The operator welcomes participants to Ameren Corporation's First Quarter 2024 Earnings Call and introduces the host, Andrew Kirk. The call will be recorded and a presentation has been posted on the company's website. The speakers may make forward-looking statements, and listeners are directed to refer to the company's SEC filings for more information. Marty Lyons, the Chairman, President, and CEO, will begin the presentation and discuss the company's successful execution of their strategic plan and their focus on delivering for customers, shareholders, and the environment.

The company has announced their first quarter 2024 earnings of $0.98 per share, with strong operating performance despite mild weather and higher expenses. They remain on track to meet their 2024 earnings guidance range. The company's top priorities for the year include strategic investments, improving reliability and efficiency for customers, and optimizing business processes. In the first three months of the year, significant capital has been invested in smart meters, switches, cables, and substations.

In the first quarter of the year, Ameren in Illinois made investments in replacing poles, switchgear, and installing underground cables to improve the reliability of energy for customers. They also completed several new transmission substations and lines. These investments have resulted in reduced outages and shorter outage durations during storms. In March, Ameren Missouri received approval for their largest solar investment and the Missouri General Assembly is considering legislation to support reliability investments.

The passage discusses the progress being made on several bills with bipartisan support in the current general assembly session, as well as ongoing efforts to gain approval from the Illinois Commerce Commission for an electric grid investment plan. The company is also working with stakeholders to promote constructive regulatory frameworks and support the state's energy transition goals. The focus is on providing reliable and affordable energy for customers and supporting growth in the region.

Ameren is committed to keeping costs under control and thanks its team members for their efficient and safe work. The company is making progress on its request with the Missouri PSC to securitize the remaining balance of the Rush Island Energy Center and other related costs. This will save customers millions of dollars. The company also provides an update on the new source review proceeding for Rush Island, which involves installing scrubbers or retiring the energy center by 2024.

The Department of Justice and Ameren Missouri have filed proposals for additional mitigation relief in response to a court order. Ameren's proposal includes the retirement of Rush Island, a school bus electrification program, an air filter program, and surrendering sulfur dioxide allowances. The DOJ's proposal is more extensive and estimated to cost $120 million. An evidentiary hearing is expected to take place this summer, with a final ruling expected in the second half of 2024. Ameren also provided an update on new rules issued by the EPA, which focus on carbon capture and storage technologies and apply to both existing coal-fired units and new gas-fired units.

The article discusses new rules that will require coal units to co-fire with natural gas by 2030, which will impact the Labadie Energy Center. This will make it more challenging and costly to maintain existing dispatchable generation or build new ones. The article also mentions future renewable generation developments, including the approval of three solar projects and a subscription-based program for businesses and organizations to use renewable sources.

The online auction for customers to subscribe to the Cass County Solar Project is expected to take place in mid-May after Missouri PSC approval. Ameren Missouri is investing in solar energy as part of their plans to meet customers' energy needs. They also plan to build a gas simple-cycle energy center for peak energy demand. Ameren has been selected to develop a competitive project for the MISO Midwest region and expects construction to begin in 2026. MISO has announced a proposed project portfolio for Tranche 2, which includes significant investments in Ameren's service territories.

The company has been working with MISO to evaluate and comment on a portfolio of projects, with a vote expected in the third quarter of 2024. They have a robust pipeline of investment opportunities worth $55 billion and expect strong earnings and dividend growth in the next five years. The first quarter earnings for 2024 were $0.98 per share, a decrease of $0.02 per share from the previous year.

The company had a strong first quarter, with higher retail sales and solid earnings performance. They attribute this to executing their strategy and making infrastructure investments for their customers. However, there were some challenges, such as new service rates and increased O&M costs. They remain confident in their 2024 guidance range and expect to see cost reductions and higher earnings in the second half of the year. They have been actively managing costs and investing in technology to improve productivity and customer experience. They also anticipate higher earnings in Ameren Transmission due to timing of financing and project expenditures.

The author encourages consideration of supplemental earnings drivers for the remainder of the year. MISO concluded a planning resource auction, with Zone 5 showing a model capacity shortfall. However, this is not expected to have a significant impact on customer bills or reliability. The results highlight the need to continue executing generation plans and expand transmission to integrate new loads and renewable generation. The company has supported 21 new economic development projects, expected to increase demand and create jobs.

Ameren Missouri and Ameren Illinois are working on over 150 economic development projects in various industries, such as manufacturing and data centers. They are also working on regulatory matters, including the 2023 annual rate reconciliation and the 2024-2027 multiyear rate plan. The 2023 reconciliation is for a $160 million adjustment, which will result in a 1.5% increase in residential customer bills. The ICC will review this and make a decision in December, with new rates going into effect next year. The multiyear rate plan for 2024-2027 is also being worked on.

In January, Ameren Illinois was granted a partial rehearing by the ICC to address grid reliability investment and 2023 rate base additions. They have filed a revised request for a cumulative annual revenue increase of $305 million by 2027. The ICC staff recommends a lower cumulative increase of $283 million. In March, Ameren Illinois filed a revised multiyear grid and rate plan, requesting a $321 million cumulative annual revenue increase from 2023 rates. They expect an ICC decision by December with rates effective January 1, 2025. Ameren Missouri has also filed a 60-day notice for their next electric service rate review.

Ameren Missouri is in a strong financial position and has recently issued bonds to fund capital expenditures and refinance debt. They plan to issue common equity in 2024 in order to maintain their credit ratings and support their infrastructure plan. The company expects to deliver strong earnings growth and an attractive total shareholder return in the future. The speaker invites questions from the audience, and the first question is about recent EPA regulations.

The speaker discusses potential impacts of the new rules on the company's Integrated Resource Plan (IRP). They mention that the rules rely on carbon capture and sequestration, which may not be ready for use yet, and this could affect their planned combined cycle facility and the retirement of their Labadie Energy Center. The company will need to reassess and potentially revise their IRP in light of the new rules and potential litigation.

The new rule would require co-firing with natural gas in the 2030s, which could cause challenges in terms of permitting and construction. The company has concerns about the feasibility and reliability of the system and it may require a greater level of investment in the IRP. The PI auction in Zone 5 saw a large breakout due to a capacity issue, but there should not be any impact on customers or reliability of service.

The speaker discusses the MISO model and how it may result in some shifting of revenue. They mention Missouri's ownership of generation in Zone 4 and how it helps offset the shifting. They also mention the need for dispatchable generation and note some issues that have caused increased load and reduced import capabilities. The speaker believes there may be some relief in the next few years and mentions legislative initiatives in Missouri, specifically PISA legislation.

The speaker says that the company is well-positioned for the passage of Senate Bill 1422, Senate Bill 740, and House Bill 1746, but time is short as the legislative session ends in two weeks. They will continue to work towards passage. In Illinois, the regulatory process for the electronic hearing the grid plan refiling is progressing well, and the team has been working hard. The rehearing process is going smoothly.

The company expects a decision in June regarding an interim adjustment, with a more comprehensive multiyear rate plan to follow in the second half of the year. The company is advocating for an OpEx issue and some deferred projects in the rehearing process. There are no current legislative initiatives in Missouri and Illinois, but the company is still advocating for a right of first refusal.

Michael Moehn, speaking on behalf of Ameren, stated that the company expects to make a decision on the proposed revenue increase in July. The proposed increase is $305 million over a four-year period, with a portion of it already accounted for in the 2024 guidance. If there are any changes to the plan, Ameren will have to reevaluate and consider options. In regards to the Rush Island case, the debate will mainly revolve around the size of the proposed program, with Ameren proposing a $20 million program and the Department of Justice proposing a $120 million program.

The speaker discusses the similarities between two programs and how it may not be a matter of the program mix but rather the extent and cost of them. They cannot predict what mitigation the court would order, but they generally expect that the positions and proposed orders from both parties would be the book ends for the degree of relief. The speaker also mentions the challenges associated with the EPA rule and the potential remedies that may be considered, such as running plants lower, using more batteries, or changing depreciation schedules. However, it is still early days and it is difficult to predict the outcome at this point.

The speaker discusses the impact of new EPA rules on their current energy plans. They will reassess their IRP and consider litigation. They mention the importance of their planned renewable energy, battery storage, and simple-cycle generation. They also mention the potential retirement of two energy centers and the need to reassess their plans for a combined cycle facility due to the feasibility and cost of carbon capture. They will need to consider alternative options to maintain reliability for their system.

The speaker, Paul Patterson, asks about the potential deployment of grid-enhancing technologies at Ameren, and Shawn Schukar responds by saying they will be complementary to their grid investments. Nick Campanella then asks about the mitigation proposal for Rush Island, which could result in an ongoing $20 million hit to O&M if the DOJ's request for $120 million is granted. The speaker, Marty Lyons, clarifies that this would be a one-time, non-recurring item.

The speaker discusses their plans to overcome the cost of a potential court order, which they estimate to be around $20 million. They also reiterate their O&M range for 2024 and mention various cost-saving measures they have implemented, including hiring freezes and automation investments. They feel confident in their ability to reach their O&M goals.

The speaker reflects on the challenges faced in 2020 due to COVID-19 but notes that the company was able to adapt and find opportunities to maintain their sales. They also mention their ability to be flexible and make decisions for the long-term. The speaker confirms that their equity needs for 2024 are taken care of and that $600 million per year is the estimated amount for 2025 and beyond. The questioner asks about the potential for data center opportunities and the speaker mentions that they are seeing opportunities with large customers and that they may need to invest in these projects, with the size and cost varying.

The speaker believes that the company has a strong value proposition for both data centers and manufacturers due to their competitive rates and availability of sites with necessary capabilities. State, local, and regional leaders are working together to offer incentives for businesses. The company has already signed a construction agreement for one data center and is actively working on multiple projects with a potential for 1,000+ megawatts. There is also a lot of growth happening in the manufacturing sector, with large expansions from companies like Boeing and Wieland.

The speaker discusses potential growth in projects that will positively impact the company's capital and customer affordability. They also mention a proposed map for Tranche 2, which shows opportunities for investment in their service areas, potentially twice the size of Tranche 1. However, it is too early to determine the exact level of investments in their service territory for Tranche 2.

The speaker discusses the potential impact of proposed projects in their service territory, but notes that it is premature to determine the exact investment value or whether they will be brownfield or greenfield projects. They expect the plans to be modified based on stakeholder input and are excited about the upcoming approval of the portfolio. The speaker also mentions upcoming events, such as the Annual Shareholder Meeting and the AGA Financial Forum.

This summary was generated with AI and may contain some inaccuracies.