills arsenic debased arsenic imaginable while investing to guarantee we supply safe, reliable and cleaner power for our customers. We stay laser-focused connected disciplined costs management, practicing continuous betterment and optimizing our operating capacity arsenic we toggle shape our business.

In 2022, we continued our modulation to a cleaner power procreation portfolio, and arsenic planned successful December, we retired our oldest and least-efficient coal-fired plant, nan Meramec Energy Center. Thank you to each of our coworkers who person worked astatine Meramec providing reliable power complete nan past respective decades.

We admit that our customers dangle connected america each time to proviso nan power that supports their regular lives, and arsenic such, we person kept them astatine nan halfway of our strategy. We are honored that successful 2022 and for nan 3rd consecutive year, our residential customers person recognized Ameren pinch a top-quartile wide customer restitution ranking among ample electrical inferior providers successful nan Midwest. In addition, Ameren Missouri classed number 1 successful business customer satisfaction.

And finally, for our shareholders. Yesterday, we announced 2022 net of $4.14 per stock compared to net of $3.84 per stock successful 2021. This consequence was astatine nan precocious extremity of our net per stock guidance range. The beardown execution of our strategy successful 2022 reflects strategical alignment crossed each of our business segments. We are staying focused connected optimizing our operations and safely completing billions of dollars of value-adding projects to present important worth to our customers, communities, shareholders and nan environment.

Turning now to Page 6. Here, you tin spot we person delivered accordant superior worth to our shareholders for astir a decade. Since 2013, our weather-normalized halfway net per stock person risen 92% astatine an approximate 7.5% compound yearly maturation rate, while our yearly dividends paid per stock person accrued astir 48% complete nan aforesaid clip period. This drove a beardown full return of astir 226% for our shareholders from 2013 to 2022, which was importantly supra our inferior adjacent average.

While I americium very pleased pinch our way grounds of beardown and accordant performance, remainder assured that we are not letting up. Our squad will stay focused connected enhancing capacity successful 2023 and successful nan years up truthful that we tin proceed to present superior worth to our customers, communities and shareholders.

Turning to Page 7. This page summarizes our beardown sustainability worth proposition and attraction connected environmental, social, governance and sustainable maturation goals and reflects nan measurement we merge our sustainability values into our normal people of business.

Beginning pinch biology stewardship. Last June, we announced an acceleration of our transformational procreation assets plan, now aiming to execute net-zero Scope 1 and 2 c emissions by 2045 and crossed each of our operations successful Missouri and Illinois, which is accordant pinch nan objectives of nan Paris Agreement and limiting world somesthesia emergence to 1.5 degrees Celsius. This scheme besides advances our interim greenhouse state emanation simplification targets to 60% and 85% beneath 2005 levels by 2030 and 2040, respectively.

As mentioned, successful 2022, we were assigned definite projects arsenic portion of nan Tranche 1 task portfolio to prospectively build and run important transmission investments successful MISO territory. These arsenic good arsenic different transmission investments will supply our region entree to a divers operation of power resources and are an important measurement guardant to support a soft cleanable power transition.

We besides person a beardown semipermanent committedness to our customers and communities to beryllium socially responsible and economically impactful. One illustration is our effort to thrust inclusive economical maturation astatine Ameren and successful our communities. In 2022, we spent astir $1.1 cardinal pinch divers suppliers, including minority, women and veteran-owned businesses, a 22% summation complete 2021.

Because of actions for illustration this, successful May, we were honored to beryllium recognized again by Diversity Inc. arsenic number 1 connected nan nation's apical utilities database for diversity, equity and inclusion. This is nan 14th consecutive twelvemonth we person been named to this distinguished list. I americium besides very pleased to opportunity that Ameren was named a apical institution for ESG for nan 3rd consecutive year. In addition, we proceed to support galore nonprofit organizations successful nan communities we serve, including programs focused connected DE&I, to which, we person made a $10 cardinal publication committedness by 2025.

Moving to governance. Our beardown firm governance is led by a divers Board of Directors focused connected beardown oversight of our sustainability efforts. In 2022, we named our first mixed Chief Sustainability, Diversity and Philanthropy Officer to further optimize our initiatives. And our executive compensation practices see capacity metrics that are tied to diversity, equity, inclusion and advancement toward a cleanable power early for all.

Finally, this descent summarizes our very beardown sustainable maturation proposition, which we judge remains among nan champion successful nan industry. Today, we published our updated sustainability investor position called Leading nan Way to a Sustainable Energy Future, which is disposable astatine It demonstrates really we person been efficaciously integrating our sustainability values and practices into our firm strategy. I promote you to return immoderate clip to publication much astir our beardown sustainability worth proposition.

Moving to Page 8, we move our attraction to nan existent year. We expect 2023 to beryllium different engaged year, and we are excited astir a number of strategical objectives. Notably, we will support our attraction connected important infrastructure finance for nan use of our customers.

We expect to put astir $3.5 cardinal successful electric, earthy state and transmission infrastructure to bolster safety, security, reliability, resiliency and further nan cleanable power modulation successful a responsible fashion. And arsenic nan nation's cleanable power modulation continues, we scheme to thief create nan needed transmission finance by submitting bids for nan MISO Tranche 1 competitory long-range transmission projects arsenic good arsenic support study of imaginable Tranche 2 projects.

We person an progressive regulatory almanac this year. We look to constructively reason our Ameren Missouri electrical complaint reappraisal Ameren Illinois Electric multiyear complaint scheme and Ameren Illinois earthy state complaint review.

We will besides activity to successfully advocator for certificates of convenience and necessity for early renewable procreation astatine Ameren Missouri. And our adjacent Ameren Missouri integrated assets scheme will beryllium revenge successful September, which will see a broad update of assumptions, including changes driven by nan ostentation Reduction Act enacted past year. Finally, we are focused connected maintaining disciplined costs guidance pinch nan anticipation of holding operations and attraction expenses level successful 2023 comparative to 2022.

Moving now to Page 9. I Yesterday afternoon, we announced that we expect our 2023 net to beryllium successful a scope of $4.25 to $4.45 per share. Based connected nan midpoint of nan range, this represents 7% net per stock maturation compared to nan midpoint of our original 2022 guidance scope of $4.05 per share. Michael will supply you pinch much specifications connected our 2023 guidance a spot later.

Building connected nan beardown execution of our strategy and our robust net maturation complete nan past respective years, we expect to present 6% to 8% compound yearly net per stock maturation from 2023 done 2027 utilizing nan midpoint of our 2023 guidance, $4.35 per share, arsenic nan base.

Our dividend is different important constituent of our beardown full shareholder return proposition. Last week, Ameren's Board of Directors approved a quarterly dividend summation of astir 7%, resulting successful an annualized dividend complaint of $2.52 per share. This represents our 3rd consecutive twelvemonth of astir 7% dividend growth, and nan summation reflects assurance by Ameren's Board of Directors successful our business outlook and management's expertise to execute our strategy.

Looking ahead, we expect Ameren's early dividend maturation to beryllium successful statement pinch our semipermanent net per stock maturation expectations and wrong a payout ratio scope of 55% to 70%. We expect our weather-normalized dividend payout ratio successful 2023 to beryllium astir 58%. I person afloat assurance successful our squad arsenic we look ahead.

Turning to Page 10. The beardown semipermanent net maturation I conscionable discussed is chiefly nan consequence of complaint guidelines maturation driven by finance successful power infrastructure nether constructive regulatory frameworks. Today, we are rolling guardant our five-year finance plan. And arsenic you tin see, we expect to turn our complaint guidelines astatine an approximate 8% compound yearly complaint for nan 2022 done 2027 period.

Our robust superior scheme of astir $19.7 cardinal complete nan adjacent 5 years will present important worth to our customers and nan communities we serve. Our scheme includes strategically allocating superior to each 4 of our business segments, and importantly, includes finance successful a signed MISO long-range transmission readying projects of astir $800 cardinal and renewable power projects of astir $2.5 cardinal done 2027. Finally, we stay focused connected disciplined costs guidance to support customer bills arsenic debased arsenic imaginable and improved earned returns successful each of our businesses.

Moving to Page 11. As we look to nan future, our 5-year scheme is not only focused connected delivering beardown results done 2027, but is besides designed to position Ameren for occurrence complete nan adjacent decade and beyond. The correct broadside of this page shows that our allocation of superior is expected to turn our electrical and earthy state power transportation investments to beryllium 81% of our complaint guidelines by nan extremity of 2027. Incorporating renewable finance opportunities from our latest IRP, we expect our complaint guidelines from renewable procreation to turn to 11%, and for coal-fired procreation to diminution to conscionable 3% of complaint guidelines by nan extremity of 2027.

In ray of nan Rush Island and Sue Energy Centers approaching status by 2025 and 2030, respectively, only astir 3.5% of nan superior expenditures successful our 5-year scheme are expected to beryllium spent connected coal-related projects, focusing connected investments needed for safety, reliability and biology compliance. The bottommost statement is that we are taking steps coming crossed nan committee to position Ameren to supply safe, reliable, affordable and cleaner power for nan agelong term.

Turning now to Page 12. Looking up complete nan adjacent decade, we person a robust pipeline of finance opportunities of $48 cardinal that will present important worth to each of our stakeholders by making our power grid stronger, smarter and cleaner. Of course, our finance opportunities will besides create thousands of jobs for our section economies. Maintaining constructive power policies that support robust finance successful power infrastructure and a modulation to a cleaner early successful a responsible manner will beryllium captious to gathering our country’s power needs successful nan early and delivering connected our customers’ expectations.

Moving now to Page 13. Our finance plans released coming incorporated our intentions to put successful important renewable resources arsenic we execute nan cleanable power modulation laid retired successful our Ameren Missouri Integrated Resource Plan. Our IRP lays retired nan astir prudent attack to systematically put successful renewable power procreation to complement existing and planned dispatchable resources, building a diverse, reliable, resilient and affordable strategy for our customers. We proceed to activity successful earnest pinch developers to get renewable procreation projects and expect to denote further agreements complete nan people of this year.

We are pleased to opportunity that past week, nan Missouri PSC approved our Certificate of Convenience and Necessity for nan 200-megawatt Huck Finn star project. Construction of this installation is expected to create astir 250 jobs, and erstwhile successful operation, nutrient capable power to powerfulness astir 40,000 homes. We expect nan Missouri PSC determination connected a remaining pending Certificate of Convenience and Necessity for nan 150-megawatt Boomtown star task by April, though nan committee is nether nary deadline to rumor a decision. We look guardant to continuing to prosecute pinch stakeholders regarding our early procreation needs and cleanable power transition.

Moving to Slide 14. As we’ve discussed successful nan past, MISO completed a study outlining a imaginable roadworthy representation of transmission projects done 2039. In July, MISO approved nan first group of projects, which includes $1.8 cardinal assigned to Ameren. Detailed creation activity and task readying for nan assigned Tranche 1 projects are underway. MISO requests for connection connected nan remaining competitory projects person begun to beryllium issued, and we expect nan connection and information process to return spot complete nan people of 2023 and 2024. Looking up to Tranche 2, study of imaginable projects is underway and will proceed for nan remainder of nan year. MISO anticipates nan Tranche 2 portfolio of projects will beryllium approved successful nan first half of 2024.

Moving to Page 15. As noted earlier, we stay relentlessly focused connected continuous betterment and disciplined costs management. Ongoing initiatives see nan automation and optimization of galore processes leveraging nan benefits from important past and early investments successful integer technologies and grid modernization. Additionally, successful 2022, we extended astir of our corporate bargaining portion labour agreements retired done mid to precocious 2026 for astir each Ameren national represented employees, which will supply predictability successful our labour costs successful nan coming years. In 2023, we expect our operations and attraction expenses to beryllium level pinch 2022, and we are targeting level operations and attraction expenses done 2027.

Moving to Page 16. To sum up our worth proposition, we stay firmly convinced that nan execution of our strategy successful 2023 and beyond will proceed to present superior worth to our customers, shareholders and nan environment. We judge our anticipation of 6% to 8% compound yearly net maturation from 2023 done 2027 driven by beardown complaint guidelines maturation compares very favorably pinch our regulated inferior peers.

I americium assured successful our expertise to execute our strategy and finance plans crossed each 4 of our business segments arsenic we person an knowledgeable and dedicated squad pinch a way grounds of execution that has positioned america good for early success. Further, our shares proceed to connection investors an charismatic dividend and nan beardown net maturation expectations we outlined coming position america good for early dividend growth. Simply put, we judge this results successful a very charismatic full return opportunity for shareholders.

Again, convey you each for joining america today, and I will now move nan telephone complete to Michael.

Michael Moehn

Thanks, Marty, and bully morning, everyone. Turning now to Page 18 of our presentation. Yesterday, we reported 2022 net of $4.14 per stock compared to net of $3.84 per stock successful 2021, an summation of astir 8%. This page summarizes cardinal drivers impacting net astatine each segment.

I would statement successful nan 4th quarter, we benefited from colder than normal upwind arsenic good arsenic an improved marketplace conditions related to nan rate surrender worth of our company-owned life security investments, which contributed to 2022 net results astatine nan apical extremity of nan net per stock guidance scope that we outlined connected our 3rd 4th call.

We’ve besides included connected this page nan year-over-year weather-normalized income trends for Ameren Missouri. Weather-normalized kilowatt hr income to Illinois residential and business customers were down astir 1.5% and 1% year-over-year, respectively. And weather-normalized kilowatt hr income to Illinois commercialized customers accrued by astir 0.5%. Recall that changes successful electrical income successful Illinois, nary matter nan cause, do not impact our net since we person afloat gross decoupling.

Moving to Page 19 of nan presentation. Here, we supply an overview of our $19.7 cardinal of planned superior expenditures for nan 2023 done 2027 play by business conception that supports nan astir 8% projected compound yearly complaint guidelines growth. We’ve incorporated an incremental $2.4 cardinal compared to nan $17.3 cardinal five-year scheme for 2022 done 2026 that we laid retired past February. The scheme includes investments related to assigned MISO long-range transmission projects arsenic good arsenic renewable power procreation investments aligned pinch our 2022 Missouri Integrated Resource Plan. As you tin spot connected nan correct broadside of this page, we are allocating superior accordant pinch nan allowed return connected equity nether each regulatory framework.

Turning to Page 20. We outlined present nan expected backing sources for nan infrastructure investments noted connected nan anterior page. We expect continued maturation successful rate from operations arsenic investments were reflected successful customer rates. We besides expect to make important taxation deferrals. The taxation deferrals are driven chiefly by nan timing differences betwixt financial connection depreciation reflected successful customer rates and accelerated depreciation for taxation purposes.

From a financing perspective, we expect to proceed to rumor semipermanent indebtedness to money a information of our rate requirements. We besides scheme to proceed to usage recently issued shares from our dividend reinvestment and worker use plans complete nan five-year guidance period. We expect this to supply equity backing of astir $100 cardinal annually.

In bid for america to support a beardown equilibrium expanse while we money our robust infrastructure plan, we expect incremental equity issuances of astir $300 cardinal successful 2023 and $500 cardinal each twelvemonth from 2024 done 2027. The $300 cardinal of equity needs outlined for 2023 person been fulfilled done guardant income agreements nether our at-the-market equity distribution programme which we expect to settee by nan extremity of this year. All of these actions are expected to alteration america to support a consolidated capitalization target of astir 45% equity.

And lastly, nan bottommost of Page 20 shows our pension and OPEB obligations were good funded astatine nan extremity of 2022. Constructive regulatory mechanisms are successful spot for a betterment of associated costs, including a locator astatine Ameren Missouri and formulaic rates successful nan Ameren Illinois Electric Distribution and Ameren Transmission.

Moving to Page 21 of our presentation. I would now for illustration to talk cardinal drivers impacting our 2023 net guidance. We expect 2023 diluted net per stock to beryllium successful nan scope of $4.25 per stock to $4.45 per share. On this page and next, we person listed cardinal net drivers and assumptions down our 2023 net guidance surgery down by conception arsenic compared to nan 2022 results. I would note, accordant pinch past practice, our 2023 net guidance does not see immoderate anticipation of COLI gains aliases losses.

Beginning pinch Ameren Missouri. Earnings are expected to emergence successful 2023. New electrical work rates effective July 1, 2023, are expected to summation earnings. The net comparison is besides expected to beryllium favorably impacted by higher investments successful infrastructure that are eligible for PISA chiefly during nan first half of 2023 earlier rates are reset. We expect a return to normal upwind successful 2023 will alteration Ameren Missouri net by astir $0.14 compared to 2022 results. Further, we expect higher liking disbursal mostly driven by higher semipermanent indebtedness outstanding. And we expect to admit net related to power ratio capacity incentives from a azygous scheme twelvemonth successful 2023.

Moving on, net from our FERC-regulated electrical transmission activities are expected to use from further investments successful Ameren Illinois and ATXI projects made nether forward-looking look ratemaking.

Turning to Page 22. For Ameren Illinois Electric Distribution, net are expected to use successful 2023 compared to 2022 from further infrastructure investments made nether Illinois performance-based ratemaking. We besides expect higher net successful Ameren Illinois Electric Distribution from a higher allowed return connected equity owed to nan expected higher 30-year treasury rates.

Our guidance incorporates an ROE of 9.55% utilizing a forecasted 3.75% 2023 mean output for nan 30-year treasury bond, which is higher than nan allowed ROE of 8.9% successful 2022. The allowed ROE is applied to year-end complaint base.

For Ameren Illinois Natural Gas, net will use from infrastructure investments qualifying for rider curen which are expected to beryllium partially offset by higher depreciation expense.

Moving now to Ameren-wide drivers and assumptions. We expect accrued communal shares outstanding to unfavorably effect net per stock by $0.08. And we expect higher liking disbursal successful nan Ameren Parent. Of course, successful 2023, we will activity to negociate each of our businesses to gain arsenic adjacent to our allowed returns arsenic imaginable while being mindful of operating and different business needs.

I’d besides for illustration to return a infinitesimal to talk our unit electrical income outlook. We expect weather-normalized Missouri kilowatt-hour income to beryllium successful nan scope of level to up astir 0.5% compounded annually complete a five-year plan, excluding nan effects of MIA power ratio plans utilizing 2022 arsenic nan guidelines year. We exclude MIA effects because nan scheme provides complaint betterment to guarantee that net are not affected by reduced electrical income resulting from our power ratio efforts.

Turning to Illinois. We expect our weather-normalized kilowatt-hour sales, including power efficiency, to beryllium comparatively level complete our five-year plan.

Turning to Page 23, of Missouri regulatory matters. In August, we revenge for a $316 cardinal electrical gross summation pinch nan Missouri Public Service Commission. The petition includes a 10.2% return connected equity, a 51.9% equity ratio and a December 31, 2022, estimated complaint guidelines of $11.6 billion.

In January, nan Missouri Public Service Commission unit and different interviewers revenge rebuttal testimony. Missouri PSC unit recommended a $199 cardinal gross summation including a return connected equity scope of 9.34% to 9.84% and an equity ratio of 51.84% based connected nan Ameren Missouri superior building astatine September 30, 2022. The equity ratio will beryllium updated to usage nan superior building arsenic of December 31, 2022.

The quality betwixt our petition and nan Missouri PSC staff’s proposal is chiefly driven by return connected equity and curen of nan High Prairie and Rush Island power centers. Both of our petition and staff’s proposal will beryllium trued up done December 31, 2022. As always, we will activity to activity done these and different differences pinch interveners arsenic we activity done nan proceedings. Evidentiary hearings are scheduled to statesman successful April, and nan determination from nan Missouri PSC is expected by June 2023 pinch rates effective by July 1, 2023.

Turning to Page 24 for specifications connected Illinois Electric matters. In January, Ameren Illinois Electric Distribution revenge its first multiyear complaint plan, aliases MYRP, pinch nan ICC. The MYRP includes a awesome scheme that lays retired our electrical distribution finance plans for Illinois and supports our yearly gross summation petition for nan adjacent 4 years. Our petition for $175 cardinal gross summation successful 2024 is based connected an mean complaint guidelines of $4.3 billion, a return connected equity of 10.5% and an equity ratio of conscionable nether 54%. You tin find further cardinal components of our MYRP connected this slide.

The guidelines return connected equity will beryllium adjusted up aliases down annually based connected 7 capacity metrics focused heavy connected reliability and highest load reduction. Importantly, our superior expenditure plans for nan coming years are expected to thrust improvements successful galore of nan areas of attraction for these capacity metrics. An yearly gross request true-up will return spot each twelvemonth pinch 105% headdress connected existent costs compared to nan gross request approved successful nan MYRP. However, galore adaptable items, specified arsenic changes successful acquisition powerfulness costs, liking rates, changes successful taxes and ample large wind restoration costs, are excluded from this cap. We expect nan ICC determination connected nan MYRP by December 2023 pinch caller rates effective successful January 2024.

Additionally, arsenic portion of nan Illinois Energy Transition legislation, successful June, Ameren Illinois revenge a proscription beneficial electrification plan. The scheme proposes to walk $27 cardinal to supply incentives, rates and programs to promote electrical conveyance utilization and infrastructure improvement crossed Ameren Illinois work territory done 2025. This is being done successful support of nan Governor’s extremity of 1 cardinal electrical vehicles connected nan roadworthy by 2030. We expect an ICC bid connected nan proscription electrification filing by nan extremity of March 2023.

Moving to Page 25. We precocious concluded our look complaint reappraisal of Ameren Illinois Electric Distribution. In December, nan ICC approved a $61 cardinal complaint summation arsenic portion of its yearly performance-based complaint update. New rates became effective successful January.

Major investments included successful this petition were nan installation of outage avoidance and discovery technology, integration of storm-hardening instrumentality and nan implementation of caller exertion to amended connection pinch our customers. Since implementing nan performance-based ratemaking successful 2012, reliability has accrued by astir 20%, and nan balanced of complete 1,700 jobs person been created. We look guardant to nan caller performance-based complaint making nether nan MYRP, which will besides let america nan opportunity to amended our returns successful speech for meaningful improvements for nan use of our customers.

Finally, successful January, Ameren Illinois Natural Gas requested a $160 cardinal gross summation from nan ICC based connected a 10.7% return connected equity and an astir 54% equity ratio and a $2.9 cardinal complaint guidelines utilizing our early 2024 trial year. This requested summation includes astir $77 cardinal that would different beryllium recovered successful 2024 nether QIP and different riders. An ICC determination is required by precocious November 2023, pinch rates expected to beryllium effective successful early December 2023.

You tin spot we person an progressive regulatory almanac up of us. We’ve developed beardown relationships pinch our stakeholders and person a agelong way grounds of constructive results that show our investments are genuinely making a quality successful nan lives of our customers.

On Page 26, we supply an update regarding nan Inflation Reduction Act. As we beryllium present today, we do not expect nan firm minimum tax, aliases CMT, to use successful 2023 aliases 2024. We proceed to exemplary nan CMT, and it’s imaginable it could effect 2025 and beyond. We await further guidance from Treasury, which we expect to supply further clarity. Again, these imaginable incremental yearly rate taxation payments are not expected to beryllium material.

These estimates are of people taxable to nan magnitude and timing of superior expenditures being placed successful work aliases retired, timing of complaint reviews and further guidance that whitethorn beryllium issued by nan IRS aliases Department of Treasury, among different items.

Finally, moving to Page 27. I’ll stress again that we person a beardown squad and are good positioned to proceed executing our plan. We delivered beardown net maturation successful 2022, and we expect to present beardown net maturation successful 2023 arsenic we proceed to successfully execute our strategy.

And arsenic we look ahead, we expect 6% to 8% compound net per stock maturation from 2023 to 2027, driven by robust complaint guidelines maturation and disciplined costs management. We judge this maturation will comparison favorably pinch nan maturation of our peers. Further, Ameren shares continued to connection investors an charismatic dividend. In total, we person an charismatic full shareholder return communicative that compares very favorably to our peers.

That concludes our prepared remarks. We now induce your questions.

Question-and-Answer Session


[Operator Instructions] Our first mobility comes from nan statement of Nicholas Campanella pinch Credit Suisse. Please proceed pinch your question.

Nicholas Campanella

Hey, everyone. Thanks for each nan info coming and Andrew, invited back. Really happy to perceive your voice.

Andrew Kirk

Thanks, Nick. Appreciate it.

Nicholas Campanella

Absolutely. Yes. So I conjecture conscionable connected nan Missouri complaint case, you did person immoderate differences present successful complaint guidelines for staff, but conscionable wanted to get a consciousness of your wide appetite to settee this lawsuit if that’s still a anticipation – conscionable reasoning backmost to really anterior cases person gone. Thank you.

Marty Lyons

Yes, Nick, this is Marty Lyons. Good morning. Thanks for nan question. Yes. Look, arsenic we spell into each case, we surely are hopeful of being capable to scope a constructive settlement. And arsenic we talked astir galore times, we person a bully history of moving pinch stakeholders successful Missouri and reaching constructive settlements.

We outlined wherever we are successful nan lawsuit coming successful our prepared materials, you saw successful nan descent deck, and we outlined immoderate of nan issues that disagreement america today, chiefly successful immoderate of nan accepted areas for illustration ROE, but besides connected a mates of issues for illustration High Prairie and Rush Island power centers, wherever there’s immoderate differences betwixt america and nan unit successful particular.

Importantly, each of america will beryllium updating our cases based connected year-end complaint guidelines arsenic good arsenic different true-up items that spell done December 31. So you mentioned immoderate of nan differences successful complaint base. Really, those are conscionable timing differences betwixt nan staff’s complaint base, which was arsenic of June 30 and nan company’s revenge position, which projected done December 31. But each of those things are going to beryllium trued up present successful nan coming days up done December 31.

So importantly, immoderate dates that we highlighted, a last reconciliation of nan parties’ positions will beryllium owed March 30, and that comes aft server vessel testimony, which is connected March 13. And past evidentiary hearings of those are needed would commencement connected April 3. So traditionally, nan champion clip to beryllium capable to scope a constructive colony fixed wherever this complaint lawsuit is, this complaint reappraisal would beryllium extremity of March, early April successful position of erstwhile you mightiness beryllium capable to really scope a constructive colony pinch nan parties.

Nicholas Campanella

That’s helpful. Appreciate that. And past conscionable connected nan equity financing, recognizing that you did raise CapEx successful this caller five-year plan. You do person immoderate sizable needs present successful nan retired years and I cognize you precocious past 4th besides said that you were expanding nan ATM to $1 cardinal for 2024 and beyond. But tin you conscionable thief america understand, pinch nan equity successful nan plan, conscionable your preferred root of backing that aliases sourcing it, rather.

Michael Moehn

Yes. Yes, you bet, Nick. Good morning. This is Michael, A mates of things, past I’ll get specifically connected that question. I mean, again, I deliberation arsenic we’ve talked complete time, I mean, we do judge our equilibrium expanse really provides america a position of spot here. We’ve worked difficult to proceed to conservatively negociate it. I deliberation we for illustration our ratings wherever they are, Baa1, BBB+. We evidently person much separator astatine S&P than we do astatine Moody’s. We talked astir that from clip to time. We proceed to target this capitalization ratio of adjacent to 45%, which I think, again, it served america good successful these various regulatory proceedings and making judge we’re maintaining these equilibrium sheets appropriately astatine nan subsidiaries.

In position of what we request here, you’re right. I mean, nan $2.4 cardinal of incremental capital, I deliberation what we proceed to connection on nan year, arsenic we thought astir immoderate increases successful superior associated pinch these opportunities astir LRTP aliases nan renewables that we should proceed to deliberation astir our equilibrium expanse successful a akin fashion. And I deliberation that’s what we’re doing here, we’re laying retired this incremental really $800 cardinal of equity. There’s immoderate evidently retained net successful location arsenic well, benignant of gets you backmost to that aforesaid benignant of capitalization ratio.

The ATM has served america good up to this point. I mean, we’ve taken attraction of each of our needs for 2023, Nick. We’ve sold guardant successful 2023. So we’re really vanished pinch that $300 million. We started to waste guardant into 2024. You’re correct that we did summation nan capacity of nan ATM. We’ll person to proceed to measure that complete clip arsenic we would tally into immoderate limits there. But again, it’s a really businesslike measurement for america to rumor capital. We deliberation it’s a manageable magnitude if you look astatine it comparative to our full marketplace capitalization. So we consciousness comfortable pinch it. And again, I deliberation that it provides america rather a spot of spot location arsenic we conscionable deliberation astir nan wide backing that we request complete nan people of nan adjacent 5 years.

Nicholas Campanella

Appreciate nan color. I’ll get backmost successful nan queue. Thank you.


Our adjacent mobility comes from Jeremy Tonet pinch JPMorgan. Please proceed pinch your question.

Jeremy Tonet

Hi. Good morning.

Marty Lyons

Good morning, Jeremy.

Jeremy Tonet

I conscionable wanted to commencement disconnected with, I guess, a complaint guidelines CAGR, nan 8% arsenic you laid retired location successful nan $2.5 cardinal figure. Just wondering, what are nan IRP assumptions successful your CapEx scheme update that – underpin nan $2.5 cardinal there. And what does this connote for institution ownership of resources versus PPA? And really do you position nan wide statement of show here? And erstwhile do you expect to benignant of get last committee decisions connected each resources?

Marty Lyons

Yes. Good morning, Jeremy, this is Marty. There’s a fewer questions, I think, embedded successful that question. So I’ll commencement and possibly Michael would want to adhd on. First of all, nan superior expenditures that we’ve put into nan scheme successful Missouri for nan IRP really necktie to nan scheme that we laid retired successful nan IRP. So if you spell backmost and you look astatine that wide clip line, we scheme to adhd 800 megawatts done 2025 and past different 2,000 megawatts of renewables betwixt 2026 and 2030. And if you conscionable do immoderate elemental mathematics there, it’s astir 400 megawatts per year. So you extremity up pinch astir 1,600 megawatts wide complete a five-year period. And again, we’ve put successful astir $2.5 cardinal arsenic an estimate for that. So that’s really it lines up.

We were pleased to person nan commission, Missouri Public Service Commission approved nan Huck Finn project, which was a 200-megawatt star task we’d proposed, they approved that 1 precocious astatine CCN. And of course, we’ve sewage nan Boomtown project, which is simply a 150-megawatt star task earlier them now and awaiting nan decision. And we proceed to activity pinch developers connected further renewable projects to really capable retired that scheme that we person nether nan IRP, which we deliberation is perfectly nan astir prudent measurement to move guardant to supply our customers nan reliable, affordable and cleaner power that they’re seeking.

Now backmost to nan wide CapEx plan. What you’ll announcement is we’ve sewage a $19.7 cardinal wide superior expenditure scheme for 2023 to 2027. That compares to nan 1 we had previously, which was 2022 to 2026, we had $17.3 billion. So we’ve added astir $2.4 cardinal wide arsenic we move from our anterior scheme to this one. And successful Missouri successful particular, I’d constituent retired that we antecedently had $8.9 cardinal of planned expenditures moving now to $10.4 million, which is astir a $1.5 cardinal wide addition.

So we’ve embedded nan anticipation of those renewable projects getting done successful nan wide $10.4 million. But I would opportunity we’ve taken a measured attack to upping our wide superior expenditure plan, which gives america awesome assurance successful our expertise to execute it.

Again, we’ve already had 1 renewable task approved. We’ve sewage a beardown pipeline of superior expenditure opportunity complete nan adjacent 10 years, arsenic we’ve talked about, $48 cardinal and person a batch of assurance successful our expertise to execute, not only nan $10.4 cardinal scheme for Missouri, but nan wide $19.7 cardinal scheme we’ve laid retired today.

Michael Moehn

Yes. The only thing, Jeremy, I mightiness adhd to that, Marty conscionable gave a really broad answer, is conscionable specifically pinch nan pipeline to renewables itself. And look, nan squad continues to do a batch of really difficult activity here. There’s immoderate progressive RFPs they proceed to person open. They proceed to person a batch of conversations pinch developers astir these projects.

I deliberation you had thing embedded location astir really do we deliberation astir possibly PPAs versus ownership. Again, we judge that ownership is successful nan champion liking of our customers for nan agelong term, and that’s really wherever our attraction has been. It’s surely evidenced by what we did pinch nan upwind projects. Certainly, we’re closing pinch nan 2 renewable star projects that Marty said about.

So I’d opportunity an progressive pipeline, and I think, obviously, nan proviso concatenation issues person been good publicized. I deliberation we proceed to activity done those and consciousness bully astir nan projects we person retired there, and it’s going to proceed to beryllium a batch of attraction and

effort complete nan coming years.

Jeremy Tonet

Got it. That's very adjuvant there. And past moving, I guess, to MISO here, what are your existent thoughts connected imaginable MISO long-range transmission planning, fixed MISO seems to beryllium modeling much fierce assumptions successful ray of IRA. So wondering your thoughts connected nan outlook there.

Michael Moehn

Yes. I would opportunity pinch respect to Tranche 2, we're surely actively engaged pinch different stakeholders pinch MISO and modeling retired nan benefits of imaginable projects that would travel retired of tranche our wide anticipation arsenic we beryllium present coming is that nan wide portfolio of projects that MISO would o.k. arsenic portion of tranche to will beryllium larger than nan wide size of nan projects that were approved arsenic portion of Tranche 1.

But I deliberation it'd beryllium premature to remark connected specifically which projects mightiness onshore successful our work territory aliases beryllium assigned specifically to us. But remainder assured, we'll beryllium moving pinch different stakeholders to exemplary nan transmission projects that we deliberation would beryllium champion for customers and nan reliability of nan strategy wide and to evidently effectuate nan cleanable power transition. And we do expect that, arsenic we said successful our prepared remarks, MISO, to make immoderate last determination early adjacent year.

Jeremy Tonet

Got it. That's very helpful. And past conscionable benignant of tying this together, you've raised CapEx. You've raised complaint guidelines maturation a small spot here. I'm conscionable wondering what you deliberation this could mean for EPS. You don't person nan 30-year, I guess, bringing fluctuations successful nan measurement that it was successful nan past. So arsenic you presently look astatine your EPS CAGR outlook, do you spot immoderate bias wrong nan scope towards nan higher parts, fixed this measurement up successful CapEx and complaint guidelines here, complaint guidelines growth?

Marty Lyons

Yes, Jeremy, I mean, I deliberation arsenic you know, I mean, our past believe really has not been to benignant of estimate wherever we'll beryllium wrong that range. I deliberation I'll constituent to wherever we person achieved results, obviously. Historically, we've been to 7.5% CAGR since astir 2013. So I'll fto that benignant of speak to itself. Obviously, we did raise nan complaint guidelines maturation from 7% to 8%. And I mean again, arsenic you deliberation astir that range, complete time, it drives astir a $0.45 range, that 6% to 8% complete that benignant of five-year period. And obviously, location are immoderate drivers, arsenic you pointed out, successful position of conscionable outcomes successful nan multiyear complaint plan, earned versus allowed ROEs, financing assumptions, et cetera. But again, fto benignant of nan past speak for itself astatine nan moment.

Michael Moehn

Yes. And Jeremy, I'd conscionable reiterate what I said. We consciousness very assured successful our expertise to beryllium capable to execute that $19.7 cardinal CapEx plan, which gives america assurance successful our expertise to execute that 8% complaint guidelines maturation plan. And that underscores our assurance successful nan 6% to 8% EPS CAGR that we've outlined today.

Jeremy Tonet

Got it. That's helpful. I'll time off it there. And Andrew, really awesome to perceive you connected nan call.

Andrew Kirk

Thanks, Jeremy. Appreciate it. Glad to perceive you, too.


[Operator Instructions] Our adjacent mobility comes from Julien Dumoulin-Smith pinch Bank of America. Please proceed pinch your question.

Julien Dumoulin-Smith

Hey, bully morning, team. Thanks for nan time, admit nan comments frankincense far. Maybe to travel up connected Nick's mobility earlier, conscionable pinch respect to Illinois and prospects for settling here. Any further elaborations astir nan caller compact there? Just arsenic you measurement into this, I conscionable want to understand. Does this request to beryllium benignant of afloat litigated and afloat fleshed retired to found much of a record, fixed nan discourse of immoderate displacement successful nan compact here? And again, that's a mobility specifically directed astatine some nan electrical and nan gas.

Marty Lyons

Yes. Julien, this is Marty. Yes, I deliberation your intuition is astir apt correct there, particularly arsenic it relates to nan multiyear complaint plan. I deliberation it's difficult to speculate. I mean, if ever we person nan opportunity to really participate into a constructive colony pinch stakeholders, we're surely going to beryllium willing successful having that speech pinch stakeholders. I deliberation it's conscionable very early successful this multiyear complaint scheme filing. Obviously, we haven't seen immoderate unit aliases intervenor nonstop testimony. We won't spot that until May. And really premature to cognize whether it's thing that could beryllium constructively settled aliases not.

I will statement that successful Illinois, location hasn't been that history of wide world settlements that we've had successful Missouri. But we'll surely beryllium looking aft we get grounds to activity pinch stakeholders to resoluteness differences, constrictive nan issues. And if we can, settee and that would clasp existent for nan state lawsuit arsenic well.

Julien Dumoulin-Smith

Right. It holds done arsenic and you astir apt want to activity done a afloat litigated lawsuit here.

Marty Lyons

No. I conjecture what I was saying location is we're ever going to beryllium wanting to activity pinch stakeholders. Once we spot nan differences to constrictive those differences, surely correct immoderate errors and really to constrictive nan issues. And if we tin scope a world colony and put that earlier nan commission, we'll activity to do that.

I was conscionable saying pinch respect to nan electrical distribution portion of nan business, fixed nan newness of this model and nan truth that we haven't seen immoderate grounds really premature to opportunity whether that's thing that has a precocious grade of probability.

Julien Dumoulin-Smith

Yes. All right. And actually, arsenic it pertains to QIP here, conscionable – I cognize that there's a caller model connected nan electrical side, and that's mostly established astatine this constituent pending implementation. But QIP and its consequent forms aliases iterations remains a small spot outstanding. Can you elaborate what your thoughts are, and possibly going backmost whether legislatively aliases different astatine this point, to get thing new? Again, I'll time off it unfastened ended connected what that mightiness look like. I cognize we've talked astir this successful nan past astatine times, but is location a model coming to revisit that speech possibly successful nan slate you did before?

Michael Moehn

Julian, this is Marty again. Look, we haven't fixed up immoderate benignant of replacement for QIP and really because nan QIP was successful our dice really awesome rider for our customers, really allowed america to make immoderate investments that bolster nan information and reliability of nan state system. I'd opportunity our attraction correct now is really though connected nan state lawsuit that you and I conscionable discussed. And really looking to get a constructive solution of that case. As you know, nan wide state regulatory environment, moreover without QIP is coagulated pinch guardant trial years, gross decoupling, bad indebtedness riders, et cetera.

So we judge that going forward, without nan QIP, we'd request to beryllium thoughtful astir nan timing of complaint reviews, but they do usage guardant trial years, which I deliberation is very important to deliberation about. And we'll beryllium thoughtful astir nan timing of superior expenditures to switch aging equipment, et cetera. So we do deliberation nan regulatory situation without QIP is thing we tin negociate around, we tin still invest, we tin gain bully returns.

But we will look for windows of opportunity to look for thing to switch nan QIP. I'll time off nan doorway unfastened for illustration you did successful position of what shape that whitethorn take. But correct now, our attraction is connected that state case.

Julien Dumoulin-Smith

Yes. Excellent. And past sorry, speedy explanation from earlier. Boomtown, conscionable is location thing different astir this? Say, comparative to Huck Finn aliases thing for illustration that, that mightiness guidelines retired successful position of that support process? Obviously, nan timing present being a small different successful position of nan long for nan CCF.

Marty Lyons

Yes. I deliberation 1 of nan differences, Julian, is nan Huck Finn task was projected to beryllium compliance pinch nan renewable power modular that we person successful Missouri, and it was approved arsenic such.

The Boomtown task is really being projected twofold. One, for customers, particularly ample business commercialized customers that are looking for renewable power arsenic portion of a user programme for them, and arsenic good arsenic portion of our modulation nether nan IRP. But it's not being projected for circumstantial compliance pinch nan renewable power standard. And truthful that's a distinguishing truth betwixt nan two.

Julien Dumoulin-Smith

Andrew, I echo nan sentiment.

Andrew Kirk

Thanks, Julien. Appreciate it.


We person reached nan extremity of nan question-and-answer session. I would now for illustration to move nan telephone backmost to Marty Lyons for closing comments.

Marty Lyons

Well, convey you each for joining america today. As you heard, we had a very beardown 2022, and we really stay focused connected delivering again successful 2023 and beyond, for our customers, for our communities and for our shareholders. So pinch that, beryllium safe, and we look guardant to seeing galore of you complete nan coming months.


This concludes today's conference. You whitethorn disconnect your lines astatine this time, and we convey you for your participation.

Editor: Naga

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