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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren's primary assets are the common stock of its subsidiaries. Ameren's subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses in Missouri and Illinois. Dividends on Ameren's common stock and the payment of other 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.
| Ÿ |
Union Electric Company, or 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 Missouri was incorporated in Missouri in 1922 and is successor to a number of companies, the oldest of which was organized in 1881. It is the largest electric utility in the state of Missouri. It supplies electric and natural gas service to a 24,000-square-mile area in central and eastern Missouri. This area has an estimated population of 2.9 million and includes the Greater St. Louis area. Ameren Missouri supplies electric service to 1.2 million customers and natural gas service to 127,000 customers. |
| Ÿ |
Ameren Illinois Company, or Ameren Illinois, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois. Ameren Illinois was created by the merger of CILCO and IP with and into CIPS. CIPS was incorporated in Illinois in 1923 and is successor to a number of companies, the oldest of which was organized in 1902. Ameren Illinois supplies electric and natural gas utility service to portions of central and southern Illinois having an estimated population of 3.1 million in an area of 40,000 square miles. Ameren Illinois supplies electric service to 1.2 million customers and natural gas service to 809,000 customers. |
| Ÿ |
AER consists of non-rate-regulated operations, including Genco, AERG, Marketing Company and Medina Valley. The Medina Valley energy center was sold in February 2012. Genco operates a merchant electric generation business in Illinois and holds an 80% ownership interest in EEI, which it consolidates for financial reporting purposes. Genco was incorporated in Illinois in March 2000. Genco's coal and natural gas electric generating facilities are expected to have capacity of 3,095 and 1,348 megawatts, respectively, at the time of the 2012 peak summer electrical demand. |
Ameren has various other subsidiaries responsible for activities such as the provision of shared services.
On October 1, 2010, Ameren, CIPS, CILCO, IP, AERG and AER completed a two-step corporate internal reorganization. The first step of the reorganization was the Ameren Illinois Merger. Upon consummation of the Ameren Illinois Merger, the separate legal existence of CILCO and IP ended. The second step of the reorganization involved the distribution of AERG stock from Ameren Illinois to Ameren and the subsequent contribution by Ameren of the AERG stock to AER. The Ameren Illinois Merger and the distribution of AERG stock were accounted for as transactions between entities under common control. In accordance with authoritative accounting guidance, assets and liabilities transferred between entities under common control were accounted for at the historical cost basis of the common parent, Ameren, as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in Ameren Illinois included purchase accounting adjustments related to Ameren's acquisition of CILCORP in 2003. Ameren Illinois accounted for the AERG distribution as a spinoff. Ameren Illinois transferred AERG to Ameren based on AERG's carrying value. Ameren Illinois has segregated AERG's operating results and cash flows and presented them separately as discontinued operations in its consolidated statement of income and consolidated statement of cash flows, respectively, for all periods presented prior to October 1, 2010, in this report. For Ameren's financial statements, AERG's results of operations remain classified as continuing operations. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Effective January 1, 2010, as part of an internal reorganization, AER transferred its 80% stock ownership interest in EEI to Genco through a capital contribution. The
transfer of EEI to Genco was accounted for as a transaction between entities under common control, whereby Genco accounted for the transfer at the historical carrying value of the parent (Ameren) as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in EEI included purchase accounting adjustments relating to Ameren's acquisition of an additional 20% ownership interest in EEI in 2004. This transfer required Genco's prior-period financial statements to be retrospectively combined for all periods presented. Consequently, Genco's prior-period consolidated financial statements reflect EEI as if it had been a subsidiary of Genco. Ameren and Genco consolidate EEI for financial reporting purposes.
The financial statements of Ameren, Ameren Illinois and Genco are prepared on a consolidated basis. Ameren Missouri has no subsidiaries, and therefore its financial statements were not prepared on a consolidated basis. All significant intercompany transactions have been eliminated. 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 presentation of our results. The preparation of financial statements in conformity with GAAP requires that Ameren management 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.
During the second quarter of 2011, Genco identified an error in the cash flow statement classification of a capital contribution from Ameren that affected Genco's year ended December 31, 2010. For the year ended December 31, 2010, Genco's previously reported cash flows provided by operating activities were $280 million, and cash flows used in financing activities were $251 million. As corrected herein, Genco's cash flows provided by operating activities were $304 million and cash flows used in financing activities were $275 million. This correction had no impact on Ameren's previously reported consolidated statement of cash flows.
Regulation
Certain Ameren subsidiaries are regulated by the MoPSC, the ICC, and FERC. In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs as assets pursuant to actions of rate regulators or based on the expectation they will be able to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts as liabilities pursuant to actions of rate regulators or based on the expectation that such amounts will be returned to customers in future rates. Regulatory assets and liabilities are amortized consistent with the period of expected regulatory treatment. See Note 2 – Rate and Regulatory Matters for additional information on regulatory assets and liabilities. In addition, other costs that Ameren Missouri and Ameren Illinois expect to recover from customers are recorded as construction work in progress and property and plant, net. See Note 3 – Property and Plant, Net.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and temporary investments purchased with an original maturity of three months or less.
Allowance for Doubtful Accounts Receivable
The allowance for doubtful accounts represents our best estimate of existing accounts receivable that will ultimately be uncollectible. The allowance is calculated by applying estimated loss factors to various classes of outstanding receivables, including unbilled revenue. The loss factors used to estimate uncollectible accounts are based upon both historical collections experience and management's best estimate of future collections success given the existing and anticipated future collections environment. Ameren Illinois has a rate mechanism that adjusts rates for bad debt expense above or below those being collected in rates.
Materials and Supplies
Materials and supplies are recorded at the lower of cost or market. Cost is determined using the average-cost method. Materials and supplies are capitalized as inventory when purchased and then expensed or capitalized as plant assets when installed, as appropriate. The following table presents a breakdown of materials and supplies for each of the Ameren Companies at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
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2011: |
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Fuel(b) |
$ | 251 | $ | 150 | $ | - | $ | 76 | ||||||||
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Gas stored underground |
171 | 22 | 149 | - | ||||||||||||
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Other materials and supplies |
290 | 176 | 50 | 46 | ||||||||||||
| $ | 712 | $ | 348 | $ | 199 | $ | 122 | |||||||||
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2010: |
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Fuel(b) |
$ | 255 | $ | 152 | $ | - | $ | 81 | ||||||||
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Gas stored underground |
175 | 22 | 152 | - | ||||||||||||
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Other materials and supplies |
277 | 167 | 46 | 49 | ||||||||||||
| $ | 707 | $ | 341 | $ | 198 | $ | 130 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Consists of coal, oil, paint, propane, and tire chips. |
Property and Plant
We capitalize the cost of additions to and betterments of units of property and plant. The cost includes labor, material, applicable taxes, and overhead. An allowance for funds used during construction, as discussed specifically below, is also capitalized as a cost of our rate-regulated assets. Interest incurred during construction is capitalized as a cost of merchant generation assets. Maintenance expenditures, including nuclear refueling and maintenance outages, are expensed as incurred. When units of depreciable property are retired, the original costs, less salvage values, are charged to accumulated depreciation. Asset removal costs incurred by our merchant generation operations that do not constitute legal obligations are expensed as incurred. Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Asset Retirement Obligations below and Note 3 – Property and Plant, Net, for additional information.
Depreciation
Depreciation is provided over the estimated lives of the various classes of depreciable property by applying composite rates on a straight-line basis to the cost basis of such property. The provision for depreciation for the Ameren Companies in 2011, 2010 and 2009 ranged from 3% to 4% of the average depreciable cost.
Allowance for Funds Used During Construction
In our rate-regulated operations, we capitalize the allowance for funds used during construction, or the cost of borrowed funds and the cost of equity funds (preferred and common stockholders' equity) applicable to rate-regulated construction expenditures, as is the utility industry accounting practice. Allowance for funds used during construction does not represent a current source of cash funds. This accounting practice offsets the effect on earnings of the cost of financing current construction, and it treats such financing costs in the same manner as construction charges for labor and materials.
Under accepted ratemaking practice, cash recovery of allowance for funds used during construction and other construction costs occurs when completed projects are placed in service and reflected in customer rates. The following table presents the annual allowance for funds used during construction rates that were utilized during 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
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Ameren |
8% - 9% | 8% - 9% | 6% - 9% | |||||||||
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Ameren Missouri |
8 | 8 | 6 | |||||||||
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Ameren Illinois |
9 | 9 | 9 | |||||||||
Goodwill and Intangible Assets
Goodwill. Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. As of December 31, 2011, Ameren's and Ameren Illinois' goodwill related to Ameren's acquisition of IP in 2004 and Ameren's acquisition of CILCORP in 2003.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. During the fourth quarter of 2011, Ameren and Ameren Illinois used a qualitative evaluation to assess the likelihood of a goodwill impairment based on authoritative accounting guidance issued by the FASB in 2011. That evaluation led Ameren and Ameren Illinois to believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values, resulting in no impairment in 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the goodwill impairment recorded in 2010.
Intangible Assets. Ameren, Ameren Missouri and Genco classify emission allowances and renewable energy credits as intangible assets. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the intangible asset impairments recorded in 2011 and 2010.
At December 31, 2011, Ameren's and Ameren Missouri's intangible assets included renewable energy credits obtained through wind and solar power purchase agreements. The book value of each of Ameren's and Ameren Missouri's renewable energy credits was $7 million and less than $1 million at December 31, 2011, and 2010, respectively.
In July 2011, the EPA issued the CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of preexisting SO2 and NOx allowances to the acid rain program and NOx budget trading program, respectively. In anticipation of the CSAPR announcement, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash, pretax impairment charge of $2 million and $1 million, respectively, which was reflected in "Goodwill, impairment and other charges" on their statements of income. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact to earnings. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until that court proceeding is finalized, the EPA is expected to continue to administer the CAIR and to use CAIR's allowance program for compliance. During 2010, Ameren and Genco each recognized an impairment charge of intangible assets to reduce the carrying value of SO2 emission allowances. The charge was reflected in "Goodwill, impairment and other charges" in their statements of income. See Note 15 – Commitments and Contingencies for additional information on emission allowances and the CSAPR. The book value of each of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was less than $1 million at December 31, 2011. The book value of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was $7 million, $2 million, and $3 million, at December 31, 2010, respectively.
Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. The following table presents amortization expense based on usage of renewable energy credits and emission allowances, net of gains from sales, for Ameren, Ameren Missouri, Ameren Illinois, and Genco during the years ended December 31, 2011, 2010, and 2009. The table below does not include the intangible asset impairment charges referenced above.
| 2011 | 2010 | 2009 | ||||||||||
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Ameren Missouri |
$ | (a | ) | $ | 6 | $ | 2 | |||||
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Ameren Illinois |
3 | 7 | 9 | |||||||||
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Genco(b) |
2 | 18 | 24 | |||||||||
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Other(b)(c) |
1 | 4 | 5 | |||||||||
|
Ameren(b) |
$ | 6 | $ | 35 | $ | 40 | ||||||
| (a) | Less than $1 million. |
| (b) | Includes allowances consumed that were recorded through purchase accounting. |
| (c) | Consists of renewable energy credit expense for Marketing Company and emission allowances expense for AERG. |
Impairment of Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value. In the period in which we determine an asset meets the held for sale criteria, we record an impairment charge to the extent the book value exceeds its fair value less cost to sell. See Note 17 – Goodwill, Impairment and Other Charges for information about Ameren's, Ameren Missouri's and Genco's impairments.
Investments
Ameren and Ameren Missouri evaluate for impairment the investments held in Ameren Missouri's nuclear decommissioning trust fund. Losses on assets in the trust fund could result in higher funding requirements for decommissioning costs, which Ameren Missouri believes would be recovered in electric rates paid by its customers. Accordingly, Ameren and Ameren Missouri recognize a regulatory asset on their balance sheets for losses on investments held in the nuclear decommissioning trust fund. See Note 9 – Nuclear Decommissioning Trust Fund Investments for additional information.
Environmental Costs
Liabilities for environmental costs are recorded on an undiscounted basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Costs are expensed or deferred as a regulatory asset when it is expected that the costs will be recovered from customers in future rates. If environmental expenditures are related to facilities currently in use, such as pollution control equipment, the cost is capitalized and depreciated over the expected life of the asset.
Unamortized Debt Discount, Premium, and Expense
Discount, premium, and expense associated with long-term debt are amortized over the lives of the related issues.
Revenue
Operating Revenues
Ameren Missouri, Ameren Illinois and Genco record operating revenue for electric or natural gas service when it is delivered to customers. We accrue an estimate of electric and natural gas revenues for service rendered but unbilled at the end of each accounting period.
Trading Activities
We present the revenues and costs associated with certain energy derivative contracts designated as trading on a net basis in "Operating Revenues – Electric" and "Operating Revenues – Other."
Nuclear Fuel
Ameren Missouri's cost of nuclear fuel is capitalized and then amortized to fuel expense on a unit-of-production basis. Spent fuel disposal cost is based on net kilowatthours generated and sold, and that cost is charged to expense.
Purchased Gas, Power and Fuel Rate-adjustment Mechanisms
Ameren's utility subsidiaries have various rate-adjustment mechanisms in place that provide for the recovery of purchased natural gas and electric fuel and purchased power costs. See Note 2 – Rate and Regulatory Matters for the regulatory assets and liabilities recorded at December 31, 2011, and 2010, related to the rate-adjustment mechanisms discussed below.
In Ameren Missouri's and Ameren Illinois' retail natural gas utility jurisdictions, changes in natural gas costs are generally reflected in billings to their natural gas utility customers through PGA clauses. The difference between actual natural gas costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to natural gas utility customers in a subsequent period.
In Ameren Illinois' retail electric utility jurisdictions, changes in purchased power costs are generally reflected in billings to their electric utility customers through pass-through rate-adjustment clauses. The difference between actual purchased power costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to electric utility customers in a subsequent period.
Ameren Missouri has a FAC that allows an adjustment of electric rates three times per year for a pass-through to customers of 95% of changes in fuel, emission allowances and purchased power costs, net of off-system revenues, including MISO costs and revenues, greater or less than the amount set in base rates, subject to MoPSC prudency review. The differences between the cost of fuel incurred and the cost of fuel recovered from Ameren Missouri's customers are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to Ameren Missouri's electric utility customers in a subsequent period.
Accounting for MISO Transactions
MISO-related purchase and sale transactions are recorded by Ameren, Ameren Missouri and Ameren Illinois using settlement information provided by MISO. These purchase and sale transactions are accounted for on a net hourly position. We record net purchases in a single hour in "Operating Expenses – Purchased power" and net sales in a single hour in "Operating Revenues – Electric" in our statements of income. On occasion, prior-period transactions will be resettled outside the routine settlement process because of a change in MISO's tariff or a material interpretation thereof. In these cases, Ameren, Ameren Missouri and Ameren Illinois recognize expenses associated with resettlements once the resettlement is probable and the resettlement amount can be estimated.
Stock-based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award. Ameren recognizes as compensation expense the estimated fair value of stock-based compensation on a straight-line basis over the requisite service period. See Note 12 – Stock-based Compensation for additional information.
Excise Taxes
Excise taxes imposed on us are reflected on Ameren Missouri customer electric bills and on Ameren Missouri and Ameren Illinois customer natural gas bills. They are recorded gross in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" on the statement of income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in "Taxes accrued" on the balance sheet. The following table presents excise taxes recorded in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" for the years ended 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | 137 | $ | 130 | $ | 112 | ||||||
|
Ameren Illinois |
57 | 59 | 56 | |||||||||
|
Ameren |
$ | 194 | $ | 189 | $ | 168 | ||||||
Income Taxes
Ameren uses an asset and liability approach for its financial accounting and reporting of income taxes, in
accordance with authoritative accounting guidance. Deferred tax assets and liabilities are recognized for transactions that are treated differently for financial reporting and income tax return purposes. These deferred tax assets and liabilities are based on statutory tax rates.
We recognize that regulators will probably reduce future revenues for deferred tax liabilities that were initially recorded at rates in excess of the current statutory rate. Therefore, reductions in the deferred tax liability, which were recorded because of decreases in the statutory rate, have been credited to a regulatory liability. A regulatory asset has been established to recognize the probable recovery in rates of future income taxes, resulting principally from the reversal of allowance for funds used during construction. This refers to equity and temporary differences related to property and plant acquired before 1976 that were unrecognized temporary differences prior to the adoption of the authoritative accounting guidance for income taxes.
Investment tax credits used on tax returns for prior years have been deferred for book purposes; the credits are being amortized over the useful lives of the related investment. Deferred income taxes were recorded on the temporary difference represented by the deferred investment tax credits and a corresponding regulatory liability. This recognizes the expected reduction in rate revenue for future lower income taxes associated with the amortization of the investment tax credits. See Note 13 – Income Taxes.
Ameren Missouri, Ameren Illinois and Genco are parties to a tax sharing agreement with Ameren that provides for the allocation of consolidated tax liabilities. The tax sharing agreement specifies that each party be allocated an amount of tax similar to that which would be owed had the party been separately subject to tax. Any net benefit attributable to the parent is reallocated to other members. That allocation is treated as a contribution of capital to the party receiving the benefit.
Noncontrolling Interests
Ameren's noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests are classified as a component of equity separate from Ameren's equity in its consolidated balance sheet. Genco's noncontrolling interest comprised the 20% of EEI not owned by Genco. This noncontrolling interest is classified as a component of equity separate from Genco's equity in its consolidated balance sheet.
Earnings per Share
There were no material differences between Ameren's basic and diluted earnings per share amounts in 2011, 2010, and 2009. The number of stock options, restricted stock shares, and performance share units outstanding was immaterial. There were no assumed stock option conversions in 2009 and 2010, as the remaining stock options were not dilutive. All of Ameren's stock options expired in February 2010.
Accounting Changes and Other Matters
The following is a summary of recently adopted authoritative accounting guidance as well as guidance issued but not yet adopted that could impact the Ameren Companies.
Disclosures about an Employer's Participation in a Multiemployer Plan
In September 2011, FASB amended its guidance to require employers to provide additional disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. This guidance was applicable to Ameren Missouri, Ameren Illinois, and Genco because they participate in their parent's (Ameren's) benefit plans. Ameren Missouri, Ameren Illinois, and Genco adopted this guidance as of December 31, 2011. See Note 11 – Retirement Benefits for the required additional disclosures made by Ameren Missouri, Ameren Illinois and Genco, including the amount of their contributions to Ameren's benefit plans.
Testing of Goodwill for Impairment
In September 2011, FASB amended its guidance on testing of goodwill impairment. The amended guidance provided companies the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. As permitted, Ameren and Ameren Illinois early adopted the amended guidance for the annual goodwill impairment test performed as of October 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Disclosures about Fair Value Measurements
See Note 8 – Fair Value Measurements for adopted guidance on fair value measurements issued in January 2010, which became effective in its entirety for the Ameren Companies as of January 1, 2011.
In May 2011, FASB issued additional authoritative guidance regarding fair value measurements. The guidance amends the disclosure requirements for fair value measurements in order to align the principles for fair value measurements and the related disclosure requirements under GAAP and International Financial Reporting Standards. The amendments will not affect the Ameren Companies' results of operations, financial positions, or liquidity, as this guidance only requires additional disclosures. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012 with retrospective application required.
Presentation of Comprehensive Income
In June 2011, FASB amended its guidance on the presentation of comprehensive income in financial statements. The amended guidance will not affect the Ameren Companies' results of operations, financial positions, or liquidity. The amended guidance changes the presentation of comprehensive income in the financial statements. It requires entities to report components of comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012. In December 2011, the FASB amended the guidance to postpone a requirement to present reclassification adjustments by income component until further guidance is issued.
Asset Retirement Obligations
Authoritative accounting guidance requires us to record the estimated fair value of legal obligations associated with the retirement of tangible long-lived assets in the period in which the liabilities are incurred and to capitalize a corresponding amount as part of the book value of the related long-lived asset. In subsequent periods, we are required to make adjustments to AROs based on changes in the estimated fair values of the obligations. Corresponding increases in asset book values are depreciated over the remaining useful life of the related asset. Uncertainties as to the probability, timing, or amount of cash flows associated with AROs affect our estimates of fair value. Ameren, Ameren Missouri and Genco have recorded AROs for retirement costs associated with Ameren Missouri's Callaway energy center decommissioning costs, asbestos removal, ash ponds, and river structures. In addition, Ameren, Ameren Missouri and Ameren Illinois have recorded AROs for the disposal of certain transformers.
Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Note 2 – Rate and Regulatory Matters.
The following table provides a reconciliation of the beginning and ending carrying amount of AROs for the years 2011 and 2010:
| Ameren Missouri(a) | Ameren Illinois(b) | Genco | AERG | Ameren(a) | ||||||||||||||||
|
Balance at December 31, 2009 |
$ | 331 | $ | 5 | $ | 65 | $ | 33 | $ | 434 | ||||||||||
|
Liabilities incurred |
5 | (c | ) | 3 | - | 8 | ||||||||||||||
|
Liabilities settled |
(4 | ) | (c | ) | (c | ) | (c | ) | (4 | ) | ||||||||||
|
Accretion in 2010(d) |
19 | 1 | 4 | 2 | 26 | |||||||||||||||
|
Change in estimates(e) |
12 | (3 | ) | 2 | (c | ) | 11 | |||||||||||||
|
Balance at December 31, 2010 |
$ | 363 | $ | 3 | $ | 74 | $ | 35 | $ | 475 | ||||||||||
|
Liabilities incurred |
- | - | (c | ) | - | (c | ) | |||||||||||||
|
Liabilities settled |
(1 | ) | (c | ) | (2 | ) | (c | ) | (3 | ) | ||||||||||
|
Accretion in 2011(d) |
20 | (c | ) | 5 | 2 | 27 | ||||||||||||||
|
Change in estimates(f) |
(54 | ) | (c | ) | (6 | ) | (6 | ) | (66 | ) | ||||||||||
|
Balance at December 31, 2011 |
$ | 328 | $ | 3 | $ | 71 | (g) | $ | 31 | $ | 433 | (g) | ||||||||
| (a) | The nuclear decommissioning trust fund assets of $357 million and $337 million as of December 31, 2011, and 2010, respectively, were restricted for decommissioning of the Callaway energy center. |
| (b) | Balance included in "Other deferred credits and liabilities" on the balance sheet. |
| (c) | Less than $1 million. |
| (d) | Accretion expense was recorded as an increase to regulatory assets at Ameren Missouri and Ameren Illinois. |
| (e) | Ameren Missouri and Genco changed their estimates for asbestos removal. Additionally, Genco changed the estimates related to retirement costs for its coal combustion byproduct storage areas. |
| (f) | Ameren Missouri changed estimates related to its Callaway energy center decommissioning costs because of a cost study performed in 2011 and a decline in the cost escalation factor assumptions. Additionally, Ameren Missouri, Genco and AERG changed estimates related to retirement costs for asbestos removal, river structures and their coal combustion byproduct storage areas. |
| (g) | Balance included $5 million in "Other current liabilities" on the balance sheet as of December 31, 2011. |
Genco Asset Sale
In June 2010, Genco completed a sale of 25% of its Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $18 million and recognized a $5 million pretax gain from the sale.
In June 2011, Genco completed the sale of its remaining interest in the Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $45 million and recognized an $8 million pretax gain from the sale. Effective with the sale, the power purchase agreements between Marketing Company and the city of Columbia were terminated. Also in 2011, Genco sold additional property and assets for cash proceeds of $4 million, which resulted in pretax gains of $4 million.
Medina Valley Sale in 2012
In February 2012, Ameren completed the asset sale of its Medina Valley energy center's net property and plant for cash proceeds of $16 million and an additional $1 million payment at the two-year anniversary date of the sale if there are no violations of representations and warranties contained in the sale agreement.
Employee Separation and Other Charges
During the fourth quarter of 2011, as part of efforts to reduce operations and maintenance expenses, Ameren Missouri and Ameren Services extended voluntary separation offers consistent with Ameren's standard management separation program to eligible management and labor union-represented employees. Approximately 340 employees of Ameren Missouri and Ameren Services accepted the offers and left their employment by December 31, 2011. Ameren and Ameren Missouri recorded a pretax charge to earnings of $28 million and $27 million, respectively, for the severance costs related to these offers. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income for the year ended December 31, 2011. Substantially all of the severance costs will be paid in the first quarter of 2012 and were recorded in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. The severance costs related to participating Ameren Services employees were allocated to affiliates consistent with the terms of its support services agreement, which is described in Note 14 – Related Party Transactions.
Also during 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers at the end of 2011 resulted in the elimination of 90 positions. Ameren and Genco each recorded a $4 million pretax charge for related severance and relocation costs to "Goodwill, impairment and other charges" in their statements of income for the year ended December 31, 2011. The severance costs will be substantially paid during the first quarter of 2012 and were accrued in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
In 2010, Ameren's Merchant Generation segment initiated an involuntary separation program to reduce positions under the terms and benefits consistent with Ameren's standard management separation program. Ameren and Genco recorded a pretax charge to earnings of $4 million in 2010 for the severance costs related to this program. These charges were recorded in "Other operations and maintenance expense" on Ameren's and Genco's consolidated statement of income.
In 2009, Ameren initiated voluntary and involuntary separation programs under terms and benefits consistent with Ameren's standard management severance program. Ameren recorded a pretax charge to earnings of $17 million (Ameren Missouri – $8 million, Ameren Illinois – $3 million, Genco – $5 million) for the severance costs related to both the voluntary and involuntary separation programs. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income. The number of positions eliminated as a result of these separation programs was approximately 300. In its May 2010 electric rate order, the MoPSC allowed Ameren Missouri to recover the costs of this severance program from its customers. Therefore, in 2010 Ameren Missouri reclassified the 2009 "Other operations and maintenance expense" to "Regulatory assets." In addition to these programs, Genco recorded a $4 million pretax charge to 2009 earnings in connection with the retirement of two generating units at its Meredosia energy center and for related obsolete inventory.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren's primary assets are the common stock of its subsidiaries. Ameren's subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses in Missouri and Illinois. Dividends on Ameren's common stock and the payment of other 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.
| Ÿ |
Union Electric Company, or 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 Missouri was incorporated in Missouri in 1922 and is successor to a number of companies, the oldest of which was organized in 1881. It is the largest electric utility in the state of Missouri. It supplies electric and natural gas service to a 24,000-square-mile area in central and eastern Missouri. This area has an estimated population of 2.9 million and includes the Greater St. Louis area. Ameren Missouri supplies electric service to 1.2 million customers and natural gas service to 127,000 customers. |
| Ÿ |
Ameren Illinois Company, or Ameren Illinois, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois. Ameren Illinois was created by the merger of CILCO and IP with and into CIPS. CIPS was incorporated in Illinois in 1923 and is successor to a number of companies, the oldest of which was organized in 1902. Ameren Illinois supplies electric and natural gas utility service to portions of central and southern Illinois having an estimated population of 3.1 million in an area of 40,000 square miles. Ameren Illinois supplies electric service to 1.2 million customers and natural gas service to 809,000 customers. |
| Ÿ |
AER consists of non-rate-regulated operations, including Genco, AERG, Marketing Company and Medina Valley. The Medina Valley energy center was sold in February 2012. Genco operates a merchant electric generation business in Illinois and holds an 80% ownership interest in EEI, which it consolidates for financial reporting purposes. Genco was incorporated in Illinois in March 2000. Genco's coal and natural gas electric generating facilities are expected to have capacity of 3,095 and 1,348 megawatts, respectively, at the time of the 2012 peak summer electrical demand. |
Ameren has various other subsidiaries responsible for activities such as the provision of shared services.
On October 1, 2010, Ameren, CIPS, CILCO, IP, AERG and AER completed a two-step corporate internal reorganization. The first step of the reorganization was the Ameren Illinois Merger. Upon consummation of the Ameren Illinois Merger, the separate legal existence of CILCO and IP ended. The second step of the reorganization involved the distribution of AERG stock from Ameren Illinois to Ameren and the subsequent contribution by Ameren of the AERG stock to AER. The Ameren Illinois Merger and the distribution of AERG stock were accounted for as transactions between entities under common control. In accordance with authoritative accounting guidance, assets and liabilities transferred between entities under common control were accounted for at the historical cost basis of the common parent, Ameren, as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in Ameren Illinois included purchase accounting adjustments related to Ameren's acquisition of CILCORP in 2003. Ameren Illinois accounted for the AERG distribution as a spinoff. Ameren Illinois transferred AERG to Ameren based on AERG's carrying value. Ameren Illinois has segregated AERG's operating results and cash flows and presented them separately as discontinued operations in its consolidated statement of income and consolidated statement of cash flows, respectively, for all periods presented prior to October 1, 2010, in this report. For Ameren's financial statements, AERG's results of operations remain classified as continuing operations. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Effective January 1, 2010, as part of an internal reorganization, AER transferred its 80% stock ownership interest in EEI to Genco through a capital contribution. The
transfer of EEI to Genco was accounted for as a transaction between entities under common control, whereby Genco accounted for the transfer at the historical carrying value of the parent (Ameren) as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in EEI included purchase accounting adjustments relating to Ameren's acquisition of an additional 20% ownership interest in EEI in 2004. This transfer required Genco's prior-period financial statements to be retrospectively combined for all periods presented. Consequently, Genco's prior-period consolidated financial statements reflect EEI as if it had been a subsidiary of Genco. Ameren and Genco consolidate EEI for financial reporting purposes.
The financial statements of Ameren, Ameren Illinois and Genco are prepared on a consolidated basis. Ameren Missouri has no subsidiaries, and therefore its financial statements were not prepared on a consolidated basis. All significant intercompany transactions have been eliminated. 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 presentation of our results. The preparation of financial statements in conformity with GAAP requires that Ameren management 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.
During the second quarter of 2011, Genco identified an error in the cash flow statement classification of a capital contribution from Ameren that affected Genco's year ended December 31, 2010. For the year ended December 31, 2010, Genco's previously reported cash flows provided by operating activities were $280 million, and cash flows used in financing activities were $251 million. As corrected herein, Genco's cash flows provided by operating activities were $304 million and cash flows used in financing activities were $275 million. This correction had no impact on Ameren's previously reported consolidated statement of cash flows.
Regulation
Certain Ameren subsidiaries are regulated by the MoPSC, the ICC, and FERC. In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs as assets pursuant to actions of rate regulators or based on the expectation they will be able to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts as liabilities pursuant to actions of rate regulators or based on the expectation that such amounts will be returned to customers in future rates. Regulatory assets and liabilities are amortized consistent with the period of expected regulatory treatment. See Note 2 – Rate and Regulatory Matters for additional information on regulatory assets and liabilities. In addition, other costs that Ameren Missouri and Ameren Illinois expect to recover from customers are recorded as construction work in progress and property and plant, net. See Note 3 – Property and Plant, Net.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and temporary investments purchased with an original maturity of three months or less.
Allowance for Doubtful Accounts Receivable
The allowance for doubtful accounts represents our best estimate of existing accounts receivable that will ultimately be uncollectible. The allowance is calculated by applying estimated loss factors to various classes of outstanding receivables, including unbilled revenue. The loss factors used to estimate uncollectible accounts are based upon both historical collections experience and management's best estimate of future collections success given the existing and anticipated future collections environment. Ameren Illinois has a rate mechanism that adjusts rates for bad debt expense above or below those being collected in rates.
Materials and Supplies
Materials and supplies are recorded at the lower of cost or market. Cost is determined using the average-cost method. Materials and supplies are capitalized as inventory when purchased and then expensed or capitalized as plant assets when installed, as appropriate. The following table presents a breakdown of materials and supplies for each of the Ameren Companies at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Fuel(b) |
$ | 251 | $ | 150 | $ | - | $ | 76 | ||||||||
|
Gas stored underground |
171 | 22 | 149 | - | ||||||||||||
|
Other materials and supplies |
290 | 176 | 50 | 46 | ||||||||||||
| $ | 712 | $ | 348 | $ | 199 | $ | 122 | |||||||||
|
2010: |
||||||||||||||||
|
Fuel(b) |
$ | 255 | $ | 152 | $ | - | $ | 81 | ||||||||
|
Gas stored underground |
175 | 22 | 152 | - | ||||||||||||
|
Other materials and supplies |
277 | 167 | 46 | 49 | ||||||||||||
| $ | 707 | $ | 341 | $ | 198 | $ | 130 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Consists of coal, oil, paint, propane, and tire chips. |
Property and Plant
We capitalize the cost of additions to and betterments of units of property and plant. The cost includes labor, material, applicable taxes, and overhead. An allowance for funds used during construction, as discussed specifically below, is also capitalized as a cost of our rate-regulated assets. Interest incurred during construction is capitalized as a cost of merchant generation assets. Maintenance expenditures, including nuclear refueling and maintenance outages, are expensed as incurred. When units of depreciable property are retired, the original costs, less salvage values, are charged to accumulated depreciation. Asset removal costs incurred by our merchant generation operations that do not constitute legal obligations are expensed as incurred. Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Asset Retirement Obligations below and Note 3 – Property and Plant, Net, for additional information.
Depreciation
Depreciation is provided over the estimated lives of the various classes of depreciable property by applying composite rates on a straight-line basis to the cost basis of such property. The provision for depreciation for the Ameren Companies in 2011, 2010 and 2009 ranged from 3% to 4% of the average depreciable cost.
Allowance for Funds Used During Construction
In our rate-regulated operations, we capitalize the allowance for funds used during construction, or the cost of borrowed funds and the cost of equity funds (preferred and common stockholders' equity) applicable to rate-regulated construction expenditures, as is the utility industry accounting practice. Allowance for funds used during construction does not represent a current source of cash funds. This accounting practice offsets the effect on earnings of the cost of financing current construction, and it treats such financing costs in the same manner as construction charges for labor and materials.
Under accepted ratemaking practice, cash recovery of allowance for funds used during construction and other construction costs occurs when completed projects are placed in service and reflected in customer rates. The following table presents the annual allowance for funds used during construction rates that were utilized during 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren |
8% - 9% | 8% - 9% | 6% - 9% | |||||||||
|
Ameren Missouri |
8 | 8 | 6 | |||||||||
|
Ameren Illinois |
9 | 9 | 9 | |||||||||
Goodwill and Intangible Assets
Goodwill. Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. As of December 31, 2011, Ameren's and Ameren Illinois' goodwill related to Ameren's acquisition of IP in 2004 and Ameren's acquisition of CILCORP in 2003.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. During the fourth quarter of 2011, Ameren and Ameren Illinois used a qualitative evaluation to assess the likelihood of a goodwill impairment based on authoritative accounting guidance issued by the FASB in 2011. That evaluation led Ameren and Ameren Illinois to believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values, resulting in no impairment in 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the goodwill impairment recorded in 2010.
Intangible Assets. Ameren, Ameren Missouri and Genco classify emission allowances and renewable energy credits as intangible assets. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the intangible asset impairments recorded in 2011 and 2010.
At December 31, 2011, Ameren's and Ameren Missouri's intangible assets included renewable energy credits obtained through wind and solar power purchase agreements. The book value of each of Ameren's and Ameren Missouri's renewable energy credits was $7 million and less than $1 million at December 31, 2011, and 2010, respectively.
In July 2011, the EPA issued the CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of preexisting SO2 and NOx allowances to the acid rain program and NOx budget trading program, respectively. In anticipation of the CSAPR announcement, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash, pretax impairment charge of $2 million and $1 million, respectively, which was reflected in "Goodwill, impairment and other charges" on their statements of income. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact to earnings. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until that court proceeding is finalized, the EPA is expected to continue to administer the CAIR and to use CAIR's allowance program for compliance. During 2010, Ameren and Genco each recognized an impairment charge of intangible assets to reduce the carrying value of SO2 emission allowances. The charge was reflected in "Goodwill, impairment and other charges" in their statements of income. See Note 15 – Commitments and Contingencies for additional information on emission allowances and the CSAPR. The book value of each of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was less than $1 million at December 31, 2011. The book value of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was $7 million, $2 million, and $3 million, at December 31, 2010, respectively.
Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. The following table presents amortization expense based on usage of renewable energy credits and emission allowances, net of gains from sales, for Ameren, Ameren Missouri, Ameren Illinois, and Genco during the years ended December 31, 2011, 2010, and 2009. The table below does not include the intangible asset impairment charges referenced above.
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | (a | ) | $ | 6 | $ | 2 | |||||
|
Ameren Illinois |
3 | 7 | 9 | |||||||||
|
Genco(b) |
2 | 18 | 24 | |||||||||
|
Other(b)(c) |
1 | 4 | 5 | |||||||||
|
Ameren(b) |
$ | 6 | $ | 35 | $ | 40 | ||||||
| (a) | Less than $1 million. |
| (b) | Includes allowances consumed that were recorded through purchase accounting. |
| (c) | Consists of renewable energy credit expense for Marketing Company and emission allowances expense for AERG. |
Impairment of Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value. In the period in which we determine an asset meets the held for sale criteria, we record an impairment charge to the extent the book value exceeds its fair value less cost to sell. See Note 17 – Goodwill, Impairment and Other Charges for information about Ameren's, Ameren Missouri's and Genco's impairments.
Investments
Ameren and Ameren Missouri evaluate for impairment the investments held in Ameren Missouri's nuclear decommissioning trust fund. Losses on assets in the trust fund could result in higher funding requirements for decommissioning costs, which Ameren Missouri believes would be recovered in electric rates paid by its customers. Accordingly, Ameren and Ameren Missouri recognize a regulatory asset on their balance sheets for losses on investments held in the nuclear decommissioning trust fund. See Note 9 – Nuclear Decommissioning Trust Fund Investments for additional information.
Environmental Costs
Liabilities for environmental costs are recorded on an undiscounted basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Costs are expensed or deferred as a regulatory asset when it is expected that the costs will be recovered from customers in future rates. If environmental expenditures are related to facilities currently in use, such as pollution control equipment, the cost is capitalized and depreciated over the expected life of the asset.
Unamortized Debt Discount, Premium, and Expense
Discount, premium, and expense associated with long-term debt are amortized over the lives of the related issues.
Revenue
Operating Revenues
Ameren Missouri, Ameren Illinois and Genco record operating revenue for electric or natural gas service when it is delivered to customers. We accrue an estimate of electric and natural gas revenues for service rendered but unbilled at the end of each accounting period.
Trading Activities
We present the revenues and costs associated with certain energy derivative contracts designated as trading on a net basis in "Operating Revenues – Electric" and "Operating Revenues – Other."
Nuclear Fuel
Ameren Missouri's cost of nuclear fuel is capitalized and then amortized to fuel expense on a unit-of-production basis. Spent fuel disposal cost is based on net kilowatthours generated and sold, and that cost is charged to expense.
Purchased Gas, Power and Fuel Rate-adjustment Mechanisms
Ameren's utility subsidiaries have various rate-adjustment mechanisms in place that provide for the recovery of purchased natural gas and electric fuel and purchased power costs. See Note 2 – Rate and Regulatory Matters for the regulatory assets and liabilities recorded at December 31, 2011, and 2010, related to the rate-adjustment mechanisms discussed below.
In Ameren Missouri's and Ameren Illinois' retail natural gas utility jurisdictions, changes in natural gas costs are generally reflected in billings to their natural gas utility customers through PGA clauses. The difference between actual natural gas costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to natural gas utility customers in a subsequent period.
In Ameren Illinois' retail electric utility jurisdictions, changes in purchased power costs are generally reflected in billings to their electric utility customers through pass-through rate-adjustment clauses. The difference between actual purchased power costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to electric utility customers in a subsequent period.
Ameren Missouri has a FAC that allows an adjustment of electric rates three times per year for a pass-through to customers of 95% of changes in fuel, emission allowances and purchased power costs, net of off-system revenues, including MISO costs and revenues, greater or less than the amount set in base rates, subject to MoPSC prudency review. The differences between the cost of fuel incurred and the cost of fuel recovered from Ameren Missouri's customers are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to Ameren Missouri's electric utility customers in a subsequent period.
Accounting for MISO Transactions
MISO-related purchase and sale transactions are recorded by Ameren, Ameren Missouri and Ameren Illinois using settlement information provided by MISO. These purchase and sale transactions are accounted for on a net hourly position. We record net purchases in a single hour in "Operating Expenses – Purchased power" and net sales in a single hour in "Operating Revenues – Electric" in our statements of income. On occasion, prior-period transactions will be resettled outside the routine settlement process because of a change in MISO's tariff or a material interpretation thereof. In these cases, Ameren, Ameren Missouri and Ameren Illinois recognize expenses associated with resettlements once the resettlement is probable and the resettlement amount can be estimated.
Stock-based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award. Ameren recognizes as compensation expense the estimated fair value of stock-based compensation on a straight-line basis over the requisite service period. See Note 12 – Stock-based Compensation for additional information.
Excise Taxes
Excise taxes imposed on us are reflected on Ameren Missouri customer electric bills and on Ameren Missouri and Ameren Illinois customer natural gas bills. They are recorded gross in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" on the statement of income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in "Taxes accrued" on the balance sheet. The following table presents excise taxes recorded in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" for the years ended 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | 137 | $ | 130 | $ | 112 | ||||||
|
Ameren Illinois |
57 | 59 | 56 | |||||||||
|
Ameren |
$ | 194 | $ | 189 | $ | 168 | ||||||
Income Taxes
Ameren uses an asset and liability approach for its financial accounting and reporting of income taxes, in
accordance with authoritative accounting guidance. Deferred tax assets and liabilities are recognized for transactions that are treated differently for financial reporting and income tax return purposes. These deferred tax assets and liabilities are based on statutory tax rates.
We recognize that regulators will probably reduce future revenues for deferred tax liabilities that were initially recorded at rates in excess of the current statutory rate. Therefore, reductions in the deferred tax liability, which were recorded because of decreases in the statutory rate, have been credited to a regulatory liability. A regulatory asset has been established to recognize the probable recovery in rates of future income taxes, resulting principally from the reversal of allowance for funds used during construction. This refers to equity and temporary differences related to property and plant acquired before 1976 that were unrecognized temporary differences prior to the adoption of the authoritative accounting guidance for income taxes.
Investment tax credits used on tax returns for prior years have been deferred for book purposes; the credits are being amortized over the useful lives of the related investment. Deferred income taxes were recorded on the temporary difference represented by the deferred investment tax credits and a corresponding regulatory liability. This recognizes the expected reduction in rate revenue for future lower income taxes associated with the amortization of the investment tax credits. See Note 13 – Income Taxes.
Ameren Missouri, Ameren Illinois and Genco are parties to a tax sharing agreement with Ameren that provides for the allocation of consolidated tax liabilities. The tax sharing agreement specifies that each party be allocated an amount of tax similar to that which would be owed had the party been separately subject to tax. Any net benefit attributable to the parent is reallocated to other members. That allocation is treated as a contribution of capital to the party receiving the benefit.
Noncontrolling Interests
Ameren's noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests are classified as a component of equity separate from Ameren's equity in its consolidated balance sheet. Genco's noncontrolling interest comprised the 20% of EEI not owned by Genco. This noncontrolling interest is classified as a component of equity separate from Genco's equity in its consolidated balance sheet.
Earnings per Share
There were no material differences between Ameren's basic and diluted earnings per share amounts in 2011, 2010, and 2009. The number of stock options, restricted stock shares, and performance share units outstanding was immaterial. There were no assumed stock option conversions in 2009 and 2010, as the remaining stock options were not dilutive. All of Ameren's stock options expired in February 2010.
Accounting Changes and Other Matters
The following is a summary of recently adopted authoritative accounting guidance as well as guidance issued but not yet adopted that could impact the Ameren Companies.
Disclosures about an Employer's Participation in a Multiemployer Plan
In September 2011, FASB amended its guidance to require employers to provide additional disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. This guidance was applicable to Ameren Missouri, Ameren Illinois, and Genco because they participate in their parent's (Ameren's) benefit plans. Ameren Missouri, Ameren Illinois, and Genco adopted this guidance as of December 31, 2011. See Note 11 – Retirement Benefits for the required additional disclosures made by Ameren Missouri, Ameren Illinois and Genco, including the amount of their contributions to Ameren's benefit plans.
Testing of Goodwill for Impairment
In September 2011, FASB amended its guidance on testing of goodwill impairment. The amended guidance provided companies the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. As permitted, Ameren and Ameren Illinois early adopted the amended guidance for the annual goodwill impairment test performed as of October 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Disclosures about Fair Value Measurements
See Note 8 – Fair Value Measurements for adopted guidance on fair value measurements issued in January 2010, which became effective in its entirety for the Ameren Companies as of January 1, 2011.
In May 2011, FASB issued additional authoritative guidance regarding fair value measurements. The guidance amends the disclosure requirements for fair value measurements in order to align the principles for fair value measurements and the related disclosure requirements under GAAP and International Financial Reporting Standards. The amendments will not affect the Ameren Companies' results of operations, financial positions, or liquidity, as this guidance only requires additional disclosures. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012 with retrospective application required.
Presentation of Comprehensive Income
In June 2011, FASB amended its guidance on the presentation of comprehensive income in financial statements. The amended guidance will not affect the Ameren Companies' results of operations, financial positions, or liquidity. The amended guidance changes the presentation of comprehensive income in the financial statements. It requires entities to report components of comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012. In December 2011, the FASB amended the guidance to postpone a requirement to present reclassification adjustments by income component until further guidance is issued.
Asset Retirement Obligations
Authoritative accounting guidance requires us to record the estimated fair value of legal obligations associated with the retirement of tangible long-lived assets in the period in which the liabilities are incurred and to capitalize a corresponding amount as part of the book value of the related long-lived asset. In subsequent periods, we are required to make adjustments to AROs based on changes in the estimated fair values of the obligations. Corresponding increases in asset book values are depreciated over the remaining useful life of the related asset. Uncertainties as to the probability, timing, or amount of cash flows associated with AROs affect our estimates of fair value. Ameren, Ameren Missouri and Genco have recorded AROs for retirement costs associated with Ameren Missouri's Callaway energy center decommissioning costs, asbestos removal, ash ponds, and river structures. In addition, Ameren, Ameren Missouri and Ameren Illinois have recorded AROs for the disposal of certain transformers.
Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Note 2 – Rate and Regulatory Matters.
The following table provides a reconciliation of the beginning and ending carrying amount of AROs for the years 2011 and 2010:
| Ameren Missouri(a) | Ameren Illinois(b) | Genco | AERG | Ameren(a) | ||||||||||||||||
|
Balance at December 31, 2009 |
$ | 331 | $ | 5 | $ | 65 | $ | 33 | $ | 434 | ||||||||||
|
Liabilities incurred |
5 | (c | ) | 3 | - | 8 | ||||||||||||||
|
Liabilities settled |
(4 | ) | (c | ) | (c | ) | (c | ) | (4 | ) | ||||||||||
|
Accretion in 2010(d) |
19 | 1 | 4 | 2 | 26 | |||||||||||||||
|
Change in estimates(e) |
12 | (3 | ) | 2 | (c | ) | 11 | |||||||||||||
|
Balance at December 31, 2010 |
$ | 363 | $ | 3 | $ | 74 | $ | 35 | $ | 475 | ||||||||||
|
Liabilities incurred |
- | - | (c | ) | - | (c | ) | |||||||||||||
|
Liabilities settled |
(1 | ) | (c | ) | (2 | ) | (c | ) | (3 | ) | ||||||||||
|
Accretion in 2011(d) |
20 | (c | ) | 5 | 2 | 27 | ||||||||||||||
|
Change in estimates(f) |
(54 | ) | (c | ) | (6 | ) | (6 | ) | (66 | ) | ||||||||||
|
Balance at December 31, 2011 |
$ | 328 | $ | 3 | $ | 71 | (g) | $ | 31 | $ | 433 | (g) | ||||||||
| (a) | The nuclear decommissioning trust fund assets of $357 million and $337 million as of December 31, 2011, and 2010, respectively, were restricted for decommissioning of the Callaway energy center. |
| (b) | Balance included in "Other deferred credits and liabilities" on the balance sheet. |
| (c) | Less than $1 million. |
| (d) | Accretion expense was recorded as an increase to regulatory assets at Ameren Missouri and Ameren Illinois. |
| (e) | Ameren Missouri and Genco changed their estimates for asbestos removal. Additionally, Genco changed the estimates related to retirement costs for its coal combustion byproduct storage areas. |
| (f) | Ameren Missouri changed estimates related to its Callaway energy center decommissioning costs because of a cost study performed in 2011 and a decline in the cost escalation factor assumptions. Additionally, Ameren Missouri, Genco and AERG changed estimates related to retirement costs for asbestos removal, river structures and their coal combustion byproduct storage areas. |
| (g) | Balance included $5 million in "Other current liabilities" on the balance sheet as of December 31, 2011. |
Genco Asset Sale
In June 2010, Genco completed a sale of 25% of its Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $18 million and recognized a $5 million pretax gain from the sale.
In June 2011, Genco completed the sale of its remaining interest in the Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $45 million and recognized an $8 million pretax gain from the sale. Effective with the sale, the power purchase agreements between Marketing Company and the city of Columbia were terminated. Also in 2011, Genco sold additional property and assets for cash proceeds of $4 million, which resulted in pretax gains of $4 million.
Medina Valley Sale in 2012
In February 2012, Ameren completed the asset sale of its Medina Valley energy center's net property and plant for cash proceeds of $16 million and an additional $1 million payment at the two-year anniversary date of the sale if there are no violations of representations and warranties contained in the sale agreement.
Employee Separation and Other Charges
During the fourth quarter of 2011, as part of efforts to reduce operations and maintenance expenses, Ameren Missouri and Ameren Services extended voluntary separation offers consistent with Ameren's standard management separation program to eligible management and labor union-represented employees. Approximately 340 employees of Ameren Missouri and Ameren Services accepted the offers and left their employment by December 31, 2011. Ameren and Ameren Missouri recorded a pretax charge to earnings of $28 million and $27 million, respectively, for the severance costs related to these offers. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income for the year ended December 31, 2011. Substantially all of the severance costs will be paid in the first quarter of 2012 and were recorded in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. The severance costs related to participating Ameren Services employees were allocated to affiliates consistent with the terms of its support services agreement, which is described in Note 14 – Related Party Transactions.
Also during 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers at the end of 2011 resulted in the elimination of 90 positions. Ameren and Genco each recorded a $4 million pretax charge for related severance and relocation costs to "Goodwill, impairment and other charges" in their statements of income for the year ended December 31, 2011. The severance costs will be substantially paid during the first quarter of 2012 and were accrued in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
In 2010, Ameren's Merchant Generation segment initiated an involuntary separation program to reduce positions under the terms and benefits consistent with Ameren's standard management separation program. Ameren and Genco recorded a pretax charge to earnings of $4 million in 2010 for the severance costs related to this program. These charges were recorded in "Other operations and maintenance expense" on Ameren's and Genco's consolidated statement of income.
In 2009, Ameren initiated voluntary and involuntary separation programs under terms and benefits consistent with Ameren's standard management severance program. Ameren recorded a pretax charge to earnings of $17 million (Ameren Missouri – $8 million, Ameren Illinois – $3 million, Genco – $5 million) for the severance costs related to both the voluntary and involuntary separation programs. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income. The number of positions eliminated as a result of these separation programs was approximately 300. In its May 2010 electric rate order, the MoPSC allowed Ameren Missouri to recover the costs of this severance program from its customers. Therefore, in 2010 Ameren Missouri reclassified the 2009 "Other operations and maintenance expense" to "Regulatory assets." In addition to these programs, Genco recorded a $4 million pretax charge to 2009 earnings in connection with the retirement of two generating units at its Meredosia energy center and for related obsolete inventory.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren's primary assets are the common stock of its subsidiaries. Ameren's subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses in Missouri and Illinois. Dividends on Ameren's common stock and the payment of other 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.
| Ÿ |
Union Electric Company, or 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 Missouri was incorporated in Missouri in 1922 and is successor to a number of companies, the oldest of which was organized in 1881. It is the largest electric utility in the state of Missouri. It supplies electric and natural gas service to a 24,000-square-mile area in central and eastern Missouri. This area has an estimated population of 2.9 million and includes the Greater St. Louis area. Ameren Missouri supplies electric service to 1.2 million customers and natural gas service to 127,000 customers. |
| Ÿ |
Ameren Illinois Company, or Ameren Illinois, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois. Ameren Illinois was created by the merger of CILCO and IP with and into CIPS. CIPS was incorporated in Illinois in 1923 and is successor to a number of companies, the oldest of which was organized in 1902. Ameren Illinois supplies electric and natural gas utility service to portions of central and southern Illinois having an estimated population of 3.1 million in an area of 40,000 square miles. Ameren Illinois supplies electric service to 1.2 million customers and natural gas service to 809,000 customers. |
| Ÿ |
AER consists of non-rate-regulated operations, including Genco, AERG, Marketing Company and Medina Valley. The Medina Valley energy center was sold in February 2012. Genco operates a merchant electric generation business in Illinois and holds an 80% ownership interest in EEI, which it consolidates for financial reporting purposes. Genco was incorporated in Illinois in March 2000. Genco's coal and natural gas electric generating facilities are expected to have capacity of 3,095 and 1,348 megawatts, respectively, at the time of the 2012 peak summer electrical demand. |
Ameren has various other subsidiaries responsible for activities such as the provision of shared services.
On October 1, 2010, Ameren, CIPS, CILCO, IP, AERG and AER completed a two-step corporate internal reorganization. The first step of the reorganization was the Ameren Illinois Merger. Upon consummation of the Ameren Illinois Merger, the separate legal existence of CILCO and IP ended. The second step of the reorganization involved the distribution of AERG stock from Ameren Illinois to Ameren and the subsequent contribution by Ameren of the AERG stock to AER. The Ameren Illinois Merger and the distribution of AERG stock were accounted for as transactions between entities under common control. In accordance with authoritative accounting guidance, assets and liabilities transferred between entities under common control were accounted for at the historical cost basis of the common parent, Ameren, as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in Ameren Illinois included purchase accounting adjustments related to Ameren's acquisition of CILCORP in 2003. Ameren Illinois accounted for the AERG distribution as a spinoff. Ameren Illinois transferred AERG to Ameren based on AERG's carrying value. Ameren Illinois has segregated AERG's operating results and cash flows and presented them separately as discontinued operations in its consolidated statement of income and consolidated statement of cash flows, respectively, for all periods presented prior to October 1, 2010, in this report. For Ameren's financial statements, AERG's results of operations remain classified as continuing operations. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Effective January 1, 2010, as part of an internal reorganization, AER transferred its 80% stock ownership interest in EEI to Genco through a capital contribution. The
transfer of EEI to Genco was accounted for as a transaction between entities under common control, whereby Genco accounted for the transfer at the historical carrying value of the parent (Ameren) as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in EEI included purchase accounting adjustments relating to Ameren's acquisition of an additional 20% ownership interest in EEI in 2004. This transfer required Genco's prior-period financial statements to be retrospectively combined for all periods presented. Consequently, Genco's prior-period consolidated financial statements reflect EEI as if it had been a subsidiary of Genco. Ameren and Genco consolidate EEI for financial reporting purposes.
The financial statements of Ameren, Ameren Illinois and Genco are prepared on a consolidated basis. Ameren Missouri has no subsidiaries, and therefore its financial statements were not prepared on a consolidated basis. All significant intercompany transactions have been eliminated. 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 presentation of our results. The preparation of financial statements in conformity with GAAP requires that Ameren management 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.
During the second quarter of 2011, Genco identified an error in the cash flow statement classification of a capital contribution from Ameren that affected Genco's year ended December 31, 2010. For the year ended December 31, 2010, Genco's previously reported cash flows provided by operating activities were $280 million, and cash flows used in financing activities were $251 million. As corrected herein, Genco's cash flows provided by operating activities were $304 million and cash flows used in financing activities were $275 million. This correction had no impact on Ameren's previously reported consolidated statement of cash flows.
Regulation
Certain Ameren subsidiaries are regulated by the MoPSC, the ICC, and FERC. In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs as assets pursuant to actions of rate regulators or based on the expectation they will be able to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts as liabilities pursuant to actions of rate regulators or based on the expectation that such amounts will be returned to customers in future rates. Regulatory assets and liabilities are amortized consistent with the period of expected regulatory treatment. See Note 2 – Rate and Regulatory Matters for additional information on regulatory assets and liabilities. In addition, other costs that Ameren Missouri and Ameren Illinois expect to recover from customers are recorded as construction work in progress and property and plant, net. See Note 3 – Property and Plant, Net.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and temporary investments purchased with an original maturity of three months or less.
Allowance for Doubtful Accounts Receivable
The allowance for doubtful accounts represents our best estimate of existing accounts receivable that will ultimately be uncollectible. The allowance is calculated by applying estimated loss factors to various classes of outstanding receivables, including unbilled revenue. The loss factors used to estimate uncollectible accounts are based upon both historical collections experience and management's best estimate of future collections success given the existing and anticipated future collections environment. Ameren Illinois has a rate mechanism that adjusts rates for bad debt expense above or below those being collected in rates.
Materials and Supplies
Materials and supplies are recorded at the lower of cost or market. Cost is determined using the average-cost method. Materials and supplies are capitalized as inventory when purchased and then expensed or capitalized as plant assets when installed, as appropriate. The following table presents a breakdown of materials and supplies for each of the Ameren Companies at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Fuel(b) |
$ | 251 | $ | 150 | $ | - | $ | 76 | ||||||||
|
Gas stored underground |
171 | 22 | 149 | - | ||||||||||||
|
Other materials and supplies |
290 | 176 | 50 | 46 | ||||||||||||
| $ | 712 | $ | 348 | $ | 199 | $ | 122 | |||||||||
|
2010: |
||||||||||||||||
|
Fuel(b) |
$ | 255 | $ | 152 | $ | - | $ | 81 | ||||||||
|
Gas stored underground |
175 | 22 | 152 | - | ||||||||||||
|
Other materials and supplies |
277 | 167 | 46 | 49 | ||||||||||||
| $ | 707 | $ | 341 | $ | 198 | $ | 130 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Consists of coal, oil, paint, propane, and tire chips. |
Property and Plant
We capitalize the cost of additions to and betterments of units of property and plant. The cost includes labor, material, applicable taxes, and overhead. An allowance for funds used during construction, as discussed specifically below, is also capitalized as a cost of our rate-regulated assets. Interest incurred during construction is capitalized as a cost of merchant generation assets. Maintenance expenditures, including nuclear refueling and maintenance outages, are expensed as incurred. When units of depreciable property are retired, the original costs, less salvage values, are charged to accumulated depreciation. Asset removal costs incurred by our merchant generation operations that do not constitute legal obligations are expensed as incurred. Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Asset Retirement Obligations below and Note 3 – Property and Plant, Net, for additional information.
Depreciation
Depreciation is provided over the estimated lives of the various classes of depreciable property by applying composite rates on a straight-line basis to the cost basis of such property. The provision for depreciation for the Ameren Companies in 2011, 2010 and 2009 ranged from 3% to 4% of the average depreciable cost.
Allowance for Funds Used During Construction
In our rate-regulated operations, we capitalize the allowance for funds used during construction, or the cost of borrowed funds and the cost of equity funds (preferred and common stockholders' equity) applicable to rate-regulated construction expenditures, as is the utility industry accounting practice. Allowance for funds used during construction does not represent a current source of cash funds. This accounting practice offsets the effect on earnings of the cost of financing current construction, and it treats such financing costs in the same manner as construction charges for labor and materials.
Under accepted ratemaking practice, cash recovery of allowance for funds used during construction and other construction costs occurs when completed projects are placed in service and reflected in customer rates. The following table presents the annual allowance for funds used during construction rates that were utilized during 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren |
8% - 9% | 8% - 9% | 6% - 9% | |||||||||
|
Ameren Missouri |
8 | 8 | 6 | |||||||||
|
Ameren Illinois |
9 | 9 | 9 | |||||||||
Goodwill and Intangible Assets
Goodwill. Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. As of December 31, 2011, Ameren's and Ameren Illinois' goodwill related to Ameren's acquisition of IP in 2004 and Ameren's acquisition of CILCORP in 2003.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. During the fourth quarter of 2011, Ameren and Ameren Illinois used a qualitative evaluation to assess the likelihood of a goodwill impairment based on authoritative accounting guidance issued by the FASB in 2011. That evaluation led Ameren and Ameren Illinois to believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values, resulting in no impairment in 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the goodwill impairment recorded in 2010.
Intangible Assets. Ameren, Ameren Missouri and Genco classify emission allowances and renewable energy credits as intangible assets. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the intangible asset impairments recorded in 2011 and 2010.
At December 31, 2011, Ameren's and Ameren Missouri's intangible assets included renewable energy credits obtained through wind and solar power purchase agreements. The book value of each of Ameren's and Ameren Missouri's renewable energy credits was $7 million and less than $1 million at December 31, 2011, and 2010, respectively.
In July 2011, the EPA issued the CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of preexisting SO2 and NOx allowances to the acid rain program and NOx budget trading program, respectively. In anticipation of the CSAPR announcement, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash, pretax impairment charge of $2 million and $1 million, respectively, which was reflected in "Goodwill, impairment and other charges" on their statements of income. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact to earnings. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until that court proceeding is finalized, the EPA is expected to continue to administer the CAIR and to use CAIR's allowance program for compliance. During 2010, Ameren and Genco each recognized an impairment charge of intangible assets to reduce the carrying value of SO2 emission allowances. The charge was reflected in "Goodwill, impairment and other charges" in their statements of income. See Note 15 – Commitments and Contingencies for additional information on emission allowances and the CSAPR. The book value of each of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was less than $1 million at December 31, 2011. The book value of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was $7 million, $2 million, and $3 million, at December 31, 2010, respectively.
Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. The following table presents amortization expense based on usage of renewable energy credits and emission allowances, net of gains from sales, for Ameren, Ameren Missouri, Ameren Illinois, and Genco during the years ended December 31, 2011, 2010, and 2009. The table below does not include the intangible asset impairment charges referenced above.
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | (a | ) | $ | 6 | $ | 2 | |||||
|
Ameren Illinois |
3 | 7 | 9 | |||||||||
|
Genco(b) |
2 | 18 | 24 | |||||||||
|
Other(b)(c) |
1 | 4 | 5 | |||||||||
|
Ameren(b) |
$ | 6 | $ | 35 | $ | 40 | ||||||
| (a) | Less than $1 million. |
| (b) | Includes allowances consumed that were recorded through purchase accounting. |
| (c) | Consists of renewable energy credit expense for Marketing Company and emission allowances expense for AERG. |
Impairment of Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value. In the period in which we determine an asset meets the held for sale criteria, we record an impairment charge to the extent the book value exceeds its fair value less cost to sell. See Note 17 – Goodwill, Impairment and Other Charges for information about Ameren's, Ameren Missouri's and Genco's impairments.
Investments
Ameren and Ameren Missouri evaluate for impairment the investments held in Ameren Missouri's nuclear decommissioning trust fund. Losses on assets in the trust fund could result in higher funding requirements for decommissioning costs, which Ameren Missouri believes would be recovered in electric rates paid by its customers. Accordingly, Ameren and Ameren Missouri recognize a regulatory asset on their balance sheets for losses on investments held in the nuclear decommissioning trust fund. See Note 9 – Nuclear Decommissioning Trust Fund Investments for additional information.
Environmental Costs
Liabilities for environmental costs are recorded on an undiscounted basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Costs are expensed or deferred as a regulatory asset when it is expected that the costs will be recovered from customers in future rates. If environmental expenditures are related to facilities currently in use, such as pollution control equipment, the cost is capitalized and depreciated over the expected life of the asset.
Unamortized Debt Discount, Premium, and Expense
Discount, premium, and expense associated with long-term debt are amortized over the lives of the related issues.
Revenue
Operating Revenues
Ameren Missouri, Ameren Illinois and Genco record operating revenue for electric or natural gas service when it is delivered to customers. We accrue an estimate of electric and natural gas revenues for service rendered but unbilled at the end of each accounting period.
Trading Activities
We present the revenues and costs associated with certain energy derivative contracts designated as trading on a net basis in "Operating Revenues – Electric" and "Operating Revenues – Other."
Nuclear Fuel
Ameren Missouri's cost of nuclear fuel is capitalized and then amortized to fuel expense on a unit-of-production basis. Spent fuel disposal cost is based on net kilowatthours generated and sold, and that cost is charged to expense.
Purchased Gas, Power and Fuel Rate-adjustment Mechanisms
Ameren's utility subsidiaries have various rate-adjustment mechanisms in place that provide for the recovery of purchased natural gas and electric fuel and purchased power costs. See Note 2 – Rate and Regulatory Matters for the regulatory assets and liabilities recorded at December 31, 2011, and 2010, related to the rate-adjustment mechanisms discussed below.
In Ameren Missouri's and Ameren Illinois' retail natural gas utility jurisdictions, changes in natural gas costs are generally reflected in billings to their natural gas utility customers through PGA clauses. The difference between actual natural gas costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to natural gas utility customers in a subsequent period.
In Ameren Illinois' retail electric utility jurisdictions, changes in purchased power costs are generally reflected in billings to their electric utility customers through pass-through rate-adjustment clauses. The difference between actual purchased power costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to electric utility customers in a subsequent period.
Ameren Missouri has a FAC that allows an adjustment of electric rates three times per year for a pass-through to customers of 95% of changes in fuel, emission allowances and purchased power costs, net of off-system revenues, including MISO costs and revenues, greater or less than the amount set in base rates, subject to MoPSC prudency review. The differences between the cost of fuel incurred and the cost of fuel recovered from Ameren Missouri's customers are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to Ameren Missouri's electric utility customers in a subsequent period.
Accounting for MISO Transactions
MISO-related purchase and sale transactions are recorded by Ameren, Ameren Missouri and Ameren Illinois using settlement information provided by MISO. These purchase and sale transactions are accounted for on a net hourly position. We record net purchases in a single hour in "Operating Expenses – Purchased power" and net sales in a single hour in "Operating Revenues – Electric" in our statements of income. On occasion, prior-period transactions will be resettled outside the routine settlement process because of a change in MISO's tariff or a material interpretation thereof. In these cases, Ameren, Ameren Missouri and Ameren Illinois recognize expenses associated with resettlements once the resettlement is probable and the resettlement amount can be estimated.
Stock-based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award. Ameren recognizes as compensation expense the estimated fair value of stock-based compensation on a straight-line basis over the requisite service period. See Note 12 – Stock-based Compensation for additional information.
Excise Taxes
Excise taxes imposed on us are reflected on Ameren Missouri customer electric bills and on Ameren Missouri and Ameren Illinois customer natural gas bills. They are recorded gross in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" on the statement of income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in "Taxes accrued" on the balance sheet. The following table presents excise taxes recorded in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" for the years ended 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | 137 | $ | 130 | $ | 112 | ||||||
|
Ameren Illinois |
57 | 59 | 56 | |||||||||
|
Ameren |
$ | 194 | $ | 189 | $ | 168 | ||||||
Income Taxes
Ameren uses an asset and liability approach for its financial accounting and reporting of income taxes, in
accordance with authoritative accounting guidance. Deferred tax assets and liabilities are recognized for transactions that are treated differently for financial reporting and income tax return purposes. These deferred tax assets and liabilities are based on statutory tax rates.
We recognize that regulators will probably reduce future revenues for deferred tax liabilities that were initially recorded at rates in excess of the current statutory rate. Therefore, reductions in the deferred tax liability, which were recorded because of decreases in the statutory rate, have been credited to a regulatory liability. A regulatory asset has been established to recognize the probable recovery in rates of future income taxes, resulting principally from the reversal of allowance for funds used during construction. This refers to equity and temporary differences related to property and plant acquired before 1976 that were unrecognized temporary differences prior to the adoption of the authoritative accounting guidance for income taxes.
Investment tax credits used on tax returns for prior years have been deferred for book purposes; the credits are being amortized over the useful lives of the related investment. Deferred income taxes were recorded on the temporary difference represented by the deferred investment tax credits and a corresponding regulatory liability. This recognizes the expected reduction in rate revenue for future lower income taxes associated with the amortization of the investment tax credits. See Note 13 – Income Taxes.
Ameren Missouri, Ameren Illinois and Genco are parties to a tax sharing agreement with Ameren that provides for the allocation of consolidated tax liabilities. The tax sharing agreement specifies that each party be allocated an amount of tax similar to that which would be owed had the party been separately subject to tax. Any net benefit attributable to the parent is reallocated to other members. That allocation is treated as a contribution of capital to the party receiving the benefit.
Noncontrolling Interests
Ameren's noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests are classified as a component of equity separate from Ameren's equity in its consolidated balance sheet. Genco's noncontrolling interest comprised the 20% of EEI not owned by Genco. This noncontrolling interest is classified as a component of equity separate from Genco's equity in its consolidated balance sheet.
Earnings per Share
There were no material differences between Ameren's basic and diluted earnings per share amounts in 2011, 2010, and 2009. The number of stock options, restricted stock shares, and performance share units outstanding was immaterial. There were no assumed stock option conversions in 2009 and 2010, as the remaining stock options were not dilutive. All of Ameren's stock options expired in February 2010.
Accounting Changes and Other Matters
The following is a summary of recently adopted authoritative accounting guidance as well as guidance issued but not yet adopted that could impact the Ameren Companies.
Disclosures about an Employer's Participation in a Multiemployer Plan
In September 2011, FASB amended its guidance to require employers to provide additional disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. This guidance was applicable to Ameren Missouri, Ameren Illinois, and Genco because they participate in their parent's (Ameren's) benefit plans. Ameren Missouri, Ameren Illinois, and Genco adopted this guidance as of December 31, 2011. See Note 11 – Retirement Benefits for the required additional disclosures made by Ameren Missouri, Ameren Illinois and Genco, including the amount of their contributions to Ameren's benefit plans.
Testing of Goodwill for Impairment
In September 2011, FASB amended its guidance on testing of goodwill impairment. The amended guidance provided companies the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. As permitted, Ameren and Ameren Illinois early adopted the amended guidance for the annual goodwill impairment test performed as of October 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Disclosures about Fair Value Measurements
See Note 8 – Fair Value Measurements for adopted guidance on fair value measurements issued in January 2010, which became effective in its entirety for the Ameren Companies as of January 1, 2011.
In May 2011, FASB issued additional authoritative guidance regarding fair value measurements. The guidance amends the disclosure requirements for fair value measurements in order to align the principles for fair value measurements and the related disclosure requirements under GAAP and International Financial Reporting Standards. The amendments will not affect the Ameren Companies' results of operations, financial positions, or liquidity, as this guidance only requires additional disclosures. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012 with retrospective application required.
Presentation of Comprehensive Income
In June 2011, FASB amended its guidance on the presentation of comprehensive income in financial statements. The amended guidance will not affect the Ameren Companies' results of operations, financial positions, or liquidity. The amended guidance only changes the presentation of comprehensive income in the financial statements. It requires entities to report components of comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012. In December 2011, the FASB amended the guidance to postpone a requirement to present reclassification adjustments by income component until further guidance is issued.
Asset Retirement Obligations
Authoritative accounting guidance requires us to record the estimated fair value of legal obligations associated with the retirement of tangible long-lived assets in the period in which the liabilities are incurred and to capitalize a corresponding amount as part of the book value of the related long-lived asset. In subsequent periods, we are required to make adjustments to AROs based on changes in the estimated fair values of the obligations. Corresponding increases in asset book values are depreciated over the remaining useful life of the related asset. Uncertainties as to the probability, timing, or amount of cash flows associated with AROs affect our estimates of fair value. Ameren, Ameren Missouri and Genco have recorded AROs for retirement costs associated with Ameren Missouri's Callaway energy center decommissioning costs, asbestos removal, ash ponds, and river structures. In addition, Ameren, Ameren Missouri and Ameren Illinois have recorded AROs for the disposal of certain transformers.
Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Note 2 – Rate and Regulatory Matters.
The following table provides a reconciliation of the beginning and ending carrying amount of AROs for the years 2011 and 2010:
| Ameren Missouri(a) | Ameren Illinois(b) | Genco | AERG | Ameren(a) | ||||||||||||||||
|
Balance at December 31, 2009 |
$ | 331 | $ | 5 | $ | 65 | $ | 33 | $ | 434 | ||||||||||
|
Liabilities incurred |
5 | (c | ) | 3 | - | 8 | ||||||||||||||
|
Liabilities settled |
(4 | ) | (c | ) | (c | ) | (c | ) | (4 | ) | ||||||||||
|
Accretion in 2010(d) |
19 | 1 | 4 | 2 | 26 | |||||||||||||||
|
Change in estimates(e) |
12 | (3 | ) | 2 | (c | ) | 11 | |||||||||||||
|
Balance at December 31, 2010 |
$ | 363 | $ | 3 | $ | 74 | $ | 35 | $ | 475 | ||||||||||
|
Liabilities incurred |
- | - | (c | ) | - | (c | ) | |||||||||||||
|
Liabilities settled |
(1 | ) | (c | ) | (2 | ) | (c | ) | (3 | ) | ||||||||||
|
Accretion in 2011(d) |
20 | (c | ) | 5 | 2 | 27 | ||||||||||||||
|
Change in estimates(f) |
(54 | ) | (c | ) | (6 | ) | (6 | ) | (66 | ) | ||||||||||
|
Balance at December 31, 2011 |
$ | 328 | $ | 3 | $ | 71 | (g) | $ | 31 | $ | 433 | (g) | ||||||||
| (a) | The nuclear decommissioning trust fund assets of $357 million and $337 million as of December 31, 2011, and 2010, respectively, were restricted for decommissioning of the Callaway energy center. |
| (b) | Balance included in "Other deferred credits and liabilities" on the balance sheet. |
| (c) | Less than $1 million. |
| (d) | Accretion expense was recorded as an increase to regulatory assets at Ameren Missouri and Ameren Illinois. |
| (e) | Ameren Missouri and Genco changed their estimates for asbestos removal. Additionally, Genco changed the estimates related to retirement costs for its coal combustion byproduct storage areas. |
| (f) | Ameren Missouri changed estimates related to its Callaway energy center decommissioning costs because of a cost study performed in 2011 and a decline in the cost escalation factor assumptions. Additionally, Ameren Missouri, Genco and AERG changed estimates related to retirement costs for asbestos removal, river structures and their coal combustion byproduct storage areas. |
| (g) | Balance included $5 million in "Other current liabilities" on the balance sheet as of December 31, 2011. |
Genco Asset Sale
In June 2010, Genco completed a sale of 25% of its Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $18 million and recognized a $5 million pretax gain from the sale.
In June 2011, Genco completed the sale of its remaining interest in the Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $45 million and recognized an $8 million pretax gain from the sale. Effective with the sale, the power purchase agreements between Marketing Company and the city of Columbia were terminated. Also in 2011, Genco sold additional property and assets for cash proceeds of $4 million, which resulted in pretax gains of $4 million.
Medina Valley Sale in 2012
In February 2012, Ameren completed the asset sale of its Medina Valley energy center's net property and plant for cash proceeds of $16 million and an additional $1 million payment at the two-year anniversary date of the sale if there are no violations of representations and warranties contained in the sale agreement.
Employee Separation and Other Charges
During the fourth quarter of 2011, as part of efforts to reduce operations and maintenance expenses, Ameren Missouri and Ameren Services extended voluntary separation offers consistent with Ameren's standard management separation program to eligible management and labor union-represented employees. Approximately 340 employees of Ameren Missouri and Ameren Services accepted the offers and left their employment by December 31, 2011. Ameren and Ameren Missouri recorded a pretax charge to earnings of $28 million and $27 million, respectively, for the severance costs related to these offers. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income for the year ended December 31, 2011. Substantially all of the severance costs will be paid in the first quarter of 2012 and were recorded in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. The severance costs related to participating Ameren Services employees were allocated to affiliates consistent with the terms of its support services agreement, which is described in Note 14 – Related Party Transactions.
Also during 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers at the end of 2011 resulted in the elimination of 90 positions. Ameren and Genco each recorded a $4 million pretax charge for related severance and relocation costs to "Goodwill, impairment and other charges" in their statements of income for the year ended December 31, 2011. The severance costs will be substantially paid during the first quarter of 2012 and were accrued in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
In 2010, Ameren's Merchant Generation segment initiated an involuntary separation program to reduce positions under the terms and benefits consistent with Ameren's standard management separation program. Ameren and Genco recorded a pretax charge to earnings of $4 million in 2010 for the severance costs related to this program. These charges were recorded in "Other operations and maintenance expense" on Ameren's and Genco's consolidated statement of income.
In 2009, Ameren initiated voluntary and involuntary separation programs under terms and benefits consistent with Ameren's standard management severance program. Ameren recorded a pretax charge to earnings of $17 million (Ameren Missouri – $8 million, Ameren Illinois – $3 million, Genco – $5 million) for the severance costs related to both the voluntary and involuntary separation programs. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income. The number of positions eliminated as a result of these separation programs was approximately 300. In its May 2010 electric rate order, the MoPSC allowed Ameren Missouri to recover the costs of this severance program from its customers. Therefore, in 2010 Ameren Missouri reclassified the 2009 "Other operations and maintenance expense" to "Regulatory assets." In addition to these programs, Genco recorded a $4 million pretax charge to 2009 earnings in connection with the retirement of two generating units at its Meredosia energy center and for related obsolete inventory.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren's primary assets are the common stock of its subsidiaries. Ameren's subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses in Missouri and Illinois. Dividends on Ameren's common stock and the payment of other 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.
| Ÿ |
Union Electric Company, or 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 Missouri was incorporated in Missouri in 1922 and is successor to a number of companies, the oldest of which was organized in 1881. It is the largest electric utility in the state of Missouri. It supplies electric and natural gas service to a 24,000-square-mile area in central and eastern Missouri. This area has an estimated population of 2.9 million and includes the Greater St. Louis area. Ameren Missouri supplies electric service to 1.2 million customers and natural gas service to 127,000 customers. |
| Ÿ |
Ameren Illinois Company, or Ameren Illinois, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois. Ameren Illinois was created by the merger of CILCO and IP with and into CIPS. CIPS was incorporated in Illinois in 1923 and is successor to a number of companies, the oldest of which was organized in 1902. Ameren Illinois supplies electric and natural gas utility service to portions of central and southern Illinois having an estimated population of 3.1 million in an area of 40,000 square miles. Ameren Illinois supplies electric service to 1.2 million customers and natural gas service to 809,000 customers. |
| Ÿ |
AER consists of non-rate-regulated operations, including Genco, AERG, Marketing Company and Medina Valley. The Medina Valley energy center was sold in February 2012. Genco operates a merchant electric generation business in Illinois and holds an 80% ownership interest in EEI, which it consolidates for financial reporting purposes. Genco was incorporated in Illinois in March 2000. Genco's coal and natural gas electric generating facilities are expected to have capacity of 3,095 and 1,348 megawatts, respectively, at the time of the 2012 peak summer electrical demand. |
Ameren has various other subsidiaries responsible for activities such as the provision of shared services.
On October 1, 2010, Ameren, CIPS, CILCO, IP, AERG and AER completed a two-step corporate internal reorganization. The first step of the reorganization was the Ameren Illinois Merger. Upon consummation of the Ameren Illinois Merger, the separate legal existence of CILCO and IP ended. The second step of the reorganization involved the distribution of AERG stock from Ameren Illinois to Ameren and the subsequent contribution by Ameren of the AERG stock to AER. The Ameren Illinois Merger and the distribution of AERG stock were accounted for as transactions between entities under common control. In accordance with authoritative accounting guidance, assets and liabilities transferred between entities under common control were accounted for at the historical cost basis of the common parent, Ameren, as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in Ameren Illinois included purchase accounting adjustments related to Ameren's acquisition of CILCORP in 2003. Ameren Illinois accounted for the AERG distribution as a spinoff. Ameren Illinois transferred AERG to Ameren based on AERG's carrying value. Ameren Illinois has segregated AERG's operating results and cash flows and presented them separately as discontinued operations in its consolidated statement of income and consolidated statement of cash flows, respectively, for all periods presented prior to October 1, 2010, in this report. For Ameren's financial statements, AERG's results of operations remain classified as continuing operations. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Effective January 1, 2010, as part of an internal reorganization, AER transferred its 80% stock ownership interest in EEI to Genco through a capital contribution. The
transfer of EEI to Genco was accounted for as a transaction between entities under common control, whereby Genco accounted for the transfer at the historical carrying value of the parent (Ameren) as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in EEI included purchase accounting adjustments relating to Ameren's acquisition of an additional 20% ownership interest in EEI in 2004. This transfer required Genco's prior-period financial statements to be retrospectively combined for all periods presented. Consequently, Genco's prior-period consolidated financial statements reflect EEI as if it had been a subsidiary of Genco. Ameren and Genco consolidate EEI for financial reporting purposes.
The financial statements of Ameren, Ameren Illinois and Genco are prepared on a consolidated basis. Ameren Missouri has no subsidiaries, and therefore its financial statements were not prepared on a consolidated basis. All significant intercompany transactions have been eliminated. 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 presentation of our results. The preparation of financial statements in conformity with GAAP requires that Ameren management 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.
During the second quarter of 2011, Genco identified an error in the cash flow statement classification of a capital contribution from Ameren that affected Genco's year ended December 31, 2010. For the year ended December 31, 2010, Genco's previously reported cash flows provided by operating activities were $280 million, and cash flows used in financing activities were $251 million. As corrected herein, Genco's cash flows provided by operating activities were $304 million and cash flows used in financing activities were $275 million. This correction had no impact on Ameren's previously reported consolidated statement of cash flows.
Regulation
Certain Ameren subsidiaries are regulated by the MoPSC, the ICC, and FERC. In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs as assets pursuant to actions of rate regulators or based on the expectation they will be able to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts as liabilities pursuant to actions of rate regulators or based on the expectation that such amounts will be returned to customers in future rates. Regulatory assets and liabilities are amortized consistent with the period of expected regulatory treatment. See Note 2 – Rate and Regulatory Matters for additional information on regulatory assets and liabilities. In addition, other costs that Ameren Missouri and Ameren Illinois expect to recover from customers are recorded as construction work in progress and property and plant, net. See Note 3 – Property and Plant, Net.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and temporary investments purchased with an original maturity of three months or less.
Allowance for Doubtful Accounts Receivable
The allowance for doubtful accounts represents our best estimate of existing accounts receivable that will ultimately be uncollectible. The allowance is calculated by applying estimated loss factors to various classes of outstanding receivables, including unbilled revenue. The loss factors used to estimate uncollectible accounts are based upon both historical collections experience and management's best estimate of future collections success given the existing and anticipated future collections environment. Ameren Illinois has a rate mechanism that adjusts rates for bad debt expense above or below those being collected in rates.
Materials and Supplies
Materials and supplies are recorded at the lower of cost or market. Cost is determined using the average-cost method. Materials and supplies are capitalized as inventory when purchased and then expensed or capitalized as plant assets when installed, as appropriate. The following table presents a breakdown of materials and supplies for each of the Ameren Companies at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Fuel(b) |
$ | 251 | $ | 150 | $ | - | $ | 76 | ||||||||
|
Gas stored underground |
171 | 22 | 149 | - | ||||||||||||
|
Other materials and supplies |
290 | 176 | 50 | 46 | ||||||||||||
| $ | 712 | $ | 348 | $ | 199 | $ | 122 | |||||||||
|
2010: |
||||||||||||||||
|
Fuel(b) |
$ | 255 | $ | 152 | $ | - | $ | 81 | ||||||||
|
Gas stored underground |
175 | 22 | 152 | - | ||||||||||||
|
Other materials and supplies |
277 | 167 | 46 | 49 | ||||||||||||
| $ | 707 | $ | 341 | $ | 198 | $ | 130 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Consists of coal, oil, paint, propane, and tire chips. |
Property and Plant
We capitalize the cost of additions to and betterments of units of property and plant. The cost includes labor, material, applicable taxes, and overhead. An allowance for funds used during construction, as discussed specifically below, is also capitalized as a cost of our rate-regulated assets. Interest incurred during construction is capitalized as a cost of merchant generation assets. Maintenance expenditures, including nuclear refueling and maintenance outages, are expensed as incurred. When units of depreciable property are retired, the original costs, less salvage values, are charged to accumulated depreciation. Asset removal costs incurred by our merchant generation operations that do not constitute legal obligations are expensed as incurred. Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Asset Retirement Obligations below and Note 3 – Property and Plant, Net, for additional information.
Depreciation
Depreciation is provided over the estimated lives of the various classes of depreciable property by applying composite rates on a straight-line basis to the cost basis of such property. The provision for depreciation for the Ameren Companies in 2011, 2010 and 2009 ranged from 3% to 4% of the average depreciable cost.
Allowance for Funds Used During Construction
In our rate-regulated operations, we capitalize the allowance for funds used during construction, or the cost of borrowed funds and the cost of equity funds (preferred and common stockholders' equity) applicable to rate-regulated construction expenditures, as is the utility industry accounting practice. Allowance for funds used during construction does not represent a current source of cash funds. This accounting practice offsets the effect on earnings of the cost of financing current construction, and it treats such financing costs in the same manner as construction charges for labor and materials.
Under accepted ratemaking practice, cash recovery of allowance for funds used during construction and other construction costs occurs when completed projects are placed in service and reflected in customer rates. The following table presents the annual allowance for funds used during construction rates that were utilized during 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren |
8% - 9% | 8% - 9% | 6% - 9% | |||||||||
|
Ameren Missouri |
8 | 8 | 6 | |||||||||
|
Ameren Illinois |
9 | 9 | 9 | |||||||||
Goodwill and Intangible Assets
Goodwill. Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. As of December 31, 2011, Ameren's and Ameren Illinois' goodwill related to Ameren's acquisition of IP in 2004 and Ameren's acquisition of CILCORP in 2003.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. During the fourth quarter of 2011, Ameren and Ameren Illinois used a qualitative evaluation to assess the likelihood of a goodwill impairment based on authoritative accounting guidance issued by the FASB in 2011. That evaluation led Ameren and Ameren Illinois to believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values, resulting in no impairment in 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the goodwill impairment recorded in 2010.
Intangible Assets. Ameren, Ameren Missouri and Genco classify emission allowances and renewable energy credits as intangible assets. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the intangible asset impairments recorded in 2011 and 2010.
At December 31, 2011, Ameren's and Ameren Missouri's intangible assets included renewable energy credits obtained through wind and solar power purchase agreements. The book value of each of Ameren's and Ameren Missouri's renewable energy credits was $7 million and less than $1 million at December 31, 2011, and 2010, respectively.
In July 2011, the EPA issued the CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of preexisting SO2 and NOx allowances to the acid rain program and NOx budget trading program, respectively. In anticipation of the CSAPR announcement, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash, pretax impairment charge of $2 million and $1 million, respectively, which was reflected in "Goodwill, impairment and other charges" on their statements of income. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact to earnings. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until that court proceeding is finalized, the EPA is expected to continue to administer the CAIR and to use CAIR's allowance program for compliance. During 2010, Ameren and Genco each recognized an impairment charge of intangible assets to reduce the carrying value of SO2 emission allowances. The charge was reflected in "Goodwill, impairment and other charges" in their statements of income. See Note 15 – Commitments and Contingencies for additional information on emission allowances and the CSAPR. The book value of each of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was less than $1 million at December 31, 2011. The book value of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was $7 million, $2 million, and $3 million, at December 31, 2010, respectively.
Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. The following table presents amortization expense based on usage of renewable energy credits and emission allowances, net of gains from sales, for Ameren, Ameren Missouri, Ameren Illinois, and Genco during the years ended December 31, 2011, 2010, and 2009. The table below does not include the intangible asset impairment charges referenced above.
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | (a | ) | $ | 6 | $ | 2 | |||||
|
Ameren Illinois |
3 | 7 | 9 | |||||||||
|
Genco(b) |
2 | 18 | 24 | |||||||||
|
Other(b)(c) |
1 | 4 | 5 | |||||||||
|
Ameren(b) |
$ | 6 | $ | 35 | $ | 40 | ||||||
| (a) | Less than $1 million. |
| (b) | Includes allowances consumed that were recorded through purchase accounting. |
| (c) | Consists of renewable energy credit expense for Marketing Company and emission allowances expense for AERG. |
Impairment of Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value. In the period in which we determine an asset meets the held for sale criteria, we record an impairment charge to the extent the book value exceeds its fair value less cost to sell. See Note 17 – Goodwill, Impairment and Other Charges for information about Ameren's, Ameren Missouri's and Genco's impairments.
Investments
Ameren and Ameren Missouri evaluate for impairment the investments held in Ameren Missouri's nuclear decommissioning trust fund. Losses on assets in the trust fund could result in higher funding requirements for decommissioning costs, which Ameren Missouri believes would be recovered in electric rates paid by its customers. Accordingly, Ameren and Ameren Missouri recognize a regulatory asset on their balance sheets for losses on investments held in the nuclear decommissioning trust fund. See Note 9 – Nuclear Decommissioning Trust Fund Investments for additional information.
Environmental Costs
Liabilities for environmental costs are recorded on an undiscounted basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Costs are expensed or deferred as a regulatory asset when it is expected that the costs will be recovered from customers in future rates. If environmental expenditures are related to facilities currently in use, such as pollution control equipment, the cost is capitalized and depreciated over the expected life of the asset.
Unamortized Debt Discount, Premium, and Expense
Discount, premium, and expense associated with long-term debt are amortized over the lives of the related issues.
Revenue
Operating Revenues
Ameren Missouri, Ameren Illinois and Genco record operating revenue for electric or natural gas service when it is delivered to customers. We accrue an estimate of electric and natural gas revenues for service rendered but unbilled at the end of each accounting period.
Trading Activities
We present the revenues and costs associated with certain energy derivative contracts designated as trading on a net basis in "Operating Revenues – Electric" and "Operating Revenues – Other."
Nuclear Fuel
Ameren Missouri's cost of nuclear fuel is capitalized and then amortized to fuel expense on a unit-of-production basis. Spent fuel disposal cost is based on net kilowatthours generated and sold, and that cost is charged to expense.
Purchased Gas, Power and Fuel Rate-adjustment Mechanisms
Ameren's utility subsidiaries have various rate-adjustment mechanisms in place that provide for the recovery of purchased natural gas and electric fuel and purchased power costs. See Note 2 – Rate and Regulatory Matters for the regulatory assets and liabilities recorded at December 31, 2011, and 2010, related to the rate-adjustment mechanisms discussed below.
In Ameren Missouri's and Ameren Illinois' retail natural gas utility jurisdictions, changes in natural gas costs are generally reflected in billings to their natural gas utility customers through PGA clauses. The difference between actual natural gas costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to natural gas utility customers in a subsequent period.
In Ameren Illinois' retail electric utility jurisdictions, changes in purchased power costs are generally reflected in billings to their electric utility customers through pass-through rate-adjustment clauses. The difference between actual purchased power costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to electric utility customers in a subsequent period.
Ameren Missouri has a FAC that allows an adjustment of electric rates three times per year for a pass-through to customers of 95% of changes in fuel, emission allowances and purchased power costs, net of off-system revenues, including MISO costs and revenues, greater or less than the amount set in base rates, subject to MoPSC prudency review. The differences between the cost of fuel incurred and the cost of fuel recovered from Ameren Missouri's customers are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to Ameren Missouri's electric utility customers in a subsequent period.
Accounting for MISO Transactions
MISO-related purchase and sale transactions are recorded by Ameren, Ameren Missouri and Ameren Illinois using settlement information provided by MISO. These purchase and sale transactions are accounted for on a net hourly position. We record net purchases in a single hour in "Operating Expenses – Purchased power" and net sales in a single hour in "Operating Revenues – Electric" in our statements of income. On occasion, prior-period transactions will be resettled outside the routine settlement process because of a change in MISO's tariff or a material interpretation thereof. In these cases, Ameren, Ameren Missouri and Ameren Illinois recognize expenses associated with resettlements once the resettlement is probable and the resettlement amount can be estimated.
Stock-based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award. Ameren recognizes as compensation expense the estimated fair value of stock-based compensation on a straight-line basis over the requisite service period. See Note 12 – Stock-based Compensation for additional information.
Excise Taxes
Excise taxes imposed on us are reflected on Ameren Missouri customer electric bills and on Ameren Missouri and Ameren Illinois customer natural gas bills. They are recorded gross in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" on the statement of income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in "Taxes accrued" on the balance sheet. The following table presents excise taxes recorded in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" for the years ended 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | 137 | $ | 130 | $ | 112 | ||||||
|
Ameren Illinois |
57 | 59 | 56 | |||||||||
|
Ameren |
$ | 194 | $ | 189 | $ | 168 | ||||||
Income Taxes
Ameren uses an asset and liability approach for its financial accounting and reporting of income taxes, in
accordance with authoritative accounting guidance. Deferred tax assets and liabilities are recognized for transactions that are treated differently for financial reporting and income tax return purposes. These deferred tax assets and liabilities are based on statutory tax rates.
We recognize that regulators will probably reduce future revenues for deferred tax liabilities that were initially recorded at rates in excess of the current statutory rate. Therefore, reductions in the deferred tax liability, which were recorded because of decreases in the statutory rate, have been credited to a regulatory liability. A regulatory asset has been established to recognize the probable recovery in rates of future income taxes, resulting principally from the reversal of allowance for funds used during construction. This refers to equity and temporary differences related to property and plant acquired before 1976 that were unrecognized temporary differences prior to the adoption of the authoritative accounting guidance for income taxes.
Investment tax credits used on tax returns for prior years have been deferred for book purposes; the credits are being amortized over the useful lives of the related investment. Deferred income taxes were recorded on the temporary difference represented by the deferred investment tax credits and a corresponding regulatory liability. This recognizes the expected reduction in rate revenue for future lower income taxes associated with the amortization of the investment tax credits. See Note 13 – Income Taxes.
Ameren Missouri, Ameren Illinois and Genco are parties to a tax sharing agreement with Ameren that provides for the allocation of consolidated tax liabilities. The tax sharing agreement specifies that each party be allocated an amount of tax similar to that which would be owed had the party been separately subject to tax. Any net benefit attributable to the parent is reallocated to other members. That allocation is treated as a contribution of capital to the party receiving the benefit.
Noncontrolling Interests
Ameren's noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests are classified as a component of equity separate from Ameren's equity in its consolidated balance sheet. Genco's noncontrolling interest comprised the 20% of EEI not owned by Genco. This noncontrolling interest is classified as a component of equity separate from Genco's equity in its consolidated balance sheet.
Earnings per Share
There were no material differences between Ameren's basic and diluted earnings per share amounts in 2011, 2010, and 2009. The number of stock options, restricted stock shares, and performance share units outstanding was immaterial. There were no assumed stock option conversions in 2009 and 2010, as the remaining stock options were not dilutive. All of Ameren's stock options expired in February 2010.
Accounting Changes and Other Matters
The following is a summary of recently adopted authoritative accounting guidance as well as guidance issued but not yet adopted that could impact the Ameren Companies.
Disclosures about an Employer's Participation in a Multiemployer Plan
In September 2011, FASB amended its guidance to require employers to provide additional disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. This guidance was applicable to Ameren Missouri, Ameren Illinois, and Genco because they participate in their parent's (Ameren's) benefit plans. Ameren Missouri, Ameren Illinois, and Genco adopted this guidance as of December 31, 2011. See Note 11 – Retirement Benefits for the required additional disclosures made by Ameren Missouri, Ameren Illinois and Genco, including the amount of their contributions to Ameren's benefit plans.
Testing of Goodwill for Impairment
In September 2011, FASB amended its guidance on testing of goodwill impairment. The amended guidance provided companies the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. As permitted, Ameren and Ameren Illinois early adopted the amended guidance for the annual goodwill impairment test performed as of October 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Disclosures about Fair Value Measurements
See Note 8 – Fair Value Measurements for adopted guidance on fair value measurements issued in January 2010, which became effective in its entirety for the Ameren Companies as of January 1, 2011.
In May 2011, FASB issued additional authoritative guidance regarding fair value measurements. The guidance amends the disclosure requirements for fair value measurements in order to align the principles for fair value measurements and the related disclosure requirements under GAAP and International Financial Reporting Standards. The amendments will not affect the Ameren Companies' results of operations, financial positions, or liquidity, as this guidance only requires additional disclosures. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012 with retrospective application required.
Presentation of Comprehensive Income
In June 2011, FASB amended its guidance on the presentation of comprehensive income in financial statements. The amended guidance will not affect the Ameren Companies' results of operations, financial positions, or liquidity. The amended guidance changes the presentation of comprehensive income in the financial statements. It requires entities to report components of comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2012. In December 2011, the FASB amended the guidance to postpone a requirement to present reclassification adjustments by income component until further guidance is issued.
Asset Retirement Obligations
Authoritative accounting guidance requires us to record the estimated fair value of legal obligations associated with the retirement of tangible long-lived assets in the period in which the liabilities are incurred and to capitalize a corresponding amount as part of the book value of the related long-lived asset. In subsequent periods, we are required to make adjustments to AROs based on changes in the estimated fair values of the obligations. Corresponding increases in asset book values are depreciated over the remaining useful life of the related asset. Uncertainties as to the probability, timing, or amount of cash flows associated with AROs affect our estimates of fair value. Ameren, Ameren Missouri and Genco have recorded AROs for retirement costs associated with Ameren Missouri's Callaway energy center decommissioning costs, asbestos removal, ash ponds, and river structures. In addition, Ameren, Ameren Missouri and Ameren Illinois have recorded AROs for the disposal of certain transformers.
Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Note 2 – Rate and Regulatory Matters.
The following table provides a reconciliation of the beginning and ending carrying amount of AROs for the years 2011 and 2010:
| Ameren Missouri(a) | Ameren Illinois(b) | Genco | AERG | Ameren(a) | ||||||||||||||||
|
Balance at December 31, 2009 |
$ | 331 | $ | 5 | $ | 65 | $ | 33 | $ | 434 | ||||||||||
|
Liabilities incurred |
5 | (c | ) | 3 | - | 8 | ||||||||||||||
|
Liabilities settled |
(4 | ) | (c | ) | (c | ) | (c | ) | (4 | ) | ||||||||||
|
Accretion in 2010(d) |
19 | 1 | 4 | 2 | 26 | |||||||||||||||
|
Change in estimates(e) |
12 | (3 | ) | 2 | (c | ) | 11 | |||||||||||||
|
Balance at December 31, 2010 |
$ | 363 | $ | 3 | $ | 74 | $ | 35 | $ | 475 | ||||||||||
|
Liabilities incurred |
- | - | (c | ) | - | (c | ) | |||||||||||||
|
Liabilities settled |
(1 | ) | (c | ) | (2 | ) | (c | ) | (3 | ) | ||||||||||
|
Accretion in 2011(d) |
20 | (c | ) | 5 | 2 | 27 | ||||||||||||||
|
Change in estimates(f) |
(54 | ) | (c | ) | (6 | ) | (6 | ) | (66 | ) | ||||||||||
|
Balance at December 31, 2011 |
$ | 328 | $ | 3 | $ | 71 | (g) | $ | 31 | $ | 433 | (g) | ||||||||
| (a) | The nuclear decommissioning trust fund assets of $357 million and $337 million as of December 31, 2011, and 2010, respectively, were restricted for decommissioning of the Callaway energy center. |
| (b) | Balance included in "Other deferred credits and liabilities" on the balance sheet. |
| (c) | Less than $1 million. |
| (d) | Accretion expense was recorded as an increase to regulatory assets at Ameren Missouri and Ameren Illinois. |
| (e) | Ameren Missouri and Genco changed their estimates for asbestos removal. Additionally, Genco changed the estimates related to retirement costs for its coal combustion byproduct storage areas. |
| (f) | Ameren Missouri changed estimates related to its Callaway energy center decommissioning costs because of a cost study performed in 2011 and a decline in the cost escalation factor assumptions. Additionally, Ameren Missouri, Genco and AERG changed estimates related to retirement costs for asbestos removal, river structures and their coal combustion byproduct storage areas. |
| (g) | Balance included $5 million in "Other current liabilities" on the balance sheet as of December 31, 2011. |
Genco Asset Sale
In June 2010, Genco completed a sale of 25% of its Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $18 million and recognized a $5 million pretax gain from the sale.
In June 2011, Genco completed the sale of its remaining interest in the Columbia CT energy center to the city of Columbia, Missouri. Genco received cash proceeds of $45 million and recognized an $8 million pretax gain from the sale. Effective with the sale, the power purchase agreements between Marketing Company and the city of Columbia were terminated. Also in 2011, Genco sold additional property and assets for cash proceeds of $4 million, which resulted in pretax gains of $4 million.
Medina Valley Sale in 2012
In February 2012, Ameren completed the asset sale of its Medina Valley energy center's net property and plant for cash proceeds of $16 million and an additional $1 million payment at the two-year anniversary date of the sale if there are no violations of representations and warranties contained in the sale agreement.
Employee Separation and Other Charges
During the fourth quarter of 2011, as part of efforts to reduce operations and maintenance expenses, Ameren Missouri and Ameren Services extended voluntary separation offers consistent with Ameren's standard management separation program to eligible management and labor union-represented employees. Approximately 340 employees of Ameren Missouri and Ameren Services accepted the offers and left their employment by December 31, 2011. Ameren and Ameren Missouri recorded a pretax charge to earnings of $28 million and $27 million, respectively, for the severance costs related to these offers. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income for the year ended December 31, 2011. Substantially all of the severance costs will be paid in the first quarter of 2012 and were recorded in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. The severance costs related to participating Ameren Services employees were allocated to affiliates consistent with the terms of its support services agreement, which is described in Note 14 – Related Party Transactions.
Also during 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers at the end of 2011 resulted in the elimination of 90 positions. Ameren and Genco each recorded a $4 million pretax charge for related severance and relocation costs to "Goodwill, impairment and other charges" in their statements of income for the year ended December 31, 2011. The severance costs will be substantially paid during the first quarter of 2012 and were accrued in "Accounts and wages payable" on each company's balance sheet at December 31, 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
In 2010, Ameren's Merchant Generation segment initiated an involuntary separation program to reduce positions under the terms and benefits consistent with Ameren's standard management separation program. Ameren and Genco recorded a pretax charge to earnings of $4 million in 2010 for the severance costs related to this program. These charges were recorded in "Other operations and maintenance expense" on Ameren's and Genco's consolidated statement of income.
In 2009, Ameren initiated voluntary and involuntary separation programs under terms and benefits consistent with Ameren's standard management severance program. Ameren recorded a pretax charge to earnings of $17 million (Ameren Missouri – $8 million, Ameren Illinois – $3 million, Genco – $5 million) for the severance costs related to both the voluntary and involuntary separation programs. These charges were recorded in "Other operations and maintenance expense" in each company's statement of income. The number of positions eliminated as a result of these separation programs was approximately 300. In its May 2010 electric rate order, the MoPSC allowed Ameren Missouri to recover the costs of this severance program from its customers. Therefore, in 2010 Ameren Missouri reclassified the 2009 "Other operations and maintenance expense" to "Regulatory assets." In addition to these programs, Genco recorded a $4 million pretax charge to 2009 earnings in connection with the retirement of two generating units at its Meredosia energy center and for related obsolete inventory.
|
|||
NOTE 2 – RATE AND REGULATORY MATTERS
Below is a summary of significant regulatory proceedings and related lawsuits. 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
2009 Electric Rate Order
In February 2009, Noranda, Ameren Missouri's largest electric customer, and the MoOPC appealed certain aspects of the MoPSC's 2009 electric rate order to the Circuit Court of Stoddard County, Missouri. In September 2009, the Stoddard County Circuit Court granted Noranda's request to stay the electric rate increase granted by the January 2009 MoPSC's order as it applied specifically to Noranda's electric service account until the court rendered its decision on the appeal. From the granting of the stay request until June 2010, Noranda paid into the Stoddard County Circuit Court's registry the entire amount of its monthly base rate increase and monthly FAC payments. In June 2010, when the May 2010 electric rate order became effective, Noranda ceased making base rate payments into the Stoddard County Circuit Court's registry. Noranda continued to pay into the Stoddard County Circuit Court's registry its monthly FAC payments related to electric service received during the time periods prior to the effectiveness of the May 2010 electric rate order.
In August 2010, the Stoddard County Circuit Court issued a judgment that reversed parts of the MoPSC's decision. However, upon issuance, the Stoddard County Circuit Court suspended its own judgment. Ameren Missouri filed an appeal of the Stoddard County Circuit Court's judgment with the Missouri Court of Appeals, Southern District. In November 2011, the Missouri Court of Appeals issued a ruling that upheld the MoPSC's January 2009 electric rate order; thereby reversing the Stoddard County Circuit Court's August 2010 decision. As of December 31, 2011, the amount held in the Stoddard County Circuit Court's registry was $20 million. That amount was reflected in "Accounts receivable-trade" on Ameren's and Ameren Missouri's balance sheets at December 31, 2011. Ameren Missouri expects to receive all of the funds held in the Stoddard County Circuit Court's registry relating to the stay during the first quarter of 2012.
2010 Electric Rate Order
In May 2010, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric service of $230 million.
The MIEC and MoOPC appealed certain aspects of the MoPSC order to the Cole County Circuit Court. In addition to the MIEC appeal, four industrial customers, who are members of MIEC, also filed a request for a stay with the Cole County Circuit Court. In December 2010, the Cole County Circuit Court granted the request of the four industrial customers to stay the MoPSC's 2010 electric rate order and required those customers to pay into the Cole County Circuit Court's registry the difference between their billings under the 2010 Missouri electric rate order and their billings under a Missouri electric rate order that became effective in June 2007, which was, at that time, the last Ameren Missouri rate order for which appeals had been exhausted. In February 2011, the four industrial customers posted the bond required by the stay. Since the bond was posted, the four industrial customers have made payments into the Cole County Circuit Court's registry equal to the difference between their base rate billings under 2010 electric rates and 2007 electric rates, as well as their FAC amounts to the extent those billings relate to service prior to the effective date of the new rates established by the 2011 electric rate order. Because of the lag between accumulations of changes in net fuel costs and the time those net fuel costs are recovered through FAC charges applied to customers' bills, the four industrial customers will continue to pay a portion of their FAC payments to the Cole County Circuit Court's registry for service prior to the effective date of the new rates by the 2011 electric rate order. It is expected that a portion of the FAC billings invoiced to these customers in September 2012 would be the last contested amount deposited into the Cole County Circuit Court's registry relating to this 2010 electric rate order appeal, pending resolution of the appeal. As of December 31, 2011, the amount held by the Cole County Circuit Court, excluding the bond amount, was $15 million. This amount held in the registry was reflected in "Accounts receivable-trade" on Ameren's and Ameren Missouri's balance sheets at December 31, 2011.
A Cole County Circuit Court decision is expected during the first quarter of 2012 on the MIEC's and MoOPC's appeal. We cannot predict the ultimate outcome of this proceeding, which could have a material effect on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity. If the MoPSC's 2010 electric rate order is ultimately upheld, Ameren Missouri will receive all of the funds held in the Cole County Circuit Court's registry, plus accrued interest. If Ameren Missouri were to conclude that some portion of the rate increase resulting from the 2010 electric rate order was probable of refund to Ameren Missouri's customers, a charge to earnings would be recorded for the estimated amount of refund in the period in which that determination was made. At this time, Ameren Missouri does not believe any aspect of the 2010 MoPSC's electric rate order is probable of refund to Ameren Missouri's customers. Therefore, no reserve has been established.
2011 Electric Rate Order
In July 2011, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric service of $173 million, including $52 million related to an increase in normalized net fuel costs above the net fuel costs included in base rates previously authorized by the MoPSC in its 2010 electric rate order. The revenue increase was based on a 10.2% return on equity, a capital structure composed of 52.2% common equity, and a rate base of $6.6 billion. The rate changes became effective on July 31, 2011. The MoPSC order approved the continued use of Ameren Missouri's vegetation management and infrastructure cost tracker, its pension and postretirement benefit cost tracker, and the FAC at the current 95% sharing level. The MoPSC order shortened the FAC recovery and refund period from 12 months to eight months. The MoPSC order denied Ameren Missouri's request for the ability to recover any under-recovery of fixed costs as a result of lower sales volumes from the implementation of energy efficiency measures.
Additionally, the MoPSC order provided for a tracking mechanism for uncertain income tax positions. The order provides that reserves for uncertain income tax positions do not reduce rate base. However, when an uncertain income tax position liability is resolved, the order requires the creation of a regulatory asset or regulatory liability to reflect the time value (using the weighted-average cost of capital in the order) of the difference between the uncertain income tax position liability that was excluded from rate base and the final tax liability. The resulting regulatory asset or liability will be amortized over three years beginning on the effective date of new rates established in the next electric rate case.
The MoPSC order disallowed the recovery of all costs of enhancements, or costs that would have been incurred absent the breach, related to the rebuilding of the Taum Sauk energy center in excess of amounts recovered from property insurance. As a result of the order, Ameren and Ameren Missouri each recorded in 2011 a pretax charge to earnings of $89 million relating to the Taum Sauk disallowance. This charge was recorded in Ameren's statement of income as "Goodwill, impairment and other charges" and recorded in Ameren Missouri's statement of income as "Loss from regulatory disallowance."
In July 2011, a new law that reformed the judicial appeal process for MoPSC rate orders took effect. Among other items, the new law allows appeals to bypass the circuit court and to be made directly to the appellate court. The new law provides that rates cannot be stayed; however, the appellate court could direct the MoPSC to revise rates. Such rate revisions could be ordered to be applied retroactively. This new law applied to judicial appeals of the MoPSC's July 2011 rate order.
In August 2011, Ameren Missouri appealed the disallowance of Taum Sauk enhancements to the Missouri Court of Appeals, Western District. A decision is expected by the Missouri Court of Appeals, Western District, in 2012. Ameren Missouri cannot predict the ultimate outcome of its appeal.
Pending Electric Rate Case
On February 3, 2012, Ameren Missouri filed a request with the MoPSC to increase its annual revenues for electric service by $376 million. Included in this requested increase is a $103 million increase in normalized net fuel costs above the net fuel costs included in base rates previously authorized by the MoPSC in its July 2011 electric rate order. Absent initiation of this general rate proceeding, 95% of this amount would have been reflected in rate adjustments implemented under Ameren Missouri's FAC. Approximately $85 million of the request relates to investments to improve the reliability of Ameren Missouri's infrastructure and to comply with environmental and renewable energy regulations, including the requested return on such investments, and $81 million of the request relates to recovery of the costs associated with energy efficiency programs under the MEEIA, including energy efficiency investments, which is discussed below. The electric rate increase request was based on a 10.75% return on equity, a capital structure composed of 52% common equity, an aggregate electric rate base of $6.8 billion, and a test year ended September 30, 2011, with certain pro forma adjustments expected through the anticipated true-up date of July 31, 2012.
As part of its filing, Ameren Missouri requested that the MoPSC approve the implementation of a storm cost tracking mechanism, as well as plant-in-service accounting treatment. The proposed storm cost tracking mechanism would allow Ameren Missouri to record a regulatory asset or liability, as applicable, reflecting the difference between a base level of major storm restoration costs used to set rates in the current rate case and the actual storm restoration costs, and to request recovery of such regulatory asset or liability in Ameren Missouri's next rate case for amortization over a three-year period. The plant-in-service accounting treatment would permit Ameren Missouri to recover a return and to defer depreciation expense on assets placed in service but not yet reflected in customer rates.
Ameren Missouri requested continued use of the FAC and the regulatory tracking mechanisms for vegetation management/infrastructure inspection costs, for pension and postretirement benefits, and for uncertain income tax positions that the MoPSC previously authorized in earlier electric rate orders. Ameren Missouri also requested recovery of the 2011 voluntary separation program severance costs over three years.
A decision by the MoPSC in this proceeding is expected in December 2012. Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, when any rate change may go into effect, or whether any rate increase that may eventually be approved will be sufficient for Ameren Missouri to recover its costs and earn a reasonable return on its investments when the increase goes into effect.
MEEIA Filing
The MEEIA, enacted in 2009, established a regulatory framework that, among other things, allows electric utilities to recover costs related to MoPSC-approved energy efficiency programs. The law requires the MoPSC to ensure that a utility's financial incentives are aligned with helping customers use energy more efficiently, to provide timely cost recovery, and to provide earnings opportunities associated with cost-effective energy efficiency programs. Missouri does not have a law mandating energy efficiency standards.
In January 2012, Ameren Missouri made its initial filing with the MoPSC under the MEEIA. This filing proposes a three-year plan that includes a portfolio of energy efficiency programs along with a cost-recovery mechanism. If the proposal is approved, beginning in January 2013, Ameren Missouri plans to invest $145 million over three years for the proposed energy efficiency programs.
A decision by the MoPSC in this proceeding is anticipated in the second quarter of 2012. The MoPSC's order in this proceeding will not affect Ameren Missouri rates until these rates are included in an electric service rate case. Ameren Missouri anticipates that the impacts of the MoPSC's decision in this MEEIA filing will be included in rates set under its pending electric service rate case that was filed on February 3, 2012, which has an anticipated true-up date of July 31, 2012. Ameren Missouri's pending electric rate case includes an annual revenue increase of $81 million relating to its planned portfolio of energy efficiency programs included in its MEEIA filing.
FAC Prudence Review
Missouri law requires the MoPSC to complete prudence reviews of Ameren Missouri's FAC at least every 18 months. In April 2011, the MoPSC issued an order with respect to its review of Ameren Missouri's FAC for the period from March 1, 2009, to September 30, 2009. In this order, the MoPSC ruled that Ameren Missouri should have included in the FAC calculation all revenues and costs associated with certain long-term partial requirements sales that were made by Ameren Missouri because of the loss of Noranda's load caused by a severe ice storm in January 2009. As a result of the order, Ameren Missouri recorded a pretax charge to earnings of $18 million, including $1 million for interest, in 2011 for its obligation to refund to Ameren Missouri's electric customers the earnings associated with these sales previously recognized by Ameren Missouri during the period from March 1, 2009, to September 30, 2009. In October 2011, Ameren Missouri began refunding the $18 million to customers through the FAC.
Ameren Missouri disagrees with the MoPSC order's classification of these sales and believes that the terms of its FAC tariff did not provide for the inclusion of these sales in the FAC calculation. In June 2011, Ameren Missouri filed an appeal with the Cole County Circuit Court. A decision is expected from the Cole County Circuit Court in 2012. Separately, in July 2011, Ameren Missouri filed a request with the MoPSC for an accounting authority order that would allow Ameren Missouri to defer, as a regulatory asset, fixed costs totaling $36 million that were not recovered from Noranda as a result of the loss of load caused by the severe 2009 ice storm for potential recovery in a future electric rate case. We cannot predict the ultimate outcome of these regulatory or judicial proceedings.
Ameren Missouri recognized an additional $25 million of pretax earnings associated with the same long-term partial requirements sales contracts subsequent to September 30, 2009, which were not addressed by the MoPSC order issued in April 2011. The MoPSC's FAC review for the period from October 1, 2009, to May 31, 2011, was initiated in September 2011. In October 2011, the MoPSC staff filed a recommendation with the MoPSC to direct Ameren Missouri to refund to customers, prior to the completion of the staff's prudence review, the pretax earnings associated with the same long-term partial requirements sales contracts subsequent to September 30, 2009. The MoPSC staff calculated these pretax earnings to be $26 million. We cannot predict whether the MoPSC will approve this recommendation. If Ameren Missouri were to determine that these sales were probable of refund to Ameren Missouri's electric customers, a charge to earnings would be recorded for the refund in the period in which that determination was made. Because of pending court appeals and regulatory review, Ameren Missouri does not currently believe these amounts are probable of refund to customers.
Renewable Energy Portfolio Requirement
A ballot initiative passed by Missouri voters in November 2008 created a renewable energy portfolio requirement. Beginning in 2011, Ameren Missouri and other Missouri investor-owned utilities are required to purchase or generate from renewable energy sources electricity equaling at least 2% of native load sales, with that percentage increasing in subsequent years to at least 15% by 2021, subject to a 1% limit on customer rate impacts. At least 2% of each portfolio requirement must be derived from solar energy. Compliance with the renewable energy portfolio requirement can be achieved through generation or the procurement of renewable energy credits. Ameren Missouri expects that any related costs or investments will ultimately be recovered in rates.
In July 2010, the MoPSC issued final rules implementing the state's renewable energy portfolio requirement. Ameren Missouri objected to the MoPSC rules calculating the 1% limit on customer rates. In August 2010, Ameren Missouri and other groups filed an appeal with the Cole County Circuit Court of multiple aspects of the MoPSC's rules. In December 2011, the Cole County Circuit Court issued a ruling clarifying that the 1% customer rate increase limit is an annual restriction, not a multiyear limit.
Illinois
IEIMA
In October 2011, the IEIMA was enacted into law and became effective immediately. Certain amendments to the IEIMA became effective on December 30, 2011. On January 3, 2012, Ameren Illinois elected to participate in the performance-based formula ratemaking process established pursuant to the IEIMA by filing initial performance-based formula rates with the ICC. With this filing, as required by law, Ameren Illinois' previously pending electric delivery service rate case was withdrawn. The initial filing, based on 2010 recoverable costs and expected net plant additions for 2011 and 2012, will result in new electric delivery service rates in October 2012. Pending ICC approval, the initial filing will result in a decrease of $19 million in Ameren Illinois revenues for electric delivery service, on an annualized basis. Ameren Illinois anticipates making an update filing by May 1, 2012, based on 2011 costs and expected net plant additions for 2012, that would result in new electric delivery service rates on January 1, 2013.
Ameren Illinois will participate in a performance-based formula process for determining rates. The formula will provide for the recovery of actual costs of electric delivery service that are prudently incurred, reflect the utility's actual regulated capital structure, and include a formula for calculating the return on equity component of the cost of capital. The return on equity component of the formula rate will be equal to the average for the applicable calendar year of the monthly average yields of 30-year United States treasury bonds plus 590 basis points for 2012 and 580 basis points thereafter. Ameren Illinois' actual return on equity relating to electric delivery service will be subject to a collar adjustment on earnings in excess of 50 basis points above or below its allowed return. Beginning in 2012, the law provides for an annual reconciliation of revenues to costs prudently and reasonably incurred. This annual revenue reconciliation, along with the collar adjustment, if necessary, will be collected from or refunded to customers in a subsequent year.
Ameren Illinois will also be subject to five performance standards. Failure to achieve the standards will result in a reduction in the company's allowed return on equity calculated under the formula. The performance standards include improvements in service reliability to reduce both the frequency and duration of outages, improvements in customer satisfaction scores, reduction in the number of estimated bills, and a reduction in uncollectible accounts expense. The IEIMA provides for return on equity penalties totaling up to 30 basis points in 2013 through 2015, 34 basis points in 2016 through 2018, and 38 basis points in 2019 through 2022 if the performance standards are not met. The formula ratemaking process is effective until the end of 2017, but could be extended by the Illinois General Assembly for an additional five years. The formula ratemaking process would also terminate if the average residential rate increases by more than 2.5% annually from June 2011 through May 2014.
Between 2012 and 2021, Ameren Illinois will be required to invest $625 million in capital expenditures incremental to Ameren Illinois' average electric delivery capital expenditures for calendar years 2008 through 2010 to modernize its distribution system. Such investments are expected to encourage economic development and to create an estimated 450 additional jobs within Illinois. Ameren Illinois is subject to monetary penalties if 450 additional jobs are not created during the peak program years. Also, Ameren Illinois will be required to contribute $1 million annually for certain nonrecoverable customer assistance programs for as long as Ameren Illinois participates in the formula ratemaking process. Ameren Illinois will also be required to make a one-time $7.5 million nonrecoverable donation to the Illinois Science and Energy Innovation Trust in 2012, as well as an approximate $1 million annual donation to the same trust for as long as it participates in the formula ratemaking process.
The IEIMA does not apply to natural gas utilities.
2012 Natural Gas Delivery Service Rate Order
In January 2012, the ICC issued a rate order that approved an increase in annual Ameren Illinois' revenues for natural gas delivery service of $32 million. The revenue increase was based on a 9.06% return on equity, a capital structure composed of 53.3% common equity, and a rate base of $1 billion. The rate order was based on a 2012 future test year. The rate changes became effective on January 20, 2012. In February 2012, the ICC denied rehearing requests by Ameren Illinois and an intervenor related to the granted return on equity.
2010 Electric and Natural Gas Delivery Service Rate Orders
During 2010, the ICC issued orders that authorized an aggregate $40 million increase in Ameren Illinois' annual electric and natural gas delivery service revenues.
In December 2010, Ameren Illinois and an intervenor appealed portions of the ICC's orders to the Appellate Court of the Fourth District of Illinois. In January 2012, the Appellate Court issued a decision that upheld the ICC's 2010 electric and natural gas delivery service rate order.
Federal
Electric Transmission Investment
FERC, in its order issued in May 2011, approved transmission rate incentives for the Illinois Rivers project and the Big Muddy project, which will be developed by ATXI or ATX. The FERC May 2011 order approved the following rate mechanisms with respect to Ameren's Illinois Rivers and Big Muddy projects:
| Ÿ |
Full recovery of financing costs, including debt and equity, associated with construction work in progress before the asset is placed in service; |
| Ÿ |
Recovery of costs prudently incurred in developing project facilities that might later be abandoned due to issues outside the company's control; and |
| Ÿ |
Use of a hypothetical capital structure during construction that reflects a capital structure of 56% common equity. |
In December 2011, MISO approved the Illinois Rivers project as well as the Spoon River and Mark Twain projects. The total investment in these three MISO-approved projects is expected to be more than $1.2 billion through 2019, with potential investment of $750 million from 2012 to 2016. All four projects are in Missouri and Illinois. Construction will begin first on the Illinois Rivers project. The Big Muddy project is currently being evaluated for inclusion in MISO's 2012 expansion plan.
On December 30, 2011, ATXI made a filing with FERC seeking a forward-looking rate calculation with an annual revenue reconciliation adjustment as well as requesting the implementation of the incentives FERC approved in its May 2011 order described above for the Illinois Rivers project and the Big Muddy project. FERC is expected to issue a decision on the ATXI filing during the first quarter of 2012.
2011 Wholesale Distribution Rate Case
In January 2011, Ameren Illinois filed a request with FERC to increase its annual revenues for electric delivery service for its wholesale customers by $11 million. These wholesale distribution revenues are treated as a deduction from Ameren Illinois' revenue requirement in retail rate filings with the ICC. In March 2011, FERC issued an order authorizing the proposed rates to take effect, subject to refund when the final rates are determined. Ameren Illinois reached an agreement with two of its nine wholesale customers in 2011. The impasse with the remaining seven wholesale customers has resulted in FERC litigation. An initial decision by the FERC administrative law judge is expected in 2012 and a final FERC decision may be received after 2012. We cannot predict the ultimate outcome of this proceeding or its impact on Ameren's or Ameren Illinois' results of operations, financial position, or liquidity.
Regional Transmission Organization
Ameren Missouri is a transmission owning member of MISO. Ameren Missouri received authorization from the MoPSC to participate in MISO, subject to certain conditions. Ameren Missouri's continued conditional MISO participation is authorized by the MoPSC through April 30, 2012.
As required by the MoPSC, Ameren Missouri filed in November 2010 and again in August 2011 updated cost benefit studies with the MoPSC that evaluated the costs and benefits of Ameren Missouri's continued participation in MISO. Ameren Missouri's updated studies continue to show substantial benefits to Ameren Missouri customers associated with its participation in MISO.
In November 2011, Ameren Missouri, together with the MoPSC staff, the MIEC, and MISO, filed a Non-Unanimous Stipulation and Agreement (Stipulation) with the MoPSC that reflected their agreement that continued Ameren Missouri participation in MISO through May 31, 2016, was prudent and reasonable, subject to certain conditions. The MoOPC opposes the Stipulation, in part because of its desire that the MoPSC impose conditions relating to ATX's involvement in transmission projects located within Ameren Missouri's service territory. These conditions, which are not included in the Stipulation are, in Ameren Missouri's view, inappropriate and unlawful. Ameren Missouri expects an order from the MoPSC before April 30, 2012.
FERC Order – MISO Charges
Ameren Missouri and Ameren Illinois, as well as other MISO participants, have filed complaints with FERC with respect to the FERC's March 2007 order involving the reallocation of certain MISO operational costs among MISO participants retroactive to 2005. Subsequently, FERC has issued a series of orders related to the applicability and the implementation of the order, which in some cases have conflicted with previous orders.
In May 2009, FERC changed the effective date for refunds such that certain operational costs would be allocated among MISO market participants beginning November 2008, instead of August 2007. In June 2009, Ameren Missouri and Ameren Illinois filed a request for rehearing. The rehearing request is pending.
In June 2009, FERC issued an order dismissing rehearing requests of a November 2008 order and waiving refunds of amounts billed that were included in the MISO charge, under the assumption that there was a rate mismatch for the period April 2006 through November 2007. Ameren Missouri and Ameren Illinois filed a request for rehearing in July 2009. This rehearing request is pending.
Ameren Missouri and Ameren Illinois do not believe that the ultimate resolution of these proceedings will have a material effect on their results of operations, financial position, or liquidity.
Ameren Missouri Power Purchase Agreement with Entergy Arkansas, Inc.
Beginning in 2005, FERC issued a series of orders addressing a complaint filed in 2001 by the Louisiana Public Service Commission (LPSC) against Entergy Arkansas, Inc. (Entergy) and certain of its affiliates. The complaint alleged unjust and unreasonable cost allocations. As a result of the FERC orders, Entergy began billing Ameren Missouri in 2007 for additional charges under a 165-megawatt power purchase agreement, and Ameren Missouri paid those charges. Additional charges continued during the remainder of the term of the power purchase agreement, which expired August 31, 2009. Although Ameren Missouri was not a party to the FERC proceedings that gave rise to these additional charges, Ameren Missouri intervened in related FERC proceedings. Ameren Missouri also filed a complaint with FERC against Entergy and Entergy Services, Inc. in April 2008 to challenge the additional charges. In January 2010, FERC issued a ruling that Entergy may not pass the additional charges on to Ameren Missouri. In February 2010, Entergy filed a request for rehearing of the January 2010 ruling. Ameren Missouri has not recorded any prospective refund for additional charges paid to Entergy as a result of the FERC orders.
The LPSC appealed FERC's orders regarding LPSC's complaint against Entergy Services, Inc. to the United States Court of Appeals for the District of Columbia. In April 2008, that court ordered further FERC proceedings regarding LPSC's complaint. The court ordered FERC to explain its previous denial of retroactive refunds and the implementation of prospective charges. FERC's decision on remand of the retroactive impact of these issues could have a financial impact on Ameren Missouri. Ameren Missouri is unable to predict how FERC will respond to the court's decisions. Ameren Missouri estimates that it could incur an additional expense of up to $25 million if FERC orders retroactive application for the years 2001 to 2005. Ameren Missouri believes that the likelihood of incurring any expense is not probable, and therefore no liability has been recorded as of December 31, 2011. Ameren Missouri plans to participate in any proceeding that FERC initiates to address the court's decisions.
COLA and Early Site Permit
In 2008, Ameren Missouri filed an application with the NRC for a COLA for a new 1,600-megawatt nuclear unit at Ameren Missouri's existing Callaway County, Missouri, nuclear energy center site. In 2009, Ameren Missouri suspended its efforts to build a new nuclear unit at its existing Missouri nuclear energy center site, and the NRC suspended review of the COLA.
Ameren Missouri is considering filing an application to obtain an early site permit from the NRC for the Callaway energy center site. An early site permit approves a specific location for a nuclear facility; however, additional licenses would be required for the specific type and design of nuclear facility to be built at that site. An early site permit does not authorize construction of a plant. An early site permit is valid for 20 years and could be renewed for up to an additional 20 years. Attempts to pass legislation to maintain an option for nuclear power in the state of Missouri by recovering the costs of the early site permit, subject to appropriate consumer protections, were not successful during 2011. However, support for nuclear power exists in the state of Missouri, which could lead to the passage of an early site permit recovery mechanism in future legislative sessions. Ameren Missouri's pursuit of an early site permit is dependent upon enactment of a legislative framework ensuring cost recovery.
As of December 31, 2011, Ameren Missouri had capitalized $69 million relating to its efforts to construct a new nuclear unit. All of these incurred costs will remain capitalized while management assesses options to maximize the value of its investment in this project. If efforts are permanently abandoned or management concludes it is probable the costs incurred will be disallowed in rates, a charge to earnings would be recognized in the period in which that determination was made.
Pumped-storage Hydroelectric Energy Center Relicensing
In June 2008, Ameren Missouri filed a relicensing application with FERC to operate its Taum Sauk pumped-storage hydroelectric energy center for another 40 years. The existing FERC license expired on June 30, 2010. On July 2, 2010, Ameren Missouri received a license extension that allows Taum Sauk to continue operations until FERC issues a new license. FERC is reviewing the relicensing application. A FERC order is expected in 2012 or 2013. Ameren Missouri cannot predict the ultimate outcome of the application.
Regulatory Assets and Liabilities
In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs pursuant to actions of regulators or based on the expected ability to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts because of actions of regulators or because of the expectation that such amounts will be returned to customers in future rates. The following table presents Ameren's, Ameren Missouri's and Ameren Illinois' regulatory assets and regulatory liabilities at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||||||||||||||||||
| Ameren(a) |
Ameren Missouri |
Ameren Illinois |
Ameren(a) |
Ameren Missouri |
Ameren Illinois |
|||||||||||||||||||||
|
Current regulatory assets: |
||||||||||||||||||||||||||
|
Under-recovered FAC(b)(c) |
$ | 83 | $ | 83 | $ | - | $ | 158 | $ | 158 | $ | - | ||||||||||||||
|
Under-recovered Illinois electric power costs(b)(d) |
4 | - | 4 | 4 | - | 4 | ||||||||||||||||||||
|
Under-recovered PGA(b)(d) |
8 | 5 | 3 | 2 | - | 2 | ||||||||||||||||||||
|
MTM derivative losses(e) |
120 | 21 | 299 | 103 | 21 | 254 | ||||||||||||||||||||
|
Total current regulatory assets |
$ | 215 | $ | 109 | $ | 306 | $ | 267 | $ | 179 | $ | 260 | ||||||||||||||
|
Noncurrent regulatory assets: |
||||||||||||||||||||||||||
|
Pension and postretirement benefit costs(f) |
$ | 878 | $ | 382 | $ | 496 | $ | 555 | $ | 251 | $ | 304 | ||||||||||||||
|
Income taxes(g) |
239 | 234 | 5 | 230 | 225 | 5 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
6 | - | 6 | 9 | 3 | 6 | ||||||||||||||||||||
|
Callaway costs(b)(i) |
48 | 48 | - | 51 | 51 | - | ||||||||||||||||||||
|
Unamortized loss on reacquired debt(b)(j) |
47 | 21 | 26 | 53 | 25 | 28 | ||||||||||||||||||||
|
Recoverable costs – contaminated facilities(k) |
102 | - | 102 | 127 | - | 127 | ||||||||||||||||||||
|
MTM derivative losses(e) |
100 | 13 | 87 | 85 | 14 | 249 | ||||||||||||||||||||
|
SO2 emission allowances sale tracker(l) |
6 | 6 | - | 12 | 12 | - | ||||||||||||||||||||
|
Storm costs(m) |
16 | 16 | - | 23 | 23 | - | ||||||||||||||||||||
|
Demand-side costs(n) |
70 | 70 | - | 39 | 39 | - | ||||||||||||||||||||
|
Reserve for workers' compensation liabilities(o) |
13 | 7 | 6 | 14 | 8 | 6 | ||||||||||||||||||||
|
Credit facilities fees(p) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Employee separation costs(q) |
6 | 3 | 3 | 8 | 6 | 2 | ||||||||||||||||||||
|
Common stock issuance costs(r) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Construction accounting for pollution control equipment(b)(s) |
25 | 25 | - | 4 | 4 | - | ||||||||||||||||||||
|
Other(t) |
27 | 10 | 17 | 29 | 9 | 20 | ||||||||||||||||||||
|
Total noncurrent regulatory assets |
$ | 1,603 | $ | 855 | $ | 748 | $ | 1,263 | $ | 694 | $ | 747 | ||||||||||||||
|
Current regulatory liabilities: |
||||||||||||||||||||||||||
|
Over-recovered FAC(u) |
$ | 12 | $ | 12 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
|
Over-recovered Illinois electric power costs(d) |
66 | - | 66 | 62 | - | 62 | ||||||||||||||||||||
|
Over-recovered PGA(d) |
9 | - | 9 | 12 | 1 | 11 | ||||||||||||||||||||
|
MTM derivative gains(v) |
46 | 45 | 1 | 25 | 22 | 3 | ||||||||||||||||||||
|
Total current regulatory liabilities |
$ | 133 | $ | 57 | $ | 76 | $ | 99 | $ | 23 | $ | 76 | ||||||||||||||
|
Noncurrent regulatory liabilities: |
||||||||||||||||||||||||||
|
Income taxes(w) |
$ | 48 | $ | 44 | $ | 4 | $ | 54 | $ | 48 | $ | 6 | ||||||||||||||
|
Removal costs(x) |
1,269 | 719 | 550 | 1,177 | 655 | 522 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
29 | 29 | - | - | - | - | ||||||||||||||||||||
|
MTM derivative gains(v) |
82 | 4 | 78 | 20 | 13 | 7 | ||||||||||||||||||||
|
Bad debt rider(y) |
10 | - | 10 | 5 | - | 5 | ||||||||||||||||||||
|
Pension and postretirement benefit costs tracker(z) |
38 | 38 | - | 45 | 45 | - | ||||||||||||||||||||
|
Energy efficiency rider(aa) |
24 | - | 24 | 13 | - | 13 | ||||||||||||||||||||
|
Other(bb) |
2 | 2 | - | 5 | 5 | - | ||||||||||||||||||||
|
Total noncurrent regulatory liabilities |
$ | 1,502 | $ | 836 | $ | 666 | $ | 1,319 | $ | 766 | $ | 553 | ||||||||||||||
| (a) | Includes intercompany eliminations. |
| (b) | These assets earn a return. |
| (c) | Under-recovered fuel costs for periods from July 2009 through December 2011. Specific accumulation periods aggregate the under-recovered costs over four months, any related adjustments occur over the following four months, and then recovery from customers occurs over the next eight months. |
| (d) | Costs under- or over-recovered from utility customers. Amounts will be recovered from, or refunded to, customers within one year of the deferral. |
| (e) | Deferral of commodity-related derivative MTM losses, as well as the MTM losses on financial contracts entered into by Ameren Illinois with Marketing Company. |
| (f) | These costs are being amortized in proportion to the recognition of prior service costs (credits), transition obligations (assets), and actuarial losses (gains) attributable to Ameren's pension plan and postretirement benefit plans. See Note 11 – Retirement Benefits for additional information. |
| (g) | Offset to certain deferred tax liabilities for expected recovery of future income taxes when paid. See Note 13 – Income Taxes for amortization period. |
| (h) | Recoverable or refundable removal costs for AROs at our rate-regulated operations, including net realized and unrealized gains and losses related to the nuclear decommissioning trust fund investments. See Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (i) | Ameren Missouri's Callaway energy center operations and maintenance expenses, property taxes, and carrying costs incurred between the plant in-service date and the date the plant was reflected in rates. These costs are being amortized over the remaining life of the plant's current operating license (through 2024). |
| (j) | Losses related to reacquired debt. These amounts are being amortized over the lives of the related new debt issuances or the remaining lives of the old debt issuances if no new debt was issued. |
| (k) | The recoverable portion of accrued environmental site liabilities, primarily collected from electric and natural gas customers through ICC-approved cost recovery riders. The period of recovery will depend on the timing of actual expenditures. See Note 15 – Commitments and Contingencies for additional information. |
| (l) |
A regulatory tracking mechanism for gains on sales of SO2 emission allowances, net of SO2 premiums incurred under the terms of coal procurement contracts, plus any SO2 discounts received under such contracts, as approved in a MoPSC order. The MoPSC's May 2010 electric rate order discontinued any future deferrals under this tracking mechanism. The MoPSC's July 2011 rate order approved the amortization of these costs through July 2013. |
| (m) | Actual storm costs in a test year that exceed the MoPSC staff's normalized storm costs for rate purposes. The 2006 storm costs are being amortized until July 2013. The 2008 storm costs are being amortized over five years, beginning on March 1, 2009. In addition, the balance includes January 2007 ice storm costs that Ameren Missouri will recover over five years, beginning in March 2009, as approved by the January 2009 MoPSC electric rate order. The 2009 storm costs are being amortized over five years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. |
| (n) | Demand-side costs, including the costs of developing, implementing and evaluating customer energy efficiency and demand response programs. Costs incurred from May 2008 through September 2008 are being amortized over 10 years, beginning in March 2009. Costs incurred from October 2008 through December 2009 are being amortized over six years, beginning in July 2010. Costs incurred from January 2010 through February 2011 are being amortized over six years, beginning in August 2011. The amortization period for the costs incurred after February 2011 will be determined in Ameren Missouri's pending electric rate case. |
| (o) | Reserve for workers' compensation claims. |
| (p) | Ameren Missouri's costs incurred to enter into and maintain the 2009 multiyear and supplemental credit agreements, prior to their termination in 2010. These costs are being amortized over two years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. These costs are being amortized to construction work in progress, which will be subsequently depreciated when assets are placed into service. |
| (q) | Cost incurred for the voluntary and involuntary separation programs. The 2009 Ameren Missouri-related costs are being amortized over three years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. The 2009 Ameren Illinois-related costs are being amortized over three years, beginning in May 2010, as approved by the April 2010 ICC electric and natural gas rate order. |
| (r) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to recover its portion of Ameren's September 2009 common stock issuance costs. These costs are being amortized over five years, beginning in July 2010. |
| (s) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to continue recording an allowance for funds used during construction for pollution control equipment at its Sioux energy center until the cost of that equipment is placed in customer rates. The amortization of these costs will be over the expected life of the Sioux energy center. |
| (t) | Includes costs related to Ameren Illinois' delivery service rate cases that resulted in orders in 2008 and 2010 as well as the natural gas delivery service rate case that resulted in an order in January 2012. The natural gas costs associated with the 2008 rate case will be amortized until September 2013. The 2010 rate case costs are being amortized over a two-year period, beginning in May 2010. The 2012 natural gas rate case costs will be amortized over a two year period, beginning in January 2012. The Ameren Illinois total also includes a portion of the unamortized debt fair value adjustment recorded upon Ameren's acquisition of IP. This portion is being amortized over the remaining life of the related debt, beginning with the expiration of the electric rate freeze in Illinois on January 1, 2007. The Ameren Illinois total also includes Ameren Illinois Merger integration and optimization costs. These costs will be amortized over four years, beginning in January 2012. At Ameren Missouri, the balance includes cost associated with the retirement of renewable energy credits and solar rebates to fulfill Ameren Missouri's renewable energy portfolio requirement. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. The Ameren Missouri balance also includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2011 through December 2011 were more than the amount allowed in base rates. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. |
| (u) | Over-recovered fuel costs from March 2009 through September 2009 as ordered by the MoPSC in April 2011. Customer refunds will conclude in May 2012. |
| (v) | Deferral of commodity-related derivative MTM gains. |
| (w) | Unamortized portion of investment tax credit and federal excess deferred taxes. See Note 13 – Income Taxes for amortization period. |
| (x) | Estimated funds collected for the eventual dismantling and removal of plant from service, net of salvage value, upon retirement related to our rate-regulated operations. See discussion in Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (y) | A regulatory tracking mechanism for the difference between the level of bad debt expense incurred by Ameren Illinois under GAAP and the level of such costs included in electric and natural gas rates. The over-recovery relating to 2010 is being refunded to customers from June 2011 through May 2012. The over-recovery relating to 2011 will be refunded to customers from June 2012 through May 2013. |
| (z) |
A 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 built into electric rates. The 2008 costs are being amortized through February 2014. The 2009 costs are being amortized through June 2015. The 2010 costs assigned to the natural gas and electric businesses are being amortized through February 2016 and July 2016, respectively. The 2011 costs will be determined in Ameren Missouri's pending electric rate case. |
| (aa) | A regulatory tracking mechanism that allows Ameren Illinois to recover its electric and natural gas costs associated with developing, implementing and evaluating customer energy efficiency and demand response programs. This over-recovery will be refunded to customers over the following 12 months after the plan year. |
| (bb) | Balance includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2010 through February 2011 were less than the amount allowed in base rates. The over-recovery incurred during that time period is being amortized over three years beginning in August 2011. The balance also includes the deferral of gains on emission allowance vintage swaps Ameren Missouri entered into during 2005. The balance of this gain was immaterial at the end of 2011. |
Ameren Missouri and Ameren Illinois continually assess the recoverability of their regulatory assets. Under current accounting standards, regulatory assets are charged to earnings when it is no longer probable that such amounts will be recovered through future revenues. To the extent that payments of regulatory liabilities are no longer probable, the amounts are credited to earnings.
NOTE 2 – RATE AND REGULATORY MATTERS
Below is a summary of significant regulatory proceedings and related lawsuits. 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
2009 Electric Rate Order
In February 2009, Noranda, Ameren Missouri's largest electric customer, and the MoOPC appealed certain aspects of the MoPSC's 2009 electric rate order to the Circuit Court of Stoddard County, Missouri. In September 2009, the Stoddard County Circuit Court granted Noranda's request to stay the electric rate increase granted by the January 2009 MoPSC's order as it applied specifically to Noranda's electric service account until the court rendered its decision on the appeal. From the granting of the stay request until June 2010, Noranda paid into the Stoddard County Circuit Court's registry the entire amount of its monthly base rate increase and monthly FAC payments. In June 2010, when the May 2010 electric rate order became effective, Noranda ceased making base rate payments into the Stoddard County Circuit Court's registry. Noranda continued to pay into the Stoddard County Circuit Court's registry its monthly FAC payments related to electric service received during the time periods prior to the effectiveness of the May 2010 electric rate order.
In August 2010, the Stoddard County Circuit Court issued a judgment that reversed parts of the MoPSC's decision. However, upon issuance, the Stoddard County Circuit Court suspended its own judgment. Ameren Missouri filed an appeal of the Stoddard County Circuit Court's judgment with the Missouri Court of Appeals, Southern District. In November 2011, the Missouri Court of Appeals issued a ruling that upheld the MoPSC's January 2009 electric rate order; thereby reversing the Stoddard County Circuit Court's August 2010 decision. As of December 31, 2011, the amount held in the Stoddard County Circuit Court's registry was $20 million. That amount was reflected in "Accounts receivable-trade" on Ameren's and Ameren Missouri's balance sheets at December 31, 2011. Ameren Missouri expects to receive all of the funds held in the Stoddard County Circuit Court's registry relating to the stay during the first quarter of 2012.
2010 Electric Rate Order
In May 2010, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric service of $230 million.
The MIEC and MoOPC appealed certain aspects of the MoPSC order to the Cole County Circuit Court. In addition to the MIEC appeal, four industrial customers, who are members of MIEC, also filed a request for a stay with the Cole County Circuit Court. In December 2010, the Cole County Circuit Court granted the request of the four industrial customers to stay the MoPSC's 2010 electric rate order and required those customers to pay into the Cole County Circuit Court's registry the difference between their billings under the 2010 Missouri electric rate order and their billings under a Missouri electric rate order that became effective in June 2007, which was, at that time, the last Ameren Missouri rate order for which appeals had been exhausted. In February 2011, the four industrial customers posted the bond required by the stay. Since the bond was posted, the four industrial customers have made payments into the Cole County Circuit Court's registry equal to the difference between their base rate billings under 2010 electric rates and 2007 electric rates, as well as their FAC amounts to the extent those billings relate to service prior to the effective date of the new rates established by the 2011 electric rate order. Because of the lag between accumulations of changes in net fuel costs and the time those net fuel costs are recovered through FAC charges applied to customers' bills, the four industrial customers will continue to pay a portion of their FAC payments to the Cole County Circuit Court's registry for service prior to the effective date of the new rates by the 2011 electric rate order. It is expected that a portion of the FAC billings invoiced to these customers in September 2012 would be the last contested amount deposited into the Cole County Circuit Court's registry relating to this 2010 electric rate order appeal, pending resolution of the appeal. As of December 31, 2011, the amount held by the Cole County Circuit Court, excluding the bond amount, was $15 million. This amount held in the registry was reflected in "Accounts receivable-trade" on Ameren's and Ameren Missouri's balance sheets at December 31, 2011.
A Cole County Circuit Court decision is expected during the first quarter of 2012 on the MIEC's and MoOPC's appeal. We cannot predict the ultimate outcome of this proceeding, which could have a material effect on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity. If the MoPSC's 2010 electric rate order is ultimately upheld, Ameren Missouri will receive all of the funds held in the Cole County Circuit Court's registry, plus accrued interest. If Ameren Missouri were to conclude that some portion of the rate increase resulting from the 2010 electric rate order was probable of refund to Ameren Missouri's customers, a charge to earnings would be recorded for the estimated amount of refund in the period in which that determination was made. At this time, Ameren Missouri does not believe any aspect of the 2010 MoPSC's electric rate order is probable of refund to Ameren Missouri's customers. Therefore, no reserve has been established.
2011 Electric Rate Order
In July 2011, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric service of $173 million, including $52 million related to an increase in normalized net fuel costs above the net fuel costs included in base rates previously authorized by the MoPSC in its 2010 electric rate order. The revenue increase was based on a 10.2% return on equity, a capital structure composed of 52.2% common equity, and a rate base of $6.6 billion. The rate changes became effective on July 31, 2011. The MoPSC order approved the continued use of Ameren Missouri's vegetation management and infrastructure cost tracker, its pension and postretirement benefit cost tracker, and the FAC at the current 95% sharing level. The MoPSC order shortened the FAC recovery and refund period from 12 months to eight months. The MoPSC order denied Ameren Missouri's request for the ability to recover any under-recovery of fixed costs as a result of lower sales volumes from the implementation of energy efficiency measures.
Additionally, the MoPSC order provided for a tracking mechanism for uncertain income tax positions. The order provides that reserves for uncertain income tax positions do not reduce rate base. However, when an uncertain income tax position liability is resolved, the order requires the creation of a regulatory asset or regulatory liability to reflect the time value (using the weighted-average cost of capital in the order) of the difference between the uncertain income tax position liability that was excluded from rate base and the final tax liability. The resulting regulatory asset or liability will be amortized over three years beginning on the effective date of new rates established in the next electric rate case.
The MoPSC order disallowed the recovery of all costs of enhancements, or costs that would have been incurred absent the breach, related to the rebuilding of the Taum Sauk energy center in excess of amounts recovered from property insurance. As a result of the order, Ameren and Ameren Missouri each recorded in 2011 a pretax charge to earnings of $89 million relating to the Taum Sauk disallowance. This charge was recorded in Ameren's statement of income as "Goodwill, impairment and other charges" and recorded in Ameren Missouri's statement of income as "Loss from regulatory disallowance."
In July 2011, a new law that reformed the judicial appeal process for MoPSC rate orders took effect. Among other items, the new law allows appeals to bypass the circuit court and to be made directly to the appellate court. The new law provides that rates cannot be stayed; however, the appellate court could direct the MoPSC to revise rates. Such rate revisions could be ordered to be applied retroactively. This new law applied to judicial appeals of the MoPSC's July 2011 rate order.
In August 2011, Ameren Missouri appealed the disallowance of Taum Sauk enhancements to the Missouri Court of Appeals, Western District. A decision is expected by the Missouri Court of Appeals, Western District, in 2012. Ameren Missouri cannot predict the ultimate outcome of its appeal.
Pending Electric Rate Case
On February 3, 2012, Ameren Missouri filed a request with the MoPSC to increase its annual revenues for electric service by $376 million. Included in this requested increase is a $103 million increase in normalized net fuel costs above the net fuel costs included in base rates previously authorized by the MoPSC in its July 2011 electric rate order. Absent initiation of this general rate proceeding, 95% of this amount would have been reflected in rate adjustments implemented under Ameren Missouri's FAC. Approximately $85 million of the request relates to investments to improve the reliability of Ameren Missouri's infrastructure and to comply with environmental and renewable energy regulations, including the requested return on such investments, and $81 million of the request relates to recovery of the costs associated with energy efficiency programs under the MEEIA, including energy efficiency investments, which is discussed below. The electric rate increase request was based on a 10.75% return on equity, a capital structure composed of 52% common equity, an aggregate electric rate base of $6.8 billion, and a test year ended September 30, 2011, with certain pro forma adjustments expected through the anticipated true-up date of July 31, 2012.
As part of its filing, Ameren Missouri requested that the MoPSC approve the implementation of a storm cost tracking mechanism, as well as plant-in-service accounting treatment. The proposed storm cost tracking mechanism would allow Ameren Missouri to record a regulatory asset or liability, as applicable, reflecting the difference between a base level of major storm restoration costs used to set rates in the current rate case and the actual storm restoration costs, and to request recovery of such regulatory asset or liability in Ameren Missouri's next rate case for amortization over a three-year period. The plant-in-service accounting treatment would permit Ameren Missouri to recover a return and to defer depreciation expense on assets placed in service but not yet reflected in customer rates.
Ameren Missouri requested continued use of the FAC and the regulatory tracking mechanisms for vegetation management/infrastructure inspection costs, for pension and postretirement benefits, and for uncertain income tax positions that the MoPSC previously authorized in earlier electric rate orders. Ameren Missouri also requested recovery of the 2011 voluntary separation program severance costs over three years.
A decision by the MoPSC in this proceeding is expected in December 2012. Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, when any rate change may go into effect, or whether any rate increase that may eventually be approved will be sufficient for Ameren Missouri to recover its costs and earn a reasonable return on its investments when the increase goes into effect.
MEEIA Filing
The MEEIA, enacted in 2009, established a regulatory framework that, among other things, allows electric utilities to recover costs related to MoPSC-approved energy efficiency programs. The law requires the MoPSC to ensure that a utility's financial incentives are aligned with helping customers use energy more efficiently, to provide timely cost recovery, and to provide earnings opportunities associated with cost-effective energy efficiency programs. Missouri does not have a law mandating energy efficiency standards.
In January 2012, Ameren Missouri made its initial filing with the MoPSC under the MEEIA. This filing proposes a three-year plan that includes a portfolio of energy efficiency programs along with a cost-recovery mechanism. If the proposal is approved, beginning in January 2013, Ameren Missouri plans to invest $145 million over three years for the proposed energy efficiency programs.
A decision by the MoPSC in this proceeding is anticipated in the second quarter of 2012. The MoPSC's order in this proceeding will not affect Ameren Missouri rates until these rates are included in an electric service rate case. Ameren Missouri anticipates that the impacts of the MoPSC's decision in this MEEIA filing will be included in rates set under its pending electric service rate case that was filed on February 3, 2012, which has an anticipated true-up date of July 31, 2012. Ameren Missouri's pending electric rate case includes an annual revenue increase of $81 million relating to its planned portfolio of energy efficiency programs included in its MEEIA filing.
FAC Prudence Review
Missouri law requires the MoPSC to complete prudence reviews of Ameren Missouri's FAC at least every 18 months. In April 2011, the MoPSC issued an order with respect to its review of Ameren Missouri's FAC for the period from March 1, 2009, to September 30, 2009. In this order, the MoPSC ruled that Ameren Missouri should have included in the FAC calculation all revenues and costs associated with certain long-term partial requirements sales that were made by Ameren Missouri because of the loss of Noranda's load caused by a severe ice storm in January 2009. As a result of the order, Ameren Missouri recorded a pretax charge to earnings of $18 million, including $1 million for interest, in 2011 for its obligation to refund to Ameren Missouri's electric customers the earnings associated with these sales previously recognized by Ameren Missouri during the period from March 1, 2009, to September 30, 2009. In October 2011, Ameren Missouri began refunding the $18 million to customers through the FAC.
Ameren Missouri disagrees with the MoPSC order's classification of these sales and believes that the terms of its FAC tariff did not provide for the inclusion of these sales in the FAC calculation. In June 2011, Ameren Missouri filed an appeal with the Cole County Circuit Court. A decision is expected from the Cole County Circuit Court in 2012. Separately, in July 2011, Ameren Missouri filed a request with the MoPSC for an accounting authority order that would allow Ameren Missouri to defer, as a regulatory asset, fixed costs totaling $36 million that were not recovered from Noranda as a result of the loss of load caused by the severe 2009 ice storm for potential recovery in a future electric rate case. We cannot predict the ultimate outcome of these regulatory or judicial proceedings.
Ameren Missouri recognized an additional $25 million of pretax earnings associated with the same long-term partial requirements sales contracts subsequent to September 30, 2009, which were not addressed by the MoPSC order issued in April 2011. The MoPSC's FAC review for the period from October 1, 2009, to May 31, 2011, was initiated in September 2011. In October 2011, the MoPSC staff filed a recommendation with the MoPSC to direct Ameren Missouri to refund to customers, prior to the completion of the staff's prudence review, the pretax earnings associated with the same long-term partial requirements sales contracts subsequent to September 30, 2009. The MoPSC staff calculated these pretax earnings to be $26 million. We cannot predict whether the MoPSC will approve this recommendation. If Ameren Missouri were to determine that these sales were probable of refund to Ameren Missouri's electric customers, a charge to earnings would be recorded for the refund in the period in which that determination was made. Because of pending court appeals and regulatory review, Ameren Missouri does not currently believe these amounts are probable of refund to customers.
Renewable Energy Portfolio Requirement
A ballot initiative passed by Missouri voters in November 2008 created a renewable energy portfolio requirement. Beginning in 2011, Ameren Missouri and other Missouri investor-owned utilities are required to purchase or generate from renewable energy sources electricity equaling at least 2% of native load sales, with that percentage increasing in subsequent years to at least 15% by 2021, subject to a 1% limit on customer rate impacts. At least 2% of each portfolio requirement must be derived from solar energy. Compliance with the renewable energy portfolio requirement can be achieved through generation or the procurement of renewable energy credits. Ameren Missouri expects that any related costs or investments will ultimately be recovered in rates.
In July 2010, the MoPSC issued final rules implementing the state's renewable energy portfolio requirement. Ameren Missouri objected to the MoPSC rules calculating the 1% limit on customer rates. In August 2010, Ameren Missouri and other groups filed an appeal with the Cole County Circuit Court of multiple aspects of the MoPSC's rules. In December 2011, the Cole County Circuit Court issued a ruling clarifying that the 1% customer rate increase limit is an annual restriction, not a multiyear limit.
Illinois
IEIMA
In October 2011, the IEIMA was enacted into law and became effective immediately. Certain amendments to the IEIMA became effective on December 30, 2011. On January 3, 2012, Ameren Illinois elected to participate in the performance-based formula ratemaking process established pursuant to the IEIMA by filing initial performance-based formula rates with the ICC. With this filing, as required by law, Ameren Illinois' previously pending electric delivery service rate case was withdrawn. The initial filing, based on 2010 recoverable costs and expected net plant additions for 2011 and 2012, will result in new electric delivery service rates in October 2012. Pending ICC approval, the initial filing will result in a decrease of $19 million in Ameren Illinois revenues for electric delivery service, on an annualized basis. Ameren Illinois anticipates making an update filing by May 1, 2012, based on 2011 costs and expected net plant additions for 2012, that would result in new electric delivery service rates on January 1, 2013.
Ameren Illinois will participate in a performance-based formula process for determining rates. The formula will provide for the recovery of actual costs of electric delivery service that are prudently incurred, reflect the utility's actual regulated capital structure, and include a formula for calculating the return on equity component of the cost of capital. The return on equity component of the formula rate will be equal to the average for the applicable calendar year of the monthly average yields of 30-year United States treasury bonds plus 590 basis points for 2012 and 580 basis points thereafter. Ameren Illinois' actual return on equity relating to electric delivery service will be subject to a collar adjustment on earnings in excess of 50 basis points above or below its allowed return. Beginning in 2012, the law provides for an annual reconciliation of revenues to costs prudently and reasonably incurred. This annual revenue reconciliation, along with the collar adjustment, if necessary, will be collected from or refunded to customers in a subsequent year.
Ameren Illinois will also be subject to five performance standards. Failure to achieve the standards will result in a reduction in the company's allowed return on equity calculated under the formula. The performance standards include improvements in service reliability to reduce both the frequency and duration of outages, improvements in customer satisfaction scores, reduction in the number of estimated bills, and a reduction in uncollectible accounts expense. The IEIMA provides for return on equity penalties totaling up to 30 basis points in 2013 through 2015, 34 basis points in 2016 through 2018, and 38 basis points in 2019 through 2022 if the performance standards are not met. The formula ratemaking process is effective until the end of 2017, but could be extended by the Illinois General Assembly for an additional five years. The formula ratemaking process would also terminate if the average residential rate increases by more than 2.5% annually from June 2011 through May 2014.
Between 2012 and 2021, Ameren Illinois will be required to invest $625 million in capital expenditures incremental to Ameren Illinois' average electric delivery capital expenditures for calendar years 2008 through 2010 to modernize its distribution system. Such investments are expected to encourage economic development and to create an estimated 450 additional jobs within Illinois. Ameren Illinois is subject to monetary penalties if 450 additional jobs are not created during the peak program years. Also, Ameren Illinois will be required to contribute $1 million annually for certain nonrecoverable customer assistance programs for as long as Ameren Illinois participates in the formula ratemaking process. Ameren Illinois will also be required to make a one-time $7.5 million nonrecoverable donation to the Illinois Science and Energy Innovation Trust in 2012, as well as an approximate $1 million annual donation to the same trust for as long as it participates in the formula ratemaking process.
The IEIMA does not apply to natural gas utilities.
2012 Natural Gas Delivery Service Rate Order
In January 2012, the ICC issued a rate order that approved an increase in annual Ameren Illinois' revenues for natural gas delivery service of $32 million. The revenue increase was based on a 9.06% return on equity, a capital structure composed of 53.3% common equity, and a rate base of $1 billion. The rate order was based on a 2012 future test year. The rate changes became effective on January 20, 2012. In February 2012, the ICC denied rehearing requests by Ameren Illinois and an intervenor related to the granted return on equity.
2010 Electric and Natural Gas Delivery Service Rate Orders
During 2010, the ICC issued orders that authorized an aggregate $40 million increase in Ameren Illinois' annual electric and natural gas delivery service revenues.
In December 2010, Ameren Illinois and an intervenor appealed portions of the ICC's orders to the Appellate Court of the Fourth District of Illinois. In January 2012, the Appellate Court issued a decision that upheld the ICC's 2010 electric and natural gas delivery service rate order.
Federal
Electric Transmission Investment
FERC, in its order issued in May 2011, approved transmission rate incentives for the Illinois Rivers project and the Big Muddy project, which will be developed by ATXI or ATX. The FERC May 2011 order approved the following rate mechanisms with respect to Ameren's Illinois Rivers and Big Muddy projects:
| Ÿ |
Full recovery of financing costs, including debt and equity, associated with construction work in progress before the asset is placed in service; |
| Ÿ |
Recovery of costs prudently incurred in developing project facilities that might later be abandoned due to issues outside the company's control; and |
| Ÿ |
Use of a hypothetical capital structure during construction that reflects a capital structure of 56% common equity. |
In December 2011, MISO approved the Illinois Rivers project as well as the Spoon River and Mark Twain projects. The total investment in these three MISO-approved projects is expected to be more than $1.2 billion through 2019, with potential investment of $750 million from 2012 to 2016. All four projects are in Missouri and Illinois. Construction will begin first on the Illinois Rivers project. The Big Muddy project is currently being evaluated for inclusion in MISO's 2012 expansion plan.
On December 30, 2011, ATXI made a filing with FERC seeking a forward-looking rate calculation with an annual revenue reconciliation adjustment as well as requesting the implementation of the incentives FERC approved in its May 2011 order described above for the Illinois Rivers project and the Big Muddy project. FERC is expected to issue a decision on the ATXI filing during the first quarter of 2012.
2011 Wholesale Distribution Rate Case
In January 2011, Ameren Illinois filed a request with FERC to increase its annual revenues for electric delivery service for its wholesale customers by $11 million. These wholesale distribution revenues are treated as a deduction from Ameren Illinois' revenue requirement in retail rate filings with the ICC. In March 2011, FERC issued an order authorizing the proposed rates to take effect, subject to refund when the final rates are determined. Ameren Illinois reached an agreement with two of its nine wholesale customers in 2011. The impasse with the remaining seven wholesale customers has resulted in FERC litigation. An initial decision by the FERC administrative law judge is expected in 2012 and a final FERC decision may be received after 2012. We cannot predict the ultimate outcome of this proceeding or its impact on Ameren's or Ameren Illinois' results of operations, financial position, or liquidity.
Regional Transmission Organization
Ameren Missouri is a transmission owning member of MISO. Ameren Missouri received authorization from the MoPSC to participate in MISO, subject to certain conditions. Ameren Missouri's continued conditional MISO participation is authorized by the MoPSC through April 30, 2012.
As required by the MoPSC, Ameren Missouri filed in November 2010 and again in August 2011 updated cost benefit studies with the MoPSC that evaluated the costs and benefits of Ameren Missouri's continued participation in MISO. Ameren Missouri's updated studies continue to show substantial benefits to Ameren Missouri customers associated with its participation in MISO.
In November 2011, Ameren Missouri, together with the MoPSC staff, the MIEC, and MISO, filed a Non-Unanimous Stipulation and Agreement (Stipulation) with the MoPSC that reflected their agreement that continued Ameren Missouri participation in MISO through May 31, 2016, was prudent and reasonable, subject to certain conditions. The MoOPC opposes the Stipulation, in part because of its desire that the MoPSC impose conditions relating to ATX's involvement in transmission projects located within Ameren Missouri's service territory. These conditions, which are not included in the Stipulation are, in Ameren Missouri's view, inappropriate and unlawful. Ameren Missouri expects an order from the MoPSC before April 30, 2012.
FERC Order – MISO Charges
Ameren Missouri and Ameren Illinois, as well as other MISO participants, have filed complaints with FERC with respect to the FERC's March 2007 order involving the reallocation of certain MISO operational costs among MISO participants retroactive to 2005. Subsequently, FERC has issued a series of orders related to the applicability and the implementation of the order, which in some cases have conflicted with previous orders.
In May 2009, FERC changed the effective date for refunds such that certain operational costs would be allocated among MISO market participants beginning November 2008, instead of August 2007. In June 2009, Ameren Missouri and Ameren Illinois filed a request for rehearing. The rehearing request is pending.
In June 2009, FERC issued an order dismissing rehearing requests of a November 2008 order and waiving refunds of amounts billed that were included in the MISO charge, under the assumption that there was a rate mismatch for the period April 2006 through November 2007. Ameren Missouri and Ameren Illinois filed a request for rehearing in July 2009. This rehearing request is pending.
Ameren Missouri and Ameren Illinois do not believe that the ultimate resolution of these proceedings will have a material effect on their results of operations, financial position, or liquidity.
Ameren Missouri Power Purchase Agreement with Entergy Arkansas, Inc.
Beginning in 2005, FERC issued a series of orders addressing a complaint filed in 2001 by the Louisiana Public Service Commission (LPSC) against Entergy Arkansas, Inc. (Entergy) and certain of its affiliates. The complaint alleged unjust and unreasonable cost allocations. As a result of the FERC orders, Entergy began billing Ameren Missouri in 2007 for additional charges under a 165-megawatt power purchase agreement, and Ameren Missouri paid those charges. Additional charges continued during the remainder of the term of the power purchase agreement, which expired August 31, 2009. Although Ameren Missouri was not a party to the FERC proceedings that gave rise to these additional charges, Ameren Missouri intervened in related FERC proceedings. Ameren Missouri also filed a complaint with FERC against Entergy and Entergy Services, Inc. in April 2008 to challenge the additional charges. In January 2010, FERC issued a ruling that Entergy may not pass the additional charges on to Ameren Missouri. In February 2010, Entergy filed a request for rehearing of the January 2010 ruling. Ameren Missouri has not recorded any prospective refund for additional charges paid to Entergy as a result of the FERC orders.
The LPSC appealed FERC's orders regarding LPSC's complaint against Entergy Services, Inc. to the United States Court of Appeals for the District of Columbia. In April 2008, that court ordered further FERC proceedings regarding LPSC's complaint. The court ordered FERC to explain its previous denial of retroactive refunds and the implementation of prospective charges. FERC's decision on remand of the retroactive impact of these issues could have a financial impact on Ameren Missouri. Ameren Missouri is unable to predict how FERC will respond to the court's decisions. Ameren Missouri estimates that it could incur an additional expense of up to $25 million if FERC orders retroactive application for the years 2001 to 2005. Ameren Missouri believes that the likelihood of incurring any expense is not probable, and therefore no liability has been recorded as of December 31, 2011. Ameren Missouri plans to participate in any proceeding that FERC initiates to address the court's decisions.
COLA and Early Site Permit
In 2008, Ameren Missouri filed an application with the NRC for a COLA for a new 1,600-megawatt nuclear unit at Ameren Missouri's existing Callaway County, Missouri, nuclear energy center site. In 2009, Ameren Missouri suspended its efforts to build a new nuclear unit at its existing Missouri nuclear energy center site, and the NRC suspended review of the COLA.
Ameren Missouri is considering filing an application to obtain an early site permit from the NRC for the Callaway energy center site. An early site permit approves a specific location for a nuclear facility; however, additional licenses would be required for the specific type and design of nuclear facility to be built at that site. An early site permit does not authorize construction of a plant. An early site permit is valid for 20 years and could be renewed for up to an additional 20 years. Attempts to pass legislation to maintain an option for nuclear power in the state of Missouri by recovering the costs of the early site permit, subject to appropriate consumer protections, were not successful during 2011. However, support for nuclear power exists in the state of Missouri, which could lead to the passage of an early site permit recovery mechanism in future legislative sessions. Ameren Missouri's pursuit of an early site permit is dependent upon enactment of a legislative framework ensuring cost recovery.
As of December 31, 2011, Ameren Missouri had capitalized $69 million relating to its efforts to construct a new nuclear unit. All of these incurred costs will remain capitalized while management assesses options to maximize the value of its investment in this project. If efforts are permanently abandoned or management concludes it is probable the costs incurred will be disallowed in rates, a charge to earnings would be recognized in the period in which that determination was made.
Pumped-storage Hydroelectric Energy Center Relicensing
In June 2008, Ameren Missouri filed a relicensing application with FERC to operate its Taum Sauk pumped-storage hydroelectric energy center for another 40 years. The existing FERC license expired on June 30, 2010. On July 2, 2010, Ameren Missouri received a license extension that allows Taum Sauk to continue operations until FERC issues a new license. FERC is reviewing the relicensing application. A FERC order is expected in 2012 or 2013. Ameren Missouri cannot predict the ultimate outcome of the application.
Regulatory Assets and Liabilities
In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs pursuant to actions of regulators or based on the expected ability to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts because of actions of regulators or because of the expectation that such amounts will be returned to customers in future rates. The following table presents Ameren's, Ameren Missouri's and Ameren Illinois' regulatory assets and regulatory liabilities at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||||||||||||||||||
| Ameren(a) |
Ameren Missouri |
Ameren Illinois |
Ameren(a) |
Ameren Missouri |
Ameren Illinois |
|||||||||||||||||||||
|
Current regulatory assets: |
||||||||||||||||||||||||||
|
Under-recovered FAC(b)(c) |
$ | 83 | $ | 83 | $ | - | $ | 158 | $ | 158 | $ | - | ||||||||||||||
|
Under-recovered Illinois electric power costs(b)(d) |
4 | - | 4 | 4 | - | 4 | ||||||||||||||||||||
|
Under-recovered PGA(b)(d) |
8 | 5 | 3 | 2 | - | 2 | ||||||||||||||||||||
|
MTM derivative losses(e) |
120 | 21 | 299 | 103 | 21 | 254 | ||||||||||||||||||||
|
Total current regulatory assets |
$ | 215 | $ | 109 | $ | 306 | $ | 267 | $ | 179 | $ | 260 | ||||||||||||||
|
Noncurrent regulatory assets: |
||||||||||||||||||||||||||
|
Pension and postretirement benefit costs(f) |
$ | 878 | $ | 382 | $ | 496 | $ | 555 | $ | 251 | $ | 304 | ||||||||||||||
|
Income taxes(g) |
239 | 234 | 5 | 230 | 225 | 5 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
6 | - | 6 | 9 | 3 | 6 | ||||||||||||||||||||
|
Callaway costs(b)(i) |
48 | 48 | - | 51 | 51 | - | ||||||||||||||||||||
|
Unamortized loss on reacquired debt(b)(j) |
47 | 21 | 26 | 53 | 25 | 28 | ||||||||||||||||||||
|
Recoverable costs – contaminated facilities(k) |
102 | - | 102 | 127 | - | 127 | ||||||||||||||||||||
|
MTM derivative losses(e) |
100 | 13 | 87 | 85 | 14 | 249 | ||||||||||||||||||||
|
SO2 emission allowances sale tracker(l) |
6 | 6 | - | 12 | 12 | - | ||||||||||||||||||||
|
Storm costs(m) |
16 | 16 | - | 23 | 23 | - | ||||||||||||||||||||
|
Demand-side costs(n) |
70 | 70 | - | 39 | 39 | - | ||||||||||||||||||||
|
Reserve for workers' compensation liabilities(o) |
13 | 7 | 6 | 14 | 8 | 6 | ||||||||||||||||||||
|
Credit facilities fees(p) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Employee separation costs(q) |
6 | 3 | 3 | 8 | 6 | 2 | ||||||||||||||||||||
|
Common stock issuance costs(r) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Construction accounting for pollution control equipment(b)(s) |
25 | 25 | - | 4 | 4 | - | ||||||||||||||||||||
|
Other(t) |
27 | 10 | 17 | 29 | 9 | 20 | ||||||||||||||||||||
|
Total noncurrent regulatory assets |
$ | 1,603 | $ | 855 | $ | 748 | $ | 1,263 | $ | 694 | $ | 747 | ||||||||||||||
|
Current regulatory liabilities: |
||||||||||||||||||||||||||
|
Over-recovered FAC(u) |
$ | 12 | $ | 12 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
|
Over-recovered Illinois electric power costs(d) |
66 | - | 66 | 62 | - | 62 | ||||||||||||||||||||
|
Over-recovered PGA(d) |
9 | - | 9 | 12 | 1 | 11 | ||||||||||||||||||||
|
MTM derivative gains(v) |
46 | 45 | 1 | 25 | 22 | 3 | ||||||||||||||||||||
|
Total current regulatory liabilities |
$ | 133 | $ | 57 | $ | 76 | $ | 99 | $ | 23 | $ | 76 | ||||||||||||||
|
Noncurrent regulatory liabilities: |
||||||||||||||||||||||||||
|
Income taxes(w) |
$ | 48 | $ | 44 | $ | 4 | $ | 54 | $ | 48 | $ | 6 | ||||||||||||||
|
Removal costs(x) |
1,269 | 719 | 550 | 1,177 | 655 | 522 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
29 | 29 | - | - | - | - | ||||||||||||||||||||
|
MTM derivative gains(v) |
82 | 4 | 78 | 20 | 13 | 7 | ||||||||||||||||||||
|
Bad debt rider(y) |
10 | - | 10 | 5 | - | 5 | ||||||||||||||||||||
|
Pension and postretirement benefit costs tracker(z) |
38 | 38 | - | 45 | 45 | - | ||||||||||||||||||||
|
Energy efficiency rider(aa) |
24 | - | 24 | 13 | - | 13 | ||||||||||||||||||||
|
Other(bb) |
2 | 2 | - | 5 | 5 | - | ||||||||||||||||||||
|
Total noncurrent regulatory liabilities |
$ | 1,502 | $ | 836 | $ | 666 | $ | 1,319 | $ | 766 | $ | 553 | ||||||||||||||
| (a) | Includes intercompany eliminations. |
| (b) | These assets earn a return. |
| (c) | Under-recovered fuel costs for periods from July 2009 through December 2011. Specific accumulation periods aggregate the under-recovered costs over four months, any related adjustments occur over the following four months, and then recovery from customers occurs over the next eight months. |
| (d) | Costs under- or over-recovered from utility customers. Amounts will be recovered from, or refunded to, customers within one year of the deferral. |
| (e) | Deferral of commodity-related derivative MTM losses, as well as the MTM losses on financial contracts entered into by Ameren Illinois with Marketing Company. |
| (f) | These costs are being amortized in proportion to the recognition of prior service costs (credits), transition obligations (assets), and actuarial losses (gains) attributable to Ameren's pension plan and postretirement benefit plans. See Note 11 – Retirement Benefits for additional information. |
| (g) | Offset to certain deferred tax liabilities for expected recovery of future income taxes when paid. See Note 13 – Income Taxes for amortization period. |
| (h) | Recoverable or refundable removal costs for AROs at our rate-regulated operations, including net realized and unrealized gains and losses related to the nuclear decommissioning trust fund investments. See Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (i) | Ameren Missouri's Callaway energy center operations and maintenance expenses, property taxes, and carrying costs incurred between the plant in-service date and the date the plant was reflected in rates. These costs are being amortized over the remaining life of the plant's current operating license (through 2024). |
| (j) | Losses related to reacquired debt. These amounts are being amortized over the lives of the related new debt issuances or the remaining lives of the old debt issuances if no new debt was issued. |
| (k) | The recoverable portion of accrued environmental site liabilities, primarily collected from electric and natural gas customers through ICC-approved cost recovery riders. The period of recovery will depend on the timing of actual expenditures. See Note 15 – Commitments and Contingencies for additional information. |
| (l) |
A regulatory tracking mechanism for gains on sales of SO2 emission allowances, net of SO2 premiums incurred under the terms of coal procurement contracts, plus any SO2 discounts received under such contracts, as approved in a MoPSC order. The MoPSC's May 2010 electric rate order discontinued any future deferrals under this tracking mechanism. The MoPSC's July 2011 rate order approved the amortization of these costs through July 2013. |
| (m) | Actual storm costs in a test year that exceed the MoPSC staff's normalized storm costs for rate purposes. The 2006 storm costs are being amortized until July 2013. The 2008 storm costs are being amortized over five years, beginning on March 1, 2009. In addition, the balance includes January 2007 ice storm costs that Ameren Missouri will recover over five years, beginning in March 2009, as approved by the January 2009 MoPSC electric rate order. The 2009 storm costs are being amortized over five years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. |
| (n) | Demand-side costs, including the costs of developing, implementing and evaluating customer energy efficiency and demand response programs. Costs incurred from May 2008 through September 2008 are being amortized over 10 years, beginning in March 2009. Costs incurred from October 2008 through December 2009 are being amortized over six years, beginning in July 2010. Costs incurred from January 2010 through February 2011 are being amortized over six years, beginning in August 2011. The amortization period for the costs incurred after February 2011 will be determined in Ameren Missouri's pending electric rate case. |
| (o) | Reserve for workers' compensation claims. |
| (p) | Ameren Missouri's costs incurred to enter into and maintain the 2009 multiyear and supplemental credit agreements, prior to their termination in 2010. These costs are being amortized over two years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. These costs are being amortized to construction work in progress, which will be subsequently depreciated when assets are placed into service. |
| (q) | Cost incurred for the voluntary and involuntary separation programs. The 2009 Ameren Missouri-related costs are being amortized over three years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. The 2009 Ameren Illinois-related costs are being amortized over three years, beginning in May 2010, as approved by the April 2010 ICC electric and natural gas rate order. |
| (r) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to recover its portion of Ameren's September 2009 common stock issuance costs. These costs are being amortized over five years, beginning in July 2010. |
| (s) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to continue recording an allowance for funds used during construction for pollution control equipment at its Sioux energy center until the cost of that equipment is placed in customer rates. The amortization of these costs will be over the expected life of the Sioux energy center. |
| (t) | Includes costs related to Ameren Illinois' delivery service rate cases that resulted in orders in 2008 and 2010 as well as the natural gas delivery service rate case that resulted in an order in January 2012. The natural gas costs associated with the 2008 rate case will be amortized until September 2013. The 2010 rate case costs are being amortized over a two-year period, beginning in May 2010. The 2012 natural gas rate case costs will be amortized over a two year period, beginning in January 2012. The Ameren Illinois total also includes a portion of the unamortized debt fair value adjustment recorded upon Ameren's acquisition of IP. This portion is being amortized over the remaining life of the related debt, beginning with the expiration of the electric rate freeze in Illinois on January 1, 2007. The Ameren Illinois total also includes Ameren Illinois Merger integration and optimization costs. These costs will be amortized over four years, beginning in January 2012. At Ameren Missouri, the balance includes cost associated with the retirement of renewable energy credits and solar rebates to fulfill Ameren Missouri's renewable energy portfolio requirement. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. The Ameren Missouri balance also includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2011 through December 2011 were more than the amount allowed in base rates. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. |
| (u) | Over-recovered fuel costs from March 2009 through September 2009 as ordered by the MoPSC in April 2011. Customer refunds will conclude in May 2012. |
| (v) | Deferral of commodity-related derivative MTM gains. |
| (w) | Unamortized portion of investment tax credit and federal excess deferred taxes. See Note 13 – Income Taxes for amortization period. |
| (x) | Estimated funds collected for the eventual dismantling and removal of plant from service, net of salvage value, upon retirement related to our rate-regulated operations. See discussion in Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (y) | A regulatory tracking mechanism for the difference between the level of bad debt expense incurred by Ameren Illinois under GAAP and the level of such costs included in electric and natural gas rates. The over-recovery relating to 2010 is being refunded to customers from June 2011 through May 2012. The over-recovery relating to 2011 will be refunded to customers from June 2012 through May 2013. |
| (z) |
A 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 built into electric rates. The 2008 costs are being amortized through February 2014. The 2009 costs are being amortized through June 2015. The 2010 costs assigned to the natural gas and electric businesses are being amortized through February 2016 and July 2016, respectively. The 2011 costs will be determined in Ameren Missouri's pending electric rate case. |
| (aa) | A regulatory tracking mechanism that allows Ameren Illinois to recover its electric and natural gas costs associated with developing, implementing and evaluating customer energy efficiency and demand response programs. This over-recovery will be refunded to customers over the following 12 months after the plan year. |
| (bb) | Balance includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2010 through February 2011 were less than the amount allowed in base rates. The over-recovery incurred during that time period is being amortized over three years beginning in August 2011. The balance also includes the deferral of gains on emission allowance vintage swaps Ameren Missouri entered into during 2005. The balance of this gain was immaterial at the end of 2011. |
Ameren Missouri and Ameren Illinois continually assess the recoverability of their regulatory assets. Under current accounting standards, regulatory assets are charged to earnings when it is no longer probable that such amounts will be recovered through future revenues. To the extent that payments of regulatory liabilities are no longer probable, the amounts are credited to earnings.
NOTE 2 – RATE AND REGULATORY MATTERS
Below is a summary of significant regulatory proceedings and related lawsuits. 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
2009 Electric Rate Order
In February 2009, Noranda, Ameren Missouri's largest electric customer, and the MoOPC appealed certain aspects of the MoPSC's 2009 electric rate order to the Circuit Court of Stoddard County, Missouri. In September 2009, the Stoddard County Circuit Court granted Noranda's request to stay the electric rate increase granted by the January 2009 MoPSC's order as it applied specifically to Noranda's electric service account until the court rendered its decision on the appeal. From the granting of the stay request until June 2010, Noranda paid into the Stoddard County Circuit Court's registry the entire amount of its monthly base rate increase and monthly FAC payments. In June 2010, when the May 2010 electric rate order became effective, Noranda ceased making base rate payments into the Stoddard County Circuit Court's registry. Noranda continued to pay into the Stoddard County Circuit Court's registry its monthly FAC payments related to electric service received during the time periods prior to the effectiveness of the May 2010 electric rate order.
In August 2010, the Stoddard County Circuit Court issued a judgment that reversed parts of the MoPSC's decision. However, upon issuance, the Stoddard County Circuit Court suspended its own judgment. Ameren Missouri filed an appeal of the Stoddard County Circuit Court's judgment with the Missouri Court of Appeals, Southern District. In November 2011, the Missouri Court of Appeals issued a ruling that upheld the MoPSC's January 2009 electric rate order; thereby reversing the Stoddard County Circuit Court's August 2010 decision. As of December 31, 2011, the amount held in the Stoddard County Circuit Court's registry was $20 million. That amount was reflected in "Accounts receivable-trade" on Ameren's and Ameren Missouri's balance sheets at December 31, 2011. Ameren Missouri expects to receive all of the funds held in the Stoddard County Circuit Court's registry relating to the stay during the first quarter of 2012.
2010 Electric Rate Order
In May 2010, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric service of $230 million.
The MIEC and MoOPC appealed certain aspects of the MoPSC order to the Cole County Circuit Court. In addition to the MIEC appeal, four industrial customers, who are members of MIEC, also filed a request for a stay with the Cole County Circuit Court. In December 2010, the Cole County Circuit Court granted the request of the four industrial customers to stay the MoPSC's 2010 electric rate order and required those customers to pay into the Cole County Circuit Court's registry the difference between their billings under the 2010 Missouri electric rate order and their billings under a Missouri electric rate order that became effective in June 2007, which was, at that time, the last Ameren Missouri rate order for which appeals had been exhausted. In February 2011, the four industrial customers posted the bond required by the stay. Since the bond was posted, the four industrial customers have made payments into the Cole County Circuit Court's registry equal to the difference between their base rate billings under 2010 electric rates and 2007 electric rates, as well as their FAC amounts to the extent those billings relate to service prior to the effective date of the new rates established by the 2011 electric rate order. Because of the lag between accumulations of changes in net fuel costs and the time those net fuel costs are recovered through FAC charges applied to customers' bills, the four industrial customers will continue to pay a portion of their FAC payments to the Cole County Circuit Court's registry for service prior to the effective date of the new rates by the 2011 electric rate order. It is expected that a portion of the FAC billings invoiced to these customers in September 2012 would be the last contested amount deposited into the Cole County Circuit Court's registry relating to this 2010 electric rate order appeal, pending resolution of the appeal. As of December 31, 2011, the amount held by the Cole County Circuit Court, excluding the bond amount, was $15 million. This amount held in the registry was reflected in "Accounts receivable-trade" on Ameren's and Ameren Missouri's balance sheets at December 31, 2011.
A Cole County Circuit Court decision is expected during the first quarter of 2012 on the MIEC's and MoOPC's appeal. We cannot predict the ultimate outcome of this proceeding, which could have a material effect on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity. If the MoPSC's 2010 electric rate order is ultimately upheld, Ameren Missouri will receive all of the funds held in the Cole County Circuit Court's registry, plus accrued interest. If Ameren Missouri were to conclude that some portion of the rate increase resulting from the 2010 electric rate order was probable of refund to Ameren Missouri's customers, a charge to earnings would be recorded for the estimated amount of refund in the period in which that determination was made. At this time, Ameren Missouri does not believe any aspect of the 2010 MoPSC's electric rate order is probable of refund to Ameren Missouri's customers. Therefore, no reserve has been established.
2011 Electric Rate Order
In July 2011, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric service of $173 million, including $52 million related to an increase in normalized net fuel costs above the net fuel costs included in base rates previously authorized by the MoPSC in its 2010 electric rate order. The revenue increase was based on a 10.2% return on equity, a capital structure composed of 52.2% common equity, and a rate base of $6.6 billion. The rate changes became effective on July 31, 2011. The MoPSC order approved the continued use of Ameren Missouri's vegetation management and infrastructure cost tracker, its pension and postretirement benefit cost tracker, and the FAC at the current 95% sharing level. The MoPSC order shortened the FAC recovery and refund period from 12 months to eight months. The MoPSC order denied Ameren Missouri's request for the ability to recover any under-recovery of fixed costs as a result of lower sales volumes from the implementation of energy efficiency measures.
Additionally, the MoPSC order provided for a tracking mechanism for uncertain income tax positions. The order provides that reserves for uncertain income tax positions do not reduce rate base. However, when an uncertain income tax position liability is resolved, the order requires the creation of a regulatory asset or regulatory liability to reflect the time value (using the weighted-average cost of capital in the order) of the difference between the uncertain income tax position liability that was excluded from rate base and the final tax liability. The resulting regulatory asset or liability will be amortized over three years beginning on the effective date of new rates established in the next electric rate case.
The MoPSC order disallowed the recovery of all costs of enhancements, or costs that would have been incurred absent the breach, related to the rebuilding of the Taum Sauk energy center in excess of amounts recovered from property insurance. As a result of the order, Ameren and Ameren Missouri each recorded in 2011 a pretax charge to earnings of $89 million relating to the Taum Sauk disallowance. This charge was recorded in Ameren's statement of income as "Goodwill, impairment and other charges" and recorded in Ameren Missouri's statement of income as "Loss from regulatory disallowance."
In July 2011, a new law that reformed the judicial appeal process for MoPSC rate orders took effect. Among other items, the new law allows appeals to bypass the circuit court and to be made directly to the appellate court. The new law provides that rates cannot be stayed; however, the appellate court could direct the MoPSC to revise rates. Such rate revisions could be ordered to be applied retroactively. This new law applied to judicial appeals of the MoPSC's July 2011 rate order.
In August 2011, Ameren Missouri appealed the disallowance of Taum Sauk enhancements to the Missouri Court of Appeals, Western District. A decision is expected by the Missouri Court of Appeals, Western District, in 2012. Ameren Missouri cannot predict the ultimate outcome of its appeal.
Pending Electric Rate Case
On February 3, 2012, Ameren Missouri filed a request with the MoPSC to increase its annual revenues for electric service by $376 million. Included in this requested increase is a $103 million increase in normalized net fuel costs above the net fuel costs included in base rates previously authorized by the MoPSC in its July 2011 electric rate order. Absent initiation of this general rate proceeding, 95% of this amount would have been reflected in rate adjustments implemented under Ameren Missouri's FAC. Approximately $85 million of the request relates to investments to improve the reliability of Ameren Missouri's infrastructure and to comply with environmental and renewable energy regulations, including the requested return on such investments, and $81 million of the request relates to recovery of the costs associated with energy efficiency programs under the MEEIA, including energy efficiency investments, which is discussed below. The electric rate increase request was based on a 10.75% return on equity, a capital structure composed of 52% common equity, an aggregate electric rate base of $6.8 billion, and a test year ended September 30, 2011, with certain pro forma adjustments expected through the anticipated true-up date of July 31, 2012.
As part of its filing, Ameren Missouri requested that the MoPSC approve the implementation of a storm cost tracking mechanism, as well as plant-in-service accounting treatment. The proposed storm cost tracking mechanism would allow Ameren Missouri to record a regulatory asset or liability, as applicable, reflecting the difference between a base level of major storm restoration costs used to set rates in the current rate case and the actual storm restoration costs, and to request recovery of such regulatory asset or liability in Ameren Missouri's next rate case for amortization over a three-year period. The plant-in-service accounting treatment would permit Ameren Missouri to recover a return and to defer depreciation expense on assets placed in service but not yet reflected in customer rates.
Ameren Missouri requested continued use of the FAC and the regulatory tracking mechanisms for vegetation management/infrastructure inspection costs, for pension and postretirement benefits, and for uncertain income tax positions that the MoPSC previously authorized in earlier electric rate orders. Ameren Missouri also requested recovery of the 2011 voluntary separation program severance costs over three years.
A decision by the MoPSC in this proceeding is expected in December 2012. Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, when any rate change may go into effect, or whether any rate increase that may eventually be approved will be sufficient for Ameren Missouri to recover its costs and earn a reasonable return on its investments when the increase goes into effect.
MEEIA Filing
The MEEIA, enacted in 2009, established a regulatory framework that, among other things, allows electric utilities to recover costs related to MoPSC-approved energy efficiency programs. The law requires the MoPSC to ensure that a utility's financial incentives are aligned with helping customers use energy more efficiently, to provide timely cost recovery, and to provide earnings opportunities associated with cost-effective energy efficiency programs. Missouri does not have a law mandating energy efficiency standards.
In January 2012, Ameren Missouri made its initial filing with the MoPSC under the MEEIA. This filing proposes a three-year plan that includes a portfolio of energy efficiency programs along with a cost-recovery mechanism. If the proposal is approved, beginning in January 2013, Ameren Missouri plans to invest $145 million over three years for the proposed energy efficiency programs.
A decision by the MoPSC in this proceeding is anticipated in the second quarter of 2012. The MoPSC's order in this proceeding will not affect Ameren Missouri rates until these rates are included in an electric service rate case. Ameren Missouri anticipates that the impacts of the MoPSC's decision in this MEEIA filing will be included in rates set under its pending electric service rate case that was filed on February 3, 2012, which has an anticipated true-up date of July 31, 2012. Ameren Missouri's pending electric rate case includes an annual revenue increase of $81 million relating to its planned portfolio of energy efficiency programs included in its MEEIA filing.
FAC Prudence Review
Missouri law requires the MoPSC to complete prudence reviews of Ameren Missouri's FAC at least every 18 months. In April 2011, the MoPSC issued an order with respect to its review of Ameren Missouri's FAC for the period from March 1, 2009, to September 30, 2009. In this order, the MoPSC ruled that Ameren Missouri should have included in the FAC calculation all revenues and costs associated with certain long-term partial requirements sales that were made by Ameren Missouri because of the loss of Noranda's load caused by a severe ice storm in January 2009. As a result of the order, Ameren Missouri recorded a pretax charge to earnings of $18 million, including $1 million for interest, in 2011 for its obligation to refund to Ameren Missouri's electric customers the earnings associated with these sales previously recognized by Ameren Missouri during the period from March 1, 2009, to September 30, 2009. In October 2011, Ameren Missouri began refunding the $18 million to customers through the FAC.
Ameren Missouri disagrees with the MoPSC order's classification of these sales and believes that the terms of its FAC tariff did not provide for the inclusion of these sales in the FAC calculation. In June 2011, Ameren Missouri filed an appeal with the Cole County Circuit Court. A decision is expected from the Cole County Circuit Court in 2012. Separately, in July 2011, Ameren Missouri filed a request with the MoPSC for an accounting authority order that would allow Ameren Missouri to defer, as a regulatory asset, fixed costs totaling $36 million that were not recovered from Noranda as a result of the loss of load caused by the severe 2009 ice storm for potential recovery in a future electric rate case. We cannot predict the ultimate outcome of these regulatory or judicial proceedings.
Ameren Missouri recognized an additional $25 million of pretax earnings associated with the same long-term partial requirements sales contracts subsequent to September 30, 2009, which were not addressed by the MoPSC order issued in April 2011. The MoPSC's FAC review for the period from October 1, 2009, to May 31, 2011, was initiated in September 2011. In October 2011, the MoPSC staff filed a recommendation with the MoPSC to direct Ameren Missouri to refund to customers, prior to the completion of the staff's prudence review, the pretax earnings associated with the same long-term partial requirements sales contracts subsequent to September 30, 2009. The MoPSC staff calculated these pretax earnings to be $26 million. We cannot predict whether the MoPSC will approve this recommendation. If Ameren Missouri were to determine that these sales were probable of refund to Ameren Missouri's electric customers, a charge to earnings would be recorded for the refund in the period in which that determination was made. Because of pending court appeals and regulatory review, Ameren Missouri does not currently believe these amounts are probable of refund to customers.
Renewable Energy Portfolio Requirement
A ballot initiative passed by Missouri voters in November 2008 created a renewable energy portfolio requirement. Beginning in 2011, Ameren Missouri and other Missouri investor-owned utilities are required to purchase or generate from renewable energy sources electricity equaling at least 2% of native load sales, with that percentage increasing in subsequent years to at least 15% by 2021, subject to a 1% limit on customer rate impacts. At least 2% of each portfolio requirement must be derived from solar energy. Compliance with the renewable energy portfolio requirement can be achieved through generation or the procurement of renewable energy credits. Ameren Missouri expects that any related costs or investments will ultimately be recovered in rates.
In July 2010, the MoPSC issued final rules implementing the state's renewable energy portfolio requirement. Ameren Missouri objected to the MoPSC rules calculating the 1% limit on customer rates. In August 2010, Ameren Missouri and other groups filed an appeal with the Cole County Circuit Court of multiple aspects of the MoPSC's rules. In December 2011, the Cole County Circuit Court issued a ruling clarifying that the 1% customer rate increase limit is an annual restriction, not a multiyear limit.
Illinois
IEIMA
In October 2011, the IEIMA was enacted into law and became effective immediately. Certain amendments to the IEIMA became effective on December 30, 2011. On January 3, 2012, Ameren Illinois elected to participate in the performance-based formula ratemaking process established pursuant to the IEIMA by filing initial performance-based formula rates with the ICC. With this filing, as required by law, Ameren Illinois' previously pending electric delivery service rate case was withdrawn. The initial filing, based on 2010 recoverable costs and expected net plant additions for 2011 and 2012, will result in new electric delivery service rates in October 2012. Pending ICC approval, the initial filing will result in a decrease of $19 million in Ameren Illinois revenues for electric delivery service, on an annualized basis. Ameren Illinois anticipates making an update filing by May 1, 2012, based on 2011 costs and expected net plant additions for 2012, that would result in new electric delivery service rates on January 1, 2013.
Ameren Illinois will participate in a performance-based formula process for determining rates. The formula will provide for the recovery of actual costs of electric delivery service that are prudently incurred, reflect the utility's actual regulated capital structure, and include a formula for calculating the return on equity component of the cost of capital. The return on equity component of the formula rate will be equal to the average for the applicable calendar year of the monthly average yields of 30-year United States treasury bonds plus 590 basis points for 2012 and 580 basis points thereafter. Ameren Illinois' actual return on equity relating to electric delivery service will be subject to a collar adjustment on earnings in excess of 50 basis points above or below its allowed return. Beginning in 2012, the law provides for an annual reconciliation of revenues to costs prudently and reasonably incurred. This annual revenue reconciliation, along with the collar adjustment, if necessary, will be collected from or refunded to customers in a subsequent year.
Ameren Illinois will also be subject to five performance standards. Failure to achieve the standards will result in a reduction in the company's allowed return on equity calculated under the formula. The performance standards include improvements in service reliability to reduce both the frequency and duration of outages, improvements in customer satisfaction scores, reduction in the number of estimated bills, and a reduction in uncollectible accounts expense. The IEIMA provides for return on equity penalties totaling up to 30 basis points in 2013 through 2015, 34 basis points in 2016 through 2018, and 38 basis points in 2019 through 2022 if the performance standards are not met. The formula ratemaking process is effective until the end of 2017, but could be extended by the Illinois General Assembly for an additional five years. The formula ratemaking process would also terminate if the average residential rate increases by more than 2.5% annually from June 2011 through May 2014.
Between 2012 and 2021, Ameren Illinois will be required to invest $625 million in capital expenditures incremental to Ameren Illinois' average electric delivery capital expenditures for calendar years 2008 through 2010 to modernize its distribution system. Such investments are expected to encourage economic development and to create an estimated 450 additional jobs within Illinois. Ameren Illinois is subject to monetary penalties if 450 additional jobs are not created during the peak program years. Also, Ameren Illinois will be required to contribute $1 million annually for certain nonrecoverable customer assistance programs for as long as Ameren Illinois participates in the formula ratemaking process. Ameren Illinois will also be required to make a one-time $7.5 million nonrecoverable donation to the Illinois Science and Energy Innovation Trust in 2012, as well as an approximate $1 million annual donation to the same trust for as long as it participates in the formula ratemaking process.
The IEIMA does not apply to natural gas utilities.
2012 Natural Gas Delivery Service Rate Order
In January 2012, the ICC issued a rate order that approved an increase in annual Ameren Illinois' revenues for natural gas delivery service of $32 million. The revenue increase was based on a 9.06% return on equity, a capital structure composed of 53.3% common equity, and a rate base of $1 billion. The rate order was based on a 2012 future test year. The rate changes became effective on January 20, 2012. In February 2012, the ICC denied rehearing requests by Ameren Illinois and an intervenor related to the granted return on equity.
2010 Electric and Natural Gas Delivery Service Rate Orders
During 2010, the ICC issued orders that authorized an aggregate $40 million increase in Ameren Illinois' annual electric and natural gas delivery service revenues.
In December 2010, Ameren Illinois and an intervenor appealed portions of the ICC's orders to the Appellate Court of the Fourth District of Illinois. In January 2012, the Appellate Court issued a decision that upheld the ICC's 2010 electric and natural gas delivery service rate order.
Federal
Electric Transmission Investment
FERC, in its order issued in May 2011, approved transmission rate incentives for the Illinois Rivers project and the Big Muddy project, which will be developed by ATXI or ATX. The FERC May 2011 order approved the following rate mechanisms with respect to Ameren's Illinois Rivers and Big Muddy projects:
| Ÿ |
Full recovery of financing costs, including debt and equity, associated with construction work in progress before the asset is placed in service; |
| Ÿ |
Recovery of costs prudently incurred in developing project facilities that might later be abandoned due to issues outside the company's control; and |
| Ÿ |
Use of a hypothetical capital structure during construction that reflects a capital structure of 56% common equity. |
In December 2011, MISO approved the Illinois Rivers project as well as the Spoon River and Mark Twain projects. The total investment in these three MISO-approved projects is expected to be more than $1.2 billion through 2019, with potential investment of $750 million from 2012 to 2016. All four projects are in Missouri and Illinois. Construction will begin first on the Illinois Rivers project. The Big Muddy project is currently being evaluated for inclusion in MISO's 2012 expansion plan.
On December 30, 2011, ATXI made a filing with FERC seeking a forward-looking rate calculation with an annual revenue reconciliation adjustment as well as requesting the implementation of the incentives FERC approved in its May 2011 order described above for the Illinois Rivers project and the Big Muddy project. FERC is expected to issue a decision on the ATXI filing during the first quarter of 2012.
2011 Wholesale Distribution Rate Case
In January 2011, Ameren Illinois filed a request with FERC to increase its annual revenues for electric delivery service for its wholesale customers by $11 million. These wholesale distribution revenues are treated as a deduction from Ameren Illinois' revenue requirement in retail rate filings with the ICC. In March 2011, FERC issued an order authorizing the proposed rates to take effect, subject to refund when the final rates are determined. Ameren Illinois reached an agreement with two of its nine wholesale customers in 2011. The impasse with the remaining seven wholesale customers has resulted in FERC litigation. An initial decision by the FERC administrative law judge is expected in 2012 and a final FERC decision may be received after 2012. We cannot predict the ultimate outcome of this proceeding or its impact on Ameren's or Ameren Illinois' results of operations, financial position, or liquidity.
Regional Transmission Organization
Ameren Missouri is a transmission owning member of MISO. Ameren Missouri received authorization from the MoPSC to participate in MISO, subject to certain conditions. Ameren Missouri's continued conditional MISO participation is authorized by the MoPSC through April 30, 2012.
As required by the MoPSC, Ameren Missouri filed in November 2010 and again in August 2011 updated cost benefit studies with the MoPSC that evaluated the costs and benefits of Ameren Missouri's continued participation in MISO. Ameren Missouri's updated studies continue to show substantial benefits to Ameren Missouri customers associated with its participation in MISO.
In November 2011, Ameren Missouri, together with the MoPSC staff, the MIEC, and MISO, filed a Non-Unanimous Stipulation and Agreement (Stipulation) with the MoPSC that reflected their agreement that continued Ameren Missouri participation in MISO through May 31, 2016, was prudent and reasonable, subject to certain conditions. The MoOPC opposes the Stipulation, in part because of its desire that the MoPSC impose conditions relating to ATX's involvement in transmission projects located within Ameren Missouri's service territory. These conditions, which are not included in the Stipulation are, in Ameren Missouri's view, inappropriate and unlawful. Ameren Missouri expects an order from the MoPSC before April 30, 2012.
FERC Order – MISO Charges
Ameren Missouri and Ameren Illinois, as well as other MISO participants, have filed complaints with FERC with respect to the FERC's March 2007 order involving the reallocation of certain MISO operational costs among MISO participants retroactive to 2005. Subsequently, FERC has issued a series of orders related to the applicability and the implementation of the order, which in some cases have conflicted with previous orders.
In May 2009, FERC changed the effective date for refunds such that certain operational costs would be allocated among MISO market participants beginning November 2008, instead of August 2007. In June 2009, Ameren Missouri and Ameren Illinois filed a request for rehearing. The rehearing request is pending.
In June 2009, FERC issued an order dismissing rehearing requests of a November 2008 order and waiving refunds of amounts billed that were included in the MISO charge, under the assumption that there was a rate mismatch for the period April 2006 through November 2007. Ameren Missouri and Ameren Illinois filed a request for rehearing in July 2009. This rehearing request is pending.
Ameren Missouri and Ameren Illinois do not believe that the ultimate resolution of these proceedings will have a material effect on their results of operations, financial position, or liquidity.
Ameren Missouri Power Purchase Agreement with Entergy Arkansas, Inc.
Beginning in 2005, FERC issued a series of orders addressing a complaint filed in 2001 by the Louisiana Public Service Commission (LPSC) against Entergy Arkansas, Inc. (Entergy) and certain of its affiliates. The complaint alleged unjust and unreasonable cost allocations. As a result of the FERC orders, Entergy began billing Ameren Missouri in 2007 for additional charges under a 165-megawatt power purchase agreement, and Ameren Missouri paid those charges. Additional charges continued during the remainder of the term of the power purchase agreement, which expired August 31, 2009. Although Ameren Missouri was not a party to the FERC proceedings that gave rise to these additional charges, Ameren Missouri intervened in related FERC proceedings. Ameren Missouri also filed a complaint with FERC against Entergy and Entergy Services, Inc. in April 2008 to challenge the additional charges. In January 2010, FERC issued a ruling that Entergy may not pass the additional charges on to Ameren Missouri. In February 2010, Entergy filed a request for rehearing of the January 2010 ruling. Ameren Missouri has not recorded any prospective refund for additional charges paid to Entergy as a result of the FERC orders.
The LPSC appealed FERC's orders regarding LPSC's complaint against Entergy Services, Inc. to the United States Court of Appeals for the District of Columbia. In April 2008, that court ordered further FERC proceedings regarding LPSC's complaint. The court ordered FERC to explain its previous denial of retroactive refunds and the implementation of prospective charges. FERC's decision on remand of the retroactive impact of these issues could have a financial impact on Ameren Missouri. Ameren Missouri is unable to predict how FERC will respond to the court's decisions. Ameren Missouri estimates that it could incur an additional expense of up to $25 million if FERC orders retroactive application for the years 2001 to 2005. Ameren Missouri believes that the likelihood of incurring any expense is not probable, and therefore no liability has been recorded as of December 31, 2011. Ameren Missouri plans to participate in any proceeding that FERC initiates to address the court's decisions.
COLA and Early Site Permit
In 2008, Ameren Missouri filed an application with the NRC for a COLA for a new 1,600-megawatt nuclear unit at Ameren Missouri's existing Callaway County, Missouri, nuclear energy center site. In 2009, Ameren Missouri suspended its efforts to build a new nuclear unit at its existing Missouri nuclear energy center site, and the NRC suspended review of the COLA.
Ameren Missouri is considering filing an application to obtain an early site permit from the NRC for the Callaway energy center site. An early site permit approves a specific location for a nuclear facility; however, additional licenses would be required for the specific type and design of nuclear facility to be built at that site. An early site permit does not authorize construction of a plant. An early site permit is valid for 20 years and could be renewed for up to an additional 20 years. Attempts to pass legislation to maintain an option for nuclear power in the state of Missouri by recovering the costs of the early site permit, subject to appropriate consumer protections, were not successful during 2011. However, support for nuclear power exists in the state of Missouri, which could lead to the passage of an early site permit recovery mechanism in future legislative sessions. Ameren Missouri's pursuit of an early site permit is dependent upon enactment of a legislative framework ensuring cost recovery.
As of December 31, 2011, Ameren Missouri had capitalized $69 million relating to its efforts to construct a new nuclear unit. All of these incurred costs will remain capitalized while management assesses options to maximize the value of its investment in this project. If efforts are permanently abandoned or management concludes it is probable the costs incurred will be disallowed in rates, a charge to earnings would be recognized in the period in which that determination was made.
Pumped-storage Hydroelectric Energy Center Relicensing
In June 2008, Ameren Missouri filed a relicensing application with FERC to operate its Taum Sauk pumped-storage hydroelectric energy center for another 40 years. The existing FERC license expired on June 30, 2010. On July 2, 2010, Ameren Missouri received a license extension that allows Taum Sauk to continue operations until FERC issues a new license. FERC is reviewing the relicensing application. A FERC order is expected in 2012 or 2013. Ameren Missouri cannot predict the ultimate outcome of the application.
Regulatory Assets and Liabilities
In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs pursuant to actions of regulators or based on the expected ability to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts because of actions of regulators or because of the expectation that such amounts will be returned to customers in future rates. The following table presents Ameren's, Ameren Missouri's and Ameren Illinois' regulatory assets and regulatory liabilities at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||||||||||||||||||
| Ameren(a) |
Ameren Missouri |
Ameren Illinois |
Ameren(a) |
Ameren Missouri |
Ameren Illinois |
|||||||||||||||||||||
|
Current regulatory assets: |
||||||||||||||||||||||||||
|
Under-recovered FAC(b)(c) |
$ | 83 | $ | 83 | $ | - | $ | 158 | $ | 158 | $ | - | ||||||||||||||
|
Under-recovered Illinois electric power costs(b)(d) |
4 | - | 4 | 4 | - | 4 | ||||||||||||||||||||
|
Under-recovered PGA(b)(d) |
8 | 5 | 3 | 2 | - | 2 | ||||||||||||||||||||
|
MTM derivative losses(e) |
120 | 21 | 299 | 103 | 21 | 254 | ||||||||||||||||||||
|
Total current regulatory assets |
$ | 215 | $ | 109 | $ | 306 | $ | 267 | $ | 179 | $ | 260 | ||||||||||||||
|
Noncurrent regulatory assets: |
||||||||||||||||||||||||||
|
Pension and postretirement benefit costs(f) |
$ | 878 | $ | 382 | $ | 496 | $ | 555 | $ | 251 | $ | 304 | ||||||||||||||
|
Income taxes(g) |
239 | 234 | 5 | 230 | 225 | 5 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
6 | - | 6 | 9 | 3 | 6 | ||||||||||||||||||||
|
Callaway costs(b)(i) |
48 | 48 | - | 51 | 51 | - | ||||||||||||||||||||
|
Unamortized loss on reacquired debt(b)(j) |
47 | 21 | 26 | 53 | 25 | 28 | ||||||||||||||||||||
|
Recoverable costs – contaminated facilities(k) |
102 | - | 102 | 127 | - | 127 | ||||||||||||||||||||
|
MTM derivative losses(e) |
100 | 13 | 87 | 85 | 14 | 249 | ||||||||||||||||||||
|
SO2 emission allowances sale tracker(l) |
6 | 6 | - | 12 | 12 | - | ||||||||||||||||||||
|
Storm costs(m) |
16 | 16 | - | 23 | 23 | - | ||||||||||||||||||||
|
Demand-side costs(n) |
70 | 70 | - | 39 | 39 | - | ||||||||||||||||||||
|
Reserve for workers' compensation liabilities(o) |
13 | 7 | 6 | 14 | 8 | 6 | ||||||||||||||||||||
|
Credit facilities fees(p) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Employee separation costs(q) |
6 | 3 | 3 | 8 | 6 | 2 | ||||||||||||||||||||
|
Common stock issuance costs(r) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Construction accounting for pollution control equipment(b)(s) |
25 | 25 | - | 4 | 4 | - | ||||||||||||||||||||
|
Other(t) |
27 | 10 | 17 | 29 | 9 | 20 | ||||||||||||||||||||
|
Total noncurrent regulatory assets |
$ | 1,603 | $ | 855 | $ | 748 | $ | 1,263 | $ | 694 | $ | 747 | ||||||||||||||
|
Current regulatory liabilities: |
||||||||||||||||||||||||||
|
Over-recovered FAC(u) |
$ | 12 | $ | 12 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
|
Over-recovered Illinois electric power costs(d) |
66 | - | 66 | 62 | - | 62 | ||||||||||||||||||||
|
Over-recovered PGA(d) |
9 | - | 9 | 12 | 1 | 11 | ||||||||||||||||||||
|
MTM derivative gains(v) |
46 | 45 | 1 | 25 | 22 | 3 | ||||||||||||||||||||
|
Total current regulatory liabilities |
$ | 133 | $ | 57 | $ | 76 | $ | 99 | $ | 23 | $ | 76 | ||||||||||||||
|
Noncurrent regulatory liabilities: |
||||||||||||||||||||||||||
|
Income taxes(w) |
$ | 48 | $ | 44 | $ | 4 | $ | 54 | $ | 48 | $ | 6 | ||||||||||||||
|
Removal costs(x) |
1,269 | 719 | 550 | 1,177 | 655 | 522 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
29 | 29 | - | - | - | - | ||||||||||||||||||||
|
MTM derivative gains(v) |
82 | 4 | 78 | 20 | 13 | 7 | ||||||||||||||||||||
|
Bad debt rider(y) |
10 | - | 10 | 5 | - | 5 | ||||||||||||||||||||
|
Pension and postretirement benefit costs tracker(z) |
38 | 38 | - | 45 | 45 | - | ||||||||||||||||||||
|
Energy efficiency rider(aa) |
24 | - | 24 | 13 | - | 13 | ||||||||||||||||||||
|
Other(bb) |
2 | 2 | - | 5 | 5 | - | ||||||||||||||||||||
|
Total noncurrent regulatory liabilities |
$ | 1,502 | $ | 836 | $ | 666 | $ | 1,319 | $ | 766 | $ | 553 | ||||||||||||||
| (a) | Includes intercompany eliminations. |
| (b) | These assets earn a return. |
| (c) | Under-recovered fuel costs for periods from July 2009 through December 2011. Specific accumulation periods aggregate the under-recovered costs over four months, any related adjustments occur over the following four months, and then recovery from customers occurs over the next eight months. |
| (d) | Costs under- or over-recovered from utility customers. Amounts will be recovered from, or refunded to, customers within one year of the deferral. |
| (e) | Deferral of commodity-related derivative MTM losses, as well as the MTM losses on financial contracts entered into by Ameren Illinois with Marketing Company. |
| (f) | These costs are being amortized in proportion to the recognition of prior service costs (credits), transition obligations (assets), and actuarial losses (gains) attributable to Ameren's pension plan and postretirement benefit plans. See Note 11 – Retirement Benefits for additional information. |
| (g) | Offset to certain deferred tax liabilities for expected recovery of future income taxes when paid. See Note 13 – Income Taxes for amortization period. |
| (h) | Recoverable or refundable removal costs for AROs at our rate-regulated operations, including net realized and unrealized gains and losses related to the nuclear decommissioning trust fund investments. See Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (i) | Ameren Missouri's Callaway energy center operations and maintenance expenses, property taxes, and carrying costs incurred between the plant in-service date and the date the plant was reflected in rates. These costs are being amortized over the remaining life of the plant's current operating license (through 2024). |
| (j) | Losses related to reacquired debt. These amounts are being amortized over the lives of the related new debt issuances or the remaining lives of the old debt issuances if no new debt was issued. |
| (k) | The recoverable portion of accrued environmental site liabilities, primarily collected from electric and natural gas customers through ICC-approved cost recovery riders. The period of recovery will depend on the timing of actual expenditures. See Note 15 – Commitments and Contingencies for additional information. |
| (l) |
A regulatory tracking mechanism for gains on sales of SO2 emission allowances, net of SO2 premiums incurred under the terms of coal procurement contracts, plus any SO2 discounts received under such contracts, as approved in a MoPSC order. The MoPSC's May 2010 electric rate order discontinued any future deferrals under this tracking mechanism. The MoPSC's July 2011 rate order approved the amortization of these costs through July 2013. |
| (m) | Actual storm costs in a test year that exceed the MoPSC staff's normalized storm costs for rate purposes. The 2006 storm costs are being amortized until July 2013. The 2008 storm costs are being amortized over five years, beginning on March 1, 2009. In addition, the balance includes January 2007 ice storm costs that Ameren Missouri will recover over five years, beginning in March 2009, as approved by the January 2009 MoPSC electric rate order. The 2009 storm costs are being amortized over five years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. |
| (n) | Demand-side costs, including the costs of developing, implementing and evaluating customer energy efficiency and demand response programs. Costs incurred from May 2008 through September 2008 are being amortized over 10 years, beginning in March 2009. Costs incurred from October 2008 through December 2009 are being amortized over six years, beginning in July 2010. Costs incurred from January 2010 through February 2011 are being amortized over six years, beginning in August 2011. The amortization period for the costs incurred after February 2011 will be determined in Ameren Missouri's pending electric rate case. |
| (o) | Reserve for workers' compensation claims. |
| (p) | Ameren Missouri's costs incurred to enter into and maintain the 2009 multiyear and supplemental credit agreements, prior to their termination in 2010. These costs are being amortized over two years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. These costs are being amortized to construction work in progress, which will be subsequently depreciated when assets are placed into service. |
| (q) | Cost incurred for the voluntary and involuntary separation programs. The 2009 Ameren Missouri-related costs are being amortized over three years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. The 2009 Ameren Illinois-related costs are being amortized over three years, beginning in May 2010, as approved by the April 2010 ICC electric and natural gas rate order. |
| (r) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to recover its portion of Ameren's September 2009 common stock issuance costs. These costs are being amortized over five years, beginning in July 2010. |
| (s) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to continue recording an allowance for funds used during construction for pollution control equipment at its Sioux energy center until the cost of that equipment is placed in customer rates. The amortization of these costs will be over the expected life of the Sioux energy center. |
| (t) | Includes costs related to Ameren Illinois' delivery service rate cases that resulted in orders in 2008 and 2010 as well as the natural gas delivery service rate case that resulted in an order in January 2012. The natural gas costs associated with the 2008 rate case will be amortized until September 2013. The 2010 rate case costs are being amortized over a two-year period, beginning in May 2010. The 2012 natural gas rate case costs will be amortized over a two year period, beginning in January 2012. The Ameren Illinois total also includes a portion of the unamortized debt fair value adjustment recorded upon Ameren's acquisition of IP. This portion is being amortized over the remaining life of the related debt, beginning with the expiration of the electric rate freeze in Illinois on January 1, 2007. The Ameren Illinois total also includes Ameren Illinois Merger integration and optimization costs. These costs will be amortized over four years, beginning in January 2012. At Ameren Missouri, the balance includes cost associated with the retirement of renewable energy credits and solar rebates to fulfill Ameren Missouri's renewable energy portfolio requirement. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. The Ameren Missouri balance also includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2011 through December 2011 were more than the amount allowed in base rates. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. |
| (u) | Over-recovered fuel costs from March 2009 through September 2009 as ordered by the MoPSC in April 2011. Customer refunds will conclude in May 2012. |
| (v) | Deferral of commodity-related derivative MTM gains. |
| (w) | Unamortized portion of investment tax credit and federal excess deferred taxes. See Note 13 – Income Taxes for amortization period. |
| (x) | Estimated funds collected for the eventual dismantling and removal of plant from service, net of salvage value, upon retirement related to our rate-regulated operations. See discussion in Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (y) | A regulatory tracking mechanism for the difference between the level of bad debt expense incurred by Ameren Illinois under GAAP and the level of such costs included in electric and natural gas rates. The over-recovery relating to 2010 is being refunded to customers from June 2011 through May 2012. The over-recovery relating to 2011 will be refunded to customers from June 2012 through May 2013. |
| (z) |
A 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 built into electric rates. The 2008 costs are being amortized through February 2014. The 2009 costs are being amortized through June 2015. The 2010 costs assigned to the natural gas and electric businesses are being amortized through February 2016 and July 2016, respectively. The 2011 costs will be determined in Ameren Missouri's pending electric rate case. |
| (aa) | A regulatory tracking mechanism that allows Ameren Illinois to recover its electric and natural gas costs associated with developing, implementing and evaluating customer energy efficiency and demand response programs. This over-recovery will be refunded to customers over the following 12 months after the plan year. |
| (bb) | Balance includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2010 through February 2011 were less than the amount allowed in base rates. The over-recovery incurred during that time period is being amortized over three years beginning in August 2011. The balance also includes the deferral of gains on emission allowance vintage swaps Ameren Missouri entered into during 2005. The balance of this gain was immaterial at the end of 2011. |
Ameren Missouri and Ameren Illinois continually assess the recoverability of their regulatory assets. Under current accounting standards, regulatory assets are charged to earnings when it is no longer probable that such amounts will be recovered through future revenues. To the extent that payments of regulatory liabilities are no longer probable, the amounts are credited to earnings.
|
|||
NOTE 3 – PROPERTY AND PLANT, NET
The following table presents property and plant, net, for each of the Ameren Companies at December 31, 2011 and 2010:
| Ameren(a)(b) | Ameren Missouri(b) |
Ameren Illinois |
Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,256 | $ | 14,986 | $ | 4,600 | $ | 3,370 | ||||||||
|
Gas |
1,746 | 385 | 1,361 | - | ||||||||||||
|
Other |
466 | 113 | 91 | 39 | ||||||||||||
| 26,468 | 15,484 | 6,052 | 3,409 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,429 | 6,276 | 1,364 | 1,377 | ||||||||||||
| 17,039 | 9,208 | 4,688 | 2,032 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
255 | 255 | - | - | ||||||||||||
|
Other |
833 | 495 | 82 | 199 | ||||||||||||
|
Property and plant, net |
$ | 18,127 | $ | 9,958 | $ | 4,770 | $ | 2,231 | ||||||||
|
2010: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,069 | $ | 14,745 | $ | 4,436 | $ | 3,572 | ||||||||
|
Gas |
1,661 | 374 | 1,286 | - | ||||||||||||
|
Other |
424 | 91 | 61 | 48 | ||||||||||||
| 26,154 | 15,210 | 5,783 | 3,620 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,194 | 6,052 | 1,250 | 1,518 | ||||||||||||
| 16,960 | 9,158 | 4,533 | 2,102 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
259 | 259 | - | - | ||||||||||||
|
Other |
634 | 358 | 43 | 146 | ||||||||||||
|
Property and plant, net |
$ | 17,853 | $ | 9,775 | $ | 4,576 | $ | 2,248 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries as well as intercompany eliminations. |
| (b) | Amounts in Ameren and Ameren Missouri include two electric generation CTs under two separate capital lease agreements. The gross asset value of those agreements was $229 million and $228 million at December 31, 2011 and 2010, respectively. The total accumulated depreciation associated with the two CTs was $52 million and $46 million at December 31, 2011 and 2010, respectively. |
The following table provides accrued capital expenditures at December 31, 2011, 2010, and 2009, which represent noncash investing activity excluded from the statements of cash flows:
| Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
2011 |
$ | 107 | $ | 73 | $ | 18 | $ | 13 | ||||||||
|
2010 |
79 | 53 | 15 | 8 | ||||||||||||
|
2009 |
143 | 86 | 29 | 23 | ||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
NOTE 3 – PROPERTY AND PLANT, NET
The following table presents property and plant, net, for each of the Ameren Companies at December 31, 2011 and 2010:
| Ameren(a)(b) | Ameren Missouri(b) |
Ameren Illinois |
Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,256 | $ | 14,986 | $ | 4,600 | $ | 3,370 | ||||||||
|
Gas |
1,746 | 385 | 1,361 | - | ||||||||||||
|
Other |
466 | 113 | 91 | 39 | ||||||||||||
| 26,468 | 15,484 | 6,052 | 3,409 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,429 | 6,276 | 1,364 | 1,377 | ||||||||||||
| 17,039 | 9,208 | 4,688 | 2,032 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
255 | 255 | - | - | ||||||||||||
|
Other |
833 | 495 | 82 | 199 | ||||||||||||
|
Property and plant, net |
$ | 18,127 | $ | 9,958 | $ | 4,770 | $ | 2,231 | ||||||||
|
2010: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,069 | $ | 14,745 | $ | 4,436 | $ | 3,572 | ||||||||
|
Gas |
1,661 | 374 | 1,286 | - | ||||||||||||
|
Other |
424 | 91 | 61 | 48 | ||||||||||||
| 26,154 | 15,210 | 5,783 | 3,620 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,194 | 6,052 | 1,250 | 1,518 | ||||||||||||
| 16,960 | 9,158 | 4,533 | 2,102 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
259 | 259 | - | - | ||||||||||||
|
Other |
634 | 358 | 43 | 146 | ||||||||||||
|
Property and plant, net |
$ | 17,853 | $ | 9,775 | $ | 4,576 | $ | 2,248 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries as well as intercompany eliminations. |
| (b) | Amounts in Ameren and Ameren Missouri include two electric generation CTs under two separate capital lease agreements. The gross asset value of those agreements was $229 million and $228 million at December 31, 2011 and 2010, respectively. The total accumulated depreciation associated with the two CTs was $52 million and $46 million at December 31, 2011 and 2010, respectively. |
The following table provides accrued capital expenditures at December 31, 2011, 2010, and 2009, which represent noncash investing activity excluded from the statements of cash flows:
| Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
2011 |
$ | 107 | $ | 73 | $ | 18 | $ | 13 | ||||||||
|
2010 |
79 | 53 | 15 | 8 | ||||||||||||
|
2009 |
143 | 86 | 29 | 23 | ||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
NOTE 3 – PROPERTY AND PLANT, NET
The following table presents property and plant, net, for each of the Ameren Companies at December 31, 2011 and 2010:
| Ameren(a)(b) | Ameren Missouri(b) |
Ameren Illinois |
Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,256 | $ | 14,986 | $ | 4,600 | $ | 3,370 | ||||||||
|
Gas |
1,746 | 385 | 1,361 | - | ||||||||||||
|
Other |
466 | 113 | 91 | 39 | ||||||||||||
| 26,468 | 15,484 | 6,052 | 3,409 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,429 | 6,276 | 1,364 | 1,377 | ||||||||||||
| 17,039 | 9,208 | 4,688 | 2,032 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
255 | 255 | - | - | ||||||||||||
|
Other |
833 | 495 | 82 | 199 | ||||||||||||
|
Property and plant, net |
$ | 18,127 | $ | 9,958 | $ | 4,770 | $ | 2,231 | ||||||||
|
2010: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,069 | $ | 14,745 | $ | 4,436 | $ | 3,572 | ||||||||
|
Gas |
1,661 | 374 | 1,286 | - | ||||||||||||
|
Other |
424 | 91 | 61 | 48 | ||||||||||||
| 26,154 | 15,210 | 5,783 | 3,620 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,194 | 6,052 | 1,250 | 1,518 | ||||||||||||
| 16,960 | 9,158 | 4,533 | 2,102 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
259 | 259 | - | - | ||||||||||||
|
Other |
634 | 358 | 43 | 146 | ||||||||||||
|
Property and plant, net |
$ | 17,853 | $ | 9,775 | $ | 4,576 | $ | 2,248 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries as well as intercompany eliminations. |
| (b) | Amounts in Ameren and Ameren Missouri include two electric generation CTs under two separate capital lease agreements. The gross asset value of those agreements was $229 million and $228 million at December 31, 2011 and 2010, respectively. The total accumulated depreciation associated with the two CTs was $52 million and $46 million at December 31, 2011 and 2010, respectively. |
The following table provides accrued capital expenditures at December 31, 2011, 2010, and 2009, which represent noncash investing activity excluded from the statements of cash flows:
| Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
2011 |
$ | 107 | $ | 73 | $ | 18 | $ | 13 | ||||||||
|
2010 |
79 | 53 | 15 | 8 | ||||||||||||
|
2009 |
143 | 86 | 29 | 23 | ||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
NOTE 3 – PROPERTY AND PLANT, NET
The following table presents property and plant, net, for each of the Ameren Companies at December 31, 2011 and 2010:
| Ameren(a)(b) | Ameren Missouri(b) |
Ameren Illinois |
Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,256 | $ | 14,986 | $ | 4,600 | $ | 3,370 | ||||||||
|
Gas |
1,746 | 385 | 1,361 | - | ||||||||||||
|
Other |
466 | 113 | 91 | 39 | ||||||||||||
| 26,468 | 15,484 | 6,052 | 3,409 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,429 | 6,276 | 1,364 | 1,377 | ||||||||||||
| 17,039 | 9,208 | 4,688 | 2,032 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
255 | 255 | - | - | ||||||||||||
|
Other |
833 | 495 | 82 | 199 | ||||||||||||
|
Property and plant, net |
$ | 18,127 | $ | 9,958 | $ | 4,770 | $ | 2,231 | ||||||||
|
2010: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,069 | $ | 14,745 | $ | 4,436 | $ | 3,572 | ||||||||
|
Gas |
1,661 | 374 | 1,286 | - | ||||||||||||
|
Other |
424 | 91 | 61 | 48 | ||||||||||||
| 26,154 | 15,210 | 5,783 | 3,620 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,194 | 6,052 | 1,250 | 1,518 | ||||||||||||
| 16,960 | 9,158 | 4,533 | 2,102 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
259 | 259 | - | - | ||||||||||||
|
Other |
634 | 358 | 43 | 146 | ||||||||||||
|
Property and plant, net |
$ | 17,853 | $ | 9,775 | $ | 4,576 | $ | 2,248 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries as well as intercompany eliminations. |
| (b) | Amounts in Ameren and Ameren Missouri include two electric generation CTs under two separate capital lease agreements. The gross asset value of those agreements was $229 million and $228 million at December 31, 2011 and 2010, respectively. The total accumulated depreciation associated with the two CTs was $52 million and $46 million at December 31, 2011 and 2010, respectively. |
The following table provides accrued capital expenditures at December 31, 2011, 2010, and 2009, which represent noncash investing activity excluded from the statements of cash flows:
| Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
2011 |
$ | 107 | $ | 73 | $ | 18 | $ | 13 | ||||||||
|
2010 |
79 | 53 | 15 | 8 | ||||||||||||
|
2009 |
143 | 86 | 29 | 23 | ||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
|
|||
NOTE 4 – SHORT-TERM DEBT AND LIQUIDITY
The liquidity needs of the Ameren Companies are typically supported through the use of available cash, short-term intercompany borrowings, drawings under committed bank credit facilities, or commercial paper issuances.
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Missouri Credit Agreement described below for the year ended December 31, 2011, and excludes letters of credit issued under the credit agreement:
|
2010 Missouri Credit Agreement ($800 million) |
Ameren (Parent) | Ameren Missouri | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | 105 | $ | — | $ | 105 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
2.30 | % | — | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a ) |
$ | 340 | $ | — | $ | 340 | ||||||
|
Peak interest rate during 2011 |
4.30 | % | — | 4.30 | % | |||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 195 | $ | — | $ | 195 | ||||||
|
Outstanding credit facility borrowings at period end |
340 | — | 340 | |||||||||
|
Weighted-average interest rate during 2010( b) |
2.31 | % | — | 2.31 | % | |||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 380 | $ | — | $ | 380 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | — | 2.31 | % | |||||||
| (a) | The timing of peak credit facility borrowings varies by company and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Genco Credit Agreement described below for the year ended December 31, 2011:
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | — | $ | 41 | $ | 41 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
— | 2.30 | % | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a) |
$ | — | $ | 100 | $ | 100 | ||||||
|
Peak interest rate during 2011 |
— | 2.31 | % | 2.31 | % | |||||||
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 36 | $ | 54 | $ | 90 | ||||||
|
Outstanding credit facility borrowings at period end |
— | 100 | 100 | |||||||||
|
Weighted-average interest rate during 2010(b ) |
2.30 | % | 2.31 | % | 2.31 | % | ||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 385 | $ | 100 | $ | 385 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | 2.31 | % | 2.31 | % | ||||||
| (a) | The timing of peak credit facility borrowings varies by company, and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
Neither Ameren nor Ameren Illinois borrowed under the 2010 Illinois Credit Agreement during the years ended December 31, 2011, and 2010, respectively.
2010 Credit Agreements
Ameren and certain of its subsidiaries entered into multiyear credit facility agreements with a large and diverse group of lenders in 2010. These facilities cumulatively provide $2.1 billion of credit through September 10, 2013. The facilities currently include 25 international, national, and regional lenders, with no lender providing more than $125 million of credit in aggregate.
On September 10, 2010, Ameren and Ameren Missouri entered into the $800 million 2010 Missouri Credit Agreement. On September 10, 2010, Ameren and Genco entered into the $500 million 2010 Genco Credit Agreement.
Also on September 10, 2010, Ameren and Ameren Illinois, as successor company to CIPS, CILCO and IP, entered into the $800 million 2010 Illinois Credit Agreement.
The obligations of each borrower under the respective 2010 Credit Agreements to which it is a party are several and not joint, and, except under limited circumstances relating to expenses and indemnities, the obligations of Ameren Missouri, Ameren Illinois and Genco under the respective 2010 Credit Agreements are not guaranteed by Ameren or any other subsidiary of Ameren. The maximum aggregate amount available to each borrower under each facility is shown in the following table (such amount being such borrower's "Borrowing Sublimit"):
| 2010 Missouri Credit Agreement |
2010 Genco Credit Agreement |
2010 Illinois Credit Agreement |
||||||||||
|
Ameren |
$ | 500 | $ | 500 | $ | 300 | ||||||
|
Ameren Missouri |
500 | (a | ) | (a | ) | |||||||
|
Ameren Illinois |
(a | ) | (a | ) | 800 | |||||||
|
Genco |
(a | ) | 500 | (a | ) | |||||||
| (a) | Not applicable. |
Ameren has the option to seek additional commitments from existing or new lenders to increase the total facility size of the 2010 Credit Agreements to the following maximum amounts: 2010 Missouri Credit Agreement – $1.0 billion; 2010 Genco Credit Agreement – $625 million; and 2010 Illinois Credit Agreement – $1.0 billion. Each of the 2010 Credit Agreements will mature and expire on September 10, 2013. In February 2011, Ameren Illinois received approval from the ICC to extend the expiration of its Borrowing Sublimit under the 2010 Illinois Credit Agreement to September 10, 2013. In June 2011, Ameren Missouri received approval from the MoPSC to extend the expiration of its borrowing sublimit under the 2010 Missouri Credit Agreement to September 10, 2013. The principal amount of each revolving loan owed by a borrower under any of the 2010 Credit Agreements to which it is a party will be due and payable no later than September 10, 2013.
The obligations of all borrowers under the 2010 Credit Agreements are unsecured. Loans are available on a revolving basis under each of the 2010 Credit Agreements and may be repaid and, subject to satisfaction of the conditions to borrowing, reborrowed from time to time. At the election of each borrower, the interest rates on such loans will be the alternate base rate (ABR) plus the margin applicable to the particular borrower and/or the eurodollar rate plus the margin applicable to the particular borrower. The applicable margins will be determined by the borrower's long-term unsecured credit ratings or, if no such ratings are then in effect, the borrower's corporate/issuer ratings then in effect. Letters of credit in an aggregate undrawn face amount not to exceed 25% of the applicable aggregate commitment under the respective 2010 Credit Agreements are also available for issuance for the account of the borrowers thereunder (but within the $2.1 billion overall combined facility borrowing limitations of the 2010 Credit Agreements).
The 2010 Credit Agreements are used to borrow cash, to issue letters of credit, and to support borrowings under Ameren's $500 million commercial paper program, Ameren Missouri's $500 million commercial paper program and Ameren Illinois' $500 million commercial paper program. Any of the 2010 Credit Agreements are available to Ameren to support borrowings under Ameren's commercial paper program, subject to borrowing sublimits. The 2010 Missouri Credit Agreement is available to support borrowings under Ameren Missouri's commercial paper program, and the 2010 Illinois Credit Agreement is available to support borrowings under Ameren Illinois' commercial paper program. At December 31, 2011, Ameren had $148 million of commercial paper outstanding and $15 million of letters of credit outstanding, and Ameren Missouri and Ameren Illinois had no commercial paper or letters of credit outstanding. Based on outstanding borrowings and letters of credit issued under the 2010 Credit Agreements as of December 31, 2011, as well as commercial paper outstanding as of such date, the aggregate amount of credit capacity available under the 2010 Credit Agreements at December 31, 2011, was $1.9 billion.
$20 Million Credit Facility (Terminated)
On June 2, 2010, Ameren entered into a $20 million revolving credit facility ($20 Million Facility). Borrowings under the $20 Million Facility incurred interest at a rate equal to the applicable LIBOR plus 2.25% per annum. The obligations of Ameren under the $20 Million Facility were unsecured. No subsidiary of Ameren was a party to, guarantor of, or borrower under the facility. Ameren had no outstanding borrowings under the facility as of December 31, 2011. Ameren terminated the $20 Million Facility in January 2012. During the years ended December 31, 2011 and 2010, Ameren had average daily balances outstanding of $20 million, with a weighted-average interest rate of 2.48% and 2.54%, respectively.
Commercial Paper
At December 31, 2011, and 2010, Ameren had $148 million and $269 million of commercial paper outstanding, respectively. During the years ended December 31, 2011 and 2010, Ameren had average daily commercial paper balances outstanding of $311 million and $185 million with a weighted-average interest rate of 0.87% and 0.94%, respectively. The peak short-term commercial paper outstanding during the years ended December 31, 2011, and 2010 were $435 million and $366 million, respectively. The peak interest rate for both years was 1.46%. During 2010, the commercial paper was issued only from July through December.
Indebtedness Provisions and Other Covenants
The information below presents a summary of the Ameren Companies' compliance with indebtedness provisions and other covenants.
The 2010 Credit Agreements contain conditions about borrowings and issuances of letters of credit, including the absence of default or unmatured default, material accuracy of representations and warranties (excluding any representation after the closing date as to the absence of material adverse change and material litigation), and obtaining required regulatory authorizations. In addition, solely as it relates to borrowings under the 2010 Illinois Credit Agreement, it is a condition for any such borrowing that, at the time of and after giving effect to such borrowing, the borrower not be in violation of any limitation on its ability to incur unsecured indebtedness contained in its articles of incorporation. The 2010 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 2010 Credit Agreements require each of Ameren, Ameren Missouri, Ameren Illinois and Genco to 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 December 31, 2011, the ratios of consolidated indebtedness to total consolidated capitalization, calculated in accordance with the provisions of the 2010 Credit Agreements, were 47%, 48%, 41% and 45%, for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. In addition, under the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of 2.0to 1.0, to be calculated quarterly, as of the end of the most recent four fiscal quarters then ending, in accordance with the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, as applicable. Ameren's ratio as of December 31, 2011 was 5.1 to 1.0. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable 2010 Credit Agreement.
The 2010 Credit Agreements contain default provisions. Defaults under the 2010 Credit Agreements apply separately to each borrower; except however, that a default by Ameren Missouri, Ameren Illinois or Genco under any of the 2010 Credit Agreements will also constitute a default by Ameren under such agreement. Defaults include a cross default with respect to a borrower under the applicable 2010 Credit Agreements if that borrower defaults under any other agreement covering outstanding indebtedness of itself and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $25 million in the aggregate. Any default of Ameren under any 2010 Credit Agreement that exists solely as a result of a default by Ameren Missouri, Ameren Illinois or Genco thereunder will not constitute a default under any other 2010 Credit Agreement while Ameren is otherwise in compliance with all of its obligations under such other 2010 Credit Agreement. Further, a default at the Ameren level under any 2010 Credit Agreement does not trigger a default by Ameren Missouri, Ameren Illinois or Genco under such agreement.
None of the Ameren Companies' credit facilities or other financing arrangements contains credit rating triggers that would cause an event of default or acceleration of repayment of outstanding balances. At December 31, 2011, management believes that the Ameren Companies were in compliance with the provisions and covenants of their credit facilities.
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. Separate money pools are maintained for utility and non-state-regulated entities. Ameren Services is responsible for the operation and administration of the money pool agreements.
Utility
Ameren Missouri, Ameren Illinois and Ameren Services may participate in the utility money pool as both lenders and borrowers. Ameren and AERG may participate in the utility money pool only as lenders. Ameren Services administers the utility money pool and tracks internal and external funds separately. Internal funds are surplus funds contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the 2010 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 by participants, but 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. The utility money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the utility money pool agreement 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. There were no utility money pool borrowings during the years ended December 31, 2011 and 2010.
Non-state-regulated Subsidiaries
Ameren, Ameren Services, AER, Genco, AERG, Marketing Company, and other non-state-regulated Ameren subsidiaries have the ability, subject to Ameren parent company authorization and applicable regulatory short-term borrowing authorizations, to access funding from the 2010 Credit Agreements and the commercial paper programs through a non-state-regulated subsidiary money pool agreement. All participants may borrow from or lend to the non-state-regulated money pool, except for Ameren Services, which may participate only as a borrower. The total amount available to the pool participants 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 non-state-regulated subsidiary money pool or remit funds from other external sources. The non-state-regulated subsidiary money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the non-state-regulated subsidiary money pool agreement 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 non-state-regulated subsidiary money pool. The average interest rate for borrowing under the non-state-regulated subsidiary money pool for the year ended December 31, 2011, was 0.77% (2010 – 0.77%).
See Note 14 – Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the years ended December 31, 2011, 2010, and 2009.
Unilateral Borrowing Agreement
In addition, a unilateral borrowing agreement exists among Ameren, Ameren Illinois, and Ameren Services, which enables Ameren Illinois to make short-term borrowings directly from Ameren. The aggregate amount of borrowings outstanding at any time by Ameren Illinois under the unilateral borrowing agreement and the utility money pool agreement, together with any outstanding Ameren Illinois external credit facility borrowings or commercial paper issuances, may not exceed $500 million, pursuant to authorization from the ICC. Ameren Illinois is not currently borrowing under the unilateral borrowing agreement. Ameren Services is responsible for operation and administration of the unilateral borrowing agreement.
NOTE 4 – SHORT-TERM DEBT AND LIQUIDITY
The liquidity needs of the Ameren Companies are typically supported through the use of available cash, short-term intercompany borrowings, drawings under committed bank credit facilities, or commercial paper issuances.
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Missouri Credit Agreement described below for the year ended December 31, 2011, and excludes letters of credit issued under the credit agreement:
|
2010 Missouri Credit Agreement ($800 million) |
Ameren (Parent) | Ameren Missouri | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | 105 | $ | — | $ | 105 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
2.30 | % | — | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a ) |
$ | 340 | $ | — | $ | 340 | ||||||
|
Peak interest rate during 2011 |
4.30 | % | — | 4.30 | % | |||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 195 | $ | — | $ | 195 | ||||||
|
Outstanding credit facility borrowings at period end |
340 | — | 340 | |||||||||
|
Weighted-average interest rate during 2010( b) |
2.31 | % | — | 2.31 | % | |||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 380 | $ | — | $ | 380 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | — | 2.31 | % | |||||||
| (a) | The timing of peak credit facility borrowings varies by company and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Genco Credit Agreement described below for the year ended December 31, 2011:
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | — | $ | 41 | $ | 41 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
— | 2.30 | % | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a) |
$ | — | $ | 100 | $ | 100 | ||||||
|
Peak interest rate during 2011 |
— | 2.31 | % | 2.31 | % | |||||||
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 36 | $ | 54 | $ | 90 | ||||||
|
Outstanding credit facility borrowings at period end |
— | 100 | 100 | |||||||||
|
Weighted-average interest rate during 2010(b ) |
2.30 | % | 2.31 | % | 2.31 | % | ||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 385 | $ | 100 | $ | 385 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | 2.31 | % | 2.31 | % | ||||||
| (a) | The timing of peak credit facility borrowings varies by company, and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
Neither Ameren nor Ameren Illinois borrowed under the 2010 Illinois Credit Agreement during the years ended December 31, 2011, and 2010, respectively.
2010 Credit Agreements
Ameren and certain of its subsidiaries entered into multiyear credit facility agreements with a large and diverse group of lenders in 2010. These facilities cumulatively provide $2.1 billion of credit through September 10, 2013. The facilities currently include 25 international, national, and regional lenders, with no lender providing more than $125 million of credit in aggregate.
On September 10, 2010, Ameren and Ameren Missouri entered into the $800 million 2010 Missouri Credit Agreement. On September 10, 2010, Ameren and Genco entered into the $500 million 2010 Genco Credit Agreement.
Also on September 10, 2010, Ameren and Ameren Illinois, as successor company to CIPS, CILCO and IP, entered into the $800 million 2010 Illinois Credit Agreement.
The obligations of each borrower under the respective 2010 Credit Agreements to which it is a party are several and not joint, and, except under limited circumstances relating to expenses and indemnities, the obligations of Ameren Missouri, Ameren Illinois and Genco under the respective 2010 Credit Agreements are not guaranteed by Ameren or any other subsidiary of Ameren. The maximum aggregate amount available to each borrower under each facility is shown in the following table (such amount being such borrower's "Borrowing Sublimit"):
| 2010 Missouri Credit Agreement |
2010 Genco Credit Agreement |
2010 Illinois Credit Agreement |
||||||||||
|
Ameren |
$ | 500 | $ | 500 | $ | 300 | ||||||
|
Ameren Missouri |
500 | (a | ) | (a | ) | |||||||
|
Ameren Illinois |
(a | ) | (a | ) | 800 | |||||||
|
Genco |
(a | ) | 500 | (a | ) | |||||||
| (a) | Not applicable. |
Ameren has the option to seek additional commitments from existing or new lenders to increase the total facility size of the 2010 Credit Agreements to the following maximum amounts: 2010 Missouri Credit Agreement – $1.0 billion; 2010 Genco Credit Agreement – $625 million; and 2010 Illinois Credit Agreement – $1.0 billion. Each of the 2010 Credit Agreements will mature and expire on September 10, 2013. In February 2011, Ameren Illinois received approval from the ICC to extend the expiration of its Borrowing Sublimit under the 2010 Illinois Credit Agreement to September 10, 2013. In June 2011, Ameren Missouri received approval from the MoPSC to extend the expiration of its borrowing sublimit under the 2010 Missouri Credit Agreement to September 10, 2013. The principal amount of each revolving loan owed by a borrower under any of the 2010 Credit Agreements to which it is a party will be due and payable no later than September 10, 2013.
The obligations of all borrowers under the 2010 Credit Agreements are unsecured. Loans are available on a revolving basis under each of the 2010 Credit Agreements and may be repaid and, subject to satisfaction of the conditions to borrowing, reborrowed from time to time. At the election of each borrower, the interest rates on such loans will be the alternate base rate (ABR) plus the margin applicable to the particular borrower and/or the eurodollar rate plus the margin applicable to the particular borrower. The applicable margins will be determined by the borrower's long-term unsecured credit ratings or, if no such ratings are then in effect, the borrower's corporate/issuer ratings then in effect. Letters of credit in an aggregate undrawn face amount not to exceed 25% of the applicable aggregate commitment under the respective 2010 Credit Agreements are also available for issuance for the account of the borrowers thereunder (but within the $2.1 billion overall combined facility borrowing limitations of the 2010 Credit Agreements).
The 2010 Credit Agreements are used to borrow cash, to issue letters of credit, and to support borrowings under Ameren's $500 million commercial paper program, Ameren Missouri's $500 million commercial paper program and Ameren Illinois' $500 million commercial paper program. Any of the 2010 Credit Agreements are available to Ameren to support borrowings under Ameren's commercial paper program, subject to borrowing sublimits. The 2010 Missouri Credit Agreement is available to support borrowings under Ameren Missouri's commercial paper program, and the 2010 Illinois Credit Agreement is available to support borrowings under Ameren Illinois' commercial paper program. At December 31, 2011, Ameren had $148 million of commercial paper outstanding and $15 million of letters of credit outstanding, and Ameren Missouri and Ameren Illinois had no commercial paper or letters of credit outstanding. Based on outstanding borrowings and letters of credit issued under the 2010 Credit Agreements as of December 31, 2011, as well as commercial paper outstanding as of such date, the aggregate amount of credit capacity available under the 2010 Credit Agreements at December 31, 2011, was $1.9 billion.
$20 Million Credit Facility (Terminated)
On June 2, 2010, Ameren entered into a $20 million revolving credit facility ($20 Million Facility). Borrowings under the $20 Million Facility incurred interest at a rate equal to the applicable LIBOR plus 2.25% per annum. The obligations of Ameren under the $20 Million Facility were unsecured. No subsidiary of Ameren was a party to, guarantor of, or borrower under the facility. Ameren had no outstanding borrowings under the facility as of December 31, 2011. Ameren terminated the $20 Million Facility in January 2012. During the years ended December 31, 2011 and 2010, Ameren had average daily balances outstanding of $20 million, with a weighted-average interest rate of 2.48% and 2.54%, respectively.
Commercial Paper
At December 31, 2011, and 2010, Ameren had $148 million and $269 million of commercial paper outstanding, respectively. During the years ended December 31, 2011 and 2010, Ameren had average daily commercial paper balances outstanding of $311 million and $185 million with a weighted-average interest rate of 0.87% and 0.94%, respectively. The peak short-term commercial paper outstanding during the years ended December 31, 2011, and 2010 were $435 million and $366 million, respectively. The peak interest rate for both years was 1.46%. During 2010, the commercial paper was issued only from July through December.
Indebtedness Provisions and Other Covenants
The information below presents a summary of the Ameren Companies' compliance with indebtedness provisions and other covenants.
The 2010 Credit Agreements contain conditions about borrowings and issuances of letters of credit, including the absence of default or unmatured default, material accuracy of representations and warranties (excluding any representation after the closing date as to the absence of material adverse change and material litigation), and obtaining required regulatory authorizations. In addition, solely as it relates to borrowings under the 2010 Illinois Credit Agreement, it is a condition for any such borrowing that, at the time of and after giving effect to such borrowing, the borrower not be in violation of any limitation on its ability to incur unsecured indebtedness contained in its articles of incorporation. The 2010 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 2010 Credit Agreements require each of Ameren, Ameren Missouri, Ameren Illinois and Genco to 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 December 31, 2011, the ratios of consolidated indebtedness to total consolidated capitalization, calculated in accordance with the provisions of the 2010 Credit Agreements, were 47%, 48%, 41% and 45%, for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. In addition, under the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of 2.0 to 1.0, to be calculated quarterly, as of the end of the most recent four fiscal quarters then ending, in accordance with the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, as applicable. Ameren's ratio as of December 31, 2011 was 5.1 to 1.0. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable 2010 Credit Agreement.
The 2010 Credit Agreements contain default provisions. Defaults under the 2010 Credit Agreements apply separately to each borrower; except however, that a default by Ameren Missouri, Ameren Illinois or Genco under any of the 2010 Credit Agreements will also constitute a default by Ameren under such agreement. Defaults include a cross default with respect to a borrower under the applicable 2010 Credit Agreements if that borrower defaults under any other agreement covering outstanding indebtedness of itself and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $25 million in the aggregate. Any default of Ameren under any 2010 Credit Agreement that exists solely as a result of a default by Ameren Missouri, Ameren Illinois or Genco thereunder will not constitute a default under any other 2010 Credit Agreement while Ameren is otherwise in compliance with all of its obligations under such other 2010 Credit Agreement. Further, a default at the Ameren level under any 2010 Credit Agreement does not trigger a default by Ameren Missouri, Ameren Illinois or Genco under such agreement.
None of the Ameren Companies' credit facilities or other financing arrangements contains credit rating triggers that would cause an event of default or acceleration of repayment of outstanding balances. At December 31, 2011, management believes that the Ameren Companies were in compliance with the provisions and covenants of their credit facilities.
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. Separate money pools are maintained for utility and non-state-regulated entities. Ameren Services is responsible for the operation and administration of the money pool agreements.
Utility
Ameren Missouri, Ameren Illinois and Ameren Services may participate in the utility money pool as both lenders and borrowers. Ameren and AERG may participate in the utility money pool only as lenders. Ameren Services administers the utility money pool and tracks internal and external funds separately. Internal funds are surplus funds contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the 2010 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 by participants, but 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. The utility money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the utility money pool agreement 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. There were no utility money pool borrowings during the years ended December 31, 2011 and 2010.
Non-state-regulated Subsidiaries
Ameren, Ameren Services, AER, Genco, AERG, Marketing Company, and other non-state-regulated Ameren subsidiaries have the ability, subject to Ameren parent company authorization and applicable regulatory short-term borrowing authorizations, to access funding from the 2010 Credit Agreements and the commercial paper programs through a non-state-regulated subsidiary money pool agreement. All participants may borrow from or lend to the non-state-regulated money pool, except for Ameren Services, which may participate only as a borrower. The total amount available to the pool participants 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 non-state-regulated subsidiary money pool or remit funds from other external sources. The non-state-regulated subsidiary money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the non-state-regulated subsidiary money pool agreement 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 non-state-regulated subsidiary money pool. The average interest rate for borrowing under the non-state-regulated subsidiary money pool for the year ended December 31, 2011, was 0.77% (2010 – 0.77%).
See Note 14 – Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the years ended December 31, 2011, 2010, and 2009.
Unilateral Borrowing Agreement
In addition, a unilateral borrowing agreement exists among Ameren, Ameren Illinois, and Ameren Services, which enables Ameren Illinois to make short-term borrowings directly from Ameren. The aggregate amount of borrowings outstanding at any time by Ameren Illinois under the unilateral borrowing agreement and the utility money pool agreement, together with any outstanding Ameren Illinois external credit facility borrowings or commercial paper issuances, may not exceed $500 million, pursuant to authorization from the ICC. Ameren Illinois is not currently borrowing under the unilateral borrowing agreement. Ameren Services is responsible for operation and administration of the unilateral borrowing agreement.
NOTE 4 – SHORT-TERM DEBT AND LIQUIDITY
The liquidity needs of the Ameren Companies are typically supported through the use of available cash, short-term intercompany borrowings, drawings under committed bank credit facilities, or commercial paper issuances.
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Missouri Credit Agreement described below for the year ended December 31, 2011, and excludes letters of credit issued under the credit agreement:
|
2010 Missouri Credit Agreement ($800 million) |
Ameren (Parent) | Ameren Missouri | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | 105 | $ | — | $ | 105 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
2.30 | % | — | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a ) |
$ | 340 | $ | — | $ | 340 | ||||||
|
Peak interest rate during 2011 |
4.30 | % | — | 4.30 | % | |||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 195 | $ | — | $ | 195 | ||||||
|
Outstanding credit facility borrowings at period end |
340 | — | 340 | |||||||||
|
Weighted-average interest rate during 2010( b) |
2.31 | % | — | 2.31 | % | |||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 380 | $ | — | $ | 380 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | — | 2.31 | % | |||||||
| (a) | The timing of peak credit facility borrowings varies by company and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Genco Credit Agreement described below for the year ended December 31, 2011:
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | — | $ | 41 | $ | 41 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
— | 2.30 | % | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a) |
$ | — | $ | 100 | $ | 100 | ||||||
|
Peak interest rate during 2011 |
— | 2.31 | % | 2.31 | % | |||||||
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 36 | $ | 54 | $ | 90 | ||||||
|
Outstanding credit facility borrowings at period end |
— | 100 | 100 | |||||||||
|
Weighted-average interest rate during 2010(b ) |
2.30 | % | 2.31 | % | 2.31 | % | ||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 385 | $ | 100 | $ | 385 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | 2.31 | % | 2.31 | % | ||||||
| (a) | The timing of peak credit facility borrowings varies by company, and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
Neither Ameren nor Ameren Illinois borrowed under the 2010 Illinois Credit Agreement during the years ended December 31, 2011, and 2010, respectively.
2010 Credit Agreements
Ameren and certain of its subsidiaries entered into multiyear credit facility agreements with a large and diverse group of lenders in 2010. These facilities cumulatively provide $2.1 billion of credit through September 10, 2013. The facilities currently include 25 international, national, and regional lenders, with no lender providing more than $125 million of credit in aggregate.
On September 10, 2010, Ameren and Ameren Missouri entered into the $800 million 2010 Missouri Credit Agreement. On September 10, 2010, Ameren and Genco entered into the $500 million 2010 Genco Credit Agreement.
Also on September 10, 2010, Ameren and Ameren Illinois, as successor company to CIPS, CILCO and IP, entered into the $800 million 2010 Illinois Credit Agreement.
The obligations of each borrower under the respective 2010 Credit Agreements to which it is a party are several and not joint, and, except under limited circumstances relating to expenses and indemnities, the obligations of Ameren Missouri, Ameren Illinois and Genco under the respective 2010 Credit Agreements are not guaranteed by Ameren or any other subsidiary of Ameren. The maximum aggregate amount available to each borrower under each facility is shown in the following table (such amount being such borrower's "Borrowing Sublimit"):
| 2010 Missouri Credit Agreement |
2010 Genco Credit Agreement |
2010 Illinois Credit Agreement |
||||||||||
|
Ameren |
$ | 500 | $ | 500 | $ | 300 | ||||||
|
Ameren Missouri |
500 | (a | ) | (a | ) | |||||||
|
Ameren Illinois |
(a | ) | (a | ) | 800 | |||||||
|
Genco |
(a | ) | 500 | (a | ) | |||||||
| (a) | Not applicable. |
Ameren has the option to seek additional commitments from existing or new lenders to increase the total facility size of the 2010 Credit Agreements to the following maximum amounts: 2010 Missouri Credit Agreement – $1.0 billion; 2010 Genco Credit Agreement – $625 million; and 2010 Illinois Credit Agreement – $1.0 billion. Each of the 2010 Credit Agreements will mature and expire on September 10, 2013. In February 2011, Ameren Illinois received approval from the ICC to extend the expiration of its Borrowing Sublimit under the 2010 Illinois Credit Agreement to September 10, 2013. In June 2011, Ameren Missouri received approval from the MoPSC to extend the expiration of its borrowing sublimit under the 2010 Missouri Credit Agreement to September 10, 2013. The principal amount of each revolving loan owed by a borrower under any of the 2010 Credit Agreements to which it is a party will be due and payable no later than September 10, 2013.
The obligations of all borrowers under the 2010 Credit Agreements are unsecured. Loans are available on a revolving basis under each of the 2010 Credit Agreements and may be repaid and, subject to satisfaction of the conditions to borrowing, reborrowed from time to time. At the election of each borrower, the interest rates on such loans will be the alternate base rate (ABR) plus the margin applicable to the particular borrower and/or the eurodollar rate plus the margin applicable to the particular borrower. The applicable margins will be determined by the borrower's long-term unsecured credit ratings or, if no such ratings are then in effect, the borrower's corporate/issuer ratings then in effect. Letters of credit in an aggregate undrawn face amount not to exceed 25% of the applicable aggregate commitment under the respective 2010 Credit Agreements are also available for issuance for the account of the borrowers thereunder (but within the $2.1 billion overall combined facility borrowing limitations of the 2010 Credit Agreements).
The 2010 Credit Agreements are used to borrow cash, to issue letters of credit, and to support borrowings under Ameren's $500 million commercial paper program, Ameren Missouri's $500 million commercial paper program and Ameren Illinois' $500 million commercial paper program. Any of the 2010 Credit Agreements are available to Ameren to support borrowings under Ameren's commercial paper program, subject to borrowing sublimits. The 2010 Missouri Credit Agreement is available to support borrowings under Ameren Missouri's commercial paper program, and the 2010 Illinois Credit Agreement is available to support borrowings under Ameren Illinois' commercial paper program. At December 31, 2011, Ameren had $148 million of commercial paper outstanding and $15 million of letters of credit outstanding, and Ameren Missouri and Ameren Illinois had no commercial paper or letters of credit outstanding. Based on outstanding borrowings and letters of credit issued under the 2010 Credit Agreements as of December 31, 2011, as well as commercial paper outstanding as of such date, the aggregate amount of credit capacity available under the 2010 Credit Agreements at December 31, 2011, was $1.9 billion.
$20 Million Credit Facility (Terminated)
On June 2, 2010, Ameren entered into a $20 million revolving credit facility ($20 Million Facility). Borrowings under the $20 Million Facility incurred interest at a rate equal to the applicable LIBOR plus 2.25% per annum. The obligations of Ameren under the $20 Million Facility were unsecured. No subsidiary of Ameren was a party to, guarantor of, or borrower under the facility. Ameren had no outstanding borrowings under the facility as of December 31, 2011. Ameren terminated the $20 Million Facility in January 2012. During the years ended December 31, 2011 and 2010, Ameren had average daily balances outstanding of $20 million, with a weighted-average interest rate of 2.48% and 2.54%, respectively.
Commercial Paper
At December 31, 2011, and 2010, Ameren had $148 million and $269 million of commercial paper outstanding, respectively. During the years ended December 31, 2011 and 2010, Ameren had average daily commercial paper balances outstanding of $311 million and $185 million with a weighted-average interest rate of 0.87% and 0.94%, respectively. The peak short-term commercial paper outstanding during the years ended December 31, 2011, and 2010 were $435 million and $366 million, respectively. The peak interest rate for both years was 1.46%. During 2010, the commercial paper was issued only from July through December.
Indebtedness Provisions and Other Covenants
The information below presents a summary of the Ameren Companies' compliance with indebtedness provisions and other covenants.
The 2010 Credit Agreements contain conditions about borrowings and issuances of letters of credit, including the absence of default or unmatured default, material accuracy of representations and warranties (excluding any representation after the closing date as to the absence of material adverse change and material litigation), and obtaining required regulatory authorizations. In addition, solely as it relates to borrowings under the 2010 Illinois Credit Agreement, it is a condition for any such borrowing that, at the time of and after giving effect to such borrowing, the borrower not be in violation of any limitation on its ability to incur unsecured indebtedness contained in its articles of incorporation. The 2010 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 2010 Credit Agreements require each of Ameren, Ameren Missouri, Ameren Illinois and Genco to 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 December 31, 2011, the ratios of consolidated indebtedness to total consolidated capitalization, calculated in accordance with the provisions of the 2010 Credit Agreements, were 47%, 48%, 41% and 45%, for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. In addition, under the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of 2.0 to 1.0, to be calculated quarterly, as of the end of the most recent four fiscal quarters then ending, in accordance with the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, as applicable. Ameren's ratio as of December 31, 2011 was 5.1 to 1.0. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable 2010 Credit Agreement.
The 2010 Credit Agreements contain default provisions. Defaults under the 2010 Credit Agreements apply separately to each borrower; except however, that a default by Ameren Missouri, Ameren Illinois or Genco under any of the 2010 Credit Agreements will also constitute a default by Ameren under such agreement. Defaults include a cross default with respect to a borrower under the applicable 2010 Credit Agreements if that borrower defaults under any other agreement covering outstanding indebtedness of itself and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $25 million in the aggregate. Any default of Ameren under any 2010 Credit Agreement that exists solely as a result of a default by Ameren Missouri, Ameren Illinois or Genco thereunder will not constitute a default under any other 2010 Credit Agreement while Ameren is otherwise in compliance with all of its obligations under such other 2010 Credit Agreement. Further, a default at the Ameren level under any 2010 Credit Agreement does not trigger a default by Ameren Missouri, Ameren Illinois or Genco under such agreement.
None of the Ameren Companies' credit facilities or other financing arrangements contains credit rating triggers that would cause an event of default or acceleration of repayment of outstanding balances. At December 31, 2011, management believes that the Ameren Companies were in compliance with the provisions and covenants of its credit facilities.
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. Separate money pools are maintained for utility and non-state-regulated entities. Ameren Services is responsible for the operation and administration of the money pool agreements.
Utility
Ameren Missouri, Ameren Illinois and Ameren Services may participate in the utility money pool as both lenders and borrowers. Ameren and AERG may participate in the utility money pool only as lenders. Ameren Services administers the utility money pool and tracks internal and external funds separately. Internal funds are surplus funds contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the 2010 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 by participants, but 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. The utility money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the utility money pool agreement 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. There were no utility money pool borrowings during the years ended December 31, 2011 and 2010.
Non-state-regulated Subsidiaries
Ameren, Ameren Services, AER, Genco, AERG, Marketing Company, and other non-state-regulated Ameren subsidiaries have the ability, subject to Ameren parent company authorization and applicable regulatory short-term borrowing authorizations, to access funding from the 2010 Credit Agreements and the commercial paper programs through a non-state-regulated subsidiary money pool agreement. All participants may borrow from or lend to the non-state-regulated money pool, except for Ameren Services, which may participate only as a borrower. The total amount available to the pool participants 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 non-state-regulated subsidiary money pool or remit funds from other external sources. The non-state-regulated subsidiary money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the non-state-regulated subsidiary money pool agreement 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 non-state-regulated subsidiary money pool. The average interest rate for borrowing under the non-state-regulated subsidiary money pool for the year ended December 31, 2011, was 0.77% (2010 – 0.77%).
See Note 14 – Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the years ended December 31, 2011, 2010, and 2009.
Unilateral Borrowing Agreement
In addition, a unilateral borrowing agreement exists among Ameren, Ameren Illinois, and Ameren Services, which enables Ameren Illinois to make short-term borrowings directly from Ameren. The aggregate amount of borrowings outstanding at any time by Ameren Illinois under the unilateral borrowing agreement and the utility money pool agreement, together with any outstanding Ameren Illinois external credit facility borrowings or commercial paper issuances, may not exceed $500 million, pursuant to authorization from the ICC. Ameren Illinois is not currently borrowing under the unilateral borrowing agreement. Ameren Services is responsible for operation and administration of the unilateral borrowing agreement.
NOTE 4 – SHORT-TERM DEBT AND LIQUIDITY
The liquidity needs of the Ameren Companies are typically supported through the use of available cash, short-term intercompany borrowings, drawings under committed bank credit facilities, or commercial paper issuances.
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Missouri Credit Agreement described below for the year ended December 31, 2011, and excludes letters of credit issued under the credit agreement:
|
2010 Missouri Credit Agreement ($800 million) |
Ameren (Parent) | Ameren Missouri | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | 105 | $ | — | $ | 105 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
2.30 | % | — | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a ) |
$ | 340 | $ | — | $ | 340 | ||||||
|
Peak interest rate during 2011 |
4.30 | % | — | 4.30 | % | |||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 195 | $ | — | $ | 195 | ||||||
|
Outstanding credit facility borrowings at period end |
340 | — | 340 | |||||||||
|
Weighted-average interest rate during 2010( b) |
2.31 | % | — | 2.31 | % | |||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 380 | $ | — | $ | 380 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | — | 2.31 | % | |||||||
| (a) | The timing of peak credit facility borrowings varies by company and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Genco Credit Agreement described below for the year ended December 31, 2011:
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | — | $ | 41 | $ | 41 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
— | 2.30 | % | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a) |
$ | — | $ | 100 | $ | 100 | ||||||
|
Peak interest rate during 2011 |
— | 2.31 | % | 2.31 | % | |||||||
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 36 | $ | 54 | $ | 90 | ||||||
|
Outstanding credit facility borrowings at period end |
— | 100 | 100 | |||||||||
|
Weighted-average interest rate during 2010(b ) |
2.30 | % | 2.31 | % | 2.31 | % | ||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 385 | $ | 100 | $ | 385 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | 2.31 | % | 2.31 | % | ||||||
| (a) | The timing of peak credit facility borrowings varies by company, and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
Neither Ameren nor Ameren Illinois borrowed under the 2010 Illinois Credit Agreement during the years ended December 31, 2011, and 2010, respectively.
2010 Credit Agreements
Ameren and certain of its subsidiaries entered into multiyear credit facility agreements with a large and diverse group of lenders in 2010. These facilities cumulatively provide $2.1 billion of credit through September 10, 2013. The facilities currently include 25 international, national, and regional lenders, with no lender providing more than $125 million of credit in aggregate.
On September 10, 2010, Ameren and Ameren Missouri entered into the $800 million 2010 Missouri Credit Agreement. On September 10, 2010, Ameren and Genco entered into the $500 million 2010 Genco Credit Agreement.
Also on September 10, 2010, Ameren and Ameren Illinois, as successor company to CIPS, CILCO and IP, entered into the $800 million 2010 Illinois Credit Agreement.
The obligations of each borrower under the respective 2010 Credit Agreements to which it is a party are several and not joint, and, except under limited circumstances relating to expenses and indemnities, the obligations of Ameren Missouri, Ameren Illinois and Genco under the respective 2010 Credit Agreements are not guaranteed by Ameren or any other subsidiary of Ameren. The maximum aggregate amount available to each borrower under each facility is shown in the following table (such amount being such borrower's "Borrowing Sublimit"):
| 2010 Missouri Credit Agreement |
2010 Genco Credit Agreement |
2010 Illinois Credit Agreement |
||||||||||
|
Ameren |
$ | 500 | $ | 500 | $ | 300 | ||||||
|
Ameren Missouri |
500 | (a | ) | (a | ) | |||||||
|
Ameren Illinois |
(a | ) | (a | ) | 800 | |||||||
|
Genco |
(a | ) | 500 | (a | ) | |||||||
| (a) | Not applicable. |
Ameren has the option to seek additional commitments from existing or new lenders to increase the total facility size of the 2010 Credit Agreements to the following maximum amounts: 2010 Missouri Credit Agreement – $1.0 billion; 2010 Genco Credit Agreement – $625 million; and 2010 Illinois Credit Agreement – $1.0 billion. Each of the 2010 Credit Agreements will mature and expire on September 10, 2013. In February 2011, Ameren Illinois received approval from the ICC to extend the expiration of its Borrowing Sublimit under the 2010 Illinois Credit Agreement to September 10, 2013. In June 2011, Ameren Missouri received approval from the MoPSC to extend the expiration of its borrowing sublimit under the 2010 Missouri Credit Agreement to September 10, 2013. The principal amount of each revolving loan owed by a borrower under any of the 2010 Credit Agreements to which it is a party will be due and payable no later than September 10, 2013.
The obligations of all borrowers under the 2010 Credit Agreements are unsecured. Loans are available on a revolving basis under each of the 2010 Credit Agreements and may be repaid and, subject to satisfaction of the conditions to borrowing, reborrowed from time to time. At the election of each borrower, the interest rates on such loans will be the alternate base rate (ABR) plus the margin applicable to the particular borrower and/or the eurodollar rate plus the margin applicable to the particular borrower. The applicable margins will be determined by the borrower's long-term unsecured credit ratings or, if no such ratings are then in effect, the borrower's corporate/issuer ratings then in effect. Letters of credit in an aggregate undrawn face amount not to exceed 25% of the applicable aggregate commitment under the respective 2010 Credit Agreements are also available for issuance for the account of the borrowers thereunder (but within the $2.1 billion overall combined facility borrowing limitations of the 2010 Credit Agreements).
The 2010 Credit Agreements are used to borrow cash, to issue letters of credit, and to support borrowings under Ameren's $500 million commercial paper program, Ameren Missouri's $500 million commercial paper program and Ameren Illinois' $500 million commercial paper program. Any of the 2010 Credit Agreements are available to Ameren to support borrowings under Ameren's commercial paper program, subject to borrowing sublimits. The 2010 Missouri Credit Agreement is available to support borrowings under Ameren Missouri's commercial paper program, and the 2010 Illinois Credit Agreement is available to support borrowings under Ameren Illinois' commercial paper program. At December 31, 2011, Ameren had $148 million of commercial paper outstanding and $15 million of letters of credit outstanding, and Ameren Missouri and Ameren Illinois had no commercial paper or letters of credit outstanding. Based on outstanding borrowings and letters of credit issued under the 2010 Credit Agreements as of December 31, 2011, as well as commercial paper outstanding as of such date, the aggregate amount of credit capacity available under the 2010 Credit Agreements at December 31, 2011, was $1.9 billion.
$20 Million Credit Facility (Terminated)
On June 2, 2010, Ameren entered into a $20 million revolving credit facility ($20 Million Facility). Borrowings under the $20 Million Facility incurred interest at a rate equal to the applicable LIBOR plus 2.25% per annum. The obligations of Ameren under the $20 Million Facility were unsecured. No subsidiary of Ameren was a party to, guarantor of, or borrower under the facility. Ameren had no outstanding borrowings under the facility as of December 31, 2011. Ameren terminated the $20 Million Facility in January 2012. During the years ended December 31, 2011 and 2010, Ameren had average daily balances outstanding of $20 million, with a weighted-average interest rate of 2.48% and 2.54%, respectively.
Commercial Paper
At December 31, 2011, and 2010, Ameren had $148 million and $269 million of commercial paper outstanding, respectively. During the years ended December 31, 2011 and 2010, Ameren had average daily commercial paper balances outstanding of $311 million and $185 million with a weighted-average interest rate of 0.87% and 0.94%, respectively. The peak short-term commercial paper outstanding during the years ended December 31, 2011, and 2010 were $435 million and $366 million, respectively. The peak interest rate for both years was 1.46%. During 2010, the commercial paper was issued only from July through December.
Indebtedness Provisions and Other Covenants
The information below presents a summary of the Ameren Companies' compliance with indebtedness provisions and other covenants.
The 2010 Credit Agreements contain conditions about borrowings and issuances of letters of credit, including the absence of default or unmatured default, material accuracy of representations and warranties (excluding any representation after the closing date as to the absence of material adverse change and material litigation), and obtaining required regulatory authorizations. In addition, solely as it relates to borrowings under the 2010 Illinois Credit Agreement, it is a condition for any such borrowing that, at the time of and after giving effect to such borrowing, the borrower not be in violation of any limitation on its ability to incur unsecured indebtedness contained in its articles of incorporation. The 2010 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 2010 Credit Agreements require each of Ameren, Ameren Missouri, Ameren Illinois and Genco to 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 December 31, 2011, the ratios of consolidated indebtedness to total consolidated capitalization, calculated in accordance with the provisions of the 2010 Credit Agreements, were 47%, 48%, 41% and 45%, for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. In addition, under the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of 2.0 to 1.0, to be calculated quarterly, as of the end of the most recent four fiscal quarters then ending, in accordance with the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, as applicable. Ameren's ratio as of December 31, 2011 was 5.1 to 1.0. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable 2010 Credit Agreement.
The 2010 Credit Agreements contain default provisions. Defaults under the 2010 Credit Agreements apply separately to each borrower; except however, that a default by Ameren Missouri, Ameren Illinois or Genco under any of the 2010 Credit Agreements will also constitute a default by Ameren under such agreement. Defaults include a cross default with respect to a borrower under the applicable 2010 Credit Agreements if that borrower defaults under any other agreement covering outstanding indebtedness of itself and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $25 million in the aggregate. Any default of Ameren under any 2010 Credit Agreement that exists solely as a result of a default by Ameren Missouri, Ameren Illinois or Genco thereunder will not constitute a default under any other 2010 Credit Agreement while Ameren is otherwise in compliance with all of its obligations under such other 2010 Credit Agreement. Further, a default at the Ameren level under any 2010 Credit Agreement does not trigger a default by Ameren Missouri, Ameren Illinois or Genco under such agreement.
None of the Ameren Companies' credit facilities or other financing arrangements contains credit rating triggers that would cause an event of default or acceleration of repayment of outstanding balances. At December 31, 2011, management believes that the Ameren Companies were in compliance with the provisions and covenants of their credit facilities.
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. Separate money pools are maintained for utility and non-state-regulated entities. Ameren Services is responsible for the operation and administration of the money pool agreements.
Utility
Ameren Missouri, Ameren Illinois and Ameren Services may participate in the utility money pool as both lenders and borrowers. Ameren and AERG may participate in the utility money pool only as lenders. Ameren Services administers the utility money pool and tracks internal and external funds separately. Internal funds are surplus funds contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the 2010 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 by participants, but 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. The utility money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the utility money pool agreement 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. There were no utility money pool borrowings during the years ended December 31, 2011 and 2010.
Non-state-regulated Subsidiaries
Ameren, Ameren Services, AER, Genco, AERG, Marketing Company, and other non-state-regulated Ameren subsidiaries have the ability, subject to Ameren parent company authorization and applicable regulatory short-term borrowing authorizations, to access funding from the 2010 Credit Agreements and the commercial paper programs through a non-state-regulated subsidiary money pool agreement. All participants may borrow from or lend to the non-state-regulated money pool, except for Ameren Services, which may participate only as a borrower. The total amount available to the pool participants 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 non-state-regulated subsidiary money pool or remit funds from other external sources. The non-state-regulated subsidiary money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the non-state-regulated subsidiary money pool agreement 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 non-state-regulated subsidiary money pool. The average interest rate for borrowing under the non-state-regulated subsidiary money pool for the year ended December 31, 2011, was 0.77% (2010 – 0.77%).
See Note 14 – Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the years ended December 31, 2011, 2010, and 2009.
Unilateral Borrowing Agreement
In addition, a unilateral borrowing agreement exists among Ameren, Ameren Illinois, and Ameren Services, which enables Ameren Illinois to make short-term borrowings directly from Ameren. The aggregate amount of borrowings outstanding at any time by Ameren Illinois under the unilateral borrowing agreement and the utility money pool agreement, together with any outstanding Ameren Illinois external credit facility borrowings or commercial paper issuances, may not exceed $500 million, pursuant to authorization from the ICC. Ameren Illinois is not currently borrowing under the unilateral borrowing agreement. Ameren Services is responsible for operation and administration of the unilateral borrowing agreement.
NOTE 4 – SHORT-TERM DEBT AND LIQUIDITY
The liquidity needs of the Ameren Companies are typically supported through the use of available cash, short-term intercompany borrowings, drawings under committed bank credit facilities, or commercial paper issuances.
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Missouri Credit Agreement described below for the year ended December 31, 2011, and excludes letters of credit issued under the credit agreement:
|
2010 Missouri Credit Agreement ($800 million) |
Ameren (Parent) | Ameren Missouri | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | 105 | $ | — | $ | 105 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
2.30 | % | — | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a ) |
$ | 340 | $ | — | $ | 340 | ||||||
|
Peak interest rate during 2011 |
4.30 | % | — | 4.30 | % | |||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 195 | $ | — | $ | 195 | ||||||
|
Outstanding credit facility borrowings at period end |
340 | — | 340 | |||||||||
|
Weighted-average interest rate during 2010( b) |
2.31 | % | — | 2.31 | % | |||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 380 | $ | — | $ | 380 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | — | 2.31 | % | |||||||
| (a) | The timing of peak credit facility borrowings varies by company and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Genco Credit Agreement described below for the year ended December 31, 2011:
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | — | $ | 41 | $ | 41 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
— | 2.30 | % | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a) |
$ | — | $ | 100 | $ | 100 | ||||||
|
Peak interest rate during 2011 |
— | 2.31 | % | 2.31 | % | |||||||
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 36 | $ | 54 | $ | 90 | ||||||
|
Outstanding credit facility borrowings at period end |
— | 100 | 100 | |||||||||
|
Weighted-average interest rate during 2010(b ) |
2.30 | % | 2.31 | % | 2.31 | % | ||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 385 | $ | 100 | $ | 385 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | 2.31 | % | 2.31 | % | ||||||
| (a) | The timing of peak credit facility borrowings varies by company, and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
Neither Ameren nor Ameren Illinois borrowed under the 2010 Illinois Credit Agreement during the years ended December 31, 2011, and 2010, respectively.
2010 Credit Agreements
Ameren and certain of its subsidiaries entered into multiyear credit facility agreements with a large and diverse group of lenders in 2010. These facilities cumulatively provide $2.1 billion of credit through September 10, 2013. The facilities currently include 25 international, national, and regional lenders, with no lender providing more than $125 million of credit in aggregate.
On September 10, 2010, Ameren and Ameren Missouri entered into the $800 million 2010 Missouri Credit Agreement. On September 10, 2010, Ameren and Genco entered into the $500 million 2010 Genco Credit Agreement.
Also on September 10, 2010, Ameren and Ameren Illinois, as successor company to CIPS, CILCO and IP, entered into the $800 million 2010 Illinois Credit Agreement.
The obligations of each borrower under the respective 2010 Credit Agreements to which it is a party are several and not joint, and, except under limited circumstances relating to expenses and indemnities, the obligations of Ameren Missouri, Ameren Illinois and Genco under the respective 2010 Credit Agreements are not guaranteed by Ameren or any other subsidiary of Ameren. The maximum aggregate amount available to each borrower under each facility is shown in the following table (such amount being such borrower's "Borrowing Sublimit"):
| 2010 Missouri Credit Agreement |
2010 Genco Credit Agreement |
2010 Illinois Credit Agreement |
||||||||||
|
Ameren |
$ | 500 | $ | 500 | $ | 300 | ||||||
|
Ameren Missouri |
500 | (a | ) | (a | ) | |||||||
|
Ameren Illinois |
(a | ) | (a | ) | 800 | |||||||
|
Genco |
(a | ) | 500 | (a | ) | |||||||
| (a) | Not applicable. |
Ameren has the option to seek additional commitments from existing or new lenders to increase the total facility size of the 2010 Credit Agreements to the following maximum amounts: 2010 Missouri Credit Agreement – $1.0 billion; 2010 Genco Credit Agreement – $625 million; and 2010 Illinois Credit Agreement – $1.0 billion. Each of the 2010 Credit Agreements will mature and expire on September 10, 2013. In February 2011, Ameren Illinois received approval from the ICC to extend the expiration of its Borrowing Sublimit under the 2010 Illinois Credit Agreement to September 10, 2013. In June 2011, Ameren Missouri received approval from the MoPSC to extend the expiration of its borrowing sublimit under the 2010 Missouri Credit Agreement to September 10, 2013. The principal amount of each revolving loan owed by a borrower under any of the 2010 Credit Agreements to which it is a party will be due and payable no later than September 10, 2013.
The obligations of all borrowers under the 2010 Credit Agreements are unsecured. Loans are available on a revolving basis under each of the 2010 Credit Agreements and may be repaid and, subject to satisfaction of the conditions to borrowing, reborrowed from time to time. At the election of each borrower, the interest rates on such loans will be the alternate base rate (ABR) plus the margin applicable to the particular borrower and/or the eurodollar rate plus the margin applicable to the particular borrower. The applicable margins will be determined by the borrower's long-term unsecured credit ratings or, if no such ratings are then in effect, the borrower's corporate/issuer ratings then in effect. Letters of credit in an aggregate undrawn face amount not to exceed 25% of the applicable aggregate commitment under the respective 2010 Credit Agreements are also available for issuance for the account of the borrowers thereunder (but within the $2.1 billion overall combined facility borrowing limitations of the 2010 Credit Agreements).
The 2010 Credit Agreements are used to borrow cash, to issue letters of credit, and to support borrowings under Ameren's $500 million commercial paper program, Ameren Missouri's $500 million commercial paper program and Ameren Illinois' $500 million commercial paper program. Any of the 2010 Credit Agreements are available to Ameren to support borrowings under Ameren's commercial paper program, subject to borrowing sublimits. The 2010 Missouri Credit Agreement is available to support borrowings under Ameren Missouri's commercial paper program, and the 2010 Illinois Credit Agreement is available to support borrowings under Ameren Illinois' commercial paper program. At December 31, 2011, Ameren had $148 million of commercial paper outstanding and $15 million of letters of credit outstanding, and Ameren Missouri and Ameren Illinois had no commercial paper or letters of credit outstanding. Based on outstanding borrowings and letters of credit issued under the 2010 Credit Agreements as of December 31, 2011, as well as commercial paper outstanding as of such date, the aggregate amount of credit capacity available under the 2010 Credit Agreements at December 31, 2011, was $1.9 billion.
$20 Million Credit Facility (Terminated)
On June 2, 2010, Ameren entered into a $20 million revolving credit facility ($20 Million Facility). Borrowings under the $20 Million Facility incurred interest at a rate equal to the applicable LIBOR plus 2.25% per annum. The obligations of Ameren under the $20 Million Facility were unsecured. No subsidiary of Ameren was a party to, guarantor of, or borrower under the facility. Ameren had no outstanding borrowings under the facility as of December 31, 2011. Ameren terminated the $20 Million Facility in January 2012. During the years ended December 31, 2011 and 2010, Ameren had average daily balances outstanding of $20 million, with a weighted-average interest rate of 2.48% and 2.54%, respectively.
Commercial Paper
At December 31, 2011, and 2010, Ameren had $148 million and $269 million of commercial paper outstanding, respectively. During the years ended December 31, 2011 and 2010, Ameren had average daily commercial paper balances outstanding of $311 million and $185 million with a weighted-average interest rate of 0.87% and 0.94%, respectively. The peak short-term commercial paper outstanding during the years ended December 31, 2011, and 2010 were $435 million and $366 million, respectively. The peak interest rate for both years was 1.46%. During 2010, the commercial paper was issued only from July through December.
Indebtedness Provisions and Other Covenants
The information below presents a summary of the Ameren Companies' compliance with indebtedness provisions and other covenants.
The 2010 Credit Agreements contain conditions about borrowings and issuances of letters of credit, including the absence of default or unmatured default, material accuracy of representations and warranties (excluding any representation after the closing date as to the absence of material adverse change and material litigation), and obtaining required regulatory authorizations. In addition, solely as it relates to borrowings under the 2010 Illinois Credit Agreement, it is a condition for any such borrowing that, at the time of and after giving effect to such borrowing, the borrower not be in violation of any limitation on its ability to incur unsecured indebtedness contained in its articles of incorporation. The 2010 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 2010 Credit Agreements require each of Ameren, Ameren Missouri, Ameren Illinois and Genco to 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 December 31, 2011, the ratios of consolidated indebtedness to total consolidated capitalization, calculated in accordance with the provisions of the 2010 Credit Agreements, were 47%, 48%, 41% and 45%, for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. In addition, under the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of 2.0 to 1.0, to be calculated quarterly, as of the end of the most recent four fiscal quarters then ending, in accordance with the 2010 Genco Credit Agreement and the 2010 Illinois Credit Agreement, as applicable. Ameren's ratio as of December 31, 2011 was 5.1 to 1.0. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable 2010 Credit Agreement.
The 2010 Credit Agreements contain default provisions. Defaults under the 2010 Credit Agreements apply separately to each borrower; except however, that a default by Ameren Missouri, Ameren Illinois or Genco under any of the 2010 Credit Agreements will also constitute a default by Ameren under such agreement. Defaults include a cross default with respect to a borrower under the applicable 2010 Credit Agreements if that borrower defaults under any other agreement covering outstanding indebtedness of itself and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $25 million in the aggregate. Any default of Ameren under any 2010 Credit Agreement that exists solely as a result of a default by Ameren Missouri, Ameren Illinois or Genco thereunder will not constitute a default under any other 2010 Credit Agreement while Ameren is otherwise in compliance with all of its obligations under such other 2010 Credit Agreement. Further, a default at the Ameren level under any 2010 Credit Agreement does not trigger a default by Ameren Missouri, Ameren Illinois or Genco under such agreement.
None of the Ameren Companies' credit facilities or other financing arrangements contains credit rating triggers that would cause an event of default or acceleration of repayment of outstanding balances. At December 31, 2011, management believes that the Ameren Companies were in compliance with the provisions and covenants of their credit facilities.
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. Separate money pools are maintained for utility and non-state-regulated entities. Ameren Services is responsible for the operation and administration of the money pool agreements.
Utility
Ameren Missouri, Ameren Illinois and Ameren Services may participate in the utility money pool as both lenders and borrowers. Ameren and AERG may participate in the utility money pool only as lenders. Ameren Services administers the utility money pool and tracks internal and external funds separately. Internal funds are surplus funds contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the 2010 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 by participants, but 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. The utility money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the utility money pool agreement 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. There were no utility money pool borrowings during the years ended December 31, 2011 and 2010.
Non-state-regulated Subsidiaries
Ameren, Ameren Services, AER, Genco, AERG, Marketing Company, and other non-state-regulated Ameren subsidiaries have the ability, subject to Ameren parent company authorization and applicable regulatory short-term borrowing authorizations, to access funding from the 2010 Credit Agreements and the commercial paper programs through a non-state-regulated subsidiary money pool agreement. All participants may borrow from or lend to the non-state-regulated money pool, except for Ameren Services, which may participate only as a borrower. The total amount available to the pool participants 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 non-state-regulated subsidiary money pool or remit funds from other external sources. The non-state-regulated subsidiary money pool was established to coordinate and to provide short-term cash and working capital for the participants. Participants receiving a loan under the non-state-regulated subsidiary money pool agreement 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 non-state-regulated subsidiary money pool. The average interest rate for borrowing under the non-state-regulated subsidiary money pool for the year ended December 31, 2011, was 0.77% (2010 – 0.77%).
See Note 14 – Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the years ended December 31, 2011, 2010, and 2009.
Unilateral Borrowing Agreement
In addition, a unilateral borrowing agreement exists among Ameren, Ameren Illinois, and Ameren Services, which enables Ameren Illinois to make short-term borrowings directly from Ameren. The aggregate amount of borrowings outstanding at any time by Ameren Illinois under the unilateral borrowing agreement and the utility money pool agreement, together with any outstanding Ameren Illinois external credit facility borrowings or commercial paper issuances, may not exceed $500 million, pursuant to authorization from the ICC. Ameren Illinois is not currently borrowing under the unilateral borrowing agreement. Ameren Services is responsible for operation and administration of the unilateral borrowing agreement.
|
|||
NOTE 5 – LONG-TERM DEBT AND EQUITY FINANCINGS
The following table presents long-term debt outstanding for the Ameren Companies as of December 31, 2011, and 2010:
| 2011 | 2010 | |||||||
|
Ameren (Parent): |
||||||||
|
8.875% Senior unsecured notes due 2014 |
$ | 425 | $ | 425 | ||||
|
Less: Unamortized discount and premium |
(1 | ) | (2 | ) | ||||
|
Long-term debt, net |
$ | 424 | $ | 423 | ||||
|
Ameren Missouri: |
||||||||
|
Senior secured notes:(a) |
||||||||
|
5.25% Senior secured notes due 2012 |
$ | 173 | $ | 173 | ||||
|
4.65% Senior secured notes due 2013 |
200 | 200 | ||||||
|
5.50% Senior secured notes due 2014 |
104 | 104 | ||||||
|
4.75% Senior secured notes due 2015 |
114 | 114 | ||||||
|
5.40% Senior secured notes due 2016 |
260 | 260 | ||||||
|
6.40% Senior secured notes due 2017 |
425 | 425 | ||||||
|
6.00% Senior secured notes due 2018(b) |
250 | 250 | ||||||
|
5.10% Senior secured notes due 2018 |
200 | 200 | ||||||
|
6.70% Senior secured notes due 2019(b) |
450 | 450 | ||||||
|
5.10% Senior secured notes due 2019 |
300 | 300 | ||||||
|
5.00% Senior secured notes due 2020 |
85 | 85 | ||||||
|
5.50% Senior secured notes due 2034 |
184 | 184 | ||||||
|
5.30% Senior secured notes due 2037 |
300 | 300 | ||||||
|
8.45% Senior secured notes due 2039(b) |
350 | 350 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
1992 Series due 2022(c)(d) |
47 | 47 | ||||||
|
1993 5.45% Series due 2028(e) |
44 | 44 | ||||||
|
1998 Series A due 2033(c)(d) |
60 | 60 | ||||||
|
1998 Series B due 2033(c)(d) |
50 | 50 | ||||||
|
1998 Series C due 2033(c)(d) |
50 | 50 | ||||||
|
Capital lease obligations: |
||||||||
|
City of Bowling Green capital lease (Peno Creek CT) |
69 | 74 | ||||||
|
Audrain County capital lease (Audrain County CT) |
240 | 240 | ||||||
|
Total long-term debt, gross |
3,955 | 3,960 | ||||||
|
Less: Unamortized discount and premium |
(5 | ) | (6 | ) | ||||
|
Less: Maturities due within one year |
(178 | ) | (5 | ) | ||||
|
Long-term debt, net |
$ | 3,772 | $ | 3,949 | ||||
|
Ameren Illinois: |
||||||||
|
Senior secured notes: |
||||||||
|
6.625% Senior secured notes due 2011 |
$ | - | $ | 150 | ||||
|
8.875% Senior secured notes due 2013(f)(h) |
150 | 150 | ||||||
|
6.20% Senior secured notes due 2016(f) |
54 | 54 | ||||||
|
6.25% Senior secured notes due 2016(g) |
75 | 75 | ||||||
|
6.125% Senior secured notes due 2017(g)(i) |
250 | 250 | ||||||
|
6.25% Senior secured notes due 2018(g)(i) |
337 | 337 | ||||||
|
9.75% Senior secured notes due 2018(g)(i) |
400 | 400 | ||||||
|
6.125% Senior secured notes due 2028(g) |
60 | 60 | ||||||
|
6.70% Senior secured notes due 2036(g) |
61 | 61 | ||||||
|
6.70% Senior secured notes due 2036(f) |
42 | 42 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
6.20% Series 1992B due 2012(j) |
1 | 1 | ||||||
|
2000 Series A 5.50% due 2014 |
51 | 51 | ||||||
|
5.90% Series 1993 due 2023(j) |
32 | 32 | ||||||
|
5.70% 1994A Series due 2024(k) |
36 | 36 | ||||||
|
1993 Series C-1 5.95% due 2026 |
35 | 35 | ||||||
|
1993 Series C-2 5.70% due 2026 |
8 | 8 | ||||||
|
1993 Series B-1 due 2028(d) |
17 | 17 | ||||||
|
5.40% 1998A Series due 2028(k) |
19 | 19 | ||||||
|
5.40% 1998B Series due 2028(k) |
33 | 33 | ||||||
|
Fair-market value adjustments |
5 | 5 | ||||||
|
Total long-term debt, gross |
1,666 | 1,816 | ||||||
|
Less: Unamortized discount and premium |
(8 | ) | (9 | ) | ||||
|
Less: Maturities due within one year |
(1 | ) | (150 | ) | ||||
|
Long-term debt, net |
$ | 1,657 | $ | 1,657 | ||||
|
Genco: |
||||||||
|
Unsecured notes: |
||||||||
|
Senior notes Series F 7.95% due 2032 |
$ | 275 | $ | 275 | ||||
|
Senior notes Series H 7.00% due 2018 |
300 | 300 | ||||||
|
Senior notes Series I 6.30% due 2020 |
250 | 250 | ||||||
|
Total long-term debt, gross |
825 | 825 | ||||||
|
Less: Unamortized discount and premium |
(1 | ) | (1 | ) | ||||
|
Less: Maturities due within one year |
- | - | ||||||
|
Long-term debt, net |
$ | 824 | $ | 824 | ||||
|
Ameren consolidated long-term debt, net |
$ | 6,677 | $ | 6,853 | ||||
| (a) | These notes are collaterally secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any first mortgage bonds issued under the UE mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Based on the Ameren Missouri first mortgage bonds and senior secured notes currently outstanding, and assuming no early retirement of any series of such securities in full, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2039. |
| (b) | Ameren Missouri has agreed, during the life of these notes, not to optionally redeem, purchase or otherwise retire in full its first mortgage bonds. Ameren Missouri has also agreed to prevent a first mortgage bond release date from occurring as long as any of the 8.45% Senior secured notes due 2039 remain outstanding. |
| (c) | These bonds are secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture and have a fall-away lien provision similar to that of the company's senior secured notes. The bonds are also backed by an insurance guarantee policy. |
| (d) | Interest rates, and periods during which such rates apply, vary depending on our selection of defined rate modes. Maximum interest rates could range up to 18% depending on the series of bonds. The average interest rates for 2011 and 2010 were as follows: |
| 2011 | 2010 | |||
|
Ameren Missouri 1992 Series |
0.34% | 0.47% | ||
|
Ameren Missouri 1998 Series A |
0.69% | 0.71% | ||
|
Ameren Missouri 1998 Series B |
0.68% | 0.73% | ||
|
Ameren Missouri 1998 Series C |
0.69% | 0.74% | ||
|
Ameren Illinois 1993 Series B-1 |
0.28% | 0.59% |
| (e) |
These bonds are first mortgage bonds issued by Ameren Missouri under the UE mortgage bond indenture and are secured by substantially all Ameren Missouri property and franchises. The bonds are callable at 100% of par value. |
| (f) | These notes are collaterally secured by first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the CILCO mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Based on the CILCO first mortgage bonds and senior secured notes currently outstanding, and assuming no early retirement of any series of such securities in full, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2023. |
| (g) | These notes are collaterally secured by mortgage bonds issued by Ameren Illinois under the Ameren Illinois mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the Ameren Illinois mortgage indenture remain outstanding. Redemption, purchase, or maturity of all mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Based on the Ameren Illinois mortgage bonds and senior secured notes currently outstanding, and assuming no early retirement of any series of such securities in full, we do not expect the mortgage bond lien protection associated with these notes to fall away until 2028. |
| (h) | Ameren Illinois has agreed, during the life of these notes, not to optionally redeem, purchase or otherwise retire in full its CILCO first mortgage bonds. |
| (i) | Ameren Illinois has agreed, during the life of these notes, not to optionally redeem, purchase or otherwise retire in full its Ameren Illinois mortgage bonds. |
| (j) | These bonds are first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture and are secured by substantially all property of the former CILCO. The bonds are callable at 100% of par value. |
| (k) | These bonds are mortgage bonds issued by Ameren Illinois under the Ameren Illinois mortgage indenture and are secured by substantially all property of the former IP and CIPS. The bonds are callable at 100% of par value. The bonds are also backed by an insurance guarantee policy. |
The following table presents the aggregate maturities of long-term debt, including current maturities, for the Ameren Companies at December 31, 2011:
|
Ameren (Parent)(a) |
Ameren Missouri(a) |
Ameren Illinois(a)(b) |
Genco(a) |
Ameren Consolidated |
||||||||||||||||
|
2012 |
$ | - | $ | 178 | $ | 1 | $ | - | $ | 179 | ||||||||||
|
2013 |
- | 205 | 150 | - | 355 | |||||||||||||||
|
2014 |
425 | 109 | 51 | - | 585 | |||||||||||||||
|
2015 |
- | 120 | - | - | 120 | |||||||||||||||
|
2016 |
- | 266 | 129 | - | 395 | |||||||||||||||
|
Thereafter |
- | 3,077 | 1,330 | 825 | 5,232 | |||||||||||||||
|
Total |
$ | 425 | $ | 3,955 | $ | 1,661 | $ | 825 | $ | 6,866 | ||||||||||
| (a) | Excludes unamortized discount and premium of $1 million, $5 million, $8 million and $1 million at Ameren (Parent), Ameren Missouri, Ameren Illinois and Genco, respectively. |
| (b) | Excludes $5 million related to Ameren Illinois' long-term debt fair-market value adjustments, which are being amortized to interest expense over the remaining life of the debt. |
All of the Ameren Companies expect to fund maturities of long-term debt, short-term borrowings, credit facility borrowings, commercial paper and contractual obligations through a combination of cash flow from operations and external financing. See Note 4 – Short-Term Debt and Liquidity for a discussion of external financing availability.
All classes of Ameren Missouri's and Ameren Illinois' preferred stock are entitled to cumulative dividends and have voting rights. The following table presents the outstanding preferred stock of Ameren Missouri and Ameren Illinois that is not subject to mandatory redemption. The preferred stock is redeemable, at the option of the issuer, at the prices shown below as of December 31, 2011 and 2010:
| Redemption Price (per share) | 2011 | 2010 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Without par value and stated value of $100 per share, 25 million shares authorized |
||||||||||||||||
|
$3.50 Series |
130,000 shares |
$ | 110.00 | $ | 13 | $ | 13 | |||||||||
|
$3.70 Series |
40,000 shares |
104.75 | 4 | 4 | ||||||||||||
|
$4.00 Series |
150,000 shares |
105.625 | 15 | 15 | ||||||||||||
|
$4.30 Series |
40,000 shares |
105.00 | 4 | 4 | ||||||||||||
|
$4.50 Series |
213,595 shares |
110.00(a) | 21 | 21 | ||||||||||||
|
$4.56 Series |
200,000 shares |
102.47 | 20 | 20 | ||||||||||||
|
$4.75 Series |
20,000 shares |
102.176 | 2 | 2 | ||||||||||||
|
$5.50 Series A |
14,000 shares |
110.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 80 | $ | 80 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
With par value of $100 per share, 2 million shares authorized |
||||||||||||||||
|
4.00% Series |
144,275 shares |
$ | 101.00 | $ | 14 | $ | 14 | |||||||||
|
4.08% Series |
45,224 shares |
103.00 | 5 | 5 | ||||||||||||
|
4.20% Series |
23,655 shares |
104.00 | 2 | 2 | ||||||||||||
|
4.25% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
4.26% Series |
16,621 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.42% Series |
16,190 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.70% Series |
18,429 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.90% Series |
73,825 shares |
102.00 | 7 | 7 | ||||||||||||
|
4.92% Series |
49,289 shares |
103.50 | 5 | 5 | ||||||||||||
|
5.16% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
6.625% Series |
124,273.75 shares |
100.00 | 12 | 12 | ||||||||||||
|
7.75% Series |
4,542 shares |
100.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 62 | $ | 62 | ||||||||||||
|
Total Ameren |
$ | 142 | $ | 142 | ||||||||||||
| (a) | In the event of voluntary liquidation, $105.50. |
Pursuant to the Ameren Illinois Merger: (i) every two shares of each series of IP preferred stock outstanding immediately prior to the Ameren Illinois Merger were automatically converted into one share of a newly created series of Ameren Illinois preferred stock having the same payment and redemption terms as the existing series of IP preferred stock, except to the extent that IP preferred stockholders exercised their dissenters' rights in accordance with Illinois law; and (ii) each outstanding share of CIPS common and preferred stock remained outstanding, except to the extent that CIPS preferred stockholders exercised their dissenters' rights in accordance with Illinois law. Stockholders holding 8,337 shares and 423 shares of CIPS and IP preferred stock, respectively, exercised their dissenter's rights.
In addition, Ameren has 100 million shares of $0.01 par value preferred stock authorized, with no shares outstanding. Ameren Missouri has 7.5 million shares of $1 par value preference stock authorized, with no such preference stock outstanding. Ameren Illinois has 2.6 million shares of no par value preferred stock authorized, with no shares outstanding.
Ameren
A Form S-3 registration statement was filed by Ameren with the SEC in June 2011, authorizing the offering of 6 million additional shares of its common stock under DRPlus. Shares of common stock sold under DRPlus are, at Ameren's option, newly issued shares, treasury shares, or shares purchased in the open market or in privately negotiated transactions. In 2012, Ameren plans for shares to be purchased in the open market for DRPlus and its 401(k) plan. Under DRPlus and its 401(k) plan, Ameren issued 2.2 million, 3.0 million, and 3.2 million shares of common stock in 2011, 2010, and 2009, respectively, which were valued at $65 million, $80 million, and $82 million for the respective years.
In February 2010, CILCORP completed a covenant defeasance of its remaining outstanding 9.375% senior bonds due 2029 by depositing $3 million in U.S. government obligations and cash with the indenture trustee. This deposit will be used solely to satisfy the principal and remaining interest obligations on these bonds. In connection with this covenant defeasance, the lien on the capital stock of CILCO securing these bonds was released.
Ameren Missouri
In August 2010, Ameren Missouri redeemed all $33 million of its $7.64 Series preferred stock at $100.85 per share, plus accrued and unpaid dividends.
In September 2010, Ameren Missouri redeemed all $66 million of its 7.69% Series A subordinated deferrable interest debentures at a redemption price of 102.692% of the principal amount plus accrued interest.
Ameren Illinois
In June 2011, Ameren Illinois' 6.625% $150 million senior secured notes matured and were repaid and retired using available cash on hand.
In August 2010, Ameren Illinois (formerly CILCO) redeemed all of the 111,264 outstanding shares of its 4.50% Series preferred stock at $110 per share and all of the 79,940 shares of its 4.64% Series preferred stock at $102 per share, plus, in each case, accrued and unpaid dividends. These preferred shares were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren Illinois (formerly CIPS) redeemed all $40 million of its 7.61% Series 1997-2 first mortgage bonds at a redemption price of 101.52% of the principal amount, plus accrued interest. These bonds were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren contributed to the capital of Ameren Illinois (formerly IP), without the payment of any consideration, all of the IP preferred stock owned by Ameren ($33 million). IP cancelled these preferred shares. This transaction was completed in connection with the Ameren Illinois Merger.
See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Genco
In November 2010, Genco's $200 million 8.35% senior notes matured and were retired with available cash on hand.
Indenture Provisions and Other Covenants
Ameren Missouri's and Ameren Illinois' indentures 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. However, 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 and dividend coverage ratios and bonds and preferred stock issuable as of December 31, 2011, at an assumed interest rate of 6% and dividend rate of 7%.
| 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 |
³ 2.0 | 3.2 | $ | 1,971 | ³ 2.5 | 84.9 | $ | 1,610 | ||||||||||||
|
Ameren Illinois |
³ 2.0 | 7.2 | 3,335 | (d) | ³ 1.5 | 3.1 | 203 | |||||||||||||
| (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 $89 million and $765 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. |
Ameren's indenture does not require Ameren to comply with any quantitative financial covenants. The indenture does, however, include certain cross-default provisions. Specifically, either (1) the failure by Ameren to pay when due and upon expiration of any applicable grace period any portion of any Ameren indebtedness in excess of $25 million or (2) the acceleration upon default of the maturity of any Ameren indebtedness in excess of $25 million under any indebtedness agreement, including the 2010 Credit Agreements, constitutes a default under the indenture, unless such past due or accelerated debt is discharged or the acceleration is rescinded or annulled within a specified period.
Ameren Missouri, Ameren Illinois, Genco and certain other nonregistrant 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 meaning of this limitation has never been clarified under the Federal Power Act or FERC regulations. However, 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 net income and retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on their respective stock, unless, among other things, their respective 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 its dividend payments on 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 FERC to maintain a minimum 30% ratio of common stock equity to total capitalization after the Ameren Illinois Merger and AERG distribution. As of December 31, 2011, Ameren Illinois' ratio of common stock equity to total capitalization was 58%.
Genco's indenture includes provisions that require Genco to maintain certain interest coverage and debt-to-capital ratios in order for Genco to pay dividends, to make principal or interest payments on subordinated borrowings, to make loans to or investments in affiliates, or to incur additional external, third-party indebtedness. The following table summarizes these ratios for the 12 months ended and as of December 31, 2011:
|
Required Interest |
Actual Interest |
Required Debt-to- |
Actual Debt-to- |
|||||||||
|
Genco |
³ 1.75(a)/2.50(b) | 4.3 | £ 60% (b) | 43 | % | |||||||
| (a) |
A minimum interest coverage ratio of 1.75 is required for Genco to make certain restricted payments, as defined, including specified dividend payments and, principal and interest payments on subordinated borrowings. As of the date of the restricted payment, the minimum ratio must have been achieved for the most recently ended four fiscal quarters and projected by management to be achieved for each of the subsequent four six-month periods. Investments in the non-state-regulated subsidiary money pool and repayments of non-state-regulated subsidiary money pool borrowings are not subject to this incurrence test. |
| (b) | A minimum interest coverage ratio of 2.50 for the most recently ended four fiscal quarters and a debt-to-capital ratio of no greater than 60% are required for Genco to incur additional indebtedness, as defined, other than permitted indebtedness, as defined, for borrowed money. The ratios must be computed on a pro forma basis considering the additional indebtedness to be incurred and the related interest expense. Non-state-regulated subsidiary money pool borrowings are defined as permitted indebtedness and are not subject to these incurrence tests. Credit facility borrowings, including borrowings under the 2010 Genco Credit Agreement, and other borrowings from third-party, external sources are included in the definition of indebtedness and are subject to these incurrence tests. |
Genco's debt incurrence-related ratio restrictions under its indenture may be disregarded if both Moody's and S&P reaffirm the ratings of Genco in place at the time of the debt incurrence after considering the additional indebtedness.
In order for the Ameren Companies to issue securities in the future, they will have to comply with all applicable requirements in effect at the time of any such issuances.
Off-Balance-Sheet Arrangements
At December 31, 2011, none of the Ameren Companies had any off-balance-sheet financing arrangements, other than operating leases entered into in the ordinary course of business. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.
NOTE 5 – LONG-TERM DEBT AND EQUITY FINANCINGS
The following table presents long-term debt outstanding for the Ameren Companies as of December 31, 2011, and 2010:
| 2011 | 2010 | |||||||
|
Ameren (Parent): |
||||||||
|
8.875% Senior unsecured notes due 2014 |
$ | 425 | $ | 425 | ||||
|
Less: Unamortized discount and premium |
(1 | ) | (2 | ) | ||||
|
Long-term debt, net |
$ | 424 | $ | 423 | ||||
|
Ameren Missouri: |
||||||||
|
Senior secured notes:(a) |
||||||||
|
5.25% Senior secured notes due 2012 |
$ | 173 | $ | 173 | ||||
|
4.65% Senior secured notes due 2013 |
200 | 200 | ||||||
|
5.50% Senior secured notes due 2014 |
104 | 104 | ||||||
|
4.75% Senior secured notes due 2015 |
114 | 114 | ||||||
|
5.40% Senior secured notes due 2016 |
260 | 260 | ||||||
|
6.40% Senior secured notes due 2017 |
425 | 425 | ||||||
|
6.00% Senior secured notes due 2018(b) |
250 | 250 | ||||||
|
5.10% Senior secured notes due 2018 |
200 | 200 | ||||||
|
6.70% Senior secured notes due 2019(b) |
450 | 450 | ||||||
|
5.10% Senior secured notes due 2019 |
300 | 300 | ||||||
|
5.00% Senior secured notes due 2020 |
85 | 85 | ||||||
|
5.50% Senior secured notes due 2034 |
184 | 184 | ||||||
|
5.30% Senior secured notes due 2037 |
300 | 300 | ||||||
|
8.45% Senior secured notes due 2039(b) |
350 | 350 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
1992 Series due 2022(c)(d) |
47 | 47 | ||||||
|
1993 5.45% Series due 2028(e) |
44 | 44 | ||||||
|
1998 Series A due 2033(c)(d) |
60 | 60 | ||||||
|
1998 Series B due 2033(c)(d) |
50 | 50 | ||||||
|
1998 Series C due 2033(c)(d) |
50 | 50 | ||||||
|
Capital lease obligations: |
||||||||
|
City of Bowling Green capital lease (Peno Creek CT) |
69 | 74 | ||||||
|
Audrain County capital lease (Audrain County CT) |
240 | 240 | ||||||
|
Total long-term debt, gross |
3,955 | 3,960 | ||||||
|
Less: Unamortized discount and premium |
(5 | ) | (6 | ) | ||||
|
Less: Maturities due within one year |
(178 | ) | (5 | ) | ||||
|
Long-term debt, net |
$ | 3,772 | $ | 3,949 | ||||
|
Ameren Illinois: |
||||||||
|
Senior secured notes: |
||||||||
|
6.625% Senior secured notes due 2011 |
$ | - | $ | 150 | ||||
|
8.875% Senior secured notes due 2013(f)(h) |
150 | 150 | ||||||
|
6.20% Senior secured notes due 2016(f) |
54 | 54 | ||||||
|
6.25% Senior secured notes due 2016(g) |
75 | 75 | ||||||
|
6.125% Senior secured notes due 2017(g)(i) |
250 | 250 | ||||||
|
6.25% Senior secured notes due 2018(g)(i) |
337 | 337 | ||||||
|
9.75% Senior secured notes due 2018(g)(i) |
400 | 400 | ||||||
|
6.125% Senior secured notes due 2028(g) |
60 | 60 | ||||||
|
6.70% Senior secured notes due 2036(g) |
61 | 61 | ||||||
|
6.70% Senior secured notes due 2036(f) |
42 | 42 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
6.20% Series 1992B due 2012(j) |
1 | 1 | ||||||
|
2000 Series A 5.50% due 2014 |
51 | 51 | ||||||
|
5.90% Series 1993 due 2023(j) |
32 | 32 | ||||||
|
5.70% 1994A Series due 2024(k) |
36 | 36 | ||||||
|
1993 Series C-1 5.95% due 2026 |
35 | 35 | ||||||
|
1993 Series C-2 5.70% due 2026 |
8 | 8 | ||||||
|
1993 Series B-1 due 2028(d) |
17 | 17 | ||||||
|
5.40% 1998A Series due 2028(k) |
19 | 19 | ||||||
|
5.40% 1998B Series due 2028(k) |
33 | 33 | ||||||
|
Fair-market value adjustments |
5 | 5 | ||||||
|
Total long-term debt, gross |
1,666 | 1,816 | ||||||
|
Less: Unamortized discount and premium |
(8 | ) | (9 | ) | ||||
|
Less: Maturities due within one year |
(1 | ) | (150 | ) | ||||
|
Long-term debt, net |
$ | 1,657 | $ | 1,657 | ||||
|
Genco: |
||||||||
|
Unsecured notes: |
||||||||
|
Senior notes Series F 7.95% due 2032 |
$ | 275 | $ | 275 | ||||
|
Senior notes Series H 7.00% due 2018 |
300 | 300 | ||||||
|
Senior notes Series I 6.30% due 2020 |
250 | 250 | ||||||
|
Total long-term debt, gross |
825 | 825 | ||||||
|
Less: Unamortized discount and premium |
(1 | ) | (1 | ) | ||||
|
Less: Maturities due within one year |
- | - | ||||||
|
Long-term debt, net |
$ | 824 | $ | 824 | ||||
|
Ameren consolidated long-term debt, net |
$ | 6,677 | $ | 6,853 | ||||
| (a) | These notes are collaterally secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any first mortgage bonds issued under the UE mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2039. |
| (b) | Ameren Missouri has agreed not to affect the release of first mortgage bonds securing these notes at any time during the life of these notes. |
| (c) | These notes are secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture and have a fall-away lien provision similar to that of the company's senior secured notes. The notes are also backed by an insurance guarantee policy. |
| (d) | Interest rates, and periods during which such rates apply, vary depending on our selection of defined rate modes. Maximum interest rates could range up to 18% depending on the series of bonds. The average interest rates for 2011 and 2010 were as follows: |
| 2011 | 2010 | |||
|
Ameren Missouri 1992 Series |
0.34% | 0.47% | ||
|
Ameren Missouri 1998 Series A |
0.69% | 0.71% | ||
|
Ameren Missouri 1998 Series B |
0.68% | 0.73% | ||
|
Ameren Missouri 1998 Series C |
0.69% | 0.74% | ||
|
Ameren Illinois 1993 Series B-1 |
0.28% | 0.59% |
| (e) | These notes are first mortgage bonds issued by Ameren Missouri under the UE mortgage bond indenture and are secured by substantially all Ameren Missouri property and franchises. The notes are callable at 100% of par value. |
| (f) |
These notes are collaterally secured by first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the CILCO mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2023. |
| (g) | These notes are collaterally secured by mortgage bonds issued by Ameren Illinois under the IP mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the IP mortgage indenture remain outstanding. Redemption, purchase, or maturity of all mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the mortgage bond lien protection associated with these notes to fall away until 2028. |
| (h) | Ameren Illinois has agreed not to affect a release of CILCO first mortgage bonds securing these notes at any time during the life of these notes. |
| (i) | Ameren Illinois has agreed not to affect a release of IP mortgage bonds securing these notes at any time during the life of these notes. |
| (j) | These notes are first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture and are secured by substantially all property of the former CILCO. The notes are callable at 100% of par value. |
| (k) | These notes are mortgage bonds issued by Ameren Illinois under the IP mortgage indenture and are secured by substantially all property of the former IP and CIPS. The notes are callable at 100% of par value. The notes are also backed by an insurance guarantee policy. |
The following table presents the aggregate maturities of long-term debt, including current maturities, for the Ameren Companies at December 31, 2011:
|
Ameren (Parent)(a) |
Ameren Missouri(a) |
Ameren Illinois(a)(b) |
Genco(a) |
Ameren Consolidated |
||||||||||||||||
|
2012 |
$ | - | $ | 178 | $ | 1 | $ | - | $ | 179 | ||||||||||
|
2013 |
- | 205 | 150 | - | 355 | |||||||||||||||
|
2014 |
425 | 109 | 51 | - | 585 | |||||||||||||||
|
2015 |
- | 120 | - | - | 120 | |||||||||||||||
|
2016 |
- | 266 | 129 | - | 395 | |||||||||||||||
|
Thereafter |
- | 3,077 | 1,330 | 825 | 5,232 | |||||||||||||||
|
Total |
$ | 425 | $ | 3,955 | $ | 1,661 | $ | 825 | $ | 6,866 | ||||||||||
| (a) | Excludes unamortized discount and premium of $1 million, $5 million, $8 million and $1 million at Ameren (Parent), Ameren Missouri, Ameren Illinois and Genco, respectively. |
| (b) | Excludes $5 million related to Ameren Illinois' long-term debt fair-market value adjustments, which are being amortized to interest expense over the remaining life of the debt. |
All of the Ameren Companies expect to fund maturities of long-term debt, short-term borrowings, credit facility borrowings, commercial paper and contractual obligations through a combination of cash flow from operations and external financing. See Note 4 – Short-Term Debt and Liquidity for a discussion of external financing availability.
All classes of Ameren Missouri's and Ameren Illinois' preferred stock are entitled to cumulative dividends and have voting rights. The following table presents the outstanding preferred stock of Ameren Missouri and Ameren Illinois that is not subject to mandatory redemption. The preferred stock is redeemable, at the option of the issuer, at the prices shown below as of December 31, 2011 and 2010:
| Redemption Price (per share) | 2011 | 2010 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Without par value and stated value of $100 per share, 25 million shares authorized |
||||||||||||||||
|
$3.50 Series |
130,000 shares |
$ | 110.00 | $ | 13 | $ | 13 | |||||||||
|
$3.70 Series |
40,000 shares |
104.75 | 4 | 4 | ||||||||||||
|
$4.00 Series |
150,000 shares |
105.625 | 15 | 15 | ||||||||||||
|
$4.30 Series |
40,000 shares |
105.00 | 4 | 4 | ||||||||||||
|
$4.50 Series |
213,595 shares |
110.00(a) | 21 | 21 | ||||||||||||
|
$4.56 Series |
200,000 shares |
102.47 | 20 | 20 | ||||||||||||
|
$4.75 Series |
20,000 shares |
102.176 | 2 | 2 | ||||||||||||
|
$5.50 Series A |
14,000 shares |
110.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 80 | $ | 80 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
With par value of $100 per share, 2 million shares authorized |
||||||||||||||||
|
4.00% Series |
144,275 shares |
$ | 101.00 | $ | 14 | $ | 14 | |||||||||
|
4.08% Series |
45,224 shares |
103.00 | 5 | 5 | ||||||||||||
|
4.20% Series |
23,655 shares |
104.00 | 2 | 2 | ||||||||||||
|
4.25% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
4.26% Series |
16,621 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.42% Series |
16,190 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.70% Series |
18,429 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.90% Series |
73,825 shares |
102.00 | 7 | 7 | ||||||||||||
|
4.92% Series |
49,289 shares |
103.50 | 5 | 5 | ||||||||||||
|
5.16% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
6.625% Series |
124,273.75 shares |
100.00 | 12 | 12 | ||||||||||||
|
7.75% Series |
4,542 shares |
100.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 62 | $ | 62 | ||||||||||||
|
Total Ameren |
$ | 142 | $ | 142 | ||||||||||||
| (a) | In the event of voluntary liquidation, $105.50. |
Pursuant to the Ameren Illinois Merger: (i) every two shares of each series of IP preferred stock outstanding immediately prior to the Ameren Illinois Merger were automatically converted into one share of a newly created series of Ameren Illinois preferred stock having the same payment and redemption terms as the existing series of IP preferred stock, except to the extent that IP preferred stockholders exercised their dissenters' rights in accordance with Illinois law; and (ii) each outstanding share of CIPS common and preferred stock remained outstanding, except to the extent that CIPS preferred stockholders exercised their dissenters' rights in accordance with Illinois law. Stockholders holding 8,337 shares and 423 shares of CIPS and IP preferred stock, respectively, exercised their dissenter's rights.
In addition, Ameren has 100 million shares of $0.01 par value preferred stock authorized, with no shares outstanding. Ameren Missouri has 7.5 million shares of $1 par value preference stock authorized, with no such preference stock outstanding. Ameren Illinois has 2.6 million shares of no par value preferred stock authorized, with no shares outstanding.
Ameren
A Form S-3 registration statement was filed by Ameren with the SEC in June 2011, authorizing the offering of 6 million additional shares of its common stock under DRPlus. Shares of common stock sold under DRPlus are, at Ameren's option, newly issued shares, treasury shares, or shares purchased in the open market or in privately negotiated transactions. In 2012, Ameren plans for shares to be purchased in the open market for DRPlus and its 401(k) plan. Under DRPlus and its 401(k) plan, Ameren issued 2.2 million, 3.0 million, and 3.2 million shares of common stock in 2011, 2010, and 2009, respectively, which were valued at $65 million, $80 million, and $82 million for the respective years.
In February 2010, CILCORP completed a covenant defeasance of its remaining outstanding 9.375% senior bonds due 2029 by depositing $3 million in U.S. government obligations and cash with the indenture trustee. This deposit will be used solely to satisfy the principal and remaining interest obligations on these bonds. In connection with this covenant defeasance, the lien on the capital stock of CILCO securing these bonds was released.
Ameren Missouri
In August 2010, Ameren Missouri redeemed all $33 million of its $7.64 Series preferred stock at $100.85 per share, plus accrued and unpaid dividends.
In September 2010, Ameren Missouri redeemed all $66 million of its 7.69% Series A subordinated deferrable interest debentures at a redemption price of 102.692% of the principal amount plus accrued interest.
Ameren Illinois
In June 2011, Ameren Illinois' 6.625% $150 million senior secured notes matured and were repaid and retired using available cash on hand.
In August 2010, Ameren Illinois (formerly CILCO) redeemed all of the 111,264 outstanding shares of its 4.50% Series preferred stock at $110 per share and all of the 79,940 shares of its 4.64% Series preferred stock at $102 per share, plus, in each case, accrued and unpaid dividends. These preferred shares were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren Illinois (formerly CIPS) redeemed all $40 million of its 7.61% Series 1997-2 first mortgage bonds at a redemption price of 101.52% of the principal amount, plus accrued interest. These bonds were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren contributed to the capital of Ameren Illinois (formerly IP), without the payment of any consideration, all of the IP preferred stock owned by Ameren ($33 million). IP cancelled these preferred shares. This transaction was completed in connection with the Ameren Illinois Merger.
See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Genco
In November 2010, Genco's $200 million 8.35% senior notes matured and were retired with available cash on hand.
Indenture Provisions and Other Covenants
Ameren Missouri's and Ameren Illinois' indentures 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. However, 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 and dividend coverage ratios and bonds and preferred stock issuable as of December 31, 2011, at an assumed interest rate of 6% and dividend rate of 7%.
| 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 |
³ 2.0 | 3.2 | $ | 1,971 | ³ 2.5 | 84.9 | $ | 1,610 | ||||||||||||
|
Ameren Illinois |
³ 2.0 | 7.2 | 3,335 | (d) | ³ 1.5 | 3.1 | 203 | |||||||||||||
| (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 $89 million and $765 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. |
Ameren's indenture does not require Ameren to comply with any quantitative financial covenants. The indenture does, however, include certain cross-default provisions. Specifically, either (1) the failure by Ameren to pay when due and upon expiration of any applicable grace period any portion of any Ameren indebtedness in excess of $25 million or (2) the acceleration upon default of the maturity of any Ameren indebtedness in excess of $25 million under any indebtedness agreement, including the 2010 Credit Agreements, constitutes a default under the indenture, unless such past due or accelerated debt is discharged or the acceleration is rescinded or annulled within a specified period.
Ameren Missouri, Ameren Illinois, Genco and certain other nonregistrant 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 meaning of this limitation has never been clarified under the Federal Power Act or FERC regulations. However, 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 net income and retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on their respective stock, unless, among other things, their respective 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 its dividend payments on 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 FERC to maintain a minimum 30% ratio of common stock equity to total capitalization after the Ameren Illinois Merger and AERG distribution. As of December 31, 2011, Ameren Illinois' ratio of common stock equity to total capitalization was 58%.
Genco's indenture includes provisions that require Genco to maintain certain interest coverage and debt-to-capital ratios in order for Genco to pay dividends, to make principal or interest payments on subordinated borrowings, to make loans to or investments in affiliates, or to incur additional external, third-party indebtedness. The following table summarizes these ratios for the 12 months ended and as of December 31, 2011:
|
Required Interest |
Actual Interest |
Required Debt-to- |
Actual Debt-to- |
|||||||||
|
Genco |
³ 1.75(a)/2.50(b) | 4.3 | £ 60% (b) | 43 | % | |||||||
| (a) |
A minimum interest coverage ratio of 1.75 is required for Genco to make certain restricted payments, as defined, including specified dividend payments and, principal and interest payments on subordinated borrowings. As of the date of the restricted payment, the minimum ratio must have been achieved for the most recently ended four fiscal quarters and projected by management to be achieved for each of the subsequent four six-month periods. Investments in the non-state-regulated subsidiary money pool and repayments of non-state-regulated subsidiary money pool borrowings are not subject to this incurrence test. |
| (b) | A minimum interest coverage ratio of 2.50 for the most recently ended four fiscal quarters and a debt-to-capital ratio of no greater than 60% are required for Genco to incur additional indebtedness, as defined, other than permitted indebtedness, as defined, for borrowed money. The ratios must be computed on a pro forma basis considering the additional indebtedness to be incurred and the related interest expense. Non-state-regulated subsidiary money pool borrowings are defined as permitted indebtedness and are not subject to these incurrence tests. Credit facility borrowings, including borrowings under the 2010 Genco Credit Agreement, and other borrowings from third-party, external sources are included in the definition of indebtedness and are subject to these incurrence tests. |
Genco's debt incurrence-related ratio restrictions under its indenture may be disregarded if both Moody's and S&P reaffirm the ratings of Genco in place at the time of the debt incurrence after considering the additional indebtedness.
In order for the Ameren Companies to issue securities in the future, they will have to comply with all applicable requirements in effect at the time of any such issuances.
Off-Balance-Sheet Arrangements
At December 31, 2011, none of the Ameren Companies had any off-balance-sheet financing arrangements, other than operating leases entered into in the ordinary course of business. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.
NOTE 5 – LONG-TERM DEBT AND EQUITY FINANCINGS
The following table presents long-term debt outstanding for the Ameren Companies as of December 31, 2011, and 2010:
| 2011 | 2010 | |||||||
|
Ameren (Parent): |
||||||||
|
8.875% Senior unsecured notes due 2014 |
$ | 425 | $ | 425 | ||||
|
Less: Unamortized discount and premium |
(1 | ) | (2 | ) | ||||
|
Long-term debt, net |
$ | 424 | $ | 423 | ||||
|
Ameren Missouri: |
||||||||
|
Senior secured notes:(a) |
||||||||
|
5.25% Senior secured notes due 2012 |
$ | 173 | $ | 173 | ||||
|
4.65% Senior secured notes due 2013 |
200 | 200 | ||||||
|
5.50% Senior secured notes due 2014 |
104 | 104 | ||||||
|
4.75% Senior secured notes due 2015 |
114 | 114 | ||||||
|
5.40% Senior secured notes due 2016 |
260 | 260 | ||||||
|
6.40% Senior secured notes due 2017 |
425 | 425 | ||||||
|
6.00% Senior secured notes due 2018(b) |
250 | 250 | ||||||
|
5.10% Senior secured notes due 2018 |
200 | 200 | ||||||
|
6.70% Senior secured notes due 2019(b) |
450 | 450 | ||||||
|
5.10% Senior secured notes due 2019 |
300 | 300 | ||||||
|
5.00% Senior secured notes due 2020 |
85 | 85 | ||||||
|
5.50% Senior secured notes due 2034 |
184 | 184 | ||||||
|
5.30% Senior secured notes due 2037 |
300 | 300 | ||||||
|
8.45% Senior secured notes due 2039(b) |
350 | 350 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
1992 Series due 2022(c)(d) |
47 | 47 | ||||||
|
1993 5.45% Series due 2028(e) |
44 | 44 | ||||||
|
1998 Series A due 2033(c)(d) |
60 | 60 | ||||||
|
1998 Series B due 2033(c)(d) |
50 | 50 | ||||||
|
1998 Series C due 2033(c)(d) |
50 | 50 | ||||||
|
Capital lease obligations: |
||||||||
|
City of Bowling Green capital lease (Peno Creek CT) |
69 | 74 | ||||||
|
Audrain County capital lease (Audrain County CT) |
240 | 240 | ||||||
|
Total long-term debt, gross |
3,955 | 3,960 | ||||||
|
Less: Unamortized discount and premium |
(5 | ) | (6 | ) | ||||
|
Less: Maturities due within one year |
(178 | ) | (5 | ) | ||||
|
Long-term debt, net |
$ | 3,772 | $ | 3,949 | ||||
|
Ameren Illinois: |
||||||||
|
Senior secured notes: |
||||||||
|
6.625% Senior secured notes due 2011 |
$ | - | $ | 150 | ||||
|
8.875% Senior secured notes due 2013(f)(h) |
150 | 150 | ||||||
|
6.20% Senior secured notes due 2016(f) |
54 | 54 | ||||||
|
6.25% Senior secured notes due 2016(g) |
75 | 75 | ||||||
|
6.125% Senior secured notes due 2017(g)(i) |
250 | 250 | ||||||
|
6.25% Senior secured notes due 2018(g)(i) |
337 | 337 | ||||||
|
9.75% Senior secured notes due 2018(g)(i) |
400 | 400 | ||||||
|
6.125% Senior secured notes due 2028(g) |
60 | 60 | ||||||
|
6.70% Senior secured notes due 2036(g) |
61 | 61 | ||||||
|
6.70% Senior secured notes due 2036(f) |
42 | 42 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
6.20% Series 1992B due 2012(j) |
1 | 1 | ||||||
|
2000 Series A 5.50% due 2014 |
51 | 51 | ||||||
|
5.90% Series 1993 due 2023(j) |
32 | 32 | ||||||
|
5.70% 1994A Series due 2024(k) |
36 | 36 | ||||||
|
1993 Series C-1 5.95% due 2026 |
35 | 35 | ||||||
|
1993 Series C-2 5.70% due 2026 |
8 | 8 | ||||||
|
1993 Series B-1 due 2028(d) |
17 | 17 | ||||||
|
5.40% 1998A Series due 2028(k) |
19 | 19 | ||||||
|
5.40% 1998B Series due 2028(k) |
33 | 33 | ||||||
|
Fair-market value adjustments |
5 | 5 | ||||||
|
Total long-term debt, gross |
1,666 | 1,816 | ||||||
|
Less: Unamortized discount and premium |
(8 | ) | (9 | ) | ||||
|
Less: Maturities due within one year |
(1 | ) | (150 | ) | ||||
|
Long-term debt, net |
$ | 1,657 | $ | 1,657 | ||||
|
Genco: |
||||||||
|
Unsecured notes: |
||||||||
|
Senior notes Series F 7.95% due 2032 |
$ | 275 | $ | 275 | ||||
|
Senior notes Series H 7.00% due 2018 |
300 | 300 | ||||||
|
Senior notes Series I 6.30% due 2020 |
250 | 250 | ||||||
|
Total long-term debt, gross |
825 | 825 | ||||||
|
Less: Unamortized discount and premium |
(1 | ) | (1 | ) | ||||
|
Less: Maturities due within one year |
- | - | ||||||
|
Long-term debt, net |
$ | 824 | $ | 824 | ||||
|
Ameren consolidated long-term debt, net |
$ | 6,677 | $ | 6,853 | ||||
| (a) | These notes are collaterally secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any first mortgage bonds issued under the UE mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2039. |
| (b) | Ameren Missouri has agreed not to affect the release of first mortgage bonds securing these notes at any time during the life of these notes. |
| (c) | These notes are secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture and have a fall-away lien provision similar to that of the company's senior secured notes. The notes are also backed by an insurance guarantee policy. |
| (d) | Interest rates, and periods during which such rates apply, vary depending on our selection of defined rate modes. Maximum interest rates could range up to 18% depending on the series of bonds. The average interest rates for 2011 and 2010 were as follows: |
| 2011 | 2010 | |||
|
Ameren Missouri 1992 Series |
0.34% | 0.47% | ||
|
Ameren Missouri 1998 Series A |
0.69% | 0.71% | ||
|
Ameren Missouri 1998 Series B |
0.68% | 0.73% | ||
|
Ameren Missouri 1998 Series C |
0.69% | 0.74% | ||
|
Ameren Illinois 1993 Series B-1 |
0.28% | 0.59% |
| (e) | These notes are first mortgage bonds issued by Ameren Missouri under the UE mortgage bond indenture and are secured by substantially all Ameren Missouri property and franchises. The notes are callable at 100% of par value. |
| (f) |
These notes are collaterally secured by first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the CILCO mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2023. |
| (g) | These notes are collaterally secured by mortgage bonds issued by Ameren Illinois under the IP mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the IP mortgage indenture remain outstanding. Redemption, purchase, or maturity of all mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the mortgage bond lien protection associated with these notes to fall away until 2028. |
| (h) | Ameren Illinois has agreed not to affect a release of CILCO first mortgage bonds securing these notes at any time during the life of these notes. |
| (i) | Ameren Illinois has agreed not to affect a release of IP mortgage bonds securing these notes at any time during the life of these notes. |
| (j) | These notes are first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture and are secured by substantially all property of the former CILCO. The notes are callable at 100% of par value. |
| (k) | These notes are mortgage bonds issued by Ameren Illinois under the IP mortgage indenture and are secured by substantially all property of the former IP and CIPS. The notes are callable at 100% of par value. The notes are also backed by an insurance guarantee policy. |
The following table presents the aggregate maturities of long-term debt, including current maturities, for the Ameren Companies at December 31, 2011:
|
Ameren (Parent)(a) |
Ameren Missouri(a) |
Ameren Illinois(a)(b) |
Genco(a) |
Ameren Consolidated |
||||||||||||||||
|
2012 |
$ | - | $ | 178 | $ | 1 | $ | - | $ | 179 | ||||||||||
|
2013 |
- | 205 | 150 | - | 355 | |||||||||||||||
|
2014 |
425 | 109 | 51 | - | 585 | |||||||||||||||
|
2015 |
- | 120 | - | - | 120 | |||||||||||||||
|
2016 |
- | 266 | 129 | - | 395 | |||||||||||||||
|
Thereafter |
- | 3,077 | 1,330 | 825 | 5,232 | |||||||||||||||
|
Total |
$ | 425 | $ | 3,955 | $ | 1,661 | $ | 825 | $ | 6,866 | ||||||||||
| (a) | Excludes unamortized discount and premium of $1 million, $5 million, $8 million and $1 million at Ameren (Parent), Ameren Missouri, Ameren Illinois and Genco, respectively. |
| (b) | Excludes $5 million related to Ameren Illinois' long-term debt fair-market value adjustments, which are being amortized to interest expense over the remaining life of the debt. |
All of the Ameren Companies expect to fund maturities of long-term debt, short-term borrowings, credit facility borrowings, commercial paper and contractual obligations through a combination of cash flow from operations and external financing. See Note 4 – Short-Term Debt and Liquidity for a discussion of external financing availability.
All classes of Ameren Missouri's and Ameren Illinois' preferred stock are entitled to cumulative dividends and have voting rights. The following table presents the outstanding preferred stock of Ameren Missouri and Ameren Illinois that is not subject to mandatory redemption. The preferred stock is redeemable, at the option of the issuer, at the prices shown below as of December 31, 2011 and 2010:
| Redemption Price (per share) | 2011 | 2010 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Without par value and stated value of $100 per share, 25 million shares authorized |
||||||||||||||||
|
$3.50 Series |
130,000 shares |
$ | 110.00 | $ | 13 | $ | 13 | |||||||||
|
$3.70 Series |
40,000 shares |
104.75 | 4 | 4 | ||||||||||||
|
$4.00 Series |
150,000 shares |
105.625 | 15 | 15 | ||||||||||||
|
$4.30 Series |
40,000 shares |
105.00 | 4 | 4 | ||||||||||||
|
$4.50 Series |
213,595 shares |
110.00(a) | 21 | 21 | ||||||||||||
|
$4.56 Series |
200,000 shares |
102.47 | 20 | 20 | ||||||||||||
|
$4.75 Series |
20,000 shares |
102.176 | 2 | 2 | ||||||||||||
|
$5.50 Series A |
14,000 shares |
110.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 80 | $ | 80 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
With par value of $100 per share, 2 million shares authorized |
||||||||||||||||
|
4.00% Series |
144,275 shares |
$ | 101.00 | $ | 14 | $ | 14 | |||||||||
|
4.08% Series |
45,224 shares |
103.00 | 5 | 5 | ||||||||||||
|
4.20% Series |
23,655 shares |
104.00 | 2 | 2 | ||||||||||||
|
4.25% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
4.26% Series |
16,621 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.42% Series |
16,190 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.70% Series |
18,429 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.90% Series |
73,825 shares |
102.00 | 7 | 7 | ||||||||||||
|
4.92% Series |
49,289 shares |
103.50 | 5 | 5 | ||||||||||||
|
5.16% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
6.625% Series |
124,273.75 shares |
100.00 | 12 | 12 | ||||||||||||
|
7.75% Series |
4,542 shares |
100.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 62 | $ | 62 | ||||||||||||
|
Total Ameren |
$ | 142 | $ | 142 | ||||||||||||
| (a) | In the event of voluntary liquidation, $105.50. |
Pursuant to the Ameren Illinois Merger: (i) every two shares of each series of IP preferred stock outstanding immediately prior to the Ameren Illinois Merger were automatically converted into one share of a newly created series of Ameren Illinois preferred stock having the same payment and redemption terms as the existing series of IP preferred stock, except to the extent that IP preferred stockholders exercised their dissenters' rights in accordance with Illinois law; and (ii) each outstanding share of CIPS common and preferred stock remained outstanding, except to the extent that CIPS preferred stockholders exercised their dissenters' rights in accordance with Illinois law. Stockholders holding 8,337 shares and 423 shares of CIPS and IP preferred stock, respectively, exercised their dissenter's rights.
In addition, Ameren has 100 million shares of $0.01 par value preferred stock authorized, with no shares outstanding. Ameren Missouri has 7.5 million shares of $1 par value preference stock authorized, with no such preference stock outstanding. Ameren Illinois has 2.6 million shares of no par value preferred stock authorized, with no shares outstanding.
Ameren
A Form S-3 registration statement was filed by Ameren with the SEC in June 2011, authorizing the offering of 6 million additional shares of its common stock under DRPlus. Shares of common stock sold under DRPlus are, at Ameren's option, newly issued shares, treasury shares, or shares purchased in the open market or in privately negotiated transactions. In 2012, Ameren plans for shares to be purchased in the open market for DRPlus and its 401(k) plan. Under DRPlus and its 401(k) plan, Ameren issued 2.2 million, 3.0 million, and 3.2 million shares of common stock in 2011, 2010, and 2009, respectively, which were valued at $65 million, $80 million, and $82 million for the respective years.
In February 2010, CILCORP completed a covenant defeasance of its remaining outstanding 9.375% senior bonds due 2029 by depositing $3 million in U.S. government obligations and cash with the indenture trustee. This deposit will be used solely to satisfy the principal and remaining interest obligations on these bonds. In connection with this covenant defeasance, the lien on the capital stock of CILCO securing these bonds was released.
Ameren Missouri
In August 2010, Ameren Missouri redeemed all $33 million of its $7.64 Series preferred stock at $100.85 per share, plus accrued and unpaid dividends.
In September 2010, Ameren Missouri redeemed all $66 million of its 7.69% Series A subordinated deferrable interest debentures at a redemption price of 102.692% of the principal amount plus accrued interest.
Ameren Illinois
In June 2011, Ameren Illinois' 6.625% $150 million senior secured notes matured and were repaid and retired using available cash on hand.
In August 2010, Ameren Illinois (formerly CILCO) redeemed all of the 111,264 outstanding shares of its 4.50% Series preferred stock at $110 per share and all of the 79,940 shares of its 4.64% Series preferred stock at $102 per share, plus, in each case, accrued and unpaid dividends. These preferred shares were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren Illinois (formerly CIPS) redeemed all $40 million of its 7.61% Series 1997-2 first mortgage bonds at a redemption price of 101.52% of the principal amount, plus accrued interest. These bonds were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren contributed to the capital of Ameren Illinois (formerly IP), without the payment of any consideration, all of the IP preferred stock owned by Ameren ($33 million). IP cancelled these preferred shares. This transaction was completed in connection with the Ameren Illinois Merger.
See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Genco
In November 2010, Genco's $200 million 8.35% senior notes matured and were retired with available cash on hand.
Indenture Provisions and Other Covenants
Ameren Missouri's and Ameren Illinois' indentures 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. However, 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 and dividend coverage ratios and bonds and preferred stock issuable as of December 31, 2011, at an assumed interest rate of 6% and dividend rate of 7%.
| 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 |
³ 2.0 | 3.2 | $ | 1,971 | ³ 2.5 | 84.9 | $ | 1,610 | ||||||||||||
|
Ameren Illinois |
³ 2.0 | 7.2 | 3,335 | (d) | ³ 1.5 | 3.1 | 203 | |||||||||||||
| (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 $89 million and $765 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. |
Ameren's indenture does not require Ameren to comply with any quantitative financial covenants. The indenture does, however, include certain cross-default provisions. Specifically, either (1) the failure by Ameren to pay when due and upon expiration of any applicable grace period any portion of any Ameren indebtedness in excess of $25 million or (2) the acceleration upon default of the maturity of any Ameren indebtedness in excess of $25 million under any indebtedness agreement, including the 2010 Credit Agreements, constitutes a default under the indenture, unless such past due or accelerated debt is discharged or the acceleration is rescinded or annulled within a specified period.
Ameren Missouri, Ameren Illinois, Genco and certain other nonregistrant 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 meaning of this limitation has never been clarified under the Federal Power Act or FERC regulations. However, 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 net income and retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on their respective stock, unless, among other things, their respective 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 its dividend payments on 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 FERC to maintain a minimum 30% ratio of common stock equity to total capitalization after the Ameren Illinois Merger and AERG distribution. As of December 31, 2011, Ameren Illinois' ratio of common stock equity to total capitalization was 58%.
Genco's indenture includes provisions that require Genco to maintain certain interest coverage and debt-to-capital ratios in order for Genco to pay dividends, to make principal or interest payments on subordinated borrowings, to make loans to or investments in affiliates, or to incur additional external, third-party indebtedness. The following table summarizes these ratios for the 12 months ended and as of December 31, 2011:
|
Required Interest |
Actual Interest |
Required Debt-to- |
Actual Debt-to- |
|||||||||
|
Genco |
³ 1.75(a)/2.50(b) | 4.3 | £ 60% (b) | 43 | % | |||||||
| (a) |
A minimum interest coverage ratio of 1.75 is required for Genco to make certain restricted payments, as defined, including specified dividend payments and, principal and interest payments on subordinated borrowings. As of the date of the restricted payment, the minimum ratio must have been achieved for the most recently ended four fiscal quarters and projected by management to be achieved for each of the subsequent four six-month periods. Investments in the non-state-regulated subsidiary money pool and repayments of non-state-regulated subsidiary money pool borrowings are not subject to this incurrence test. |
| (b) | A minimum interest coverage ratio of 2.50 for the most recently ended four fiscal quarters and a debt-to-capital ratio of no greater than 60% are required for Genco to incur additional indebtedness, as defined, other than permitted indebtedness, as defined, for borrowed money. The ratios must be computed on a pro forma basis considering the additional indebtedness to be incurred and the related interest expense. Non-state-regulated subsidiary money pool borrowings are defined as permitted indebtedness and are not subject to these incurrence tests. Credit facility borrowings, including borrowings under the 2010 Genco Credit Agreement, and other borrowings from third-party, external sources are included in the definition of indebtedness and are subject to these incurrence tests. |
Genco's debt incurrence-related ratio restrictions under its indenture may be disregarded if both Moody's and S&P reaffirm the ratings of Genco in place at the time of the debt incurrence after considering the additional indebtedness.
In order for the Ameren Companies to issue securities in the future, they will have to comply with all applicable requirements in effect at the time of any such issuances.
Off-Balance-Sheet Arrangements
At December 31, 2011, none of the Ameren Companies had any off-balance-sheet financing arrangements, other than operating leases entered into in the ordinary course of business. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.
NOTE 5 – LONG-TERM DEBT AND EQUITY FINANCINGS
The following table presents long-term debt outstanding for the Ameren Companies as of December 31, 2011, and 2010:
| 2011 | 2010 | |||||||
|
Ameren (Parent): |
||||||||
|
8.875% Senior unsecured notes due 2014 |
$ | 425 | $ | 425 | ||||
|
Less: Unamortized discount and premium |
(1 | ) | (2 | ) | ||||
|
Long-term debt, net |
$ | 424 | $ | 423 | ||||
|
Ameren Missouri: |
||||||||
|
Senior secured notes:(a) |
||||||||
|
5.25% Senior secured notes due 2012 |
$ | 173 | $ | 173 | ||||
|
4.65% Senior secured notes due 2013 |
200 | 200 | ||||||
|
5.50% Senior secured notes due 2014 |
104 | 104 | ||||||
|
4.75% Senior secured notes due 2015 |
114 | 114 | ||||||
|
5.40% Senior secured notes due 2016 |
260 | 260 | ||||||
|
6.40% Senior secured notes due 2017 |
425 | 425 | ||||||
|
6.00% Senior secured notes due 2018(b) |
250 | 250 | ||||||
|
5.10% Senior secured notes due 2018 |
200 | 200 | ||||||
|
6.70% Senior secured notes due 2019(b) |
450 | 450 | ||||||
|
5.10% Senior secured notes due 2019 |
300 | 300 | ||||||
|
5.00% Senior secured notes due 2020 |
85 | 85 | ||||||
|
5.50% Senior secured notes due 2034 |
184 | 184 | ||||||
|
5.30% Senior secured notes due 2037 |
300 | 300 | ||||||
|
8.45% Senior secured notes due 2039(b) |
350 | 350 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
1992 Series due 2022(c)(d) |
47 | 47 | ||||||
|
1993 5.45% Series due 2028(e) |
44 | 44 | ||||||
|
1998 Series A due 2033(c)(d) |
60 | 60 | ||||||
|
1998 Series B due 2033(c)(d) |
50 | 50 | ||||||
|
1998 Series C due 2033(c)(d) |
50 | 50 | ||||||
|
Capital lease obligations: |
||||||||
|
City of Bowling Green capital lease (Peno Creek CT) |
69 | 74 | ||||||
|
Audrain County capital lease (Audrain County CT) |
240 | 240 | ||||||
|
Total long-term debt, gross |
3,955 | 3,960 | ||||||
|
Less: Unamortized discount and premium |
(5 | ) | (6 | ) | ||||
|
Less: Maturities due within one year |
(178 | ) | (5 | ) | ||||
|
Long-term debt, net |
$ | 3,772 | $ | 3,949 | ||||
|
Ameren Illinois: |
||||||||
|
Senior secured notes: |
||||||||
|
6.625% Senior secured notes due 2011 |
$ | - | $ | 150 | ||||
|
8.875% Senior secured notes due 2013(f)(h) |
150 | 150 | ||||||
|
6.20% Senior secured notes due 2016(f) |
54 | 54 | ||||||
|
6.25% Senior secured notes due 2016(g) |
75 | 75 | ||||||
|
6.125% Senior secured notes due 2017(g)(i) |
250 | 250 | ||||||
|
6.25% Senior secured notes due 2018(g)(i) |
337 | 337 | ||||||
|
9.75% Senior secured notes due 2018(g)(i) |
400 | 400 | ||||||
|
6.125% Senior secured notes due 2028(g) |
60 | 60 | ||||||
|
6.70% Senior secured notes due 2036(g) |
61 | 61 | ||||||
|
6.70% Senior secured notes due 2036(f) |
42 | 42 | ||||||
|
Environmental improvement and pollution control revenue bonds: |
||||||||
|
6.20% Series 1992B due 2012(j) |
1 | 1 | ||||||
|
2000 Series A 5.50% due 2014 |
51 | 51 | ||||||
|
5.90% Series 1993 due 2023(j) |
32 | 32 | ||||||
|
5.70% 1994A Series due 2024(k) |
36 | 36 | ||||||
|
1993 Series C-1 5.95% due 2026 |
35 | 35 | ||||||
|
1993 Series C-2 5.70% due 2026 |
8 | 8 | ||||||
|
1993 Series B-1 due 2028(d) |
17 | 17 | ||||||
|
5.40% 1998A Series due 2028(k) |
19 | 19 | ||||||
|
5.40% 1998B Series due 2028(k) |
33 | 33 | ||||||
|
Fair-market value adjustments |
5 | 5 | ||||||
|
Total long-term debt, gross |
1,666 | 1,816 | ||||||
|
Less: Unamortized discount and premium |
(8 | ) | (9 | ) | ||||
|
Less: Maturities due within one year |
(1 | ) | (150 | ) | ||||
|
Long-term debt, net |
$ | 1,657 | $ | 1,657 | ||||
|
Genco: |
||||||||
|
Unsecured notes: |
||||||||
|
Senior notes Series F 7.95% due 2032 |
$ | 275 | $ | 275 | ||||
|
Senior notes Series H 7.00% due 2018 |
300 | 300 | ||||||
|
Senior notes Series I 6.30% due 2020 |
250 | 250 | ||||||
|
Total long-term debt, gross |
825 | 825 | ||||||
|
Less: Unamortized discount and premium |
(1 | ) | (1 | ) | ||||
|
Less: Maturities due within one year |
- | - | ||||||
|
Long-term debt, net |
$ | 824 | $ | 824 | ||||
|
Ameren consolidated long-term debt, net |
$ | 6,677 | $ | 6,853 | ||||
| (a) | These notes are collaterally secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any first mortgage bonds issued under the UE mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2039. |
| (b) | Ameren Missouri has agreed not to affect the release of first mortgage bonds securing these notes at any time during the life of these notes. |
| (c) | These notes are secured by first mortgage bonds issued by Ameren Missouri under the UE mortgage indenture and have a fall-away lien provision similar to that of the company's senior secured notes. The notes are also backed by an insurance guarantee policy. |
| (d) | Interest rates, and periods during which such rates apply, vary depending on our selection of defined rate modes. Maximum interest rates could range up to 18% depending on the series of bonds. The average interest rates for 2011 and 2010 were as follows: |
| 2011 | 2010 | |||
|
Ameren Missouri 1992 Series |
0.34% | 0.47% | ||
|
Ameren Missouri 1998 Series A |
0.69% | 0.71% | ||
|
Ameren Missouri 1998 Series B |
0.68% | 0.73% | ||
|
Ameren Missouri 1998 Series C |
0.69% | 0.74% | ||
|
Ameren Illinois 1993 Series B-1 |
0.28% | 0.59% |
| (e) | These notes are first mortgage bonds issued by Ameren Missouri under the UE mortgage bond indenture and are secured by substantially all Ameren Missouri property and franchises. The notes are callable at 100% of par value. |
| (f) |
These notes are collaterally secured by first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the CILCO mortgage indenture remain outstanding. Redemption, purchase, or maturity of all first mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the first mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the first mortgage bond lien protection associated with these notes to fall away until 2023. |
| (g) | These notes are collaterally secured by mortgage bonds issued by Ameren Illinois under the IP mortgage indenture. The notes have a fall-away lien provision and will remain secured only as long as any series of first mortgage bonds issued under the IP mortgage indenture remain outstanding. Redemption, purchase, or maturity of all mortgage bonds, including first mortgage bonds currently outstanding and any that may be issued in the future, would result in a release of the mortgage bonds currently securing these notes, at which time these notes would become unsecured obligations. Assuming no early redemption of outstanding bonds or notes, we do not expect the mortgage bond lien protection associated with these notes to fall away until 2028. |
| (h) | Ameren Illinois has agreed not to affect a release of CILCO first mortgage bonds securing these notes at any time during the life of these notes. |
| (i) | Ameren Illinois has agreed not to affect a release of IP mortgage bonds securing these notes at any time during the life of these notes. |
| (j) | These notes are first mortgage bonds issued by Ameren Illinois under the CILCO mortgage indenture and are secured by substantially all property of the former CILCO. The notes are callable at 100% of par value. |
| (k) | These notes are mortgage bonds issued by Ameren Illinois under the IP mortgage indenture and are secured by substantially all property of the former IP and CIPS. The notes are callable at 100% of par value. The notes are also backed by an insurance guarantee policy. |
The following table presents the aggregate maturities of long-term debt, including current maturities, for the Ameren Companies at December 31, 2011:
|
Ameren (Parent)(a) |
Ameren Missouri(a) |
Ameren Illinois(a)(b) |
Genco(a) |
Ameren Consolidated |
||||||||||||||||
|
2012 |
$ | - | $ | 178 | $ | 1 | $ | - | $ | 179 | ||||||||||
|
2013 |
- | 205 | 150 | - | 355 | |||||||||||||||
|
2014 |
425 | 109 | 51 | - | 585 | |||||||||||||||
|
2015 |
- | 120 | - | - | 120 | |||||||||||||||
|
2016 |
- | 266 | 129 | - | 395 | |||||||||||||||
|
Thereafter |
- | 3,077 | 1,330 | 825 | 5,232 | |||||||||||||||
|
Total |
$ | 425 | $ | 3,955 | $ | 1,661 | $ | 825 | $ | 6,866 | ||||||||||
| (a) | Excludes unamortized discount and premium of $1 million, $5 million, $8 million and $1 million at Ameren (Parent), Ameren Missouri, Ameren Illinois and Genco, respectively. |
| (b) | Excludes $5 million related to Ameren Illinois' long-term debt fair-market value adjustments, which are being amortized to interest expense over the remaining life of the debt. |
All of the Ameren Companies expect to fund maturities of long-term debt, short-term borrowings, credit facility borrowings, commercial paper and contractual obligations through a combination of cash flow from operations and external financing. See Note 4 – Short-Term Debt and Liquidity for a discussion of external financing availability.
All classes of Ameren Missouri's and Ameren Illinois' preferred stock are entitled to cumulative dividends and have voting rights. The following table presents the outstanding preferred stock of Ameren Missouri and Ameren Illinois that is not subject to mandatory redemption. The preferred stock is redeemable, at the option of the issuer, at the prices shown below as of December 31, 2011 and 2010:
| Redemption Price (per share) | 2011 | 2010 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Without par value and stated value of $100 per share, 25 million shares authorized |
||||||||||||||||
|
$3.50 Series |
130,000 shares |
$ | 110.00 | $ | 13 | $ | 13 | |||||||||
|
$3.70 Series |
40,000 shares |
104.75 | 4 | 4 | ||||||||||||
|
$4.00 Series |
150,000 shares |
105.625 | 15 | 15 | ||||||||||||
|
$4.30 Series |
40,000 shares |
105.00 | 4 | 4 | ||||||||||||
|
$4.50 Series |
213,595 shares |
110.00(a) | 21 | 21 | ||||||||||||
|
$4.56 Series |
200,000 shares |
102.47 | 20 | 20 | ||||||||||||
|
$4.75 Series |
20,000 shares |
102.176 | 2 | 2 | ||||||||||||
|
$5.50 Series A |
14,000 shares |
110.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 80 | $ | 80 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
With par value of $100 per share, 2 million shares authorized |
||||||||||||||||
|
4.00% Series |
144,275 shares |
$ | 101.00 | $ | 14 | $ | 14 | |||||||||
|
4.08% Series |
45,224 shares |
103.00 | 5 | 5 | ||||||||||||
|
4.20% Series |
23,655 shares |
104.00 | 2 | 2 | ||||||||||||
|
4.25% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
4.26% Series |
16,621 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.42% Series |
16,190 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.70% Series |
18,429 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.90% Series |
73,825 shares |
102.00 | 7 | 7 | ||||||||||||
|
4.92% Series |
49,289 shares |
103.50 | 5 | 5 | ||||||||||||
|
5.16% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
6.625% Series |
124,273.75 shares |
100.00 | 12 | 12 | ||||||||||||
|
7.75% Series |
4,542 shares |
100.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 62 | $ | 62 | ||||||||||||
|
Total Ameren |
$ | 142 | $ | 142 | ||||||||||||
| (a) | In the event of voluntary liquidation, $105.50. |
Pursuant to the Ameren Illinois Merger: (i) every two shares of each series of IP preferred stock outstanding immediately prior to the Ameren Illinois Merger were automatically converted into one share of a newly created series of Ameren Illinois preferred stock having the same payment and redemption terms as the existing series of IP preferred stock, except to the extent that IP preferred stockholders exercised their dissenters' rights in accordance with Illinois law; and (ii) each outstanding share of CIPS common and preferred stock remained outstanding, except to the extent that CIPS preferred stockholders exercised their dissenters' rights in accordance with Illinois law. Stockholders holding 8,337 shares and 423 shares of CIPS and IP preferred stock, respectively, exercised their dissenter's rights.
In addition, Ameren has 100 million shares of $0.01 par value preferred stock authorized, with no shares outstanding. Ameren Missouri has 7.5 million shares of $1 par value preference stock authorized, with no such preference stock outstanding. Ameren Illinois has 2.6 million shares of no par value preferred stock authorized, with no shares outstanding.
Ameren
A Form S-3 registration statement was filed by Ameren with the SEC in June 2011, authorizing the offering of 6 million additional shares of its common stock under DRPlus. Shares of common stock sold under DRPlus are, at Ameren's option, newly issued shares, treasury shares, or shares purchased in the open market or in privately negotiated transactions. In 2012, Ameren plans for shares to be purchased in the open market for DRPlus and its 401(k) plan. Under DRPlus and its 401(k) plan, Ameren issued 2.2 million, 3.0 million, and 3.2 million shares of common stock in 2011, 2010, and 2009, respectively, which were valued at $65 million, $80 million, and $82 million for the respective years.
In February 2010, CILCORP completed a covenant defeasance of its remaining outstanding 9.375% senior bonds due 2029 by depositing $3 million in U.S. government obligations and cash with the indenture trustee. This deposit will be used solely to satisfy the principal and remaining interest obligations on these bonds. In connection with this covenant defeasance, the lien on the capital stock of CILCO securing these bonds was released.
Ameren Missouri
In August 2010, Ameren Missouri redeemed all $33 million of its $7.64 Series preferred stock at $100.85 per share, plus accrued and unpaid dividends.
In September 2010, Ameren Missouri redeemed all $66 million of its 7.69% Series A subordinated deferrable interest debentures at a redemption price of 102.692% of the principal amount plus accrued interest.
Ameren Illinois
In June 2011, Ameren Illinois' 6.625% $150 million senior secured notes matured and were repaid and retired using available cash on hand.
In August 2010, Ameren Illinois (formerly CILCO) redeemed all of the 111,264 outstanding shares of its 4.50% Series preferred stock at $110 per share and all of the 79,940 shares of its 4.64% Series preferred stock at $102 per share, plus, in each case, accrued and unpaid dividends. These preferred shares were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren Illinois (formerly CIPS) redeemed all $40 million of its 7.61% Series 1997-2 first mortgage bonds at a redemption price of 101.52% of the principal amount, plus accrued interest. These bonds were redeemed in connection with the Ameren Illinois Merger.
In September 2010, Ameren contributed to the capital of Ameren Illinois (formerly IP), without the payment of any consideration, all of the IP preferred stock owned by Ameren ($33 million). IP cancelled these preferred shares. This transaction was completed in connection with the Ameren Illinois Merger.
See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Genco
In November 2010, Genco's $200 million 8.35% senior notes matured and were retired with available cash on hand.
Indenture Provisions and Other Covenants
Ameren Missouri's and Ameren Illinois' indentures 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. However, 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 and dividend coverage ratios and bonds and preferred stock issuable as of December 31, 2011, at an assumed interest rate of 6% and dividend rate of 7%.
| 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 |
³ 2.0 | 3.2 | $ | 1,971 | ³ 2.5 | 84.9 | $ | 1,610 | ||||||||||||
|
Ameren Illinois |
³ 2.0 | 7.2 | 3,335 | (d) | ³ 1.5 | 3.1 | 203 | |||||||||||||
| (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 $89 million and $765 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. |
Ameren's indenture does not require Ameren to comply with any quantitative financial covenants. The indenture does, however, include certain cross-default provisions. Specifically, either (1) the failure by Ameren to pay when due and upon expiration of any applicable grace period any portion of any Ameren indebtedness in excess of $25 million or (2) the acceleration upon default of the maturity of any Ameren indebtedness in excess of $25 million under any indebtedness agreement, including the 2010 Credit Agreements, constitutes a default under the indenture, unless such past due or accelerated debt is discharged or the acceleration is rescinded or annulled within a specified period.
Ameren Missouri, Ameren Illinois, Genco and certain other nonregistrant 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 meaning of this limitation has never been clarified under the Federal Power Act or FERC regulations. However, 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 net income and retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on their respective stock, unless, among other things, their respective 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 its dividend payments on 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 FERC to maintain a minimum 30% ratio of common stock equity to total capitalization after the Ameren Illinois Merger and AERG distribution. As of December 31, 2011, Ameren Illinois' ratio of common stock equity to total capitalization was 58%.
Genco's indenture includes provisions that require Genco to maintain certain interest coverage and debt-to-capital ratios in order for Genco to pay dividends, to make principal or interest payments on subordinated borrowings, to make loans to or investments in affiliates, or to incur additional external, third-party indebtedness. The following table summarizes these ratios for the 12 months ended and as of December 31, 2011:
|
Required Interest |
Actual Interest |
Required Debt-to- |
Actual Debt-to- |
|||||||||
|
Genco |
³ 1.75(a)/2.50(b) | 4.3 | £ 60% (b) | 43 | % | |||||||
| (a) |
A minimum interest coverage ratio of 1.75 is required for Genco to make certain restricted payments, as defined, including specified dividend payments and, principal and interest payments on subordinated borrowings. As of the date of the restricted payment, the minimum ratio must have been achieved for the most recently ended four fiscal quarters and projected by management to be achieved for each of the subsequent four six-month periods. Investments in the non-state-regulated subsidiary money pool and repayments of non-state-regulated subsidiary money pool borrowings are not subject to this incurrence test. |
| (b) | A minimum interest coverage ratio of 2.50 for the most recently ended four fiscal quarters and a debt-to-capital ratio of no greater than 60% are required for Genco to incur additional indebtedness, as defined, other than permitted indebtedness, as defined, for borrowed money. The ratios must be computed on a pro forma basis considering the additional indebtedness to be incurred and the related interest expense. Non-state-regulated subsidiary money pool borrowings are defined as permitted indebtedness and are not subject to these incurrence tests. Credit facility borrowings, including borrowings under the 2010 Genco Credit Agreement, and other borrowings from third-party, external sources are included in the definition of indebtedness and are subject to these incurrence tests. |
Genco's debt incurrence-related ratio restrictions under its indenture may be disregarded if both Moody's and S&P reaffirm the ratings of Genco in place at the time of the debt incurrence after considering the additional indebtedness.
In order for the Ameren Companies to issue securities in the future, they will have to comply with all applicable requirements in effect at the time of any such issuances.
Off-Balance-Sheet Arrangements
At December 31, 2011, none of the Ameren Companies had any off-balance-sheet financing arrangements, other than operating leases entered into in the ordinary course of business. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.
|
|||
NOTE 6 – OTHER INCOME AND EXPENSES
The following table presents the components of "Other Income and Expenses" in the Ameren Companies' statements of income for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren:(a) |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 4 | $ | 5 | $ | 2 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
34 | 52 | 36 | |||||||||
|
Other |
3 | 5 | 5 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 69 | $ | 90 | $ | 71 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 8 | $ | 19 | $ | 12 | ||||||
|
Other |
15 | 14 | 11 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 23 | $ | 33 | $ | 23 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Missouri: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 2 | $ | 3 | $ | 1 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
30 | 50 | 33 | |||||||||
|
Other |
1 | 2 | 1 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 61 | $ | 83 | $ | 63 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 3 | $ | 8 | $ | 3 | ||||||
|
Other |
7 | 5 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 10 | $ | 13 | $ | 7 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Illinois: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 1 | $ | 1 | $ | 6 | ||||||
|
Allowance for equity funds used during construction |
4 | 2 | 2 | |||||||||
|
Other |
2 | 4 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 7 | $ | 7 | $ | 12 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 1 | $ | 5 | $ | 4 | ||||||
|
Other |
5 | 8 | 6 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 6 | $ | 13 | $ | 10 | ||||||
|
|
|
|
|
|
|
|||||||
|
Genco: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Other |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Other |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
NOTE 6 – OTHER INCOME AND EXPENSES
The following table presents the components of "Other Income and Expenses" in the Ameren Companies' statements of income for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren:(a) |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 4 | $ | 5 | $ | 2 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
34 | 52 | 36 | |||||||||
|
Other |
3 | 5 | 5 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 69 | $ | 90 | $ | 71 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 8 | $ | 19 | $ | 12 | ||||||
|
Other |
15 | 14 | 11 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 23 | $ | 33 | $ | 23 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Missouri: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 2 | $ | 3 | $ | 1 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
30 | 50 | 33 | |||||||||
|
Other |
1 | 2 | 1 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 61 | $ | 83 | $ | 63 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 3 | $ | 8 | $ | 3 | ||||||
|
Other |
7 | 5 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 10 | $ | 13 | $ | 7 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Illinois: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 1 | $ | 1 | $ | 6 | ||||||
|
Allowance for equity funds used during construction |
4 | 2 | 2 | |||||||||
|
Other |
2 | 4 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 7 | $ | 7 | $ | 12 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 1 | $ | 5 | $ | 4 | ||||||
|
Other |
5 | 8 | 6 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 6 | $ | 13 | $ | 10 | ||||||
|
|
|
|
|
|
|
|||||||
|
Genco: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Other |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Other |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
NOTE 6 – OTHER INCOME AND EXPENSES
The following table presents the components of "Other Income and Expenses" in the Ameren Companies' statements of income for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren:(a) |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 4 | $ | 5 | $ | 2 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
34 | 52 | 36 | |||||||||
|
Other |
3 | 5 | 5 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 69 | $ | 90 | $ | 71 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 8 | $ | 19 | $ | 12 | ||||||
|
Other |
15 | 14 | 11 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 23 | $ | 33 | $ | 23 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Missouri: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 2 | $ | 3 | $ | 1 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
30 | 50 | 33 | |||||||||
|
Other |
1 | 2 | 1 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 61 | $ | 83 | $ | 63 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 3 | $ | 8 | $ | 3 | ||||||
|
Other |
7 | 5 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 10 | $ | 13 | $ | 7 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Illinois: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 1 | $ | 1 | $ | 6 | ||||||
|
Allowance for equity funds used during construction |
4 | 2 | 2 | |||||||||
|
Other |
2 | 4 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 7 | $ | 7 | $ | 12 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 1 | $ | 5 | $ | 4 | ||||||
|
Other |
5 | 8 | 6 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 6 | $ | 13 | $ | 10 | ||||||
|
|
|
|
|
|
|
|||||||
|
Genco: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Other |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Other |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
NOTE 6 – OTHER INCOME AND EXPENSES
The following table presents the components of "Other Income and Expenses" in the Ameren Companies' statements of income for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren:(a) |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 4 | $ | 5 | $ | 2 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
34 | 52 | 36 | |||||||||
|
Other |
3 | 5 | 5 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 69 | $ | 90 | $ | 71 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 8 | $ | 19 | $ | 12 | ||||||
|
Other |
15 | 14 | 11 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 23 | $ | 33 | $ | 23 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Missouri: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 2 | $ | 3 | $ | 1 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
30 | 50 | 33 | |||||||||
|
Other |
1 | 2 | 1 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 61 | $ | 83 | $ | 63 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 3 | $ | 8 | $ | 3 | ||||||
|
Other |
7 | 5 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 10 | $ | 13 | $ | 7 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Illinois: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 1 | $ | 1 | $ | 6 | ||||||
|
Allowance for equity funds used during construction |
4 | 2 | 2 | |||||||||
|
Other |
2 | 4 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 7 | $ | 7 | $ | 12 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 1 | $ | 5 | $ | 4 | ||||||
|
Other |
5 | 8 | 6 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 6 | $ | 13 | $ | 10 | ||||||
|
|
|
|
|
|
|
|||||||
|
Genco: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Other |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Other |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
|
|||
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
We use derivatives principally to manage the risk of changes in market prices for natural gas, coal, diesel, power, and uranium. Such price fluctuations may cause the following:
| Ÿ |
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; |
| Ÿ |
market values of coal, natural gas, and uranium inventories that differ from the cost of those commodities in inventory; and |
| Ÿ |
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 derivative volumes by commodity type as of December 31, 2011 and 2010:
| Quantity (in millions, except as indicated) | ||||||||||||||||||||||||||||||||
| Commodity |
NPNS Contracts(a) |
Cash Flow Hedges(b) |
Other Derivatives(c) |
Derivatives That Qualify for Regulatory Deferral(d) |
||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
|
Coal (in tons) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
116 | 46 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Genco |
24 | 21 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
7 | 6 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
147 | 73 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Fuel oils (in gallons)(g) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
(e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 53 | 80 | ||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 27 | 43 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 9 | 12 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
(e | ) | (e | ) | (e | ) | (e | ) | 36 | 55 | 53 | 80 | ||||||||||||||||||||
|
Natural gas (in mmbtu) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
8 | 13 | (e | ) | (e | ) | 9 | 2 | 19 | 21 | ||||||||||||||||||||||
|
Ameren Illinois |
42 | 85 | (e | ) | (e | ) | (e | ) | (e | ) | 174 | 173 | ||||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 7 | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 1 | 16 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
50 | 98 | (e | ) | (e | ) | 17 | 21 | 193 | 194 | ||||||||||||||||||||||
|
Power (in megawatthours) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
1 | 2 | (e | ) | (e | ) | 1 | 1 | 6 | 5 | ||||||||||||||||||||||
|
Ameren Illinois |
11 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 24 | 26 | |||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | - | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
61 | 61 | 17 | 2 | 30 | 57 | (9 | ) | (13 | ) | ||||||||||||||||||||||
|
Ameren |
73 | 63 | 17 | 2 | 31 | 61 | 21 | 18 | ||||||||||||||||||||||||
|
Uranium (pounds in thousands) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri & Ameren |
5,553 | 5,810 | (e | ) | (e | ) | (e | ) | (e | ) | 148 | 185 | ||||||||||||||||||||
| (a) | Contracts through December 2017, March 2015, September 2035, and October 2024 for coal, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (b) | Contracts through December 2014 for power as of December 31, 2011. |
| (c) | Contracts through October 2014, December 2012, and December 2015 for fuel oils, natural gas, and power, respectively, as of December 31, 2011. |
| (d) | Contracts through October 2014, October 2016, May 2032, and December 2013 for fuel oils, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (e) | Not applicable. |
| (f) | Includes AERG contracts for coal and fuel oils, Marketing Company contracts for natural gas and power, and intercompany eliminations for power. |
| (g) | Fuel oils consist of heating and crude oil. |
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 8 – Fair Value Measurements for discussion of our methods of assessing the fair value of derivative instruments. Many of our physical contracts, such as our coal and purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense recorded in connection with 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 if it qualifies for hedge accounting treatment. We also consider whether gains or losses resulting from such derivatives qualify for regulatory deferral. Contracts that qualify for cash flow hedge accounting treatment are recorded at fair value with changes in fair value charged or credited to accumulated OCI in the period in which the change occurs, to the extent the hedge is effective. To the extent the hedge is ineffective, the related changes in fair value are charged or credited to the statement of income in the period in which the change occurs. When the contract is settled or delivered, the net gain or loss is recorded in the statement of income.
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. Ameren Missouri and Ameren Illinois believe derivative gains and losses 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.
Certain derivative contracts are entered into on a regular basis as part of our risk management program but do not qualify for the NPNS exception, hedge accounting, or regulatory deferral accounting. Such contracts are recorded at fair value, with changes in fair value charged or credited to the statement of income in the period in which the change occurs.
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 the same master netting arrangement. The Ameren Companies did not elect to adopt this guidance for any eligible financial instruments or other items.
The following table presents the carrying value and balance sheet location of all derivative instruments as of December 31, 2011 and 2010:
| Balance Sheet Location | Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
2011: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 8 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 16 | - | - | - | ||||||||||||||
| Total assets | $ | 24 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
Other deferred credits and liabilities | $ | 1 | $ | - | $ | - | $ | - | |||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 29 | $ | (b | ) | $ | (b | ) | $ | 10 | |||||||
| Other current assets | - | 17 | - | - | ||||||||||||||
| Other assets | 8 | 6 | - | 1 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 6 | (b | ) | (b | ) | 2 | |||||||||||
| Other current assets | - | 2 | 1 | - | ||||||||||||||
| Other assets | - | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 72 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 30 | - | - | ||||||||||||||
| Other assets | 99 | - | 77 | - | ||||||||||||||
| Total assets | $ | 214 | $ | 55 | $ | 79 | $ | 13 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 2 | $ | (b | ) | $ | - | $ | 1 | ||||||||
| Other current liabilities | - | 1 | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 106 | (b | ) | 90 | 2 | ||||||||||||
| Other current liabilities | - | 13 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 92 | 13 | 79 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 53 | (b | ) | 9 | - | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 200 | - | ||||||||||||
| Other current liabilities | - | 9 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 26 | - | 8 | - | ||||||||||||||
|
Uranium |
Other deferred credits and liabilities | 1 | 1 | - | - | |||||||||||||
| Total liabilities | $ | 280 | $ | 37 | $ | 386 | $ | 3 | ||||||||||
|
2010: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 3 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 2 | - | - | - | ||||||||||||||
| Total assets | $ | 5 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative liabilities | $ | 1 | $ | (b | ) | $ | - | $ | - | ||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 42 | $ | (b | ) | $ | (b | ) | $ | 14 | |||||||
| Other current assets | - | 24 | - | - | ||||||||||||||
| Other assets | 22 | 13 | - | 7 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 4 | (b | ) | (b | ) | 1 | |||||||||||
| Other current assets | - | 1 | 1 | - | ||||||||||||||
| Other assets | 1 | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 78 | (b | ) | (b | ) | 11 | |||||||||||
| Other current assets | - | 8 | 2 | - | ||||||||||||||
| Other assets | 20 | - | 6 | - | ||||||||||||||
|
Uranium |
MTM derivative assets | 2 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 2 | - | - | ||||||||||||||
| Total assets | $ | 169 | $ | 48 | $ | 10 | $ | 33 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 12 | $ | (b | ) | $ | - | $ | 4 | ||||||||
| Other current liabilities | - | 7 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 1 | - | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 87 | (b | ) | 73 | 2 | ||||||||||||
| Other current liabilities | - | 11 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 84 | 13 | 70 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 61 | (b | ) | 9 | 3 | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 172 | 5 | ||||||||||||
| Other current liabilities | - | 6 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 7 | - | 179 | - | ||||||||||||||
| Total liabilities | $ | 252 | $ | 37 | $ | 503 | $ | 14 | ||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Balance sheet line item not applicable to registrant. |
| (c) | Includes derivatives subject to regulatory deferral. |
The following table presents the cumulative amount of pretax net gains (losses) on all derivative instruments in accumulated OCI and regulatory assets or regulatory liabilities as of December 31, 2011 and 2010:
| Ameren | Ameren Missouri |
Ameren Illinois |
Genco | Other(a) | ||||||||||||||||
|
2011: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 19 | $ | - | $ | - | $ | - | $ | 19 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(8 | ) | - | - | (8 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(191 | ) | (24 | ) | (167 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
81 | 21 | (140 | ) | - | 200 | ||||||||||||||
|
Uranium derivative contracts(h) |
(1 | ) | (1 | ) | - | - | - | |||||||||||||
|
2010: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 8 | $ | - | $ | - | $ | - | $ | 8 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(9 | ) | - | - | (9 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(165 | ) | (24 | ) | (141 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
1 | 3 | (352 | ) | - | 350 | ||||||||||||||
|
Uranium derivative contracts(h) |
2 | 2 | - | - | - | |||||||||||||||
| (a) | Includes amounts for Marketing Company and intercompany eliminations. |
| (b) | Represents net gains associated with power derivative contracts at Ameren. These contracts are a partial hedge of electricity price exposure through December 2014 as of December 31, 2011. Current gains of $5 million and $8 million were recorded at Ameren as of December 31, 2011, and December 31, 2010, respectively. |
| (c) | Includes net gains associated with interest rate swaps at Genco that were a partial hedge of the interest rate on debt issued in June 2002. The swaps cover the first 10 years of debt that has a 30-year maturity, and the gain in OCI is amortized over a 10-year period that began in June 2002. The carrying value at December 31, 2011, and December 31, 2010 was less than $1 million and less than $1 million, respectively. The balance of the gain will be amortized by June 2012. |
| (d) | Includes net losses associated with interest rate swaps at Genco. The swaps were executed during the fourth quarter of 2007 as a partial hedge of interest rate risks associated with Genco's April 2008 debt issuance. The loss on the interest rate swaps is being amortized over a 10-year period that began in April 2008. The carrying value at December 31, 2011, and December 31, 2010, was a loss of $9 million and a loss of $10 million, respectively. Over the next 12 months, $1.4 million of the loss will be amortized. |
| (e) | Represents net gains on fuel oils derivative contracts at Ameren Missouri. These contracts are a partial hedge of Ameren Missouri's transportation costs for coal through October 2014 as of December 31, 2011. Current gains deferred as regulatory liabilities include $16 million and $16 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current losses deferred as regulatory assets include $1 million and $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $13 million and $13 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. Current losses deferred as regulatory assets include $6 million and $6 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. |
| (f) | Represents net losses associated with natural gas derivative contracts. These contracts are a partial hedge of natural gas requirements through October 2016 at Ameren, Ameren Missouri, and Ameren Illinois in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $1 million and $1 million at Ameren and Ameren Illinois, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $101 million, $11 million, and $90 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $2 million, $1 million, and $1 million at Ameren, Ameren Missouri, and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $84 million, $11 million, and $73 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (g) | Represents net losses associated with power derivative contracts. These contracts are a partial hedge of power price requirements through May 2032 at Ameren and Ameren Illinois and through December 2015 at Ameren Missouri, in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $29 million and $29 million at Ameren and Ameren Missouri, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $17 million, $8 million, and $209 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $8 million, $6 million, and $2 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $13 million, $3 million, and $181 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (h) | Represents net gains(losses) on uranium derivative contracts at Ameren Missouri. These contracts are a partial hedge of our uranium requirements through December 2013 as of December 31, 2011. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $2 million at Ameren and $2 million at Ameren Missouri as of December 31, 2010. |
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 trading and netting agreements, and reporting daily exposure to senior management.
We believe that entering into master trading and netting 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 trading and netting agreements: (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 trading and netting agreements allow the counterparties to net settle sale and purchase transactions. Further, collateral requirements are calculated at a master trading and netting agreement level by counterparty.
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 one of eight groupings according to the primary business in which each engages. The following table presents the maximum exposure, as of December 31, 2011, and 2010, if counterparty groups were to fail completely to perform on contracts by grouping. The maximum exposure is based on the gross fair value of financial instruments, including NPNS contracts, which excludes collateral held, and does not consider the legally binding right to net transactions based on master trading and netting agreements.
| Affiliates(a) |
Coal Producers |
Commodity Marketing Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 4 | $ | 26 | $ | 4 | $ | - | $ | - | $ | 71 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | 1 | - | - | - | 85 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 2 | 6 | - | 3 | - | 13 | |||||||||||||||||||||||||||
|
Other(b) |
275 | 1 | 3 | 10 | 51 | 194 | - | 87 | 621 | |||||||||||||||||||||||||||
|
Ameren |
$ | 276 | $ | 37 | $ | 89 | $ | 16 | $ | 84 | $ | 198 | $ | 3 | $ | 87 | $ | 790 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 21 | $ | 1 | $ | 2 | $ | 5 | $ | 11 | $ | 1 | $ | - | $ | 41 | ||||||||||||||||||
|
AIC |
- | - | 3 | - | 1 | - | - | - | 4 | |||||||||||||||||||||||||||
|
Genco |
- | 6 | 2 | 1 | 1 | - | 6 | - | 16 | |||||||||||||||||||||||||||
|
Other(b) |
410 | 3 | 10 | 19 | 65 | 539 | 3 | 72 | 1,121 | |||||||||||||||||||||||||||
|
Ameren |
$ | 410 | $ | 30 | $ | 16 | $ | 22 | $ | 72 | $ | 550 | $ | 10 | $ | 72 | $ | 1,182 | ||||||||||||||||||
| (a) | Primarily composed of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
The potential loss on counterparty exposures is reduced by the application of master trading and netting agreements and collateral held to the extent of reducing the exposure to zero. Collateral includes both cash collateral and other collateral held. The amount of cash collateral held by Marketing Company from counterparties and based on the contractual rights under the agreements to seek collateral and the maximum exposure as calculated under the individual master trading and netting agreements was less than $1 million and $1 million from retail companies at December 31, 2011 and 2010, respectively. There was no cash collateral held at Ameren registrant subsidiaries. As of December 31, 2011, other collateral used to reduce exposure consisted of letters of credit in the amount of $9 million, $1 million, $1 million, and $7 million held by Ameren, Ameren Missouri, Genco, and Marketing Company, respectively. As of December 31, 2010, other collateral used to reduce exposure consisted of letters of credit in the amount of $28 million and $1 million held by Ameren and Ameren Illinois, respectively. The following table presents the potential loss after consideration of the application of master trading and netting agreements and collateral held as of December 31, 2011 and 2010:
| Affiliates(a) |
Coal Producers |
Commodity Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 3 | $ | 22 | $ | 4 | $ | - | $ | - | $ | 66 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | - | - | - | - | 84 | |||||||||||||||||||||||||||
|
Genco |
- | - | - | 1 | 1 | - | 2 | - | 4 | |||||||||||||||||||||||||||
|
Other(b) |
273 | - | 3 | 5 | 42 | 187 | - | 86 | 596 | |||||||||||||||||||||||||||
|
Ameren |
$ | 274 | $ | 35 | $ | 88 | $ | 9 | $ | 65 | $ | 191 | $ | 2 | $ | 86 | $ | 750 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 8 | $ | - | $ | 1 | $ | 2 | $ | 10 | $ | - | $ | - | $ | 21 | ||||||||||||||||||
|
AIC |
- | - | 2 | - | - | - | - | - | 2 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 1 | 1 | - | 5 | - | 9 | |||||||||||||||||||||||||||
|
Other(b) |
404 | 1 | 8 | 7 | 56 | 513 | 2 | 71 | 1,062 | |||||||||||||||||||||||||||
|
Ameren |
$ | 404 | $ | 10 | $ | 11 | $ | 9 | $ | 59 | $ | 523 | $ | 7 | $ | 71 | $ | 1,094 | ||||||||||||||||||
| (a) | Primarily comprised of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
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 performance of an obligation requested adequate assurance of performance, additional collateral postings might be required. The following table presents, as of December 31, 2011, and 2010, 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 could be required to be posted with counterparties. The additional collateral required is the net liability position allowed under the master trading and netting agreements assuming (1) the credit risk-related contingent features underlying these agreements were triggered on December 31, 2011, or 2010, respectively, 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) |
||||||||||
|
2011: |
||||||||||||
|
Ameren Missouri |
$ | 102 | $ | 8 | $ | 86 | ||||||
|
Ameren Illinois |
220 | 96 | 125 | |||||||||
|
Genco |
55 | 1 | 58 | |||||||||
|
Other(c) |
79 | 11 | 63 | |||||||||
|
Ameren |
$ | 456 | $ | 116 | $ | 332 | ||||||
|
2010: |
||||||||||||
|
Ameren Missouri |
$ | 105 | $ | 7 | $ | 93 | ||||||
|
Ameren Illinois |
233 | 109 | 111 | |||||||||
|
Genco |
31 | - | 28 | |||||||||
|
Other(c) |
62 | 18 | 42 | |||||||||
|
Ameren |
$ | 431 | $ | 134 | $ | 274 | ||||||
| (a) | Prior to consideration of master trading and netting agreements and including NPNS contract exposures. |
| (b) | As collateral requirements with certain counterparties are based on master trading and netting agreements, the aggregate amount of additional collateral required to be posted is determined after consideration of the effects of such agreements. |
| (c) | Includes amounts for Marketing Company and Ameren (parent). |
Cash Flow Hedges
The following table presents the pretax net gain or loss for the year ended December 31, 2011 and 2010, associated with derivative instruments designated as cash flow hedges:
|
Gain (Loss) Recognized in OCI(a) |
Location of (Gain) Loss Reclassified from Accumulated OCI into Income(b) |
(Gain) Loss Reclassified from Accumulated OCI into Income(b) |
Location of Gain (Loss) Recognized in Income(c) |
Gain (Loss) in Income(c) |
||||||||||||
|
2011: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | 6 | Operating Revenues - Electric | $ | 5 | Operating Revenues - Electric | $ | (10 | ) | |||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
2010: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | (2 | ) | Operating Revenues - Electric | $ | (14 | ) | Operating Revenues - Electric | $ | (3 | ) | |||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
| (a) | Effective portion of gain (loss). |
| (b) | Effective portion of (gain) loss on settlements. |
| (c) | Ineffective portion of gain (loss) and amount excluded from effectiveness testing. |
| (d) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (e) | Represents interest rate swaps settled in prior periods. The cumulative gain and loss on the interest rate swaps is being amortized into income over a 10-year period. |
| (f) | Less than $1 million. |
Other Derivatives
The following table represents the net change in market value associated with derivatives not designated as hedging instruments for the years ended December 31, 2011 and 2010:
|
Location of Gain (Loss) Recognized in Income |
Gain (Loss) Recognized in Income |
|||||||||||
| 2011 | 2010 | |||||||||||
|
Ameren(a) |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 9 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues - Electric | (2 | ) | 9 | ||||||||
| Total | $ | (1 | ) | $ | 18 | |||||||
|
Ameren Missouri |
Natural gas (generation) | Operating Expenses - Fuel | $ | (1 | ) | $ | 1 | |||||
|
Genco |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 7 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues | (3 | ) | 1 | ||||||||
| Total | $ | (2 | ) | $ | 8 | |||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Derivatives Subject to Regulatory Deferral
The following table represents the net change in market value associated with derivatives that qualify for regulatory deferral for the years ended December 31, 2011 and 2010:
|
Gain (Loss) Recognized In Regulatory Liabilities or Regulatory Assets |
||||||||||
| 2011 | 2010 | |||||||||
|
Ameren(a) |
Fuel oils | $ | - | $ | 14 | |||||
| Natural gas | (26 | ) | (91 | ) | ||||||
| Power | 80 | 12 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 51 | $ | (61 | ) | |||||
|
Ameren |
Fuel oils | $ | - | $ | 14 | |||||
|
Missouri |
Natural gas | - | (11 | ) | ||||||
| Power | 18 | 4 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 15 | $ | 11 | ||||||
|
Ameren |
Natural gas | $ | (26 | ) | $ | (80 | ) | |||
|
Illinois |
Power | 212 | 70 | |||||||
| Total | $ | 186 | $ | (10 | ) | |||||
| (a) | Includes amounts for intercompany eliminations. |
As part of the 2007 Illinois Electric Settlement Agreement and subsequent Illinois power procurement processes, Ameren Illinois entered into financial contracts with Marketing Company. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives that qualify for regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities by Ameren Illinois and OCI by Marketing Company. In Ameren's consolidated financial statements, all financial statement effects of the derivative instruments entered into among affiliates were eliminated. See Note 14 – Related Party Transactions for additional information on these financial contracts. The following table presents the fair value of the financial contracts included on Ameren Illinois' balance sheet at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||
|
Ameren Illinois |
MTM derivative liabilities - affiliates | $ | 200 | $ | 172 | |||||
| Other deferred credits and liabilities | - | 178 | ||||||||
| Total | $ | 200 | $ | 350 | ||||||
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
We use derivatives principally to manage the risk of changes in market prices for natural gas, coal, diesel, power, and uranium. Such price fluctuations may cause the following:
| Ÿ |
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; |
| Ÿ |
market values of coal, natural gas, and uranium inventories that differ from the cost of those commodities in inventory; and |
| Ÿ |
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 derivative volumes by commodity type as of December 31, 2011 and 2010:
| Quantity (in millions, except as indicated) | ||||||||||||||||||||||||||||||||
| Commodity |
NPNS Contracts(a) |
Cash Flow Hedges(b) |
Other Derivatives(c) |
Derivatives That Qualify for Regulatory Deferral(d) |
||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
|
Coal (in tons) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
116 | 46 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Genco |
24 | 21 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
7 | 6 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
147 | 73 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Fuel oils (in gallons)(g) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
(e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 53 | 80 | ||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 27 | 43 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 9 | 12 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
(e | ) | (e | ) | (e | ) | (e | ) | 36 | 55 | 53 | 80 | ||||||||||||||||||||
|
Natural gas (in mmbtu) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
8 | 13 | (e | ) | (e | ) | 9 | 2 | 19 | 21 | ||||||||||||||||||||||
|
Ameren Illinois |
42 | 85 | (e | ) | (e | ) | (e | ) | (e | ) | 174 | 173 | ||||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 7 | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 1 | 16 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
50 | 98 | (e | ) | (e | ) | 17 | 21 | 193 | 194 | ||||||||||||||||||||||
|
Power (in megawatthours) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
1 | 2 | (e | ) | (e | ) | 1 | 1 | 6 | 5 | ||||||||||||||||||||||
|
Ameren Illinois |
11 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 24 | 26 | |||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | - | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
61 | 61 | 17 | 2 | 30 | 57 | (9 | ) | (13 | ) | ||||||||||||||||||||||
|
Ameren |
73 | 63 | 17 | 2 | 31 | 61 | 21 | 18 | ||||||||||||||||||||||||
|
Uranium (pounds in thousands) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri & Ameren |
5,553 | 5,810 | (e | ) | (e | ) | (e | ) | (e | ) | 148 | 185 | ||||||||||||||||||||
| (a) | Contracts through December 2017, March 2015, September 2035, and October 2024 for coal, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (b) | Contracts through December 2014 for power as of December 31, 2011. |
| (c) | Contracts through October 2014, December 2012, and December 2015 for fuel oils, natural gas, and power, respectively, as of December 31, 2011. |
| (d) | Contracts through October 2014, October 2016, May 2032, and December 2013 for fuel oils, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (e) | Not applicable. |
| (f) | Includes AERG contracts for coal and fuel oils, Marketing Company contracts for natural gas and power, and intercompany eliminations for power. |
| (g) | Fuel oils consist of heating and crude oil. |
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 8 – Fair Value Measurements for discussion of our methods of assessing the fair value of derivative instruments. Many of our physical contracts, such as our coal and purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense recorded in connection with 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 if it qualifies for hedge accounting treatment. We also consider whether gains or losses resulting from such derivatives qualify for regulatory deferral. Contracts that qualify for cash flow hedge accounting treatment are recorded at fair value with changes in fair value charged or credited to accumulated OCI in the period in which the change occurs, to the extent the hedge is effective. To the extent the hedge is ineffective, the related changes in fair value are charged or credited to the statement of income in the period in which the change occurs. When the contract is settled or delivered, the net gain or loss is recorded in the statement of income.
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. Ameren Missouri and Ameren Illinois believe derivative gains and losses 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.
Certain derivative contracts are entered into on a regular basis as part of our risk management program but do not qualify for the NPNS exception, hedge accounting, or regulatory deferral accounting. Such contracts are recorded at fair value, with changes in fair value charged or credited to the statement of income in the period in which the change occurs.
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 the same master netting arrangement. The Ameren Companies did not elect to adopt this guidance for any eligible financial instruments or other items.
The following table presents the carrying value and balance sheet location of all derivative instruments as of December 31, 2011 and 2010:
| Balance Sheet Location | Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
2011: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 8 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 16 | - | - | - | ||||||||||||||
| Total assets | $ | 24 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
Other deferred credits and liabilities | $ | 1 | $ | - | $ | - | $ | - | |||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 29 | $ | (b | ) | $ | (b | ) | $ | 10 | |||||||
| Other current assets | - | 17 | - | - | ||||||||||||||
| Other assets | 8 | 6 | - | 1 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 6 | (b | ) | (b | ) | 2 | |||||||||||
| Other current assets | - | 2 | 1 | - | ||||||||||||||
| Other assets | - | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 72 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 30 | - | - | ||||||||||||||
| Other assets | 99 | - | 77 | - | ||||||||||||||
| Total assets | $ | 214 | $ | 55 | $ | 79 | $ | 13 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 2 | $ | (b | ) | $ | - | $ | 1 | ||||||||
| Other current liabilities | - | 1 | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 106 | (b | ) | 90 | 2 | ||||||||||||
| Other current liabilities | - | 13 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 92 | 13 | 79 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 53 | (b | ) | 9 | - | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 200 | - | ||||||||||||
| Other current liabilities | - | 9 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 26 | - | 8 | - | ||||||||||||||
|
Uranium |
Other deferred credits and liabilities | 1 | 1 | - | - | |||||||||||||
| Total liabilities | $ | 280 | $ | 37 | $ | 386 | $ | 3 | ||||||||||
|
2010: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 3 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 2 | - | - | - | ||||||||||||||
| Total assets | $ | 5 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative liabilities | $ | 1 | $ | (b | ) | $ | - | $ | - | ||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 42 | $ | (b | ) | $ | (b | ) | $ | 14 | |||||||
| Other current assets | - | 24 | - | - | ||||||||||||||
| Other assets | 22 | 13 | - | 7 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 4 | (b | ) | (b | ) | 1 | |||||||||||
| Other current assets | - | 1 | 1 | - | ||||||||||||||
| Other assets | 1 | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 78 | (b | ) | (b | ) | 11 | |||||||||||
| Other current assets | - | 8 | 2 | - | ||||||||||||||
| Other assets | 20 | - | 6 | - | ||||||||||||||
|
Uranium |
MTM derivative assets | 2 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 2 | - | - | ||||||||||||||
| Total assets | $ | 169 | $ | 48 | $ | 10 | $ | 33 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 12 | $ | (b | ) | $ | - | $ | 4 | ||||||||
| Other current liabilities | - | 7 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 1 | - | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 87 | (b | ) | 73 | 2 | ||||||||||||
| Other current liabilities | - | 11 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 84 | 13 | 70 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 61 | (b | ) | 9 | 3 | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 172 | 5 | ||||||||||||
| Other current liabilities | - | 6 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 7 | - | 179 | - | ||||||||||||||
| Total liabilities | $ | 252 | $ | 37 | $ | 503 | $ | 14 | ||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Balance sheet line item not applicable to registrant. |
| (c) | Includes derivatives subject to regulatory deferral. |
The following table presents the cumulative amount of pretax net gains (losses) on all derivative instruments in accumulated OCI and regulatory assets or regulatory liabilities as of December 31, 2011 and 2010:
| Ameren | Ameren Missouri |
Ameren Illinois |
Genco | Other(a) | ||||||||||||||||
|
2011: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 19 | $ | - | $ | - | $ | - | $ | 19 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(8 | ) | - | - | (8 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(191 | ) | (24 | ) | (167 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
81 | 21 | (140 | ) | - | 200 | ||||||||||||||
|
Uranium derivative contracts(h) |
(1 | ) | (1 | ) | - | - | - | |||||||||||||
|
2010: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 8 | $ | - | $ | - | $ | - | $ | 8 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(9 | ) | - | - | (9 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(165 | ) | (24 | ) | (141 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
1 | 3 | (352 | ) | - | 350 | ||||||||||||||
|
Uranium derivative contracts(h) |
2 | 2 | - | - | - | |||||||||||||||
| (a) | Includes amounts for Marketing Company and intercompany eliminations. |
| (b) | Represents net gains associated with power derivative contracts at Ameren. These contracts are a partial hedge of electricity price exposure through December 2014 as of December 31, 2011. Current gains of $5 million and $8 million were recorded at Ameren as of December 31, 2011, and December 31, 2010, respectively. |
| (c) | Includes net gains associated with interest rate swaps at Genco that were a partial hedge of the interest rate on debt issued in June 2002. The swaps cover the first 10 years of debt that has a 30-year maturity, and the gain in OCI is amortized over a 10-year period that began in June 2002. The carrying value at December 31, 2011, and December 31, 2010 was less than $1 million and less than $1 million, respectively. The balance of the gain will be amortized by June 2012. |
| (d) | Includes net losses associated with interest rate swaps at Genco. The swaps were executed during the fourth quarter of 2007 as a partial hedge of interest rate risks associated with Genco's April 2008 debt issuance. The loss on the interest rate swaps is being amortized over a 10-year period that began in April 2008. The carrying value at December 31, 2011, and December 31, 2010, was a loss of $9 million and a loss of $10 million, respectively. Over the next 12 months, $1.4 million of the loss will be amortized. |
| (e) | Represents net gains on fuel oils derivative contracts at Ameren Missouri. These contracts are a partial hedge of Ameren Missouri's transportation costs for coal through October 2014 as of December 31, 2011. Current gains deferred as regulatory liabilities include $16 million and $16 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current losses deferred as regulatory assets include $1 million and $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $13 million and $13 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. Current losses deferred as regulatory assets include $6 million and $6 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. |
| (f) | Represents net losses associated with natural gas derivative contracts. These contracts are a partial hedge of natural gas requirements through October 2016 at Ameren, Ameren Missouri, and Ameren Illinois in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $1 million and $1 million at Ameren and Ameren Illinois, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $101 million, $11 million, and $90 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $2 million, $1 million, and $1 million at Ameren, Ameren Missouri, and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $84 million, $11 million, and $73 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (g) | Represents net losses associated with power derivative contracts. These contracts are a partial hedge of power price requirements through May 2032 at Ameren and Ameren Illinois and through December 2015 at Ameren Missouri, in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $29 million and $29 million at Ameren and Ameren Missouri, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $17 million, $8 million, and $209 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $8 million, $6 million, and $2 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $13 million, $3 million, and $181 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (h) | Represents net gains(losses) on uranium derivative contracts at Ameren Missouri. These contracts are a partial hedge of our uranium requirements through December 2013 as of December 31, 2011. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $2 million at Ameren and $2 million at Ameren Missouri as of December 31, 2010. |
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 trading and netting agreements, and reporting daily exposure to senior management.
We believe that entering into master trading and netting 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 trading and netting agreements: (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 trading and netting agreements allow the counterparties to net settle sale and purchase transactions. Further, collateral requirements are calculated at a master trading and netting agreement level by counterparty.
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 one of eight groupings according to the primary business in which each engages. The following table presents the maximum exposure, as of December 31, 2011, and 2010, if counterparty groups were to fail completely to perform on contracts by grouping. The maximum exposure is based on the gross fair value of financial instruments, including NPNS contracts, which excludes collateral held, and does not consider the legally binding right to net transactions based on master trading and netting agreements.
| Affiliates(a) |
Coal Producers |
Commodity Marketing Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 4 | $ | 26 | $ | 4 | $ | - | $ | - | $ | 71 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | 1 | - | - | - | 85 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 2 | 6 | - | 3 | - | 13 | |||||||||||||||||||||||||||
|
Other(b) |
275 | 1 | 3 | 10 | 51 | 194 | - | 87 | 621 | |||||||||||||||||||||||||||
|
Ameren |
$ | 276 | $ | 37 | $ | 89 | $ | 16 | $ | 84 | $ | 198 | $ | 3 | $ | 87 | $ | 790 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 21 | $ | 1 | $ | 2 | $ | 5 | $ | 11 | $ | 1 | $ | - | $ | 41 | ||||||||||||||||||
|
AIC |
- | - | 3 | - | 1 | - | - | - | 4 | |||||||||||||||||||||||||||
|
Genco |
- | 6 | 2 | 1 | 1 | - | 6 | - | 16 | |||||||||||||||||||||||||||
|
Other(b) |
410 | 3 | 10 | 19 | 65 | 539 | 3 | 72 | 1,121 | |||||||||||||||||||||||||||
|
Ameren |
$ | 410 | $ | 30 | $ | 16 | $ | 22 | $ | 72 | $ | 550 | $ | 10 | $ | 72 | $ | 1,182 | ||||||||||||||||||
| (a) | Primarily composed of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
The potential loss on counterparty exposures is reduced by the application of master trading and netting agreements and collateral held to the extent of reducing the exposure to zero. Collateral includes both cash collateral and other collateral held. The amount of cash collateral held by Marketing Company from counterparties and based on the contractual rights under the agreements to seek collateral and the maximum exposure as calculated under the individual master trading and netting agreements was less than $1 million and $1 million from retail companies at December 31, 2011 and 2010, respectively. There was no cash collateral held at Ameren registrant subsidiaries. As of December 31, 2011, other collateral used to reduce exposure consisted of letters of credit in the amount of $9 million, $1 million, $1 million, and $7 million held by Ameren, Ameren Missouri, Genco, and Marketing Company, respectively. As of December 31, 2010, other collateral used to reduce exposure consisted of letters of credit in the amount of $28 million and $1 million held by Ameren and Ameren Illinois, respectively. The following table presents the potential loss after consideration of the application of master trading and netting agreements and collateral held as of December 31, 2011 and 2010:
| Affiliates(a) |
Coal Producers |
Commodity Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 3 | $ | 22 | $ | 4 | $ | - | $ | - | $ | 66 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | - | - | - | - | 84 | |||||||||||||||||||||||||||
|
Genco |
- | - | - | 1 | 1 | - | 2 | - | 4 | |||||||||||||||||||||||||||
|
Other(b) |
273 | - | 3 | 5 | 42 | 187 | - | 86 | 596 | |||||||||||||||||||||||||||
|
Ameren |
$ | 274 | $ | 35 | $ | 88 | $ | 9 | $ | 65 | $ | 191 | $ | 2 | $ | 86 | $ | 750 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 8 | $ | - | $ | 1 | $ | 2 | $ | 10 | $ | - | $ | - | $ | 21 | ||||||||||||||||||
|
AIC |
- | - | 2 | - | - | - | - | - | 2 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 1 | 1 | - | 5 | - | 9 | |||||||||||||||||||||||||||
|
Other(b) |
404 | 1 | 8 | 7 | 56 | 513 | 2 | 71 | 1,062 | |||||||||||||||||||||||||||
|
Ameren |
$ | 404 | $ | 10 | $ | 11 | $ | 9 | $ | 59 | $ | 523 | $ | 7 | $ | 71 | $ | 1,094 | ||||||||||||||||||
| (a) | Primarily comprised of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
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 performance of an obligation requested adequate assurance of performance, additional collateral postings might be required. The following table presents, as of December 31, 2011, and 2010, 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 could be required to be posted with counterparties. The additional collateral required is the net liability position allowed under the master trading and netting agreements assuming (1) the credit risk-related contingent features underlying these agreements were triggered on December 31, 2011, or 2010, respectively, 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) |
||||||||||
|
2011: |
||||||||||||
|
Ameren Missouri |
$ | 102 | $ | 8 | $ | 86 | ||||||
|
Ameren Illinois |
220 | 96 | 125 | |||||||||
|
Genco |
55 | 1 | 58 | |||||||||
|
Other(c) |
79 | 11 | 63 | |||||||||
|
Ameren |
$ | 456 | $ | 116 | $ | 332 | ||||||
|
2010: |
||||||||||||
|
Ameren Missouri |
$ | 105 | $ | 7 | $ | 93 | ||||||
|
Ameren Illinois |
233 | 109 | 111 | |||||||||
|
Genco |
31 | - | 28 | |||||||||
|
Other(c) |
62 | 18 | 42 | |||||||||
|
Ameren |
$ | 431 | $ | 134 | $ | 274 | ||||||
| (a) | Prior to consideration of master trading and netting agreements and including NPNS contract exposures. |
| (b) | As collateral requirements with certain counterparties are based on master trading and netting agreements, the aggregate amount of additional collateral required to be posted is determined after consideration of the effects of such agreements. |
| (c) | Includes amounts for Marketing Company and Ameren (parent). |
Cash Flow Hedges
The following table presents the pretax net gain or loss for the year ended December 31, 2011 and 2010, associated with derivative instruments designated as cash flow hedges:
|
Gain (Loss) Recognized in OCI(a) |
Location of (Gain) Loss Reclassified from Accumulated OCI into Income(b) |
(Gain) Loss Reclassified from Accumulated OCI into Income(b) |
Location of Gain (Loss) Recognized in Income(c) |
Gain (Loss) in Income(c) |
||||||||||||
|
2011: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | 6 | Operating Revenues - Electric | $ | 5 | Operating Revenues - Electric | $ | (10 | ) | |||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
2010: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | (2 | ) | Operating Revenues - Electric | $ | (14 | ) | Operating Revenues - Electric | $ | (3 | ) | |||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
| (a) | Effective portion of gain (loss). |
| (b) | Effective portion of (gain) loss on settlements. |
| (c) | Ineffective portion of gain (loss) and amount excluded from effectiveness testing. |
| (d) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (e) | Represents interest rate swaps settled in prior periods. The cumulative gain and loss on the interest rate swaps is being amortized into income over a 10-year period. |
| (f) | Less than $1 million. |
Other Derivatives
The following table represents the net change in market value associated with derivatives not designated as hedging instruments for the years ended December 31, 2011 and 2010:
|
Location of Gain (Loss) Recognized in Income |
Gain (Loss) Recognized in Income |
|||||||||||
| 2011 | 2010 | |||||||||||
|
Ameren(a) |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 9 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues - Electric | (2 | ) | 9 | ||||||||
| Total | $ | (1 | ) | $ | 18 | |||||||
|
Ameren Missouri |
Natural gas (generation) | Operating Expenses - Fuel | $ | (1 | ) | $ | 1 | |||||
|
Genco |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 7 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues | (3 | ) | 1 | ||||||||
| Total | $ | (2 | ) | $ | 8 | |||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Derivatives Subject to Regulatory Deferral
The following table represents the net change in market value associated with derivatives that qualify for regulatory deferral for the years ended December 31, 2011 and 2010:
|
Gain (Loss) Recognized In Regulatory Liabilities or Regulatory Assets |
||||||||||
| 2011 | 2010 | |||||||||
|
Ameren(a) |
Fuel oils | $ | - | $ | 14 | |||||
| Natural gas | (26 | ) | (91 | ) | ||||||
| Power | 80 | 12 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 51 | $ | (61 | ) | |||||
|
Ameren |
Fuel oils | $ | - | $ | 14 | |||||
|
Missouri |
Natural gas | - | (11 | ) | ||||||
| Power | 18 | 4 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 15 | $ | 11 | ||||||
|
Ameren |
Natural gas | $ | (26 | ) | $ | (80 | ) | |||
|
Illinois |
Power | 212 | 70 | |||||||
| Total | $ | 186 | $ | (10 | ) | |||||
| (a) | Includes amounts for intercompany eliminations. |
As part of the 2007 Illinois Electric Settlement Agreement and subsequent Illinois power procurement processes, Ameren Illinois entered into financial contracts with Marketing Company. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives that qualify for regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities by Ameren Illinois and OCI by Marketing Company. In Ameren's consolidated financial statements, all financial statement effects of the derivative instruments entered into among affiliates were eliminated. See Note 14 – Related Party Transactions for additional information on these financial contracts. The following table presents the fair value of the financial contracts included on Ameren Illinois' balance sheet at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||
|
Ameren Illinois |
MTM derivative liabilities - affiliates | $ | 200 | $ | 172 | |||||
| Other deferred credits and liabilities | - | 178 | ||||||||
| Total | $ | 200 | $ | 350 | ||||||
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
We use derivatives principally to manage the risk of changes in market prices for natural gas, coal, diesel, power, and uranium. Such price fluctuations may cause the following:
| Ÿ |
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; |
| Ÿ |
market values of coal, natural gas, and uranium inventories that differ from the cost of those commodities in inventory; and |
| Ÿ |
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 derivative volumes by commodity type as of December 31, 2011 and 2010:
| Quantity (in millions, except as indicated) | ||||||||||||||||||||||||||||||||
| Commodity |
NPNS Contracts(a) |
Cash Flow Hedges(b) |
Other Derivatives(c) |
Derivatives That Qualify for Regulatory Deferral(d) |
||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
|
Coal (in tons) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
116 | 46 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Genco |
24 | 21 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
7 | 6 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
147 | 73 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Fuel oils (in gallons)(g) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
(e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 53 | 80 | ||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 27 | 43 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 9 | 12 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
(e | ) | (e | ) | (e | ) | (e | ) | 36 | 55 | 53 | 80 | ||||||||||||||||||||
|
Natural gas (in mmbtu) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
8 | 13 | (e | ) | (e | ) | 9 | 2 | 19 | 21 | ||||||||||||||||||||||
|
Ameren Illinois |
42 | 85 | (e | ) | (e | ) | (e | ) | (e | ) | 174 | 173 | ||||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 7 | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 1 | 16 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
50 | 98 | (e | ) | (e | ) | 17 | 21 | 193 | 194 | ||||||||||||||||||||||
|
Power (in megawatthours) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
1 | 2 | (e | ) | (e | ) | 1 | 1 | 6 | 5 | ||||||||||||||||||||||
|
Ameren Illinois |
11 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 24 | 26 | |||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | - | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
61 | 61 | 17 | 2 | 30 | 57 | (9 | ) | (13 | ) | ||||||||||||||||||||||
|
Ameren |
73 | 63 | 17 | 2 | 31 | 61 | 21 | 18 | ||||||||||||||||||||||||
|
Uranium (pounds in thousands) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri & Ameren |
5,553 | 5,810 | (e | ) | (e | ) | (e | ) | (e | ) | 148 | 185 | ||||||||||||||||||||
| (a) | Contracts through December 2017, March 2015, September 2035, and October 2024 for coal, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (b) | Contracts through December 2014 for power as of December 31, 2011. |
| (c) | Contracts through October 2014, December 2012, and December 2015 for fuel oils, natural gas, and power, respectively, as of December 31, 2011. |
| (d) | Contracts through October 2014, October 2016, May 2032, and December 2013 for fuel oils, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (e) | Not applicable. |
| (f) | Includes AERG contracts for coal and fuel oils, Marketing Company contracts for natural gas and power, and intercompany eliminations for power. |
| (g) | Fuel oils consist of heating and crude oil. |
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 8 – Fair Value Measurements for discussion of our methods of assessing the fair value of derivative instruments. Many of our physical contracts, such as our coal and purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense recorded in connection with 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 if it qualifies for hedge accounting treatment. We also consider whether gains or losses resulting from such derivatives qualify for regulatory deferral. Contracts that qualify for cash flow hedge accounting treatment are recorded at fair value with changes in fair value charged or credited to accumulated OCI in the period in which the change occurs, to the extent the hedge is effective. To the extent the hedge is ineffective, the related changes in fair value are charged or credited to the statement of income in the period in which the change occurs. When the contract is settled or delivered, the net gain or loss is recorded in the statement of income.
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. Ameren Missouri and Ameren Illinois believe derivative gains and losses 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.
Certain derivative contracts are entered into on a regular basis as part of our risk management program but do not qualify for the NPNS exception, hedge accounting, or regulatory deferral accounting. Such contracts are recorded at fair value, with changes in fair value charged or credited to the statement of income in the period in which the change occurs.
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 the same master netting arrangement. The Ameren Companies did not elect to adopt this guidance for any eligible financial instruments or other items.
The following table presents the carrying value and balance sheet location of all derivative instruments as of December 31, 2011 and 2010:
| Balance Sheet Location | Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
2011: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 8 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 16 | - | - | - | ||||||||||||||
| Total assets | $ | 24 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
Other deferred credits and liabilities | $ | 1 | $ | - | $ | - | $ | - | |||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 29 | $ | (b | ) | $ | (b | ) | $ | 10 | |||||||
| Other current assets | - | 17 | - | - | ||||||||||||||
| Other assets | 8 | 6 | - | 1 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 6 | (b | ) | (b | ) | 2 | |||||||||||
| Other current assets | - | 2 | 1 | - | ||||||||||||||
| Other assets | - | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 72 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 30 | - | - | ||||||||||||||
| Other assets | 99 | - | 77 | - | ||||||||||||||
| Total assets | $ | 214 | $ | 55 | $ | 79 | $ | 13 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 2 | $ | (b | ) | $ | - | $ | 1 | ||||||||
| Other current liabilities | - | 1 | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 106 | (b | ) | 90 | 2 | ||||||||||||
| Other current liabilities | - | 13 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 92 | 13 | 79 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 53 | (b | ) | 9 | - | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 200 | - | ||||||||||||
| Other current liabilities | - | 9 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 26 | - | 8 | - | ||||||||||||||
|
Uranium |
Other deferred credits and liabilities | 1 | 1 | - | - | |||||||||||||
| Total liabilities | $ | 280 | $ | 37 | $ | 386 | $ | 3 | ||||||||||
|
2010: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 3 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 2 | - | - | - | ||||||||||||||
| Total assets | $ | 5 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative liabilities | $ | 1 | $ | (b | ) | $ | - | $ | - | ||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 42 | $ | (b | ) | $ | (b | ) | $ | 14 | |||||||
| Other current assets | - | 24 | - | - | ||||||||||||||
| Other assets | 22 | 13 | - | 7 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 4 | (b | ) | (b | ) | 1 | |||||||||||
| Other current assets | - | 1 | 1 | - | ||||||||||||||
| Other assets | 1 | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 78 | (b | ) | (b | ) | 11 | |||||||||||
| Other current assets | - | 8 | 2 | - | ||||||||||||||
| Other assets | 20 | - | 6 | - | ||||||||||||||
|
Uranium |
MTM derivative assets | 2 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 2 | - | - | ||||||||||||||
| Total assets | $ | 169 | $ | 48 | $ | 10 | $ | 33 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 12 | $ | (b | ) | $ | - | $ | 4 | ||||||||
| Other current liabilities | - | 7 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 1 | - | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 87 | (b | ) | 73 | 2 | ||||||||||||
| Other current liabilities | - | 11 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 84 | 13 | 70 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 61 | (b | ) | 9 | 3 | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 172 | 5 | ||||||||||||
| Other current liabilities | - | 6 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 7 | - | 179 | - | ||||||||||||||
| Total liabilities | $ | 252 | $ | 37 | $ | 503 | $ | 14 | ||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Balance sheet line item not applicable to registrant. |
| (c) | Includes derivatives subject to regulatory deferral. |
The following table presents the cumulative amount of pretax net gains (losses) on all derivative instruments in accumulated OCI and regulatory assets or regulatory liabilities as of December 31, 2011 and 2010:
| Ameren | Ameren Missouri |
Ameren Illinois |
Genco | Other(a) | ||||||||||||||||
|
2011: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 19 | $ | - | $ | - | $ | - | $ | 19 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(8 | ) | - | - | (8 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(191 | ) | (24 | ) | (167 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
81 | 21 | (140 | ) | - | 200 | ||||||||||||||
|
Uranium derivative contracts(h) |
(1 | ) | (1 | ) | - | - | - | |||||||||||||
|
2010: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 8 | $ | - | $ | - | $ | - | $ | 8 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(9 | ) | - | - | (9 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(165 | ) | (24 | ) | (141 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
1 | 3 | (352 | ) | - | 350 | ||||||||||||||
|
Uranium derivative contracts(h) |
2 | 2 | - | - | - | |||||||||||||||
| (a) | Includes amounts for Marketing Company and intercompany eliminations. |
| (b) | Represents net gains associated with power derivative contracts at Ameren. These contracts are a partial hedge of electricity price exposure through December 2014 as of December 31, 2011. Current gains of $5 million and $8 million were recorded at Ameren as of December 31, 2011, and December 31, 2010, respectively. |
| (c) | Includes net gains associated with interest rate swaps at Genco that were a partial hedge of the interest rate on debt issued in June 2002. The swaps cover the first 10 years of debt that has a 30-year maturity, and the gain in OCI is amortized over a 10-year period that began in June 2002. The carrying value at December 31, 2011, and December 31, 2010 was less than $1 million and less than $1 million, respectively. The balance of the gain will be amortized by June 2012. |
| (d) | Includes net losses associated with interest rate swaps at Genco. The swaps were executed during the fourth quarter of 2007 as a partial hedge of interest rate risks associated with Genco's April 2008 debt issuance. The loss on the interest rate swaps is being amortized over a 10-year period that began in April 2008. The carrying value at December 31, 2011, and December 31, 2010, was a loss of $9 million and a loss of $10 million, respectively. Over the next 12 months, $1.4 million of the loss will be amortized. |
| (e) | Represents net gains on fuel oils derivative contracts at Ameren Missouri. These contracts are a partial hedge of Ameren Missouri's transportation costs for coal through October 2014 as of December 31, 2011. Current gains deferred as regulatory liabilities include $16 million and $16 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current losses deferred as regulatory assets include $1 million and $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $13 million and $13 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. Current losses deferred as regulatory assets include $6 million and $6 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. |
| (f) | Represents net losses associated with natural gas derivative contracts. These contracts are a partial hedge of natural gas requirements through October 2016 at Ameren, Ameren Missouri, and Ameren Illinois in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $1 million and $1 million at Ameren and Ameren Illinois, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $101 million, $11 million, and $90 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $2 million, $1 million, and $1 million at Ameren, Ameren Missouri, and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $84 million, $11 million, and $73 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (g) | Represents net losses associated with power derivative contracts. These contracts are a partial hedge of power price requirements through May 2032 at Ameren and Ameren Illinois and through December 2015 at Ameren Missouri, in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $29 million and $29 million at Ameren and Ameren Missouri, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $17 million, $8 million, and $209 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $8 million, $6 million, and $2 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $13 million, $3 million, and $181 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (h) | Represents net gains(losses) on uranium derivative contracts at Ameren Missouri. These contracts are a partial hedge of our uranium requirements through December 2013 as of December 31, 2011. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $2 million at Ameren and $2 million at Ameren Missouri as of December 31, 2010. |
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 trading and netting agreements, and reporting daily exposure to senior management.
We believe that entering into master trading and netting 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 trading and netting agreements: (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 trading and netting agreements allow the counterparties to net settle sale and purchase transactions. Further, collateral requirements are calculated at a master trading and netting agreement level by counterparty.
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 one of eight groupings according to the primary business in which each engages. The following table presents the maximum exposure, as of December 31, 2011, and 2010, if counterparty groups were to fail completely to perform on contracts by grouping. The maximum exposure is based on the gross fair value of financial instruments, including NPNS contracts, which excludes collateral held, and does not consider the legally binding right to net transactions based on master trading and netting agreements.
| Affiliates(a) |
Coal Producers |
Commodity Marketing Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 4 | $ | 26 | $ | 4 | $ | - | $ | - | $ | 71 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | 1 | - | - | - | 85 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 2 | 6 | - | 3 | - | 13 | |||||||||||||||||||||||||||
|
Other(b) |
275 | 1 | 3 | 10 | 51 | 194 | - | 87 | 621 | |||||||||||||||||||||||||||
|
Ameren |
$ | 276 | $ | 37 | $ | 89 | $ | 16 | $ | 84 | $ | 198 | $ | 3 | $ | 87 | $ | 790 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 21 | $ | 1 | $ | 2 | $ | 5 | $ | 11 | $ | 1 | $ | - | $ | 41 | ||||||||||||||||||
|
AIC |
- | - | 3 | - | 1 | - | - | - | 4 | |||||||||||||||||||||||||||
|
Genco |
- | 6 | 2 | 1 | 1 | - | 6 | - | 16 | |||||||||||||||||||||||||||
|
Other(b) |
410 | 3 | 10 | 19 | 65 | 539 | 3 | 72 | 1,121 | |||||||||||||||||||||||||||
|
Ameren |
$ | 410 | $ | 30 | $ | 16 | $ | 22 | $ | 72 | $ | 550 | $ | 10 | $ | 72 | $ | 1,182 | ||||||||||||||||||
| (a) | Primarily composed of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
The potential loss on counterparty exposures is reduced by the application of master trading and netting agreements and collateral held to the extent of reducing the exposure to zero. Collateral includes both cash collateral and other collateral held. The amount of cash collateral held by Marketing Company from counterparties and based on the contractual rights under the agreements to seek collateral and the maximum exposure as calculated under the individual master trading and netting agreements was less than $1 million and $1 million from retail companies at December 31, 2011 and 2010, respectively. There was no cash collateral held at Ameren registrant subsidiaries. As of December 31, 2011, other collateral used to reduce exposure consisted of letters of credit in the amount of $9 million, $1 million, $1 million, and $7 million held by Ameren, Ameren Missouri, Genco, and Marketing Company, respectively. As of December 31, 2010, other collateral used to reduce exposure consisted of letters of credit in the amount of $28 million and $1 million held by Ameren and Ameren Illinois, respectively. The following table presents the potential loss after consideration of the application of master trading and netting agreements and collateral held as of December 31, 2011 and 2010:
| Affiliates(a) |
Coal Producers |
Commodity Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 3 | $ | 22 | $ | 4 | $ | - | $ | - | $ | 66 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | - | - | - | - | 84 | |||||||||||||||||||||||||||
|
Genco |
- | - | - | 1 | 1 | - | 2 | - | 4 | |||||||||||||||||||||||||||
|
Other(b) |
273 | - | 3 | 5 | 42 | 187 | - | 86 | 596 | |||||||||||||||||||||||||||
|
Ameren |
$ | 274 | $ | 35 | $ | 88 | $ | 9 | $ | 65 | $ | 191 | $ | 2 | $ | 86 | $ | 750 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 8 | $ | - | $ | 1 | $ | 2 | $ | 10 | $ | - | $ | - | $ | 21 | ||||||||||||||||||
|
AIC |
- | - | 2 | - | - | - | - | - | 2 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 1 | 1 | - | 5 | - | 9 | |||||||||||||||||||||||||||
|
Other(b) |
404 | 1 | 8 | 7 | 56 | 513 | 2 | 71 | 1,062 | |||||||||||||||||||||||||||
|
Ameren |
$ | 404 | $ | 10 | $ | 11 | $ | 9 | $ | 59 | $ | 523 | $ | 7 | $ | 71 | $ | 1,094 | ||||||||||||||||||
| (a) | Primarily comprised of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
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 performance of an obligation requested adequate assurance of performance, additional collateral postings might be required. The following table presents, as of December 31, 2011, and 2010, 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 could be required to be posted with counterparties. The additional collateral required is the net liability position allowed under the master trading and netting agreements assuming (1) the credit risk-related contingent features underlying these agreements were triggered on December 31, 2011, or 2010, respectively, 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) |
||||||||||
|
2011: |
||||||||||||
|
Ameren Missouri |
$ | 102 | $ | 8 | $ | 86 | ||||||
|
Ameren Illinois |
220 | 96 | 125 | |||||||||
|
Genco |
55 | 1 | 58 | |||||||||
|
Other(c) |
79 | 11 | 63 | |||||||||
|
Ameren |
$ | 456 | $ | 116 | $ | 332 | ||||||
|
2010: |
||||||||||||
|
Ameren Missouri |
$ | 105 | $ | 7 | $ | 93 | ||||||
|
Ameren Illinois |
233 | 109 | 111 | |||||||||
|
Genco |
31 | - | 28 | |||||||||
|
Other(c) |
62 | 18 | 42 | |||||||||
|
Ameren |
$ | 431 | $ | 134 | $ | 274 | ||||||
| (a) | Prior to consideration of master trading and netting agreements and including NPNS contract exposures. |
| (b) | As collateral requirements with certain counterparties are based on master trading and netting agreements, the aggregate amount of additional collateral required to be posted is determined after consideration of the effects of such agreements. |
| (c) | Includes amounts for Marketing Company and Ameren (parent). |
Cash Flow Hedges
The following table presents the pretax net gain or loss for the year ended December 31, 2011 and 2010, associated with derivative instruments designated as cash flow hedges:
|
Gain (Loss) Recognized in OCI(a) |
Location of (Gain) Loss Reclassified from Accumulated OCI into Income(b) |
(Gain) Loss Reclassified from Accumulated OCI into Income(b) |
Location of Gain (Loss) Recognized in Income(c) |
Gain (Loss) in Income(c) |
||||||||||||
|
2011: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | 6 | Operating Revenues - Electric | $ | 5 | Operating Revenues - Electric | $ | (10 | ) | |||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
2010: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | (2 | ) | Operating Revenues - Electric | $ | (14 | ) | Operating Revenues - Electric | $ | (3 | ) | |||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
| (a) | Effective portion of gain (loss). |
| (b) | Effective portion of (gain) loss on settlements. |
| (c) | Ineffective portion of gain (loss) and amount excluded from effectiveness testing. |
| (d) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (e) | Represents interest rate swaps settled in prior periods. The cumulative gain and loss on the interest rate swaps is being amortized into income over a 10-year period. |
| (f) | Less than $1 million. |
Other Derivatives
The following table represents the net change in market value associated with derivatives not designated as hedging instruments for the years ended December 31, 2011 and 2010:
|
Location of Gain (Loss) Recognized in Income |
Gain (Loss) Recognized in Income |
|||||||||||
| 2011 | 2010 | |||||||||||
|
Ameren(a) |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 9 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues - Electric | (2 | ) | 9 | ||||||||
| Total | $ | (1 | ) | $ | 18 | |||||||
|
Ameren Missouri |
Natural gas (generation) | Operating Expenses - Fuel | $ | (1 | ) | $ | 1 | |||||
|
Genco |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 7 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues | (3 | ) | 1 | ||||||||
| Total | $ | (2 | ) | $ | 8 | |||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Derivatives Subject to Regulatory Deferral
The following table represents the net change in market value associated with derivatives that qualify for regulatory deferral for the years ended December 31, 2011 and 2010:
|
Gain (Loss) Recognized In Regulatory Liabilities or Regulatory Assets |
||||||||||
| 2011 | 2010 | |||||||||
|
Ameren(a) |
Fuel oils | $ | - | $ | 14 | |||||
| Natural gas | (26 | ) | (91 | ) | ||||||
| Power | 80 | 12 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 51 | $ | (61 | ) | |||||
|
Ameren |
Fuel oils | $ | - | $ | 14 | |||||
|
Missouri |
Natural gas | - | (11 | ) | ||||||
| Power | 18 | 4 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 15 | $ | 11 | ||||||
|
Ameren |
Natural gas | $ | (26 | ) | $ | (80 | ) | |||
|
Illinois |
Power | 212 | 70 | |||||||
| Total | $ | 186 | $ | (10 | ) | |||||
| (a) | Includes amounts for intercompany eliminations. |
As part of the 2007 Illinois Electric Settlement Agreement and subsequent Illinois power procurement processes, Ameren Illinois entered into financial contracts with Marketing Company. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives that qualify for regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities by Ameren Illinois and OCI by Marketing Company. In Ameren's consolidated financial statements, all financial statement effects of the derivative instruments entered into among affiliates were eliminated. See Note 14 – Related Party Transactions for additional information on these financial contracts. The following table presents the fair value of the financial contracts included on Ameren Illinois' balance sheet at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||
|
Ameren Illinois |
MTM derivative liabilities - affiliates | $ | 200 | $ | 172 | |||||
| Other deferred credits and liabilities | - | 178 | ||||||||
| Total | $ | 200 | $ | 350 | ||||||
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
We use derivatives principally to manage the risk of changes in market prices for natural gas, coal, diesel, power, and uranium. Such price fluctuations may cause the following:
| Ÿ |
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; |
| Ÿ |
market values of coal, natural gas, and uranium inventories that differ from the cost of those commodities in inventory; and |
| Ÿ |
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 derivative volumes by commodity type as of December 31, 2011 and 2010:
| Quantity (in millions, except as indicated) | ||||||||||||||||||||||||||||||||
| Commodity |
NPNS Contracts(a) |
Cash Flow Hedges(b) |
Other Derivatives(c) |
Derivatives That Qualify for Regulatory Deferral(d) |
||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
|
Coal (in tons) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
116 | 46 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Genco |
24 | 21 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
7 | 6 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
147 | 73 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Fuel oils (in gallons)(g) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
(e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 53 | 80 | ||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 27 | 43 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 9 | 12 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
(e | ) | (e | ) | (e | ) | (e | ) | 36 | 55 | 53 | 80 | ||||||||||||||||||||
|
Natural gas (in mmbtu) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
8 | 13 | (e | ) | (e | ) | 9 | 2 | 19 | 21 | ||||||||||||||||||||||
|
Ameren Illinois |
42 | 85 | (e | ) | (e | ) | (e | ) | (e | ) | 174 | 173 | ||||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 7 | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 1 | 16 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
50 | 98 | (e | ) | (e | ) | 17 | 21 | 193 | 194 | ||||||||||||||||||||||
|
Power (in megawatthours) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
1 | 2 | (e | ) | (e | ) | 1 | 1 | 6 | 5 | ||||||||||||||||||||||
|
Ameren Illinois |
11 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 24 | 26 | |||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | - | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
61 | 61 | 17 | 2 | 30 | 57 | (9 | ) | (13 | ) | ||||||||||||||||||||||
|
Ameren |
73 | 63 | 17 | 2 | 31 | 61 | 21 | 18 | ||||||||||||||||||||||||
|
Uranium (pounds in thousands) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri & Ameren |
5,553 | 5,810 | (e | ) | (e | ) | (e | ) | (e | ) | 148 | 185 | ||||||||||||||||||||
| (a) | Contracts through December 2017, March 2015, September 2035, and October 2024 for coal, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (b) | Contracts through December 2014 for power as of December 31, 2011. |
| (c) | Contracts through October 2014, December 2012, and December 2015 for fuel oils, natural gas, and power, respectively, as of December 31, 2011. |
| (d) | Contracts through October 2014, October 2016, May 2032, and December 2013 for fuel oils, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (e) | Not applicable. |
| (f) | Includes AERG contracts for coal and fuel oils, Marketing Company contracts for natural gas and power, and intercompany eliminations for power. |
| (g) | Fuel oils consist of heating and crude oil. |
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 8 – Fair Value Measurements for discussion of our methods of assessing the fair value of derivative instruments. Many of our physical contracts, such as our coal and purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense recorded in connection with 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 if it qualifies for hedge accounting treatment. We also consider whether gains or losses resulting from such derivatives qualify for regulatory deferral. Contracts that qualify for cash flow hedge accounting treatment are recorded at fair value with changes in fair value charged or credited to accumulated OCI in the period in which the change occurs, to the extent the hedge is effective. To the extent the hedge is ineffective, the related changes in fair value are charged or credited to the statement of income in the period in which the change occurs. When the contract is settled or delivered, the net gain or loss is recorded in the statement of income.
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. Ameren Missouri and Ameren Illinois believe derivative gains and losses 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.
Certain derivative contracts are entered into on a regular basis as part of our risk management program but do not qualify for the NPNS exception, hedge accounting, or regulatory deferral accounting. Such contracts are recorded at fair value, with changes in fair value charged or credited to the statement of income in the period in which the change occurs.
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 the same master netting arrangement. The Ameren Companies did not elect to adopt this guidance for any eligible financial instruments or other items.
The following table presents the carrying value and balance sheet location of all derivative instruments as of December 31, 2011 and 2010:
| Balance Sheet Location | Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
2011: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 8 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 16 | - | - | - | ||||||||||||||
| Total assets | $ | 24 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
Other deferred credits and liabilities | $ | 1 | $ | - | $ | - | $ | - | |||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 29 | $ | (b | ) | $ | (b | ) | $ | 10 | |||||||
| Other current assets | - | 17 | - | - | ||||||||||||||
| Other assets | 8 | 6 | - | 1 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 6 | (b | ) | (b | ) | 2 | |||||||||||
| Other current assets | - | 2 | 1 | - | ||||||||||||||
| Other assets | - | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 72 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 30 | - | - | ||||||||||||||
| Other assets | 99 | - | 77 | - | ||||||||||||||
| Total assets | $ | 214 | $ | 55 | $ | 79 | $ | 13 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 2 | $ | (b | ) | $ | - | $ | 1 | ||||||||
| Other current liabilities | - | 1 | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 106 | (b | ) | 90 | 2 | ||||||||||||
| Other current liabilities | - | 13 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 92 | 13 | 79 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 53 | (b | ) | 9 | - | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 200 | - | ||||||||||||
| Other current liabilities | - | 9 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 26 | - | 8 | - | ||||||||||||||
|
Uranium |
Other deferred credits and liabilities | 1 | 1 | - | - | |||||||||||||
| Total liabilities | $ | 280 | $ | 37 | $ | 386 | $ | 3 | ||||||||||
|
2010: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 3 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 2 | - | - | - | ||||||||||||||
| Total assets | $ | 5 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative liabilities | $ | 1 | $ | (b | ) | $ | - | $ | - | ||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 42 | $ | (b | ) | $ | (b | ) | $ | 14 | |||||||
| Other current assets | - | 24 | - | - | ||||||||||||||
| Other assets | 22 | 13 | - | 7 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 4 | (b | ) | (b | ) | 1 | |||||||||||
| Other current assets | - | 1 | 1 | - | ||||||||||||||
| Other assets | 1 | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 78 | (b | ) | (b | ) | 11 | |||||||||||
| Other current assets | - | 8 | 2 | - | ||||||||||||||
| Other assets | 20 | - | 6 | - | ||||||||||||||
|
Uranium |
MTM derivative assets | 2 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 2 | - | - | ||||||||||||||
| Total assets | $ | 169 | $ | 48 | $ | 10 | $ | 33 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 12 | $ | (b | ) | $ | - | $ | 4 | ||||||||
| Other current liabilities | - | 7 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 1 | - | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 87 | (b | ) | 73 | 2 | ||||||||||||
| Other current liabilities | - | 11 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 84 | 13 | 70 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 61 | (b | ) | 9 | 3 | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 172 | 5 | ||||||||||||
| Other current liabilities | - | 6 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 7 | - | 179 | - | ||||||||||||||
| Total liabilities | $ | 252 | $ | 37 | $ | 503 | $ | 14 | ||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Balance sheet line item not applicable to registrant. |
| (c) | Includes derivatives subject to regulatory deferral. |
The following table presents the cumulative amount of pretax net gains (losses) on all derivative instruments in accumulated OCI and regulatory assets or regulatory liabilities as of December 31, 2011 and 2010:
| Ameren | Ameren Missouri |
Ameren Illinois |
Genco | Other(a) | ||||||||||||||||
|
2011: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 19 | $ | - | $ | - | $ | - | $ | 19 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(8 | ) | - | - | (8 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(191 | ) | (24 | ) | (167 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
81 | 21 | (140 | ) | - | 200 | ||||||||||||||
|
Uranium derivative contracts(h) |
(1 | ) | (1 | ) | - | - | - | |||||||||||||
|
2010: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 8 | $ | - | $ | - | $ | - | $ | 8 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(9 | ) | - | - | (9 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(165 | ) | (24 | ) | (141 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
1 | 3 | (352 | ) | - | 350 | ||||||||||||||
|
Uranium derivative contracts(h) |
2 | 2 | - | - | - | |||||||||||||||
| (a) | Includes amounts for Marketing Company and intercompany eliminations. |
| (b) | Represents net gains associated with power derivative contracts at Ameren. These contracts are a partial hedge of electricity price exposure through December 2014 as of December 31, 2011. Current gains of $5 million and $8 million were recorded at Ameren as of December 31, 2011, and December 31, 2010, respectively. |
| (c) | Includes net gains associated with interest rate swaps at Genco that were a partial hedge of the interest rate on debt issued in June 2002. The swaps cover the first 10 years of debt that has a 30-year maturity, and the gain in OCI is amortized over a 10-year period that began in June 2002. The carrying value at December 31, 2011, and December 31, 2010 was less than $1 million and less than $1 million, respectively. The balance of the gain will be amortized by June 2012. |
| (d) | Includes net losses associated with interest rate swaps at Genco. The swaps were executed during the fourth quarter of 2007 as a partial hedge of interest rate risks associated with Genco's April 2008 debt issuance. The loss on the interest rate swaps is being amortized over a 10-year period that began in April 2008. The carrying value at December 31, 2011, and December 31, 2010, was a loss of $9 million and a loss of $10 million, respectively. Over the next 12 months, $1.4 million of the loss will be amortized. |
| (e) | Represents net gains on fuel oils derivative contracts at Ameren Missouri. These contracts are a partial hedge of Ameren Missouri's transportation costs for coal through October 2014 as of December 31, 2011. Current gains deferred as regulatory liabilities include $16 million and $16 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current losses deferred as regulatory assets include $1 million and $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $13 million and $13 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. Current losses deferred as regulatory assets include $6 million and $6 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. |
| (f) | Represents net losses associated with natural gas derivative contracts. These contracts are a partial hedge of natural gas requirements through October 2016 at Ameren, Ameren Missouri, and Ameren Illinois in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $1 million and $1 million at Ameren and Ameren Illinois, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $101 million, $11 million, and $90 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $2 million, $1 million, and $1 million at Ameren, Ameren Missouri, and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $84 million, $11 million, and $73 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (g) | Represents net losses associated with power derivative contracts. These contracts are a partial hedge of power price requirements through May 2032 at Ameren and Ameren Illinois and through December 2015 at Ameren Missouri, in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $29 million and $29 million at Ameren and Ameren Missouri, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $17 million, $8 million, and $209 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $8 million, $6 million, and $2 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $13 million, $3 million, and $181 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (h) | Represents net gains(losses) on uranium derivative contracts at Ameren Missouri. These contracts are a partial hedge of our uranium requirements through December 2013 as of December 31, 2011. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $2 million at Ameren and $2 million at Ameren Missouri as of December 31, 2010. |
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 trading and netting agreements, and reporting daily exposure to senior management.
We believe that entering into master trading and netting 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 trading and netting agreements: (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 trading and netting agreements allow the counterparties to net settle sale and purchase transactions. Further, collateral requirements are calculated at a master trading and netting agreement level by counterparty.
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 one of eight groupings according to the primary business in which each engages. The following table presents the maximum exposure, as of December 31, 2011, and 2010, if counterparty groups were to fail completely to perform on contracts by grouping. The maximum exposure is based on the gross fair value of financial instruments, including NPNS contracts, which excludes collateral held, and does not consider the legally binding right to net transactions based on master trading and netting agreements.
| Affiliates(a) |
Coal Producers |
Commodity Marketing Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 4 | $ | 26 | $ | 4 | $ | - | $ | - | $ | 71 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | 1 | - | - | - | 85 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 2 | 6 | - | 3 | - | 13 | |||||||||||||||||||||||||||
|
Other(b) |
275 | 1 | 3 | 10 | 51 | 194 | - | 87 | 621 | |||||||||||||||||||||||||||
|
Ameren |
$ | 276 | $ | 37 | $ | 89 | $ | 16 | $ | 84 | $ | 198 | $ | 3 | $ | 87 | $ | 790 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 21 | $ | 1 | $ | 2 | $ | 5 | $ | 11 | $ | 1 | $ | - | $ | 41 | ||||||||||||||||||
|
AIC |
- | - | 3 | - | 1 | - | - | - | 4 | |||||||||||||||||||||||||||
|
Genco |
- | 6 | 2 | 1 | 1 | - | 6 | - | 16 | |||||||||||||||||||||||||||
|
Other(b) |
410 | 3 | 10 | 19 | 65 | 539 | 3 | 72 | 1,121 | |||||||||||||||||||||||||||
|
Ameren |
$ | 410 | $ | 30 | $ | 16 | $ | 22 | $ | 72 | $ | 550 | $ | 10 | $ | 72 | $ | 1,182 | ||||||||||||||||||
| (a) | Primarily composed of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
The potential loss on counterparty exposures is reduced by the application of master trading and netting agreements and collateral held to the extent of reducing the exposure to zero. Collateral includes both cash collateral and other collateral held. The amount of cash collateral held by Marketing Company from counterparties and based on the contractual rights under the agreements to seek collateral and the maximum exposure as calculated under the individual master trading and netting agreements was less than $1 million and $1 million from retail companies at December 31, 2011 and 2010, respectively. There was no cash collateral held at Ameren registrant subsidiaries. As of December 31, 2011, other collateral used to reduce exposure consisted of letters of credit in the amount of $9 million, $1 million, $1 million, and $7 million held by Ameren, Ameren Missouri, Genco, and Marketing Company, respectively. As of December 31, 2010, other collateral used to reduce exposure consisted of letters of credit in the amount of $28 million and $1 million held by Ameren and Ameren Illinois, respectively. The following table presents the potential loss after consideration of the application of master trading and netting agreements and collateral held as of December 31, 2011 and 2010:
| Affiliates(a) |
Coal Producers |
Commodity Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 3 | $ | 22 | $ | 4 | $ | - | $ | - | $ | 66 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | - | - | - | - | 84 | |||||||||||||||||||||||||||
|
Genco |
- | - | - | 1 | 1 | - | 2 | - | 4 | |||||||||||||||||||||||||||
|
Other(b) |
273 | - | 3 | 5 | 42 | 187 | - | 86 | 596 | |||||||||||||||||||||||||||
|
Ameren |
$ | 274 | $ | 35 | $ | 88 | $ | 9 | $ | 65 | $ | 191 | $ | 2 | $ | 86 | $ | 750 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 8 | $ | - | $ | 1 | $ | 2 | $ | 10 | $ | - | $ | - | $ | 21 | ||||||||||||||||||
|
AIC |
- | - | 2 | - | - | - | - | - | 2 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 1 | 1 | - | 5 | - | 9 | |||||||||||||||||||||||||||
|
Other(b) |
404 | 1 | 8 | 7 | 56 | 513 | 2 | 71 | 1,062 | |||||||||||||||||||||||||||
|
Ameren |
$ | 404 | $ | 10 | $ | 11 | $ | 9 | $ | 59 | $ | 523 | $ | 7 | $ | 71 | $ | 1,094 | ||||||||||||||||||
| (a) | Primarily comprised of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
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 performance of an obligation requested adequate assurance of performance, additional collateral postings might be required. The following table presents, as of December 31, 2011, and 2010, 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 could be required to be posted with counterparties. The additional collateral required is the net liability position allowed under the master trading and netting agreements assuming (1) the credit risk-related contingent features underlying these agreements were triggered on December 31, 2011, or 2010, respectively, 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) |
||||||||||
|
2011: |
||||||||||||
|
Ameren Missouri |
$ | 102 | $ | 8 | $ | 86 | ||||||
|
Ameren Illinois |
220 | 96 | 125 | |||||||||
|
Genco |
55 | 1 | 58 | |||||||||
|
Other(c) |
79 | 11 | 63 | |||||||||
|
Ameren |
$ | 456 | $ | 116 | $ | 332 | ||||||
|
2010: |
||||||||||||
|
Ameren Missouri |
$ | 105 | $ | 7 | $ | 93 | ||||||
|
Ameren Illinois |
233 | 109 | 111 | |||||||||
|
Genco |
31 | - | 28 | |||||||||
|
Other(c) |
62 | 18 | 42 | |||||||||
|
Ameren |
$ | 431 | $ | 134 | $ | 274 | ||||||
| (a) | Prior to consideration of master trading and netting agreements and including NPNS contract exposures. |
| (b) | As collateral requirements with certain counterparties are based on master trading and netting agreements, the aggregate amount of additional collateral required to be posted is determined after consideration of the effects of such agreements. |
| (c) | Includes amounts for Marketing Company and Ameren (parent). |
Cash Flow Hedges
The following table presents the pretax net gain or loss for the year ended December 31, 2011 and 2010, associated with derivative instruments designated as cash flow hedges:
|
Gain (Loss) Recognized in OCI(a) |
Location of (Gain) Loss Reclassified from Accumulated OCI into Income(b) |
(Gain) Loss Reclassified from Accumulated OCI into Income(b) |
Location of Gain (Loss) Recognized in Income(c) |
Gain (Loss) in Income(c) |
||||||||||||
|
2011: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | 6 | Operating Revenues - Electric | $ | 5 | Operating Revenues - Electric | $ | (10 | ) | |||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
2010: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | (2 | ) | Operating Revenues - Electric | $ | (14 | ) | Operating Revenues - Electric | $ | (3 | ) | |||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
| (a) | Effective portion of gain (loss). |
| (b) | Effective portion of (gain) loss on settlements. |
| (c) | Ineffective portion of gain (loss) and amount excluded from effectiveness testing. |
| (d) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (e) | Represents interest rate swaps settled in prior periods. The cumulative gain and loss on the interest rate swaps is being amortized into income over a 10-year period. |
| (f) | Less than $1 million. |
Other Derivatives
The following table represents the net change in market value associated with derivatives not designated as hedging instruments for the years ended December 31, 2011 and 2010:
|
Location of Gain (Loss) Recognized in Income |
Gain (Loss) Recognized in Income |
|||||||||||
| 2011 | 2010 | |||||||||||
|
Ameren(a) |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 9 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues - Electric | (2 | ) | 9 | ||||||||
| Total | $ | (1 | ) | $ | 18 | |||||||
|
Ameren Missouri |
Natural gas (generation) | Operating Expenses - Fuel | $ | (1 | ) | $ | 1 | |||||
|
Genco |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 7 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues | (3 | ) | 1 | ||||||||
| Total | $ | (2 | ) | $ | 8 | |||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Derivatives Subject to Regulatory Deferral
The following table represents the net change in market value associated with derivatives that qualify for regulatory deferral for the years ended December 31, 2011 and 2010:
|
Gain (Loss) Recognized In Regulatory Liabilities or Regulatory Assets |
||||||||||
| 2011 | 2010 | |||||||||
|
Ameren(a) |
Fuel oils | $ | - | $ | 14 | |||||
| Natural gas | (26 | ) | (91 | ) | ||||||
| Power | 80 | 12 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 51 | $ | (61 | ) | |||||
|
Ameren |
Fuel oils | $ | - | $ | 14 | |||||
|
Missouri |
Natural gas | - | (11 | ) | ||||||
| Power | 18 | 4 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 15 | $ | 11 | ||||||
|
Ameren |
Natural gas | $ | (26 | ) | $ | (80 | ) | |||
|
Illinois |
Power | 212 | 70 | |||||||
| Total | $ | 186 | $ | (10 | ) | |||||
| (a) | Includes amounts for intercompany eliminations. |
As part of the 2007 Illinois Electric Settlement Agreement and subsequent Illinois power procurement processes, Ameren Illinois entered into financial contracts with Marketing Company. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives that qualify for regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities by Ameren Illinois and OCI by Marketing Company. In Ameren's consolidated financial statements, all financial statement effects of the derivative instruments entered into among affiliates were eliminated. See Note 14 – Related Party Transactions for additional information on these financial contracts. The following table presents the fair value of the financial contracts included on Ameren Illinois' balance sheet at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||
|
Ameren Illinois |
MTM derivative liabilities - affiliates | $ | 200 | $ | 172 | |||||
| Other deferred credits and liabilities | - | 178 | ||||||||
| Total | $ | 200 | $ | 350 | ||||||
|
|||
NOTE 8 – FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange 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 the following three hierarchy levels:
Level 1: Inputs based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities are primarily exchange-traded derivatives and assets, including cash and cash equivalents and listed equity securities, such as those held in Ameren Missouri's Nuclear Decommissioning Trust Fund.
Level 2: Market-based inputs corroborated by third-party brokers or exchanges based on transacted market data. Level 2 assets and liabilities include certain assets held in Ameren Missouri's Nuclear Decommissioning Trust Fund, including corporate bonds and other fixed-income securities, U.S. treasury and agency securities, and certain over-the-counter derivative instruments, including natural gas swaps and financial power transactions. Derivative instruments classified as Level 2 are valued by corroborated observable inputs, such as pricing services or prices from similar instruments that trade in liquid markets. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. To derive our forward view to price our derivative instruments at fair value, we average the midpoints of the bid/ask spreads. To validate forward prices obtained from outside parties, we compare the pricing to recently settled market transactions. Additionally, a review of all sources is performed to identify any anomalies or potential errors. Further, we consider the volume of transactions on certain trading platforms in our reasonableness assessment of the averaged midpoint.
Level 3: Unobservable inputs that are not corroborated by market data. Level 3 assets and liabilities are valued by internally developed models and assumptions or methodologies that use significant unobservable inputs. Level 3 assets and liabilities include derivative instruments that trade in less liquid markets, where pricing is largely unobservable, including the financial contracts entered into between Ameren Illinois and Marketing Company. We value Level 3 instruments by using pricing models with inputs that are often unobservable in the market, as well as certain internal assumptions. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. As a part of our reasonableness review, an evaluation of all sources is performed to identify any anomalies or potential errors.
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.
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. Ameren recorded net losses of $2 million, net gains of less than $1 million, and net losses of less than $1 million in 2011, 2010 and 2009, respectively, related to valuation adjustments for counterparty default risk. Genco recorded net losses of less than $1 million, net gains of less than $1 million, and net gains of less than $1 million in 2011, 2010, and 2009, respectively, related to valuation adjustments for counterparty default risk. At December 31, 2011, the counterparty default risk (asset)/liability valuation adjustment related to derivative contracts totaled $1 million, less than $1 million, $19 million, and less than $(1) million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. At December 31, 2010, the counterparty default risk liability valuation adjustment related to derivative contracts totaled $2 million, less than $1 million, $21 million, and less than $1 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively.
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, 2011:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 33 | $ | - | $ | 4 | $ | 37 | ||||||||||
|
Natural gas |
4 | - | 2 | 6 | ||||||||||||||
|
Power |
- | 2 | 193 | 195 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
20 | - | 3 | 23 | |||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | 1 | 29 | 30 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 77 | 77 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
10 | - | 1 | 11 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 2 | $ | - | $ | - | $ | 2 | ||||||||||
|
Natural gas |
22 | - | 176 | 198 | ||||||||||||||
|
Power |
- | 2 | 78 | 80 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
1 | - | - | 1 | |||||||||||||
|
Natural gas |
12 | - | 14 | 26 | ||||||||||||||
|
Power |
- | 1 | 8 | 9 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 162 | 169 | |||||||||||||
|
Power |
- | - | 217 | 217 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
1 | - | - | 1 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | 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, 2010:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 64 | $ | 64 | ||||||||||
|
Natural gas |
3 | - | 2 | 5 | ||||||||||||||
|
Power |
- | 17 | 86 | 103 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 37 | 37 | |||||||||||||
|
Natural gas |
- | - | 1 | 1 | ||||||||||||||
|
Power |
- | 3 | 5 | 8 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 21 | 21 | ||||||||||||||
|
Natural gas |
1 | - | - | 1 | ||||||||||||||
|
Power |
- | - | 11 | 11 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 13 | $ | 13 | ||||||||||
|
Natural gas |
21 | - | 150 | 171 | ||||||||||||||
|
Power |
- | 19 | 50 | 69 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 7 | 7 | |||||||||||||
|
Natural gas |
9 | - | 15 | 24 | ||||||||||||||
|
Power |
- | 3 | 3 | 6 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 136 | 143 | |||||||||||||
|
Power |
- | - | 360 | 360 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 4 | 4 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | Balance excludes $1 million of receivables, payables, and accrued income, net. |
In January 2010, the FASB issued amended authoritative guidance regarding fair value measurements. This guidance required disclosures regarding significant transfers into and out of Level 1 and Level 2 fair value measurements. It also required information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. This guidance was effective for us as of January 1, 2010, with the exception of guidance applicable to detailed Level 3 reconciliation disclosures, which became effective for us as of January 1, 2011. The adoption of this guidance did not have a material impact on our results of operations, financial position, or liquidity because it provides enhanced disclosure requirements only.
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2011:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 12 | 4 | 16 | ||||||||||||||
|
Included in regulatory assets/liabilities |
19 | (a | ) | (a | ) | (a | ) | 19 | ||||||||||||
|
Total realized and unrealized gains (losses) |
19 | (a | ) | 12 | 4 | 35 | ||||||||||||||
|
Purchases |
4 | (a | ) | 1 | - | 5 | ||||||||||||||
|
Sales |
(1 | ) | (a | ) | - | - | (1 | ) | ||||||||||||
|
Settlements |
(30 | ) | (a | ) | (20 | ) | (6 | ) | (56 | ) | ||||||||||
|
Transfers into Level 3 |
- | (a | ) | - | - | - | ||||||||||||||
|
Transfers out of Level 3 |
(19 | ) | (a | ) | (9 | ) | (2 | ) | (30 | ) | ||||||||||
|
Ending balance at December 31, 2011 |
$ | 3 | $ | (a | ) | $ | 1 | $ | - | $ | 4 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31,2011 |
$ | (11 | ) | $ | (a | ) | $ | (5 | ) | $ | (2 | ) | $ | (18 | ) | |||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Realized and unrealized gains (losses): |
$ | |||||||||||||||||||
|
Included in regulatory assets/liabilities |
(8 | ) | (107 | ) | (a | ) | (a | ) | (115 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(8 | ) | (107 | ) | (a | ) | (a | ) | $ | (115 | ) | |||||||||
|
Purchases |
- | 1 | - | - | 1 | |||||||||||||||
|
Sales |
- | (1 | ) | - | - | (1 | ) | |||||||||||||
|
Settlements |
8 | 81 | - | - | 89 | |||||||||||||||
|
Ending balance at December 31, 2011 |
$ | (14 | ) | $ | (160 | ) | $ | - | $ | - | $ | (174 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | (6 | ) | $ | (72 | ) | $ | - | $ | - | $ | (78 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | (1 | ) | (12 | ) | (13 | ) | ||||||||||||
|
Included in OCI |
- | - | - | 24 | 24 | |||||||||||||||
|
Included in regulatory assets/liabilities |
17 | 7 | (a | ) | 51 | $ | 75 | |||||||||||||
|
Total realized and unrealized gains (losses) |
17 | 7 | (1 | ) | 63 | $ | 86 | |||||||||||||
|
Purchases |
30 | - | - | 35 | 65 | |||||||||||||||
|
Sales |
(1 | ) | - | - | (21 | ) | $ | (22 | ) | |||||||||||
|
Settlements |
(27 | ) | 205 | (2 | ) | (225 | ) | (49 | ) | |||||||||||
|
Transfers into Level 3 |
(1 | ) | - | - | 1 | - | ||||||||||||||
|
Transfers out of Level 3 |
1 | - | - | (2 | ) | (1 | ) | |||||||||||||
|
Ending balance at December 31, 2011 |
$ | 21 | $ | (140 | ) | $ | - | $ | 234 | $ | 115 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | 1 | $ | 13 | $ | (1 | ) | $ | 60 | $ | 73 | |||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Purchases |
(1 | ) | (a | ) | (a | ) | (a | ) | (1 | ) | ||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2011 |
$ | (1 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (1 | ) | |||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | - | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | - | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on fuel oils and natural gas derivative commodity contracts are recorded in "Operating Expenses – Fuel", while net gains and losses on power derivative commodity contracts are recorded in "Operating Revenues – Electric." |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2010:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | 32 | $ | (a | ) | $ | 21 | $ | 7 | $ | 60 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 3 | (2 | ) | 1 | |||||||||||||
|
Included in regulatory assets/liabilities |
8 | (a | ) | (a | ) | (a | ) | 8 | ||||||||||||
|
Total realized and unrealized gains (losses) |
8 | (a | ) | 3 | (2 | ) | 9 | |||||||||||||
|
Purchases |
18 | (a | ) | 11 | 4 | 33 | ||||||||||||||
|
Settlements |
(28 | ) | (a | ) | (18 | ) | (5 | ) | (51 | ) | ||||||||||
|
Ending balance at December 31, 2010 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 7 | $ | (a | ) | $ | 4 | $ | - | $ | 11 | |||||||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (6 | ) | $ | (61 | ) | $ | - | $ | - | $ | (67 | ) | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | - | - | - | |||||||||||||||
|
Included in regulatory assets/liabilities |
(20 | ) | (152 | ) | (a | ) | (a | ) | (172 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(20 | ) | (152 | ) | - | - | (172 | ) | ||||||||||||
|
Purchases |
- | (5 | ) | - | - | $ | (5 | ) | ||||||||||||
|
Settlements |
12 | 84 | - | - | 96 | |||||||||||||||
|
Ending balance at December 31, 2010 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | (11 | ) | $ | (82 | ) | $ | - | $ | 1 | $ | (92 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (1 | ) | $ | (422 | ) | $ | 1 | $ | 460 | $ | 38 | ||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
$ | - | $ | - | $ | 2 | $ | 32 | $ | 34 | ||||||||||
|
Included in OCI |
- | - | - | 8 | 8 | |||||||||||||||
|
Included in regulatory assets/liabilities |
27 | (107 | ) | (a | ) | 95 | 15 | |||||||||||||
|
Total realized and unrealized gains (losses) |
27 | (107 | ) | 2 | 135 | 57 | ||||||||||||||
|
Purchases |
4 | 19 | (10 | ) | 26 | 39 | ||||||||||||||
|
Sales |
2 | - | 12 | (13 | ) | 1 | ||||||||||||||
|
Settlements |
(24 | ) | 158 | (2 | ) | (197 | ) | (65 | ) | |||||||||||
|
Transfers into Level 3 |
- | - | - | (2 | ) | (2 | ) | |||||||||||||
|
Transfers out of Level 3 |
(6 | ) | - | - | (26 | ) | (32 | ) | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (89 | ) | $ | - | $ | 81 | $ | (7 | ) | ||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (2 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (2 | ) | |||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
3 | (a | ) | (a | ) | (a | ) | 3 | ||||||||||||
|
Total realized and unrealized gains (losses) |
3 | (a | ) | (a | ) | (a | ) | $ | 3 | |||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 1 | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on heating oil and natural gas derivative commodity contracts are recorded in Operating Expenses – Fuel, while net gains and losses on power derivative commodity contracts are recorded in Operating Revenues – Electric. |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
Transfers in or out of Level 3 represent either (1) existing assets and liabilities that were previously categorized as a higher level but were recategorized to Level 3 because the inputs to the model became unobservable during the period, or (2) existing assets and liabilities that were previously classified as Level 3 but were recategorized to a higher level because the lowest significant input became observable during the period. Transfers between Level 2 and Level 3 were primarily caused by changes in availability of financial power trades observable on electronic exchanges from the previous reporting period for the years ended December 31, 2011 and 2010. Any reclassifications are reported as transfers out of Level 3 at the fair value measurement reported at the beginning of the period in which the changes occur. For the years ended December 31, 2011 and 2010, there were no transfers between Level 1 and Level 2 related to derivative commodity contracts. The following table summarizes all transfers between fair value hierarchy levels related to derivative commodity contracts for the years ended December 31, 2011 and 2010:
| 2011 | 2010 | |||||||
|
Ameren - derivative commodity contracts:(a) |
||||||||
|
Transfers into Level 3 / Transfers out of Level 1 |
$ | - | $ | (1 | ) | |||
|
Transfers out of Level 3 / Transfers into Level 1 |
(30 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
- | (1 | ) | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
(1 | ) | (32 | ) | ||||
|
Net fair value of Level 3 transfers |
$ | (31 | ) | $ | (34 | ) | ||
|
Ameren Missouri – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
(19 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
(1 | ) | - | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
$ | 1 | $ | (6 | ) | |||
|
Net fair value of Level 3 transfers |
$ | (19 | ) | $ | (6 | ) | ||
|
Genco – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
$ | (9 | ) | $ | - | |||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
See Note 11 – Retirement Benefits for the fair value hierarchy tables detailing Ameren's pension and postretirement plan assets as of December 31, 2011, as well as a table summarizing the changes in Level 3 plan assets during 2011.
The Ameren Companies' carrying amounts of cash and cash equivalents, accounts receivable, short-term borrowings, and accounts payable approximate fair value because of the short-term nature of these instruments. The estimated fair value of long-term debt and preferred stock is based on the quoted market prices for same or similar issues for companies with similar credit profiles or on the current rates offered to the Ameren Companies for similar financial instruments.
The following table presents the carrying amounts and estimated fair values of our long-term debt and preferred stock at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
|
Ameren:(a)(b) |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 6,856 | $ | 7,800 | $ | 7,008 | $ | 7,661 | ||||||||
|
Preferred stock |
142 | 92 | 142 | 102 | ||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 3,950 | $ | 4,541 | $ | 3,954 | $ | 4,281 | ||||||||
|
Preferred stock |
80 | 55 | 80 | 62 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 1,658 | $ | 1,943 | $ | 1,807 | $ | 2,067 | ||||||||
|
Preferred stock |
62 | 37 | 62 | 40 | ||||||||||||
|
Genco: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 824 | $ | 839 | $ | 824 | $ | 826 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Preferred stock along with the 20% noncontrolling interest of EEI is recorded in Noncontrolling Interests on the balance sheet. |
NOTE 8 – FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange 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 the following three hierarchy levels:
Level 1: Inputs based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities are primarily exchange-traded derivatives and assets, including cash and cash equivalents and listed equity securities, such as those held in Ameren Missouri's Nuclear Decommissioning Trust Fund.
Level 2: Market-based inputs corroborated by third-party brokers or exchanges based on transacted market data. Level 2 assets and liabilities include certain assets held in Ameren Missouri's Nuclear Decommissioning Trust Fund, including corporate bonds and other fixed-income securities, U.S. treasury and agency securities, and certain over-the-counter derivative instruments, including natural gas swaps and financial power transactions. Derivative instruments classified as Level 2 are valued by corroborated observable inputs, such as pricing services or prices from similar instruments that trade in liquid markets. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. To derive our forward view to price our derivative instruments at fair value, we average the midpoints of the bid/ask spreads. To validate forward prices obtained from outside parties, we compare the pricing to recently settled market transactions. Additionally, a review of all sources is performed to identify any anomalies or potential errors. Further, we consider the volume of transactions on certain trading platforms in our reasonableness assessment of the averaged midpoint.
Level 3: Unobservable inputs that are not corroborated by market data. Level 3 assets and liabilities are valued by internally developed models and assumptions or methodologies that use significant unobservable inputs. Level 3 assets and liabilities include derivative instruments that trade in less liquid markets, where pricing is largely unobservable, including the financial contracts entered into between Ameren Illinois and Marketing Company. We value Level 3 instruments by using pricing models with inputs that are often unobservable in the market, as well as certain internal assumptions. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. As a part of our reasonableness review, an evaluation of all sources is performed to identify any anomalies or potential errors.
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.
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. Ameren recorded net losses of $2 million, net gains of less than $1 million, and net losses of less than $1 million in 2011, 2010 and 2009, respectively, related to valuation adjustments for counterparty default risk. Genco recorded net losses of less than $1 million, net gains of less than $1 million, and net gains of less than $1 million in 2011, 2010, and 2009, respectively, related to valuation adjustments for counterparty default risk. At December 31, 2011, the counterparty default risk (asset)/liability valuation adjustment related to derivative contracts totaled $1 million, less than $1 million, $19 million, and less than $(1) million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. At December 31, 2010, the counterparty default risk liability valuation adjustment related to derivative contracts totaled $2 million, less than $1 million, $21 million, and less than $1 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively.
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, 2011:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 33 | $ | - | $ | 4 | $ | 37 | ||||||||||
|
Natural gas |
4 | - | 2 | 6 | ||||||||||||||
|
Power |
- | 2 | 193 | 195 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
20 | - | 3 | 23 | |||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | 1 | 29 | 30 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 77 | 77 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
10 | - | 1 | 11 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 2 | $ | - | $ | - | $ | 2 | ||||||||||
|
Natural gas |
22 | - | 176 | 198 | ||||||||||||||
|
Power |
- | 2 | 78 | 80 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
1 | - | - | 1 | |||||||||||||
|
Natural gas |
12 | - | 14 | 26 | ||||||||||||||
|
Power |
- | 1 | 8 | 9 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 162 | 169 | |||||||||||||
|
Power |
- | - | 217 | 217 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
1 | - | - | 1 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | 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, 2010:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 64 | $ | 64 | ||||||||||
|
Natural gas |
3 | - | 2 | 5 | ||||||||||||||
|
Power |
- | 17 | 86 | 103 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 37 | 37 | |||||||||||||
|
Natural gas |
- | - | 1 | 1 | ||||||||||||||
|
Power |
- | 3 | 5 | 8 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 21 | 21 | ||||||||||||||
|
Natural gas |
1 | - | - | 1 | ||||||||||||||
|
Power |
- | - | 11 | 11 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 13 | $ | 13 | ||||||||||
|
Natural gas |
21 | - | 150 | 171 | ||||||||||||||
|
Power |
- | 19 | 50 | 69 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 7 | 7 | |||||||||||||
|
Natural gas |
9 | - | 15 | 24 | ||||||||||||||
|
Power |
- | 3 | 3 | 6 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 136 | 143 | |||||||||||||
|
Power |
- | - | 360 | 360 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 4 | 4 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | Balance excludes $1 million of receivables, payables, and accrued income, net. |
In January 2010, the FASB issued amended authoritative guidance regarding fair value measurements. This guidance required disclosures regarding significant transfers into and out of Level 1 and Level 2 fair value measurements. It also required information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. This guidance was effective for us as of January 1, 2010, with the exception of guidance applicable to detailed Level 3 reconciliation disclosures, which became effective for us as of January 1, 2011. The adoption of this guidance did not have a material impact on our results of operations, financial position, or liquidity because it provides enhanced disclosure requirements only.
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2011:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 12 | 4 | 16 | ||||||||||||||
|
Included in regulatory assets/liabilities |
19 | (a | ) | (a | ) | (a | ) | 19 | ||||||||||||
|
Total realized and unrealized gains (losses) |
19 | (a | ) | 12 | 4 | 35 | ||||||||||||||
|
Purchases |
4 | (a | ) | 1 | - | 5 | ||||||||||||||
|
Sales |
(1 | ) | (a | ) | - | - | (1 | ) | ||||||||||||
|
Settlements |
(30 | ) | (a | ) | (20 | ) | (6 | ) | (56 | ) | ||||||||||
|
Transfers into Level 3 |
- | (a | ) | - | - | - | ||||||||||||||
|
Transfers out of Level 3 |
(19 | ) | (a | ) | (9 | ) | (2 | ) | (30 | ) | ||||||||||
|
Ending balance at December 31, 2011 |
$ | 3 | $ | (a | ) | $ | 1 | $ | - | $ | 4 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31,2011 |
$ | (11 | ) | $ | (a | ) | $ | (5 | ) | $ | (2 | ) | $ | (18 | ) | |||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Realized and unrealized gains (losses): |
$ | |||||||||||||||||||
|
Included in regulatory assets/liabilities |
(8 | ) | (107 | ) | (a | ) | (a | ) | (115 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(8 | ) | (107 | ) | (a | ) | (a | ) | $ | (115 | ) | |||||||||
|
Purchases |
- | 1 | - | - | 1 | |||||||||||||||
|
Sales |
- | (1 | ) | - | - | (1 | ) | |||||||||||||
|
Settlements |
8 | 81 | - | - | 89 | |||||||||||||||
|
Ending balance at December 31, 2011 |
$ | (14 | ) | $ | (160 | ) | $ | - | $ | - | $ | (174 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | (6 | ) | $ | (72 | ) | $ | - | $ | - | $ | (78 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | (1 | ) | (12 | ) | (13 | ) | ||||||||||||
|
Included in OCI |
- | - | - | 24 | 24 | |||||||||||||||
|
Included in regulatory assets/liabilities |
17 | 7 | (a | ) | 51 | $ | 75 | |||||||||||||
|
Total realized and unrealized gains (losses) |
17 | 7 | (1 | ) | 63 | $ | 86 | |||||||||||||
|
Purchases |
30 | - | - | 35 | 65 | |||||||||||||||
|
Sales |
(1 | ) | - | - | (21 | ) | $ | (22 | ) | |||||||||||
|
Settlements |
(27 | ) | 205 | (2 | ) | (225 | ) | (49 | ) | |||||||||||
|
Transfers into Level 3 |
(1 | ) | - | - | 1 | - | ||||||||||||||
|
Transfers out of Level 3 |
1 | - | - | (2 | ) | (1 | ) | |||||||||||||
|
Ending balance at December 31, 2011 |
$ | 21 | $ | (140 | ) | $ | - | $ | 234 | $ | 115 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | 1 | $ | 13 | $ | (1 | ) | $ | 60 | $ | 73 | |||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Purchases |
(1 | ) | (a | ) | (a | ) | (a | ) | (1 | ) | ||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2011 |
$ | (1 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (1 | ) | |||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | - | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | - | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on fuel oils and natural gas derivative commodity contracts are recorded in "Operating Expenses – Fuel", while net gains and losses on power derivative commodity contracts are recorded in "Operating Revenues – Electric." |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2010:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | 32 | $ | (a | ) | $ | 21 | $ | 7 | $ | 60 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 3 | (2 | ) | 1 | |||||||||||||
|
Included in regulatory assets/liabilities |
8 | (a | ) | (a | ) | (a | ) | 8 | ||||||||||||
|
Total realized and unrealized gains (losses) |
8 | (a | ) | 3 | (2 | ) | 9 | |||||||||||||
|
Purchases |
18 | (a | ) | 11 | 4 | 33 | ||||||||||||||
|
Settlements |
(28 | ) | (a | ) | (18 | ) | (5 | ) | (51 | ) | ||||||||||
|
Ending balance at December 31, 2010 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 7 | $ | (a | ) | $ | 4 | $ | - | $ | 11 | |||||||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (6 | ) | $ | (61 | ) | $ | - | $ | - | $ | (67 | ) | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | - | - | - | |||||||||||||||
|
Included in regulatory assets/liabilities |
(20 | ) | (152 | ) | (a | ) | (a | ) | (172 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(20 | ) | (152 | ) | - | - | (172 | ) | ||||||||||||
|
Purchases |
- | (5 | ) | - | - | $ | (5 | ) | ||||||||||||
|
Settlements |
12 | 84 | - | - | 96 | |||||||||||||||
|
Ending balance at December 31, 2010 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | (11 | ) | $ | (82 | ) | $ | - | $ | 1 | $ | (92 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (1 | ) | $ | (422 | ) | $ | 1 | $ | 460 | $ | 38 | ||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
$ | - | $ | - | $ | 2 | $ | 32 | $ | 34 | ||||||||||
|
Included in OCI |
- | - | - | 8 | 8 | |||||||||||||||
|
Included in regulatory assets/liabilities |
27 | (107 | ) | (a | ) | 95 | 15 | |||||||||||||
|
Total realized and unrealized gains (losses) |
27 | (107 | ) | 2 | 135 | 57 | ||||||||||||||
|
Purchases |
4 | 19 | (10 | ) | 26 | 39 | ||||||||||||||
|
Sales |
2 | - | 12 | (13 | ) | 1 | ||||||||||||||
|
Settlements |
(24 | ) | 158 | (2 | ) | (197 | ) | (65 | ) | |||||||||||
|
Transfers into Level 3 |
- | - | - | (2 | ) | (2 | ) | |||||||||||||
|
Transfers out of Level 3 |
(6 | ) | - | - | (26 | ) | (32 | ) | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (89 | ) | $ | - | $ | 81 | $ | (7 | ) | ||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (2 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (2 | ) | |||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
3 | (a | ) | (a | ) | (a | ) | 3 | ||||||||||||
|
Total realized and unrealized gains (losses) |
3 | (a | ) | (a | ) | (a | ) | $ | 3 | |||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 1 | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on heating oil and natural gas derivative commodity contracts are recorded in Operating Expenses – Fuel, while net gains and losses on power derivative commodity contracts are recorded in Operating Revenues – Electric. |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
Transfers in or out of Level 3 represent either (1) existing assets and liabilities that were previously categorized as a higher level but were recategorized to Level 3 because the inputs to the model became unobservable during the period, or (2) existing assets and liabilities that were previously classified as Level 3 but were recategorized to a higher level because the lowest significant input became observable during the period. Transfers between Level 2 and Level 3 were primarily caused by changes in availability of financial power trades observable on electronic exchanges from the previous reporting period for the years ended December 31, 2011 and 2010. Any reclassifications are reported as transfers out of Level 3 at the fair value measurement reported at the beginning of the period in which the changes occur. For the years ended December 31, 2011 and 2010, there were no transfers between Level 1 and Level 2 related to derivative commodity contracts. The following table summarizes all transfers between fair value hierarchy levels related to derivative commodity contracts for the years ended December 31, 2011 and 2010:
| 2011 | 2010 | |||||||
|
Ameren - derivative commodity contracts:(a) |
||||||||
|
Transfers into Level 3 / Transfers out of Level 1 |
$ | - | $ | (1 | ) | |||
|
Transfers out of Level 3 / Transfers into Level 1 |
(30 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
- | (1 | ) | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
(1 | ) | (32 | ) | ||||
|
Net fair value of Level 3 transfers |
$ | (31 | ) | $ | (34 | ) | ||
|
Ameren Missouri – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
(19 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
(1 | ) | - | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
$ | 1 | $ | (6 | ) | |||
|
Net fair value of Level 3 transfers |
$ | (19 | ) | $ | (6 | ) | ||
|
Genco – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
$ | (9 | ) | $ | - | |||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
See Note 11 – Retirement Benefits for the fair value hierarchy tables detailing Ameren's pension and postretirement plan assets as of December 31, 2011, as well as a table summarizing the changes in Level 3 plan assets during 2011.
The Ameren Companies' carrying amounts of cash and cash equivalents, accounts receivable, short-term borrowings, and accounts payable approximate fair value because of the short-term nature of these instruments. The estimated fair value of long-term debt and preferred stock is based on the quoted market prices for same or similar issues for companies with similar credit profiles or on the current rates offered to the Ameren Companies for similar financial instruments.
The following table presents the carrying amounts and estimated fair values of our long-term debt and preferred stock at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
|
Ameren:(a)(b) |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 6,856 | $ | 7,800 | $ | 7,008 | $ | 7,661 | ||||||||
|
Preferred stock |
142 | 92 | 142 | 102 | ||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 3,950 | $ | 4,541 | $ | 3,954 | $ | 4,281 | ||||||||
|
Preferred stock |
80 | 55 | 80 | 62 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 1,658 | $ | 1,943 | $ | 1,807 | $ | 2,067 | ||||||||
|
Preferred stock |
62 | 37 | 62 | 40 | ||||||||||||
|
Genco: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 824 | $ | 839 | $ | 824 | $ | 826 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Preferred stock along with the 20% noncontrolling interest of EEI is recorded in Noncontrolling Interests on the balance sheet. |
NOTE 8 – FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange 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 the following three hierarchy levels:
Level 1: Inputs based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities are primarily exchange-traded derivatives and assets, including cash and cash equivalents and listed equity securities, such as those held in Ameren Missouri's Nuclear Decommissioning Trust Fund.
Level 2: Market-based inputs corroborated by third-party brokers or exchanges based on transacted market data. Level 2 assets and liabilities include certain assets held in Ameren Missouri's Nuclear Decommissioning Trust Fund, including corporate bonds and other fixed-income securities, U.S. treasury and agency securities, and certain over-the-counter derivative instruments, including natural gas swaps and financial power transactions. Derivative instruments classified as Level 2 are valued by corroborated observable inputs, such as pricing services or prices from similar instruments that trade in liquid markets. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. To derive our forward view to price our derivative instruments at fair value, we average the midpoints of the bid/ask spreads. To validate forward prices obtained from outside parties, we compare the pricing to recently settled market transactions. Additionally, a review of all sources is performed to identify any anomalies or potential errors. Further, we consider the volume of transactions on certain trading platforms in our reasonableness assessment of the averaged midpoint.
Level 3: Unobservable inputs that are not corroborated by market data. Level 3 assets and liabilities are valued by internally developed models and assumptions or methodologies that use significant unobservable inputs. Level 3 assets and liabilities include derivative instruments that trade in less liquid markets, where pricing is largely unobservable, including the financial contracts entered into between Ameren Illinois and Marketing Company. We value Level 3 instruments by using pricing models with inputs that are often unobservable in the market, as well as certain internal assumptions. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. As a part of our reasonableness review, an evaluation of all sources is performed to identify any anomalies or potential errors.
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.
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. Ameren recorded net losses of $2 million, net gains of less than $1 million, and net losses of less than $1 million in 2011, 2010 and 2009, respectively, related to valuation adjustments for counterparty default risk. Genco recorded net losses of less than $1 million, net gains of less than $1 million, and net gains of less than $1 million in 2011, 2010, and 2009, respectively, related to valuation adjustments for counterparty default risk. At December 31, 2011, the counterparty default risk (asset)/liability valuation adjustment related to derivative contracts totaled $1 million, less than $1 million, $19 million, and less than $(1) million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. At December 31, 2010, the counterparty default risk liability valuation adjustment related to derivative contracts totaled $2 million, less than $1 million, $21 million, and less than $1 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively.
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, 2011:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 33 | $ | - | $ | 4 | $ | 37 | ||||||||||
|
Natural gas |
4 | - | 2 | 6 | ||||||||||||||
|
Power |
- | 2 | 193 | 195 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
20 | - | 3 | 23 | |||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | 1 | 29 | 30 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 77 | 77 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
10 | - | 1 | 11 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 2 | $ | - | $ | - | $ | 2 | ||||||||||
|
Natural gas |
22 | - | 176 | 198 | ||||||||||||||
|
Power |
- | 2 | 78 | 80 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
1 | - | - | 1 | |||||||||||||
|
Natural gas |
12 | - | 14 | 26 | ||||||||||||||
|
Power |
- | 1 | 8 | 9 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 162 | 169 | |||||||||||||
|
Power |
- | - | 217 | 217 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
1 | - | - | 1 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | 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, 2010:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 64 | $ | 64 | ||||||||||
|
Natural gas |
3 | - | 2 | 5 | ||||||||||||||
|
Power |
- | 17 | 86 | 103 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 37 | 37 | |||||||||||||
|
Natural gas |
- | - | 1 | 1 | ||||||||||||||
|
Power |
- | 3 | 5 | 8 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 21 | 21 | ||||||||||||||
|
Natural gas |
1 | - | - | 1 | ||||||||||||||
|
Power |
- | - | 11 | 11 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 13 | $ | 13 | ||||||||||
|
Natural gas |
21 | - | 150 | 171 | ||||||||||||||
|
Power |
- | 19 | 50 | 69 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 7 | 7 | |||||||||||||
|
Natural gas |
9 | - | 15 | 24 | ||||||||||||||
|
Power |
- | 3 | 3 | 6 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 136 | 143 | |||||||||||||
|
Power |
- | - | 360 | 360 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 4 | 4 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | Balance excludes $1 million of receivables, payables, and accrued income, net. |
In January 2010, the FASB issued amended authoritative guidance regarding fair value measurements. This guidance required disclosures regarding significant transfers into and out of Level 1 and Level 2 fair value measurements. It also required information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. This guidance was effective for us as of January 1, 2010, with the exception of guidance applicable to detailed Level 3 reconciliation disclosures, which became effective for us as of January 1, 2011. The adoption of this guidance did not have a material impact on our results of operations, financial position, or liquidity because it provides enhanced disclosure requirements only.
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2011:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 12 | 4 | 16 | ||||||||||||||
|
Included in regulatory assets/liabilities |
19 | (a | ) | (a | ) | (a | ) | 19 | ||||||||||||
|
Total realized and unrealized gains (losses) |
19 | (a | ) | 12 | 4 | 35 | ||||||||||||||
|
Purchases |
4 | (a | ) | 1 | - | 5 | ||||||||||||||
|
Sales |
(1 | ) | (a | ) | - | - | (1 | ) | ||||||||||||
|
Settlements |
(30 | ) | (a | ) | (20 | ) | (6 | ) | (56 | ) | ||||||||||
|
Transfers into Level 3 |
- | (a | ) | - | - | - | ||||||||||||||
|
Transfers out of Level 3 |
(19 | ) | (a | ) | (9 | ) | (2 | ) | (30 | ) | ||||||||||
|
Ending balance at December 31, 2011 |
$ | 3 | $ | (a | ) | $ | 1 | $ | - | $ | 4 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31,2011 |
$ | (11 | ) | $ | (a | ) | $ | (5 | ) | $ | (2 | ) | $ | (18 | ) | |||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Realized and unrealized gains (losses): |
$ | |||||||||||||||||||
|
Included in regulatory assets/liabilities |
(8 | ) | (107 | ) | (a | ) | (a | ) | (115 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(8 | ) | (107 | ) | (a | ) | (a | ) | $ | (115 | ) | |||||||||
|
Purchases |
- | 1 | - | - | 1 | |||||||||||||||
|
Sales |
- | (1 | ) | - | - | (1 | ) | |||||||||||||
|
Settlements |
8 | 81 | - | - | 89 | |||||||||||||||
|
Ending balance at December 31, 2011 |
$ | (14 | ) | $ | (160 | ) | $ | - | $ | - | $ | (174 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | (6 | ) | $ | (72 | ) | $ | - | $ | - | $ | (78 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | (1 | ) | (12 | ) | (13 | ) | ||||||||||||
|
Included in OCI |
- | - | - | 24 | 24 | |||||||||||||||
|
Included in regulatory assets/liabilities |
17 | 7 | (a | ) | 51 | $ | 75 | |||||||||||||
|
Total realized and unrealized gains (losses) |
17 | 7 | (1 | ) | 63 | $ | 86 | |||||||||||||
|
Purchases |
30 | - | - | 35 | 65 | |||||||||||||||
|
Sales |
(1 | ) | - | - | (21 | ) | $ | (22 | ) | |||||||||||
|
Settlements |
(27 | ) | 205 | (2 | ) | (225 | ) | (49 | ) | |||||||||||
|
Transfers into Level 3 |
(1 | ) | - | - | 1 | - | ||||||||||||||
|
Transfers out of Level 3 |
1 | - | - | (2 | ) | (1 | ) | |||||||||||||
|
Ending balance at December 31, 2011 |
$ | 21 | $ | (140 | ) | $ | - | $ | 234 | $ | 115 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | 1 | $ | 13 | $ | (1 | ) | $ | 60 | $ | 73 | |||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Purchases |
(1 | ) | (a | ) | (a | ) | (a | ) | (1 | ) | ||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2011 |
$ | (1 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (1 | ) | |||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | - | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | - | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on fuel oils and natural gas derivative commodity contracts are recorded in "Operating Expenses – Fuel", while net gains and losses on power derivative commodity contracts are recorded in "Operating Revenues – Electric." |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2010:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | 32 | $ | (a | ) | $ | 21 | $ | 7 | $ | 60 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 3 | (2 | ) | 1 | |||||||||||||
|
Included in regulatory assets/liabilities |
8 | (a | ) | (a | ) | (a | ) | 8 | ||||||||||||
|
Total realized and unrealized gains (losses) |
8 | (a | ) | 3 | (2 | ) | 9 | |||||||||||||
|
Purchases |
18 | (a | ) | 11 | 4 | 33 | ||||||||||||||
|
Settlements |
(28 | ) | (a | ) | (18 | ) | (5 | ) | (51 | ) | ||||||||||
|
Ending balance at December 31, 2010 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 7 | $ | (a | ) | $ | 4 | $ | - | $ | 11 | |||||||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (6 | ) | $ | (61 | ) | $ | - | $ | - | $ | (67 | ) | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | - | - | - | |||||||||||||||
|
Included in regulatory assets/liabilities |
(20 | ) | (152 | ) | (a | ) | (a | ) | (172 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(20 | ) | (152 | ) | - | - | (172 | ) | ||||||||||||
|
Purchases |
- | (5 | ) | - | - | $ | (5 | ) | ||||||||||||
|
Settlements |
12 | 84 | - | - | 96 | |||||||||||||||
|
Ending balance at December 31, 2010 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | (11 | ) | $ | (82 | ) | $ | - | $ | 1 | $ | (92 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (1 | ) | $ | (422 | ) | $ | 1 | $ | 460 | $ | 38 | ||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
$ | - | $ | - | $ | 2 | $ | 32 | $ | 34 | ||||||||||
|
Included in OCI |
- | - | - | 8 | 8 | |||||||||||||||
|
Included in regulatory assets/liabilities |
27 | (107 | ) | (a | ) | 95 | 15 | |||||||||||||
|
Total realized and unrealized gains (losses) |
27 | (107 | ) | 2 | 135 | 57 | ||||||||||||||
|
Purchases |
4 | 19 | (10 | ) | 26 | 39 | ||||||||||||||
|
Sales |
2 | - | 12 | (13 | ) | 1 | ||||||||||||||
|
Settlements |
(24 | ) | 158 | (2 | ) | (197 | ) | (65 | ) | |||||||||||
|
Transfers into Level 3 |
- | - | - | (2 | ) | (2 | ) | |||||||||||||
|
Transfers out of Level 3 |
(6 | ) | - | - | (26 | ) | (32 | ) | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (89 | ) | $ | - | $ | 81 | $ | (7 | ) | ||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (2 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (2 | ) | |||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
3 | (a | ) | (a | ) | (a | ) | 3 | ||||||||||||
|
Total realized and unrealized gains (losses) |
3 | (a | ) | (a | ) | (a | ) | $ | 3 | |||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 1 | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on heating oil and natural gas derivative commodity contracts are recorded in Operating Expenses – Fuel, while net gains and losses on power derivative commodity contracts are recorded in Operating Revenues – Electric. |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
Transfers in or out of Level 3 represent either (1) existing assets and liabilities that were previously categorized as a higher level but were recategorized to Level 3 because the inputs to the model became unobservable during the period, or (2) existing assets and liabilities that were previously classified as Level 3 but were recategorized to a higher level because the lowest significant input became observable during the period. Transfers between Level 2 and Level 3 were primarily caused by changes in availability of financial power trades observable on electronic exchanges from the previous reporting period for the years ended December 31, 2011 and 2010. Any reclassifications are reported as transfers out of Level 3 at the fair value measurement reported at the beginning of the period in which the changes occur. For the years ended December 31, 2011 and 2010, there were no transfers between Level 1 and Level 2 related to derivative commodity contracts. The following table summarizes all transfers between fair value hierarchy levels related to derivative commodity contracts for the years ended December 31, 2011 and 2010:
| 2011 | 2010 | |||||||
|
Ameren - derivative commodity contracts:(a) |
||||||||
|
Transfers into Level 3 / Transfers out of Level 1 |
$ | - | $ | (1 | ) | |||
|
Transfers out of Level 3 / Transfers into Level 1 |
(30 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
- | (1 | ) | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
(1 | ) | (32 | ) | ||||
|
Net fair value of Level 3 transfers |
$ | (31 | ) | $ | (34 | ) | ||
|
Ameren Missouri – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
(19 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
(1 | ) | - | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
$ | 1 | $ | (6 | ) | |||
|
Net fair value of Level 3 transfers |
$ | (19 | ) | $ | (6 | ) | ||
|
Genco – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
$ | (9 | ) | $ | - | |||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
See Note 11 – Retirement Benefits for the fair value hierarchy tables detailing Ameren's pension and postretirement plan assets as of December 31, 2011, as well as a table summarizing the changes in Level 3 plan assets during 2011.
The Ameren Companies' carrying amounts of cash and cash equivalents, accounts receivable, short-term borrowings, and accounts payable approximate fair value because of the short-term nature of these instruments. The estimated fair value of long-term debt and preferred stock is based on the quoted market prices for same or similar issues for companies with similar credit profiles or on the current rates offered to the Ameren Companies for similar financial instruments.
The following table presents the carrying amounts and estimated fair values of our long-term debt and preferred stock at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
|
Ameren:(a)(b) |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 6,856 | $ | 7,800 | $ | 7,008 | $ | 7,661 | ||||||||
|
Preferred stock |
142 | 92 | 142 | 102 | ||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 3,950 | $ | 4,541 | $ | 3,954 | $ | 4,281 | ||||||||
|
Preferred stock |
80 | 55 | 80 | 62 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 1,658 | $ | 1,943 | $ | 1,807 | $ | 2,067 | ||||||||
|
Preferred stock |
62 | 37 | 62 | 40 | ||||||||||||
|
Genco: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 824 | $ | 839 | $ | 824 | $ | 826 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Preferred stock along with the 20% noncontrolling interest of EEI is recorded in Noncontrolling Interests on the balance sheet. |
NOTE 8 – FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange 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 the following three hierarchy levels:
Level 1: Inputs based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities are primarily exchange-traded derivatives and assets, including cash and cash equivalents and listed equity securities, such as those held in Ameren Missouri's Nuclear Decommissioning Trust Fund.
Level 2: Market-based inputs corroborated by third-party brokers or exchanges based on transacted market data. Level 2 assets and liabilities include certain assets held in Ameren Missouri's Nuclear Decommissioning Trust Fund, including corporate bonds and other fixed-income securities, U.S. treasury and agency securities, and certain over-the-counter derivative instruments, including natural gas swaps and financial power transactions. Derivative instruments classified as Level 2 are valued by corroborated observable inputs, such as pricing services or prices from similar instruments that trade in liquid markets. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. To derive our forward view to price our derivative instruments at fair value, we average the midpoints of the bid/ask spreads. To validate forward prices obtained from outside parties, we compare the pricing to recently settled market transactions. Additionally, a review of all sources is performed to identify any anomalies or potential errors. Further, we consider the volume of transactions on certain trading platforms in our reasonableness assessment of the averaged midpoint.
Level 3: Unobservable inputs that are not corroborated by market data. Level 3 assets and liabilities are valued by internally developed models and assumptions or methodologies that use significant unobservable inputs. Level 3 assets and liabilities include derivative instruments that trade in less liquid markets, where pricing is largely unobservable, including the financial contracts entered into between Ameren Illinois and Marketing Company. We value Level 3 instruments by using pricing models with inputs that are often unobservable in the market, as well as certain internal assumptions. Our development and corroboration process entails obtaining multiple quotes or prices from outside sources. As a part of our reasonableness review, an evaluation of all sources is performed to identify any anomalies or potential errors.
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.
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. Ameren recorded net losses of $2 million, net gains of less than $1 million, and net losses of less than $1 million in 2011, 2010 and 2009, respectively, related to valuation adjustments for counterparty default risk. Genco recorded net losses of less than $1 million, net gains of less than $1 million, and net gains of less than $1 million in 2011, 2010, and 2009, respectively, related to valuation adjustments for counterparty default risk. At December 31, 2011, the counterparty default risk (asset)/liability valuation adjustment related to derivative contracts totaled $1 million, less than $1 million, $19 million, and less than $(1) million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. At December 31, 2010, the counterparty default risk liability valuation adjustment related to derivative contracts totaled $2 million, less than $1 million, $21 million, and less than $1 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively.
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, 2011:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 33 | $ | - | $ | 4 | $ | 37 | ||||||||||
|
Natural gas |
4 | - | 2 | 6 | ||||||||||||||
|
Power |
- | 2 | 193 | 195 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
20 | - | 3 | 23 | |||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | 1 | 29 | 30 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 77 | 77 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
10 | - | 1 | 11 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 2 | $ | - | $ | - | $ | 2 | ||||||||||
|
Natural gas |
22 | - | 176 | 198 | ||||||||||||||
|
Power |
- | 2 | 78 | 80 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
1 | - | - | 1 | |||||||||||||
|
Natural gas |
12 | - | 14 | 26 | ||||||||||||||
|
Power |
- | 1 | 8 | 9 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 162 | 169 | |||||||||||||
|
Power |
- | - | 217 | 217 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
1 | - | - | 1 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | 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, 2010:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 64 | $ | 64 | ||||||||||
|
Natural gas |
3 | - | 2 | 5 | ||||||||||||||
|
Power |
- | 17 | 86 | 103 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 37 | 37 | |||||||||||||
|
Natural gas |
- | - | 1 | 1 | ||||||||||||||
|
Power |
- | 3 | 5 | 8 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 21 | 21 | ||||||||||||||
|
Natural gas |
1 | - | - | 1 | ||||||||||||||
|
Power |
- | - | 11 | 11 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 13 | $ | 13 | ||||||||||
|
Natural gas |
21 | - | 150 | 171 | ||||||||||||||
|
Power |
- | 19 | 50 | 69 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 7 | 7 | |||||||||||||
|
Natural gas |
9 | - | 15 | 24 | ||||||||||||||
|
Power |
- | 3 | 3 | 6 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 136 | 143 | |||||||||||||
|
Power |
- | - | 360 | 360 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 4 | 4 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | Balance excludes $1 million of receivables, payables, and accrued income, net. |
In January 2010, the FASB issued amended authoritative guidance regarding fair value measurements. This guidance required disclosures regarding significant transfers into and out of Level 1 and Level 2 fair value measurements. It also required information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. This guidance was effective for us as of January 1, 2010, with the exception of guidance applicable to detailed Level 3 reconciliation disclosures, which became effective for us as of January 1, 2011. The adoption of this guidance did not have a material impact on our results of operations, financial position, or liquidity because it provides enhanced disclosure requirements only.
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2011:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 12 | 4 | 16 | ||||||||||||||
|
Included in regulatory assets/liabilities |
19 | (a | ) | (a | ) | (a | ) | 19 | ||||||||||||
|
Total realized and unrealized gains (losses) |
19 | (a | ) | 12 | 4 | 35 | ||||||||||||||
|
Purchases |
4 | (a | ) | 1 | - | 5 | ||||||||||||||
|
Sales |
(1 | ) | (a | ) | - | - | (1 | ) | ||||||||||||
|
Settlements |
(30 | ) | (a | ) | (20 | ) | (6 | ) | (56 | ) | ||||||||||
|
Transfers into Level 3 |
- | (a | ) | - | - | - | ||||||||||||||
|
Transfers out of Level 3 |
(19 | ) | (a | ) | (9 | ) | (2 | ) | (30 | ) | ||||||||||
|
Ending balance at December 31, 2011 |
$ | 3 | $ | (a | ) | $ | 1 | $ | - | $ | 4 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31,2011 |
$ | (11 | ) | $ | (a | ) | $ | (5 | ) | $ | (2 | ) | $ | (18 | ) | |||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Realized and unrealized gains (losses): |
$ | |||||||||||||||||||
|
Included in regulatory assets/liabilities |
(8 | ) | (107 | ) | (a | ) | (a | ) | (115 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(8 | ) | (107 | ) | (a | ) | (a | ) | $ | (115 | ) | |||||||||
|
Purchases |
- | 1 | - | - | 1 | |||||||||||||||
|
Sales |
- | (1 | ) | - | - | (1 | ) | |||||||||||||
|
Settlements |
8 | 81 | - | - | 89 | |||||||||||||||
|
Ending balance at December 31, 2011 |
$ | (14 | ) | $ | (160 | ) | $ | - | $ | - | $ | (174 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | (6 | ) | $ | (72 | ) | $ | - | $ | - | $ | (78 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | (1 | ) | (12 | ) | (13 | ) | ||||||||||||
|
Included in OCI |
- | - | - | 24 | 24 | |||||||||||||||
|
Included in regulatory assets/liabilities |
17 | 7 | (a | ) | 51 | $ | 75 | |||||||||||||
|
Total realized and unrealized gains (losses) |
17 | 7 | (1 | ) | 63 | $ | 86 | |||||||||||||
|
Purchases |
30 | - | - | 35 | 65 | |||||||||||||||
|
Sales |
(1 | ) | - | - | (21 | ) | $ | (22 | ) | |||||||||||
|
Settlements |
(27 | ) | 205 | (2 | ) | (225 | ) | (49 | ) | |||||||||||
|
Transfers into Level 3 |
(1 | ) | - | - | 1 | - | ||||||||||||||
|
Transfers out of Level 3 |
1 | - | - | (2 | ) | (1 | ) | |||||||||||||
|
Ending balance at December 31, 2011 |
$ | 21 | $ | (140 | ) | $ | - | $ | 234 | $ | 115 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | 1 | $ | 13 | $ | (1 | ) | $ | 60 | $ | 73 | |||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Purchases |
(1 | ) | (a | ) | (a | ) | (a | ) | (1 | ) | ||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2011 |
$ | (1 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (1 | ) | |||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | - | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | - | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on fuel oils and natural gas derivative commodity contracts are recorded in "Operating Expenses – Fuel", while net gains and losses on power derivative commodity contracts are recorded in "Operating Revenues – Electric." |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2010:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | 32 | $ | (a | ) | $ | 21 | $ | 7 | $ | 60 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 3 | (2 | ) | 1 | |||||||||||||
|
Included in regulatory assets/liabilities |
8 | (a | ) | (a | ) | (a | ) | 8 | ||||||||||||
|
Total realized and unrealized gains (losses) |
8 | (a | ) | 3 | (2 | ) | 9 | |||||||||||||
|
Purchases |
18 | (a | ) | 11 | 4 | 33 | ||||||||||||||
|
Settlements |
(28 | ) | (a | ) | (18 | ) | (5 | ) | (51 | ) | ||||||||||
|
Ending balance at December 31, 2010 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 7 | $ | (a | ) | $ | 4 | $ | - | $ | 11 | |||||||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (6 | ) | $ | (61 | ) | $ | - | $ | - | $ | (67 | ) | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | - | - | - | |||||||||||||||
|
Included in regulatory assets/liabilities |
(20 | ) | (152 | ) | (a | ) | (a | ) | (172 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(20 | ) | (152 | ) | - | - | (172 | ) | ||||||||||||
|
Purchases |
- | (5 | ) | - | - | $ | (5 | ) | ||||||||||||
|
Settlements |
12 | 84 | - | - | 96 | |||||||||||||||
|
Ending balance at December 31, 2010 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | (11 | ) | $ | (82 | ) | $ | - | $ | 1 | $ | (92 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (1 | ) | $ | (422 | ) | $ | 1 | $ | 460 | $ | 38 | ||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
$ | - | $ | - | $ | 2 | $ | 32 | $ | 34 | ||||||||||
|
Included in OCI |
- | - | - | 8 | 8 | |||||||||||||||
|
Included in regulatory assets/liabilities |
27 | (107 | ) | (a | ) | 95 | 15 | |||||||||||||
|
Total realized and unrealized gains (losses) |
27 | (107 | ) | 2 | 135 | 57 | ||||||||||||||
|
Purchases |
4 | 19 | (10 | ) | 26 | 39 | ||||||||||||||
|
Sales |
2 | - | 12 | (13 | ) | 1 | ||||||||||||||
|
Settlements |
(24 | ) | 158 | (2 | ) | (197 | ) | (65 | ) | |||||||||||
|
Transfers into Level 3 |
- | - | - | (2 | ) | (2 | ) | |||||||||||||
|
Transfers out of Level 3 |
(6 | ) | - | - | (26 | ) | (32 | ) | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (89 | ) | $ | - | $ | 81 | $ | (7 | ) | ||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (2 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (2 | ) | |||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
3 | (a | ) | (a | ) | (a | ) | 3 | ||||||||||||
|
Total realized and unrealized gains (losses) |
3 | (a | ) | (a | ) | (a | ) | $ | 3 | |||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 1 | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on heating oil and natural gas derivative commodity contracts are recorded in Operating Expenses – Fuel, while net gains and losses on power derivative commodity contracts are recorded in Operating Revenues – Electric. |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
Transfers in or out of Level 3 represent either (1) existing assets and liabilities that were previously categorized as a higher level but were recategorized to Level 3 because the inputs to the model became unobservable during the period, or (2) existing assets and liabilities that were previously classified as Level 3 but were recategorized to a higher level because the lowest significant input became observable during the period. Transfers between Level 2 and Level 3 were primarily caused by changes in availability of financial power trades observable on electronic exchanges from the previous reporting period for the years ended December 31, 2011 and 2010. Any reclassifications are reported as transfers out of Level 3 at the fair value measurement reported at the beginning of the period in which the changes occur. For the years ended December 31, 2011 and 2010, there were no transfers between Level 1 and Level 2 related to derivative commodity contracts. The following table summarizes all transfers between fair value hierarchy levels related to derivative commodity contracts for the years ended December 31, 2011 and 2010:
| 2011 | 2010 | |||||||
|
Ameren - derivative commodity contracts:(a) |
||||||||
|
Transfers into Level 3 / Transfers out of Level 1 |
$ | - | $ | (1 | ) | |||
|
Transfers out of Level 3 / Transfers into Level 1 |
(30 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
- | (1 | ) | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
(1 | ) | (32 | ) | ||||
|
Net fair value of Level 3 transfers |
$ | (31 | ) | $ | (34 | ) | ||
|
Ameren Missouri – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
(19 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
(1 | ) | - | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
$ | 1 | $ | (6 | ) | |||
|
Net fair value of Level 3 transfers |
$ | (19 | ) | $ | (6 | ) | ||
|
Genco – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
$ | (9 | ) | $ | - | |||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
See Note 11 – Retirement Benefits for the fair value hierarchy tables detailing Ameren's pension and postretirement plan assets as of December 31, 2011, as well as a table summarizing the changes in Level 3 plan assets during 2011.
The Ameren Companies' carrying amounts of cash and cash equivalents, accounts receivable, short-term borrowings, and accounts payable approximate fair value because of the short-term nature of these instruments. The estimated fair value of long-term debt and preferred stock is based on the quoted market prices for same or similar issues for companies with similar credit profiles or on the current rates offered to the Ameren Companies for similar financial instruments.
The following table presents the carrying amounts and estimated fair values of our long-term debt and preferred stock at December 31, 2011 and 2010:
| 2011 | 2010 | |||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
|
Ameren:(a)(b) |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 6,856 | $ | 7,800 | $ | 7,008 | $ | 7,661 | ||||||||
|
Preferred stock |
142 | 92 | 142 | 102 | ||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 3,950 | $ | 4,541 | $ | 3,954 | $ | 4,281 | ||||||||
|
Preferred stock |
80 | 55 | 80 | 62 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 1,658 | $ | 1,943 | $ | 1,807 | $ | 2,067 | ||||||||
|
Preferred stock |
62 | 37 | 62 | 40 | ||||||||||||
|
Genco: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 824 | $ | 839 | $ | 824 | $ | 826 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Preferred stock along with the 20% noncontrolling interest of EEI is recorded in Noncontrolling Interests on the balance sheet. |
|
|||
NOTE 9 – NUCLEAR DECOMMISSIONING TRUST FUND INVESTMENTS
Ameren Missouri has investments in debt and equity securities that are held in a trust fund for the purpose of funding the decommissioning of its Callaway energy center. See Note 10 – Callaway Energy Center for additional information. We have classified these investments as available for sale, and we have recorded all such investments at their fair market value at December 31, 2011, and 2010.
Investments in the nuclear decommissioning trust fund have a target allocation of 60% to 70% in equity securities, with the balance invested in debt securities.
The following table presents proceeds from the sale of investments in Ameren Missouri's nuclear decommissioning trust fund and the gross realized gains and losses resulting from those sales for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Proceeds from sales |
$ | 199 | $ | 256 | $ | 380 | ||||||
|
Gross realized gains |
5 | 5 | 5 | |||||||||
|
Gross realized losses |
4 | 4 | 10 | |||||||||
Net realized and unrealized gains and losses are deferred and recorded as regulatory assets or regulatory liabilities on Ameren's and Ameren Missouri's balance sheets. This reporting is consistent with the method used to account for the decommissioning costs recovered in rates. Gains or losses associated with assets in the trust fund could result in lower or higher funding requirements for decommissioning costs, which are expected to be reflected in electric rates paid by Ameren Missouri's customers. See Note 2 – Rate and Regulatory Matters.
The following table presents the costs and fair values of investments in debt and equity securities in Ameren Missouri's nuclear decommissioning trust fund at December 31, 2011 and 2010:
|
Security Type |
Cost | Gross Unrealized Gain |
Gross Unrealized Loss |
Fair Value | ||||||||||||
|
2011: |
||||||||||||||||
|
Debt securities |
$ | 114 | $ | 7 | $ | (a | ) | $ | 121 | |||||||
|
Equity securities |
145 | 101 | 12 | 234 | ||||||||||||
|
Cash |
3 | — | — | 3 | ||||||||||||
|
Other(b) |
(1 | ) | — | — | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 261 | $ | 108 | $ | 12 | $ | 357 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
2010: |
||||||||||||||||
|
Debt securities |
$ | 104 | $ | 4 | $ | 1 | $ | 107 | ||||||||
|
Equity securities |
141 | 95 | 8 | 228 | ||||||||||||
|
Cash |
1 | — | — | 1 | ||||||||||||
|
Other(b) |
1 | — | — | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 247 | $ | 99 | $ | 9 | $ | 337 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Amount less than $1 million. |
| (b) | Represents payables relating to pending security purchases, net of receivables related to pending securities sales and interest receivables. |
The following table presents the costs and fair values of investments in debt securities in Ameren Missouri's nuclear decommissioning trust fund according to their contractual maturities at December 31, 2011:
| Cost | Fair Value | |||||||
|
Less than 5 years |
$ | 57 | $ | 59 | ||||
|
5 years to 10 years |
34 | 36 | ||||||
|
Due after 10 years |
23 | 26 | ||||||
|
|
|
|
|
|||||
|
Total |
$ | 114 | $ | 121 | ||||
|
|
|
|
|
|||||
We have unrealized losses relating to certain available-for-sale investments included in our decommissioning trust fund, recorded as regulatory assets as discussed above. Decommissioning will not occur until the operating license for our nuclear facility expires. Ameren Missouri submitted a license extension application to the NRC to extend the Callaway energy center's operating license to 2044. The following table presents the fair value and the gross unrealized losses of the available-for-sale securities held in Ameren Missouri's nuclear decommissioning trust fund. They are aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position at December 31, 2011:
| Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
|||||||||||||||||||
|
Debt securities |
$ | 7 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 7 | $ | (a | ) | ||||||||
|
Equity securities |
18 | 4 | 8 | 8 | 26 | 12 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Total |
$ | 25 | $ | 4 | $ | 8 | $ | 8 | $ | 33 | $ | 12 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (a) | Amount less than $1 million. |
NOTE 9 – NUCLEAR DECOMMISSIONING TRUST FUND INVESTMENTS
Ameren Missouri has investments in debt and equity securities that are held in a trust fund for the purpose of funding the decommissioning of its Callaway energy center. See Note 10 – Callaway Energy Center for additional information. We have classified these investments as available for sale, and we have recorded all such investments at their fair market value at December 31, 2011, and 2010.
Investments in the nuclear decommissioning trust fund have a target allocation of 60% to 70% in equity securities, with the balance invested in debt securities.
The following table presents proceeds from the sale of investments in Ameren Missouri's nuclear decommissioning trust fund and the gross realized gains and losses resulting from those sales for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Proceeds from sales |
$ | 199 | $ | 256 | $ | 380 | ||||||
|
Gross realized gains |
5 | 5 | 5 | |||||||||
|
Gross realized losses |
4 | 4 | 10 | |||||||||
Net realized and unrealized gains and losses are deferred and recorded as regulatory assets or regulatory liabilities on Ameren's and Ameren Missouri's balance sheets. This reporting is consistent with the method used to account for the decommissioning costs recovered in rates. Gains or losses associated with assets in the trust fund could result in lower or higher funding requirements for decommissioning costs, which are expected to be reflected in electric rates paid by Ameren Missouri's customers. See Note 2 – Rate and Regulatory Matters.
The following table presents the costs and fair values of investments in debt and equity securities in Ameren Missouri's nuclear decommissioning trust fund at December 31, 2011 and 2010:
|
Security Type |
Cost | Gross Unrealized Gain |
Gross Unrealized Loss |
Fair Value | ||||||||||||
|
2011: |
||||||||||||||||
|
Debt securities |
$ | 114 | $ | 7 | $ | (a | ) | $ | 121 | |||||||
|
Equity securities |
145 | 101 | 12 | 234 | ||||||||||||
|
Cash |
3 | — | — | 3 | ||||||||||||
|
Other(b) |
(1 | ) | — | — | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 261 | $ | 108 | $ | 12 | $ | 357 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
2010: |
||||||||||||||||
|
Debt securities |
$ | 104 | $ | 4 | $ | 1 | $ | 107 | ||||||||
|
Equity securities |
141 | 95 | 8 | 228 | ||||||||||||
|
Cash |
1 | — | — | 1 | ||||||||||||
|
Other(b) |
1 | — | — | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 247 | $ | 99 | $ | 9 | $ | 337 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Amount less than $1 million. |
| (b) | Represents payables relating to pending security purchases, net of receivables related to pending securities sales and interest receivables. |
The following table presents the costs and fair values of investments in debt securities in Ameren Missouri's nuclear decommissioning trust fund according to their contractual maturities at December 31, 2011:
| Cost | Fair Value | |||||||
|
Less than 5 years |
$ | 57 | $ | 59 | ||||
|
5 years to 10 years |
34 | 36 | ||||||
|
Due after 10 years |
23 | 26 | ||||||
|
|
|
|
|
|||||
|
Total |
$ | 114 | $ | 121 | ||||
|
|
|
|
|
|||||
We have unrealized losses relating to certain available-for-sale investments included in our decommissioning trust fund, recorded as regulatory assets as discussed above. Decommissioning will not occur until the operating license for our nuclear facility expires. Ameren Missouri submitted a license extension application to the NRC to extend the Callaway energy center's operating license to 2044. The following table presents the fair value and the gross unrealized losses of the available-for-sale securities held in Ameren Missouri's nuclear decommissioning trust fund. They are aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position at December 31, 2011:
| Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
|||||||||||||||||||
|
Debt securities |
$ | 7 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 7 | $ | (a | ) | ||||||||
|
Equity securities |
18 | 4 | 8 | 8 | 26 | 12 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Total |
$ | 25 | $ | 4 | $ | 8 | $ | 8 | $ | 33 | $ | 12 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (a) | Amount less than $1 million. |
|
|||
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 power plants. Under the NWPA, Ameren and other utilities who own and operate those plants 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 kilowatt hour generated by those plants and sold. The NWPA also requires the DOE to review the nuclear waste fee 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 and other utilities have entered into standard contracts with the federal government. The government, represented by the DOE, implements these provisions of the NWPA. Consistent with the NWPA and its contract, Ameren Missouri collects one mill from its electric customers for each kilowatt hour of electricity that it generates and sells from its Callaway energy center.
Although both the NWPA and the standard contract stated that the federal government would begin to dispose of spent nuclear fuel by 1998, the federal government has acknowledged since at least 1994 that it would not meet that deadline. The federal government is not currently predicting when it will begin to meet its disposal obligation. Ameren Missouri has sufficient installed capacity at its Callaway energy center to store the spent nuclear fuel generated at Callaway through 2020 and has the capability for additional storage capacity for spent nuclear fuel generated through the end of the energy center's current licensed life.
Until January 2009, the DOE program provided for spent nuclear fuel disposal to take place at a geologic repository to be constructed at Yucca Mountain, Nevada. In January 2009, the Obama administration announced that a repository at Yucca Mountain was unworkable and took steps to terminate the Yucca Mountain program, while acknowledging the federal government's continuing obligation to dispose of utilities' spent nuclear fuel. In January 2012, an advisory commission established by the DOE issued its report of recommendations for the storage and disposal of spent nuclear fuel. The recommendations covered topics such as the approach to siting future nuclear waste management facilities, the transport and storage of spent fuel and high-level waste, options for waste disposal, institutional arrangements for managing spent nuclear fuel and high-level wastes, and changes needed in the handling of nuclear waste fees and of the Nuclear Waste Fund. Most of these recommendations require action by the DOE and the United States Congress.
In view of the federal government's efforts to terminate the Yucca Mountain program, the Nuclear Energy Institute, a number of individual utilities, and the National Association of Regulatory Utility Commissioners sued the DOE in the United States Court of Appeals for the District of Columbia Circuit seeking the suspension of the one mill nuclear waste fee. They allege that the DOE's failure to undertake an appropriate fee adequacy review reflects the current unsettled state of the nuclear waste program. That case is pending. The DOE 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 operation of the energy center.
As a result of DOE's failure to build a repository for nuclear waste or otherwise fulfill its contract obligations, Ameren Missouri and other nuclear power plant owners have also sued DOE to recover costs incurred for ongoing storage of their spent fuel. Ameren Missouri filed a breach of contract suit in 2004 to recover $13 million in costs that it incurred through 2009. This amount included the cost of reracking the Callaway energy center's spent fuel pool, as well as certain NRC fees, and Missouri ad valorem taxes that Ameren Missouri would not have incurred had DOE performed its contractual obligations. In June 2011, the parties reached a settlement that included a payment to Ameren Missouri of $11 million for spent fuel storage and related costs through 2010 and, thereafter, annual payment of such costs after they are incurred through 2013 or any other mutually agreed extension. As a result of this settlement agreement, Ameren Missouri recorded a pretax reduction of $2 million and $2 million to its "Operating Expenses – Depreciation and amortization" and "Operating Expenses – Other operations and maintenance" expense line items, respectively, on its statement of income for the year ended December 31, 2011. Ameren Missouri reduced its property and plant assets by $7 million. Under the settlement, Ameren Missouri's 2004 breach of contract suit was dismissed in July 2011.
In December 2011, Ameren Missouri submitted a license extension application with the NRC to extend its Callaway energy center's operating license from 2024 to 2044. There is no date by which the NRC must act in this relicensing request. If the Callaway energy center's license is extended, additional spent fuel storage will be required. Ameren Missouri plans to install a dry spent fuel storage facility at its Callaway energy center and intends to begin transferring spent fuel assemblies to this facility by 2020.
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 an assumed 40-year life of the nuclear center, ending with the expiration of the energy center's current operating license in 2024. 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. Decommissioning costs are included in the costs of service used to establish electric rates for Ameren Missouri's customers. These costs amounted to $7 million in each of the years 2011, 2010, and 2009. Every three years, the MoPSC requires Ameren Missouri to file an updated cost study for decommissioning its Callaway energy center. Electric rates may be adjusted at such times to reflect changed estimates. This cost study was filed with the MoPSC in September 2011. After considering the results of this updated cost study and associated financial analysis, Ameren Missouri recommended to the MoPSC that the current rate of deposits to the trust fund continues to be appropriate and does not need to be changed. Amounts collected from customers are deposited in an external trust fund to provide for the Callaway energy center's decommissioning. If the assumed return on trust assets is not earned, we believe that it is probable that any such earnings deficiency will be recovered in rates. The fair value of the nuclear decommissioning trust fund for Ameren Missouri's Callaway energy center is reported as "Nuclear decommissioning trust fund" in Ameren's consolidated balance sheet and Ameren Missouri's balance sheet. 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 asset or regulatory liability.
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 power plants. Under the NWPA, Ameren and other utilities who own and operate those plants 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 kilowatt hour generated by those plants and sold. The NWPA also requires the DOE to review the nuclear waste fee 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 and other utilities have entered into standard contracts with the federal government. The government, represented by the DOE, implements these provisions of the NWPA. Consistent with the NWPA and its contract, Ameren Missouri collects one mill from its electric customers for each kilowatt hour of electricity that it generates and sells from its Callaway energy center.
Although both the NWPA and the standard contract stated that the federal government would begin to dispose of spent nuclear fuel by 1998, the federal government has acknowledged since at least 1994 that it would not meet that deadline. The federal government is not currently predicting when it will begin to meet its disposal obligation. Ameren Missouri has sufficient installed capacity at its Callaway energy center to store the spent nuclear fuel generated at Callaway through 2020 and has the capability for additional storage capacity for spent nuclear fuel generated through the end of the energy center's current licensed life.
Until January 2009, the DOE program provided for spent nuclear fuel disposal to take place at a geologic repository to be constructed at Yucca Mountain, Nevada. In January 2009, the Obama administration announced that a repository at Yucca Mountain was unworkable and took steps to terminate the Yucca Mountain program, while acknowledging the federal government's continuing obligation to dispose of utilities' spent nuclear fuel. In January 2012, an advisory commission established by the DOE issued its report of recommendations for the storage and disposal of spent nuclear fuel. The recommendations covered topics such as the approach to siting future nuclear waste management facilities, the transport and storage of spent fuel and high-level waste, options for waste disposal, institutional arrangements for managing spent nuclear fuel and high-level wastes, and changes needed in the handling of nuclear waste fees and of the Nuclear Waste Fund. Most of these recommendations require action by the DOE and the United States Congress.
In view of the federal government's efforts to terminate the Yucca Mountain program, the Nuclear Energy Institute, a number of individual utilities, and the National Association of Regulatory Utility Commissioners sued the DOE in the United States Court of Appeals for the District of Columbia Circuit seeking the suspension of the one mill nuclear waste fee. They allege that the DOE's failure to undertake an appropriate fee adequacy review reflects the current unsettled state of the nuclear waste program. That case is pending. The DOE 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 operation of the energy center.
As a result of DOE's failure to build a repository for nuclear waste or otherwise fulfill its contract obligations, Ameren Missouri and other nuclear power plant owners have also sued DOE to recover costs incurred for ongoing storage of their spent fuel. Ameren Missouri filed a breach of contract suit in 2004 to recover $13 million in costs that it incurred through 2009. This amount included the cost of reracking the Callaway energy center's spent fuel pool, as well as certain NRC fees, and Missouri ad valorem taxes that Ameren Missouri would not have incurred had DOE performed its contractual obligations. In June 2011, the parties reached a settlement that included a payment to Ameren Missouri of $11 million for spent fuel storage and related costs through 2010 and, thereafter, annual payment of such costs after they are incurred through 2013 or any other mutually agreed extension. As a result of this settlement agreement, Ameren Missouri recorded a pretax reduction of $2 million and $2 million to its "Operating Expenses – Depreciation and amortization" and "Operating Expenses – Other operations and maintenance" expense line items, respectively, on its statement of income for the year ended December 31, 2011. Ameren Missouri reduced its property and plant assets by $7 million. Under the settlement, Ameren Missouri's 2004 breach of contract suit was dismissed in July 2011.
In December 2011, Ameren Missouri submitted a license extension application with the NRC to extend its Callaway energy center's operating license from 2024 to 2044. There is no date by which the NRC must act in this relicensing request. If the Callaway energy center's license is extended, additional spent fuel storage will be required. Ameren Missouri plans to install a dry spent fuel storage facility at its Callaway energy center and intends to begin transferring spent fuel assemblies to this facility by 2020.
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 an assumed 40-year life of the nuclear center, ending with the expiration of the energy center's current operating license in 2024. 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. Decommissioning costs are included in the costs of service used to establish electric rates for Ameren Missouri's customers. These costs amounted to $7 million in each of the years 2011, 2010, and 2009. Every three years, the MoPSC requires Ameren Missouri to file an updated cost study for decommissioning its Callaway energy center. Electric rates may be adjusted at such times to reflect changed estimates. This cost study was filed with the MoPSC in September 2011. After considering the results of this updated cost study and associated financial analysis, Ameren Missouri recommended to the MoPSC that the current rate of deposits to the trust fund continues to be appropriate and does not need to be changed. Amounts collected from customers are deposited in an external trust fund to provide for the Callaway energy center's decommissioning. If the assumed return on trust assets is not earned, we believe that it is probable that any such earnings deficiency will be recovered in rates. The fair value of the nuclear decommissioning trust fund for Ameren Missouri's Callaway energy center is reported as "Nuclear decommissioning trust fund" in Ameren's consolidated balance sheet and Ameren Missouri's balance sheet. 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 asset or regulatory liability.
|
|||
NOTE 11 – RETIREMENT BENEFITS
The primary objective of the Ameren pension plans and postretirement benefit plans is to provide eligible employees with pension and postretirement health care and life insurance benefits. Ameren offers defined benefit pension and postretirement benefit plans covering substantially all of its employees. Ameren uses a measurement date of December 31 for its pension and postretirement benefit plans. Ameren Missouri, Ameren Illinois and Genco, excluding EEI, each participate in Ameren's single-employer pension and other postretirement plans. Ameren's qualified pension plan is the Ameren Retirement Plan. Ameren also has an unfunded non-qualified pension plan, the Ameren Supplemental Retirement Plan, which is available for certain management employees and retirees to provide a supplemental benefit when their qualified pension plan benefits are reduced to comply with Internal Revenue Code limitations. Ameren's other postretirement plans are the Ameren Retiree Medical Plan and the Ameren Group Life Insurance Plan. Separately, EEI employees and retirees participate in EEI's single-employer pension and other postretirement plans. EEI's pension plan is the Revised Retirement Plan for Employees of Electric Energy, Inc. EEI's other postretirement plans are the Group Insurance Plan for Management Employees of Electric Energy, Inc. and the Group Insurance Plan for Bargaining Unit Employees of Electric Energy, Inc. Nonaffiliated Ameren companies do not participate in the Ameren Retirement Plan, the Ameren Supplemental Retirement Plan, the Ameren Retiree Medical Plan, and the Ameren Group Life Insurance Plan. Ameren and Genco each consolidate EEI, and therefore, EEI's plans are reflected in Ameren's and Genco's pension and postretirement balances and disclosures.
The following table presents the benefit liability recorded on the balance sheets of each of the Ameren Companies as of December 31, 2011:
|
Ameren(a) |
$ | 1,350 | ||
|
Ameren Missouri |
494 | |||
|
Ameren Illinois |
496 | |||
|
Genco |
141 |
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Ameren recognizes the underfunded status of its pension and postretirement plans as a liability on its balance sheet, with offsetting entries to accumulated OCI and regulatory assets, in accordance with authoritative accounting guidance. The following table presents the funded status of our pension and postretirement benefit plans as of December 31, 2011, and 2010. It also provides the amounts included in regulatory assets and accumulated OCI at December 31, 2011, and 2010, that have not been recognized in net periodic benefit costs.
| 2011 | 2010 | |||||||||||||||
| Pension Benefits(a) |
Postretirement Benefits(a) |
Pension Benefits(a) |
Postretirement Benefits(a) |
|||||||||||||
|
Accumulated benefit obligation at end of year |
$ | 3,645 | $ | (b | ) | $ | 3,246 | $ | (b | ) | ||||||
|
Change in benefit obligation: |
||||||||||||||||
|
Net benefit obligation at beginning of year |
$ | 3,451 | $ | 1,120 | $ | 3,255 | $ | 1,143 | ||||||||
|
Service cost |
75 | 22 | 68 | 20 | ||||||||||||
|
Interest cost |
180 | 58 | 185 | 62 | ||||||||||||
|
Plan amendments(c)(d) |
(16 | ) | - | (40 | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Actuarial (gain) loss |
348 | 96 | 165 | (53 | ) | |||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Net benefit obligation at end of year |
3,865 | 1,257 | 3,451 | 1,120 | ||||||||||||
|
Change in plan assets: |
||||||||||||||||
|
Fair value of plan assets at beginning of year |
2,722 | 797 | 2,495 | 732 | ||||||||||||
|
Actual return on plan assets |
224 | 9 | 328 | 81 | ||||||||||||
|
Employer contributions |
103 | 129 | 81 | 36 | ||||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Fair value of plan assets at end of year |
2,876 | 896 | 2,722 | 797 | ||||||||||||
|
Funded status – deficiency |
989 | 361 | 729 | 323 | ||||||||||||
|
Accrued benefit cost at December 31 |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in the balance sheet consist of: |
||||||||||||||||
|
Current liability |
$ | 3 | $ | 3 | $ | 4 | $ | 3 | ||||||||
|
Noncurrent liability |
986 | 358 | 725 | 320 | ||||||||||||
|
Total |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in regulatory assets consist of: |
||||||||||||||||
|
Net actuarial loss |
$ | 734 | $ | 177 | $ | 507 | $ | 86 | ||||||||
|
Prior service cost (credit) |
(7 | ) | (28 | ) | (11 | ) | (32 | ) | ||||||||
|
Transition obligation |
- | 2 | - | 5 | ||||||||||||
|
Amounts (pretax) recognized in accumulated OCI consist of: |
||||||||||||||||
|
Net actuarial loss |
79 | 43 | 24 | 13 | ||||||||||||
|
Prior service cost (credit) |
(15 | ) | (7 | ) | 4 | (10 | ) | |||||||||
|
Total |
$ | 791 | $ | 187 | $ | 524 | $ | 62 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Not applicable. |
| (c) | In 2011, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 430 labor union-represented employees from a traditional, final pay formula to a cash balance formula. |
| (d) | In 2010, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 700 management employees from a traditional, final pay formula to a cash balance formula. |
The following table presents the assumptions used to determine our benefit obligations at December 31, 2011, and 2010:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Discount rate at measurement date |
4.50 | % | 5.25 | % | 4.50 | % | 5.25 | % | ||||||||
|
Increase in future compensation |
3.50 | 3.50 | 3.50 | 3.50 | ||||||||||||
|
Medical cost trend rate (initial) |
- | - | 5.50 | 6.00 | ||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | 5.00 | 5.00 | ||||||||||||
|
Years to ultimate rate |
- | - | 10 year | 2 years | ||||||||||||
Ameren determines discount rate assumptions by using an interest rate yield curve pursuant to authoritative accounting guidance on the determination of discount rates used for defined benefit plan obligations. The yield curve is based on the yields of more than 500 high-quality corporate bonds with maturities between zero and 30 years. A theoretical spot-rate curve constructed from this yield curve is then used as a guide to develop a discount rate matching the plans' payout structure.
Funding
Pension benefits are based on the employees' years of service and compensation. Ameren's pension plan is funded in compliance with income tax regulations and federal funding or regulatory requirements. As a result, Ameren expects to fund its pension plan at a level equal to the greater of the pension expense or the legally required minimum contribution. Considering Ameren's assumptions at December 31, 2011, its investment performance in 2011, and its pension funding policy, Ameren expects to make annual contributions of $90 million to $150 million in each of the next five years, with aggregate estimated contributions of $580 million. We expect Ameren Missouri's, Ameren Illinois' and Genco's portion of the future funding requirements to be 51%, 33%, and 12%, respectively. These amounts are estimates. The estimates may change based on actual investment performance, changes in interest rates, changes in our assumptions, any pertinent changes in government regulations, and any voluntary contributions. Our funding policy for postretirement benefits is primarily to fund the Voluntary Employee Beneficiary Association (VEBA) trusts to match the annual postretirement expense.
The following table presents the cash contributions made to our defined benefit retirement plan and to our postretirement plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 103 | $ | 81 | $ | 99 | $ | 129 | $ | 36 | $ | 49 | ||||||||||||
|
AMO |
43 | 36 | 42 | 9 | 11 | 13 | ||||||||||||||||||
|
AIC |
28 | 23 | 25 | 118 | 20 | 28 | ||||||||||||||||||
|
Genco |
12 | 4 | 10 | - | - | - | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Investment Strategy and Policies
Ameren manages plan assets in accordance with the "prudent investor" guidelines contained in ERISA. The investment committee, to the extent authority is delegated to it by the finance committee of Ameren's board of directors, implements investment strategy and asset allocation guidelines for the plan assets. The investment committee includes members of senior management. The investment committee's goals are twofold: first, to ensure that sufficient funds are available to provide the benefits at the time they are payable, and second, to maximize total return on plan assets and minimize expense volatility consistent with its tolerance for risk. Ameren delegates investment management to specialists in each asset class. As appropriate, Ameren provides the investment manager with guidelines that specify allowable and prohibited investment types. The investment committee regularly monitors manager performance and compliance with investment guidelines.
The expected return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Projected rates of return for each asset class were estimated after an analysis of historical experience, future expectations, and the volatility of the various asset classes. After considering the target asset allocation for each asset class, we adjusted the overall expected rate of return for the portfolio for historical and expected experience of active portfolio management results compared with benchmark returns and for the effect of expenses paid from plan assets. Ameren will utilize an expected return on plan assets for its pension plan assets and postretirement plan assets of 7.75% and 7.50%, respectively, in 2012. No plan assets are expected to be returned to Ameren during 2012.
Ameren's investment committee strives to assemble a portfolio of diversified assets that does not create a significant concentration of risks. The investment committee develops asset allocation guidelines between asset classes, and it creates diversification through investments in assets that differ by type (equity, debt, real estate, private equity), duration, market capitalization, country, style (growth or value) and industry, among other factors. The diversification of assets is displayed in the target allocation table below. The investment committee also routinely rebalances the plan assets to adhere to the diversification goals. The investment committee's strategy reduces the concentration of investment risk; however, Ameren is still subject to overall market risk. The following table presents our target allocations for 2012 and our pension and postretirement plans' asset categories as of December 31, 2011, and 2010.
| Percentage of Plan Assets at December 31, | ||||||||||||
|
Asset Category |
Target Allocation 2012 |
2011 | 2010 | |||||||||
|
Pension Plan: |
||||||||||||
|
Cash and cash equivalents |
0 - 5 | % | 2 | % | 1 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
29 - 39 | 33 | 31 | |||||||||
|
U.S. small and mid-capitalization |
2 - 12 | 7 | 11 | |||||||||
|
International and emerging markets |
9 - 19 | 11 | 15 | |||||||||
|
Total equity |
50 - 60 | 51 | 57 | |||||||||
|
Debt securities |
35 - 45 | 42 | 37 | |||||||||
|
Real estate |
0 - 9 | 4 | 4 | |||||||||
|
Private equity |
0 - 4 | 1 | 1 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
|
Postretirement Plans: |
||||||||||||
|
Cash and cash equivalents |
0 - 10 | % | 4 | % | 4 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
33 - 43 | 38 | 39 | |||||||||
|
U.S. small and mid-capitalization |
3 - 13 | 8 | 10 | |||||||||
|
International |
10 - 20 | 13 | 14 | |||||||||
|
Total equity |
55 - 65 | 59 | 63 | |||||||||
|
Debt securities |
30 - 40 | 37 | 33 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
In general, the U.S. large capitalization equity investments are passively managed or indexed, whereas the international, emerging markets, U.S. small capitalization, and U.S. mid-capitalization equity investments are actively managed by investment managers. Debt securities include a broad range of fixed income vehicles. Debt security investments in high-yield securities, emerging market securities, and non-U.S. dollar-denominated securities are owned by the plans, but in limited quantities to reduce risk. Most of the debt security investments are under active management by investment managers. Real estate investments include private real estate vehicles; however, Ameren does not, by policy, hold direct investments in real estate property. Ameren's investment in private equity funds consists of 10 different limited partnerships, with invested capital ranging from $0.1 million to $7 million each, which invest primarily in a diversified number of small U.S.-based companies. No further commitments may be made to private equity investments without approval by the finance committee of the board of directors. Additionally, Ameren's investment committee allows investment managers to use derivatives, such as index futures, exchange traded funds, foreign exchange futures, and options, in certain situations, to increase or to reduce market exposure in an efficient and timely manner.
Fair Value Measurements of Plan Assets
Investments in the pension and postretirement benefit plans were stated at fair value as of December 31, 2011. The fair value of an asset is the amount that would be received upon sale in an orderly transaction between market participants at the measurement date. Cash and cash equivalents have initial maturities of three months or less and are recorded at cost plus accrued interest. The carrying amounts of cash and cash equivalents approximate fair value because of the short-term nature of these instruments. Investments traded in active markets on national or international securities exchanges are valued at closing prices on the last business day on or before the measurement date. Securities traded in over-the-counter markets are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Derivative contracts are valued at fair value, as determined by the investment managers (or independent third parties on behalf of the investment managers), who use proprietary models and take into consideration exchange quotations on underlying instruments, dealer quotations, and other market information. The fair value of real estate is based on annual appraisal reports prepared by an independent real estate appraiser.
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 31 | $ | - | $ | 31 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
72 | 922 | - | 994 | ||||||||||||
|
U.S. small and mid-capitalization |
202 | 11 | - | 213 | ||||||||||||
|
International and emerging markets |
115 | 213 | - | 328 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 720 | - | 720 | ||||||||||||
|
Municipal bonds |
- | 176 | - | 176 | ||||||||||||
|
U.S. treasury and agency securities |
- | 230 | - | 230 | ||||||||||||
|
Other |
- | 121 | - | 121 | ||||||||||||
|
Real estate |
- | - | 108 | 108 | ||||||||||||
|
Private equity |
- | - | 23 | 23 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 389 | $ | 2,424 | $ | 131 | $ | 2,944 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(91 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
23 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,876 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 20 | $ | - | $ | 20 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
70 | 812 | - | 882 | ||||||||||||
|
U.S. small and mid-capitalization |
299 | 10 | - | 309 | ||||||||||||
|
International and emerging markets |
129 | 284 | - | 413 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 646 | - | 646 | ||||||||||||
|
Municipal bonds |
- | 129 | - | 129 | ||||||||||||
|
U.S. treasury and agency securities |
- | 154 | - | 154 | ||||||||||||
|
Other |
- | 100 | - | 100 | ||||||||||||
|
Real estate |
- | - | 98 | 98 | ||||||||||||
|
Private equity |
- | - | 28 | 28 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 498 | $ | 2,155 | $ | 126 | $ | 2,779 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(85 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
28 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,722 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table summarizes the changes in the fair value of the pension plan assets classified as Level 3 in the fair value hierarchy for each of the years ended December 31, 2011, and 2010:
|
Beginning Balance at January 1, |
Actual Return on Plan Assets Related to Assets Still Held at the Reporting Date |
Actual Return on Plan Assets Related to Assets Sold During the Period |
Purchases, Sales, and Settlements, net |
Net of Level 3 |
Ending Balance at December 31, |
|||||||||||||||||||
|
2011: |
||||||||||||||||||||||||
|
Real estate |
$ | 98 | $ | 10 | $ | - | $ | - | $ | - | $ | 108 | ||||||||||||
|
Private equity |
28 | (10 | ) | 11 | (6 | ) | - | 23 | ||||||||||||||||
|
2010: |
||||||||||||||||||||||||
|
Other debt securities |
$ | 1 | $ | - | $ | - | $ | (1 | ) | $ | - | $ | - | |||||||||||
|
Real estate |
90 | 7 | - | 1 | - | 98 | ||||||||||||||||||
|
Private equity |
33 | (5 | ) | 7 | (7 | ) | - | 28 | ||||||||||||||||
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | 1 | $ | 66 | $ | - | $ | 67 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
235 | 78 | - | 313 | ||||||||||||
|
U.S. small and mid-capitalization |
57 | - | - | 57 | ||||||||||||
|
International |
44 | 56 | - | 100 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 61 | - | 61 | ||||||||||||
|
Municipal bonds |
- | 86 | - | 86 | ||||||||||||
|
U.S. treasury and agency securities |
- | 82 | - | 82 | ||||||||||||
|
Asset-backed securities |
- | 23 | - | 23 | ||||||||||||
|
Other |
- | 49 | - | 49 | ||||||||||||
|
Total |
$ | 337 | $ | 501 | $ | - | $ | 838 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
91 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(33 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 896 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 35 | $ | - | $ | 35 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
215 | 72 | - | 287 | ||||||||||||
|
U.S. small and mid-capitalization |
66 | - | - | 66 | ||||||||||||
|
International |
43 | 51 | - | 94 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 59 | - | 59 | ||||||||||||
|
Municipal bonds |
- | 58 | - | 58 | ||||||||||||
|
U.S. treasury and agency securities |
- | 59 | - | 59 | ||||||||||||
|
Asset-backed securities |
- | 31 | - | 31 | ||||||||||||
|
Other |
- | 29 | - | 29 | ||||||||||||
|
Total |
$ | 324 | $ | 394 | $ | - | $ | 718 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
85 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(6 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 797 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
Net Periodic Benefit Cost
The following table presents the components of the net periodic benefit cost of our pension and postretirement benefit plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
2011: |
||||||||
|
Service cost |
$ | 75 | $ | 22 | ||||
|
Interest cost |
180 | 58 | ||||||
|
Expected return on plan assets |
(216 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
(1 | ) | (8 | ) | ||||
|
Actuarial loss |
42 | 5 | ||||||
|
Net periodic benefit cost |
$ | 80 | $ | 25 | ||||
|
2010: |
||||||||
|
Service cost |
$ | 68 | $ | 20 | ||||
|
Interest cost |
185 | 62 | ||||||
|
Expected return on plan assets |
(212 | ) | (56 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
6 | (8 | ) | |||||
|
Actuarial loss |
18 | 1 | ||||||
|
Net periodic benefit cost |
$ | 65 | $ | 21 | ||||
|
2009: |
||||||||
|
Service cost |
$ | 68 | $ | 19 | ||||
|
Interest cost |
186 | 66 | ||||||
|
Expected return on plan assets |
(206 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
9 | (8 | ) | |||||
|
Actuarial loss |
24 | 9 | ||||||
|
Net periodic benefit cost |
$ | 81 | $ | 34 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The current year expected return on plan assets is determined primarily by adjusting the prior-year market-related asset value for current year contributions, disbursements, and expected return, plus 25% of the actual return in excess of (or less than) expected return for the four prior years.
The estimated amounts that will be amortized from regulatory assets and accumulated OCI into net periodic benefit cost in 2012 are as follows:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
Regulatory assets: |
||||||||
|
Transition obligation |
$ | - | $ | 2 | ||||
|
Prior service cost (credit) |
(1 | ) | (4 | ) | ||||
|
Net actuarial loss |
87 | 23 | ||||||
|
Accumulated OCI: |
||||||||
|
Transition obligation |
- | - | ||||||
|
Prior service cost (credit) |
(1 | ) | (1 | ) | ||||
|
Net actuarial loss |
6 | 3 | ||||||
|
Total |
$ | 91 | $ | 23 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Prior service cost is amortized on a straight-line basis over the average future service of active participants benefiting under the plan amendment. The net actuarial loss subject to amortization is amortized on a straight-line basis over 10 years.
Ameren Missouri, Ameren Illinois and Genco are responsible for their share of the pension and postretirement benefit costs. The following table presents the pension costs and the postretirement benefit costs incurred for the years ended December 31, 2011, 2010, and 2009:
| Pension Costs | Postretirement Costs | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 80 | $ | 65 | $ | 81 | $ | 25 | $ | 21 | $ | 34 | ||||||||||||
|
Ameren Missouri |
51 | 42 | 50 | 11 | 11 | 15 | ||||||||||||||||||
|
Ameren Illinois |
16 | 10 | 14 | 11 | 7 | 16 | ||||||||||||||||||
|
Genco |
8 | 9 | 11 | 3 | 2 | 3 | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The expected pension and postretirement benefit payments from qualified trust and company funds and the federal subsidy for postretirement benefits related to prescription drug benefits, which reflect expected future service, as of December 31, 2011, are as follows:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||
| Paid from Qualified Trust |
Paid from Company Funds |
Paid from Qualified Trust |
Paid from Company Funds |
Federal Subsidy |
||||||||||||||||
|
2012 |
223 | 3 | 68 | 3 | 5 | |||||||||||||||
|
2013 |
225 | 3 | 71 | 3 | 5 | |||||||||||||||
|
2014 |
230 | 3 | 74 | 3 | 5 | |||||||||||||||
|
2015 |
231 | 3 | 77 | 3 | 6 | |||||||||||||||
|
2016 |
232 | 3 | 80 | 3 | 6 | |||||||||||||||
|
2017 - 2021 |
1,167 | 12 | 443 | 14 | 32 | |||||||||||||||
The following table presents the assumptions used to determine net periodic benefit cost for our pension and postretirement benefit plans for the years ended December 31, 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Discount rate at measurement date |
5.25 | % | 5.75 | % | 5.75 | % | 5.25 | % | 5.75 | % | 5.75 | % | ||||||||||||
|
Expected return on plan assets |
8.00 | 8.00 | 8.00 | 7.75 | 8.00 | 8.00 | ||||||||||||||||||
|
Increase in future compensation |
3.50 | 3.50 | 4.00 | 3.50 | 3.50 | 4.00 | ||||||||||||||||||
|
Medical cost trend rate (initial) |
- | - | - | 6.00 | 6.50 | 7.00 | ||||||||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | - | 5.00 | 5.00 | 5.00 | ||||||||||||||||||
|
Years to ultimate rate |
- | - | - | 2 years | 3 years | 4 years | ||||||||||||||||||
The table below reflects the sensitivity of Ameren's plans to potential changes in key assumptions:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| Service Cost and Interest Cost |
Projected Benefit Obligation |
Service Cost and Interest Cost |
Postretirement Benefit Obligation |
|||||||||||||
|
0.25% decrease in discount rate |
$ | (2 | ) | $ | 110 | $ | - | $ | 38 | |||||||
|
0.25% increase in salary scale |
2 | 14 | - | - | ||||||||||||
|
1.00% increase in annual medical trend |
- | - | 3 | 42 | ||||||||||||
|
1.00% decrease in annual medical trend |
- | - | (3 | ) | (41 | ) | ||||||||||
Other
Ameren sponsors a 401(k) plan for eligible employees. The Ameren plan covered all eligible employees of the Ameren Companies at December 31, 2011. The plans allowed employees to contribute a portion of their compensation in accordance with specific guidelines. Ameren matched a percentage of the employee contributions up to certain limits. The following table presents the portion of the 401(k) matching contribution to the Ameren plan attributable to each of the Ameren Companies for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 28 | $ | 27 | $ | 24 | ||||||
|
Ameren Missouri |
16 | 16 | 14 | |||||||||
|
Ameren Illinois |
8 | 8 | 7 | |||||||||
|
Genco |
2 | 1 | 2 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
NOTE 11 – RETIREMENT BENEFITS
The primary objective of the Ameren pension plans and postretirement benefit plans is to provide eligible employees with pension and postretirement health care and life insurance benefits. Ameren offers defined benefit pension and postretirement benefit plans covering substantially all of its employees. Ameren uses a measurement date of December 31 for its pension and postretirement benefit plans. Ameren Missouri, Ameren Illinois and Genco, excluding EEI, each participate in Ameren's single-employer pension and other postretirement plans. Ameren's qualified pension plan is the Ameren Retirement Plan. Ameren also has an unfunded non-qualified pension plan, the Ameren Supplemental Retirement Plan, which is available for certain management employees and retirees to provide a supplemental benefit when their qualified pension plan benefits are reduced to comply with Internal Revenue Code limitations. Ameren's other postretirement plans are the Ameren Retiree Medical Plan and the Ameren Group Life Insurance Plan. Separately, EEI employees and retirees participate in EEI's single-employer pension and other postretirement plans. EEI's pension plan is the Revised Retirement Plan for Employees of Electric Energy, Inc. EEI's other postretirement plans are the Group Insurance Plan for Management Employees of Electric Energy, Inc. and the Group Insurance Plan for Bargaining Unit Employees of Electric Energy, Inc. Nonaffiliated Ameren companies do not participate in the Ameren Retirement Plan, the Ameren Supplemental Retirement Plan, the Ameren Retiree Medical Plan, and the Ameren Group Life Insurance Plan. Ameren and Genco each consolidate EEI, and therefore, EEI's plans are reflected in Ameren's and Genco's pension and postretirement balances and disclosures.
The following table presents the benefit liability recorded on the balance sheets of each of the Ameren Companies as of December 31, 2011:
|
Ameren(a) |
$ | 1,350 | ||
|
Ameren Missouri |
494 | |||
|
Ameren Illinois |
496 | |||
|
Genco |
141 |
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Ameren recognizes the underfunded status of its pension and postretirement plans as a liability on its balance sheet, with offsetting entries to accumulated OCI and regulatory assets, in accordance with authoritative accounting guidance. The following table presents the funded status of our pension and postretirement benefit plans as of December 31, 2011, and 2010. It also provides the amounts included in regulatory assets and accumulated OCI at December 31, 2011, and 2010, that have not been recognized in net periodic benefit costs.
| 2011 | 2010 | |||||||||||||||
| Pension Benefits(a) |
Postretirement Benefits(a) |
Pension Benefits(a) |
Postretirement Benefits(a) |
|||||||||||||
|
Accumulated benefit obligation at end of year |
$ | 3,645 | $ | (b | ) | $ | 3,246 | $ | (b | ) | ||||||
|
Change in benefit obligation: |
||||||||||||||||
|
Net benefit obligation at beginning of year |
$ | 3,451 | $ | 1,120 | $ | 3,255 | $ | 1,143 | ||||||||
|
Service cost |
75 | 22 | 68 | 20 | ||||||||||||
|
Interest cost |
180 | 58 | 185 | 62 | ||||||||||||
|
Plan amendments(c)(d) |
(16 | ) | - | (40 | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Actuarial (gain) loss |
348 | 96 | 165 | (53 | ) | |||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Net benefit obligation at end of year |
3,865 | 1,257 | 3,451 | 1,120 | ||||||||||||
|
Change in plan assets: |
||||||||||||||||
|
Fair value of plan assets at beginning of year |
2,722 | 797 | 2,495 | 732 | ||||||||||||
|
Actual return on plan assets |
224 | 9 | 328 | 81 | ||||||||||||
|
Employer contributions |
103 | 129 | 81 | 36 | ||||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Fair value of plan assets at end of year |
2,876 | 896 | 2,722 | 797 | ||||||||||||
|
Funded status – deficiency |
989 | 361 | 729 | 323 | ||||||||||||
|
Accrued benefit cost at December 31 |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in the balance sheet consist of: |
||||||||||||||||
|
Current liability |
$ | 3 | $ | 3 | $ | 4 | $ | 3 | ||||||||
|
Noncurrent liability |
986 | 358 | 725 | 320 | ||||||||||||
|
Total |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in regulatory assets consist of: |
||||||||||||||||
|
Net actuarial loss |
$ | 734 | $ | 177 | $ | 507 | $ | 86 | ||||||||
|
Prior service cost (credit) |
(7 | ) | (28 | ) | (11 | ) | (32 | ) | ||||||||
|
Transition obligation |
- | 2 | - | 5 | ||||||||||||
|
Amounts (pretax) recognized in accumulated OCI consist of: |
||||||||||||||||
|
Net actuarial loss |
79 | 43 | 24 | 13 | ||||||||||||
|
Prior service cost (credit) |
(15 | ) | (7 | ) | 4 | (10 | ) | |||||||||
|
Total |
$ | 791 | $ | 187 | $ | 524 | $ | 62 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Not applicable. |
| (c) | In 2011, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 430 labor union-represented employees from a traditional, final pay formula to a cash balance formula. |
| (d) | In 2010, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 700 management employees from a traditional, final pay formula to a cash balance formula. |
The following table presents the assumptions used to determine our benefit obligations at December 31, 2011, and 2010:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Discount rate at measurement date |
4.50 | % | 5.25 | % | 4.50 | % | 5.25 | % | ||||||||
|
Increase in future compensation |
3.50 | 3.50 | 3.50 | 3.50 | ||||||||||||
|
Medical cost trend rate (initial) |
- | - | 5.50 | 6.00 | ||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | 5.00 | 5.00 | ||||||||||||
|
Years to ultimate rate |
- | - | 10 year | 2 years | ||||||||||||
Ameren determines discount rate assumptions by using an interest rate yield curve pursuant to authoritative accounting guidance on the determination of discount rates used for defined benefit plan obligations. The yield curve is based on the yields of more than 500 high-quality corporate bonds with maturities between zero and 30 years. A theoretical spot-rate curve constructed from this yield curve is then used as a guide to develop a discount rate matching the plans' payout structure.
Funding
Pension benefits are based on the employees' years of service and compensation. Ameren's pension plan is funded in compliance with income tax regulations and federal funding or regulatory requirements. As a result, Ameren expects to fund its pension plan at a level equal to the greater of the pension expense or the legally required minimum contribution. Considering Ameren's assumptions at December 31, 2011, its investment performance in 2011, and its pension funding policy, Ameren expects to make annual contributions of $90 million to $150 million in each of the next five years, with aggregate estimated contributions of $580 million. We expect Ameren Missouri's, Ameren Illinois' and Genco's portion of the future funding requirements to be 51%, 33%, and 12%, respectively. These amounts are estimates. The estimates may change based on actual investment performance, changes in interest rates, changes in our assumptions, any pertinent changes in government regulations, and any voluntary contributions. Our funding policy for postretirement benefits is primarily to fund the Voluntary Employee Beneficiary Association (VEBA) trusts to match the annual postretirement expense.
The following table presents the cash contributions made to our defined benefit retirement plan and to our postretirement plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 103 | $ | 81 | $ | 99 | $ | 129 | $ | 36 | $ | 49 | ||||||||||||
|
AMO |
43 | 36 | 42 | 9 | 11 | 13 | ||||||||||||||||||
|
AIC |
28 | 23 | 25 | 118 | 20 | 28 | ||||||||||||||||||
|
Genco |
12 | 4 | 10 | - | - | - | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Investment Strategy and Policies
Ameren manages plan assets in accordance with the "prudent investor" guidelines contained in ERISA. The investment committee, to the extent authority is delegated to it by the finance committee of Ameren's board of directors, implements investment strategy and asset allocation guidelines for the plan assets. The investment committee includes members of senior management. The investment committee's goals are twofold: first, to ensure that sufficient funds are available to provide the benefits at the time they are payable, and second, to maximize total return on plan assets and minimize expense volatility consistent with its tolerance for risk. Ameren delegates investment management to specialists in each asset class. As appropriate, Ameren provides the investment manager with guidelines that specify allowable and prohibited investment types. The investment committee regularly monitors manager performance and compliance with investment guidelines.
The expected return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Projected rates of return for each asset class were estimated after an analysis of historical experience, future expectations, and the volatility of the various asset classes. After considering the target asset allocation for each asset class, we adjusted the overall expected rate of return for the portfolio for historical and expected experience of active portfolio management results compared with benchmark returns and for the effect of expenses paid from plan assets. Ameren will utilize an expected return on plan assets for its pension plan assets and postretirement plan assets of 7.75% and 7.50%, respectively, in 2012. No plan assets are expected to be returned to Ameren during 2012.
Ameren's investment committee strives to assemble a portfolio of diversified assets that does not create a significant concentration of risks. The investment committee develops asset allocation guidelines between asset classes, and it creates diversification through investments in assets that differ by type (equity, debt, real estate, private equity), duration, market capitalization, country, style (growth or value) and industry, among other factors. The diversification of assets is displayed in the target allocation table below. The investment committee also routinely rebalances the plan assets to adhere to the diversification goals. The investment committee's strategy reduces the concentration of investment risk; however, Ameren is still subject to overall market risk. The following table presents our target allocations for 2012 and our pension and postretirement plans' asset categories as of December 31, 2011, and 2010.
| Percentage of Plan Assets at December 31, | ||||||||||||
|
Asset Category |
Target Allocation 2012 |
2011 | 2010 | |||||||||
|
Pension Plan: |
||||||||||||
|
Cash and cash equivalents |
0 - 5 | % | 2 | % | 1 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
29 - 39 | 33 | 31 | |||||||||
|
U.S. small and mid-capitalization |
2 - 12 | 7 | 11 | |||||||||
|
International and emerging markets |
9 - 19 | 11 | 15 | |||||||||
|
Total equity |
50 - 60 | 51 | 57 | |||||||||
|
Debt securities |
35 - 45 | 42 | 37 | |||||||||
|
Real estate |
0 - 9 | 4 | 4 | |||||||||
|
Private equity |
0 -4 | 1 | 1 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
|
Postretirement Plans: |
||||||||||||
|
Cash and cash equivalents |
0 - 10 | % | 4 | % | 4 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
33 - 43 | 38 | 39 | |||||||||
|
U.S. small and mid-capitalization |
3 - 13 | 8 | 10 | |||||||||
|
International |
10 - 20 | 13 | 14 | |||||||||
|
Total equity |
55 - 65 | 59 | 63 | |||||||||
|
Debt securities |
30 - 40 | 37 | 33 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
In general, the U.S. large capitalization equity investments are passively managed or indexed, whereas the international, emerging markets, U.S. small capitalization, and U.S. mid-capitalization equity investments are actively managed by investment managers. Debt securities include a broad range of fixed income vehicles. Debt security investments in high-yield securities, emerging market securities, and non-U.S. dollar-denominated securities are owned by the plans, but in limited quantities to reduce risk. Most of the debt security investments are under active management by investment managers. Real estate investments include private real estate vehicles; however, Ameren does not, by policy, hold direct investments in real estate property. Ameren's investment in private equity funds consists of 10 different limited partnerships, with invested capital ranging from $0.1 million to $7 million each, which invest primarily in a diversified number of small U.S.-based companies. No further commitments may be made to private equity investments without approval by the finance committee of the board of directors. Additionally, Ameren's investment committee allows investment managers to use derivatives, such as index futures, exchange traded funds, foreign exchange futures, and options, in certain situations, to increase or to reduce market exposure in an efficient and timely manner.
Fair Value Measurements of Plan Assets
Investments in the pension and postretirement benefit plans were stated at fair value as of December 31, 2011. The fair value of an asset is the amount that would be received upon sale in an orderly transaction between market participants at the measurement date. Cash and cash equivalents have initial maturities of three months or less and are recorded at cost plus accrued interest. The carrying amounts of cash and cash equivalents approximate fair value because of the short-term nature of these instruments. Investments traded in active markets on national or international securities exchanges are valued at closing prices on the last business day on or before the measurement date. Securities traded in over-the-counter markets are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Derivative contracts are valued at fair value, as determined by the investment managers (or independent third parties on behalf of the investment managers), who use proprietary models and take into consideration exchange quotations on underlying instruments, dealer quotations, and other market information. The fair value of real estate is based on annual appraisal reports prepared by an independent real estate appraiser.
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 31 | $ | - | $ | 31 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
72 | 922 | - | 994 | ||||||||||||
|
U.S. small and mid-capitalization |
202 | 11 | - | 213 | ||||||||||||
|
International and emerging markets |
115 | 213 | - | 328 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 720 | - | 720 | ||||||||||||
|
Municipal bonds |
- | 176 | - | 176 | ||||||||||||
|
U.S. treasury and agency securities |
- | 230 | - | 230 | ||||||||||||
|
Other |
- | 121 | - | 121 | ||||||||||||
|
Real estate |
- | - | 108 | 108 | ||||||||||||
|
Private equity |
- | - | 23 | 23 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 389 | $ | 2,424 | $ | 131 | $ | 2,944 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(91 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
23 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,876 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 20 | $ | - | $ | 20 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
70 | 812 | - | 882 | ||||||||||||
|
U.S. small and mid-capitalization |
299 | 10 | - | 309 | ||||||||||||
|
International and emerging markets |
129 | 284 | - | 413 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 646 | - | 646 | ||||||||||||
|
Municipal bonds |
- | 129 | - | 129 | ||||||||||||
|
U.S. treasury and agency securities |
- | 154 | - | 154 | ||||||||||||
|
Other |
- | 100 | - | 100 | ||||||||||||
|
Real estate |
- | - | 98 | 98 | ||||||||||||
|
Private equity |
- | - | 28 | 28 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 498 | $ | 2,155 | $ | 126 | $ | 2,779 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(85 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
28 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,722 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table summarizes the changes in the fair value of the pension plan assets classified as Level 3 in the fair value hierarchy for each of the years ended December 31, 2011, and 2010:
|
Beginning Balance at January 1, |
Actual Return on Plan Assets Related to Assets Still Held at the Reporting Date |
Actual Return on Plan Assets Related to Assets Sold During the Period |
Purchases, Sales, and Settlements, net |
Net of Level 3 |
Ending Balance at December 31, |
|||||||||||||||||||
|
2011: |
||||||||||||||||||||||||
|
Real estate |
$ | 98 | $ | 10 | $ | - | $ | - | $ | - | $ | 108 | ||||||||||||
|
Private equity |
28 | (10 | ) | 11 | (6 | ) | - | 23 | ||||||||||||||||
|
2010: |
||||||||||||||||||||||||
|
Other debt securities |
$ | 1 | $ | - | $ | - | $ | (1 | ) | $ | - | $ | - | |||||||||||
|
Real estate |
90 | 7 | - | 1 | - | 98 | ||||||||||||||||||
|
Private equity |
33 | (5 | ) | 7 | (7 | ) | - | 28 | ||||||||||||||||
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | 1 | $ | 66 | $ | - | $ | 67 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
235 | 78 | - | 313 | ||||||||||||
|
U.S. small and mid-capitalization |
57 | - | - | 57 | ||||||||||||
|
International |
44 | 56 | - | 100 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 61 | - | 61 | ||||||||||||
|
Municipal bonds |
- | 86 | - | 86 | ||||||||||||
|
U.S. treasury and agency securities |
- | 82 | - | 82 | ||||||||||||
|
Asset-backed securities |
- | 23 | - | 23 | ||||||||||||
|
Other |
- | 49 | - | 49 | ||||||||||||
|
Total |
$ | 337 | $ | 501 | $ | - | $ | 838 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
91 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(33 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 896 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 35 | $ | - | $ | 35 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
215 | 72 | - | 287 | ||||||||||||
|
U.S. small and mid-capitalization |
66 | - | - | 66 | ||||||||||||
|
International |
43 | 51 | - | 94 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 59 | - | 59 | ||||||||||||
|
Municipal bonds |
- | 58 | - | 58 | ||||||||||||
|
U.S. treasury and agency securities |
- | 59 | - | 59 | ||||||||||||
|
Asset-backed securities |
- | 31 | - | 31 | ||||||||||||
|
Other |
- | 29 | - | 29 | ||||||||||||
|
Total |
$ | 324 | $ | 394 | $ | - | $ | 718 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
85 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(6 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 797 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
Net Periodic Benefit Cost
The following table presents the components of the net periodic benefit cost of our pension and postretirement benefit plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
2011: |
||||||||
|
Service cost |
$ | 75 | $ | 22 | ||||
|
Interest cost |
180 | 58 | ||||||
|
Expected return on plan assets |
(216 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
(1 | ) | (8 | ) | ||||
|
Actuarial loss |
42 | 5 | ||||||
|
Net periodic benefit cost |
$ | 80 | $ | 25 | ||||
|
2010: |
||||||||
|
Service cost |
$ | 68 | $ | 20 | ||||
|
Interest cost |
185 | 62 | ||||||
|
Expected return on plan assets |
(212 | ) | (56 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
6 | (8 | ) | |||||
|
Actuarial loss |
18 | 1 | ||||||
|
Net periodic benefit cost |
$ | 65 | $ | 21 | ||||
|
2009: |
||||||||
|
Service cost |
$ | 68 | $ | 19 | ||||
|
Interest cost |
186 | 66 | ||||||
|
Expected return on plan assets |
(206 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
9 | (8 | ) | |||||
|
Actuarial loss |
24 | 9 | ||||||
|
Net periodic benefit cost |
$ | 81 | $ | 34 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The current year expected return on plan assets is determined primarily by adjusting the prior-year market-related asset value for current year contributions, disbursements, and expected return, plus 25% of the actual return in excess of (or less than) expected return for the four prior years.
The estimated amounts that will be amortized from regulatory assets and accumulated OCI into net periodic benefit cost in 2012 are as follows:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
Regulatory assets: |
||||||||
|
Transition obligation |
$ | - | $ | 2 | ||||
|
Prior service cost (credit) |
(1 | ) | (4 | ) | ||||
|
Net actuarial loss |
87 | 23 | ||||||
|
Accumulated OCI: |
||||||||
|
Transition obligation |
- | - | ||||||
|
Prior service cost (credit) |
(1 | ) | (1 | ) | ||||
|
Net actuarial loss |
6 | 3 | ||||||
|
Total |
$ | 91 | $ | 23 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Prior service cost is amortized on a straight-line basis over the average future service of active participants benefiting under the plan amendment. The net actuarial loss subject to amortization is amortized on a straight-line basis over 10 years.
Ameren Missouri, Ameren Illinois and Genco are responsible for their share of the pension and postretirement benefit costs. The following table presents the pension costs and the postretirement benefit costs incurred for the years ended December 31, 2011, 2010, and 2009:
| Pension Costs | Postretirement Costs | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 80 | $ | 65 | $ | 81 | $ | 25 | $ | 21 | $ | 34 | ||||||||||||
|
Ameren Missouri |
51 | 42 | 50 | 11 | 11 | 15 | ||||||||||||||||||
|
Ameren Illinois |
16 | 10 | 14 | 11 | 7 | 16 | ||||||||||||||||||
|
Genco |
8 | 9 | 11 | 3 | 2 | 3 | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The expected pension and postretirement benefit payments from qualified trust and company funds and the federal subsidy for postretirement benefits related to prescription drug benefits, which reflect expected future service, as of December 31, 2011, are as follows:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||
| Paid from Qualified Trust |
Paid from Company Funds |
Paid from Qualified Trust |
Paid from Company Funds |
Federal Subsidy |
||||||||||||||||
|
2012 |
223 | 3 | 68 | 3 | 5 | |||||||||||||||
|
2013 |
225 | 3 | 71 | 3 | 5 | |||||||||||||||
|
2014 |
230 | 3 | 74 | 3 | 5 | |||||||||||||||
|
2015 |
231 | 3 | 77 | 3 | 6 | |||||||||||||||
|
2016 |
232 | 3 | 80 | 3 | 6 | |||||||||||||||
|
2017 - 2021 |
1,167 | 12 | 443 | 14 | 32 | |||||||||||||||
The following table presents the assumptions used to determine net periodic benefit cost for our pension and postretirement benefit plans for the years ended December 31, 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Discount rate at measurement date |
5.25 | % | 5.75 | % | 5.75 | % | 5.25 | % | 5.75 | % | 5.75 | % | ||||||||||||
|
Expected return on plan assets |
8.00 | 8.00 | 8.00 | 7.75 | 8.00 | 8.00 | ||||||||||||||||||
|
Increase in future compensation |
3.50 | 3.50 | 4.00 | 3.50 | 3.50 | 4.00 | ||||||||||||||||||
|
Medical cost trend rate (initial) |
- | - | - | 6.00 | 6.50 | 7.00 | ||||||||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | - | 5.00 | 5.00 | 5.00 | ||||||||||||||||||
|
Years to ultimate rate |
- | - | - | 2 years | 3 years | 4 years | ||||||||||||||||||
The table below reflects the sensitivity of Ameren's plans to potential changes in key assumptions:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| Service Cost and Interest Cost |
Projected Benefit Obligation |
Service Cost and Interest Cost |
Postretirement Benefit Obligation |
|||||||||||||
|
0.25% decrease in discount rate |
$ | (2 | ) | $ | 110 | $ | - | $ | 38 | |||||||
|
0.25% increase in salary scale |
2 | 14 | - | - | ||||||||||||
|
1.00% increase in annual medical trend |
- | - | 3 | 42 | ||||||||||||
|
1.00% decrease in annual medical trend |
- | - | (3 | ) | (41 | ) | ||||||||||
Other
Ameren sponsors a 401(k) plan for eligible employees. The Ameren plan covered all eligible employees of the Ameren Companies at December 31, 2011. The plans allowed employees to contribute a portion of their compensation in accordance with specific guidelines. Ameren matched a percentage of the employee contributions up to certain limits. The following table presents the portion of the 401(k) matching contribution to the Ameren plan attributable to each of the Ameren Companies for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 28 | $ | 27 | $ | 24 | ||||||
|
Ameren Missouri |
16 | 16 | 14 | |||||||||
|
Ameren Illinois |
8 | 8 | 7 | |||||||||
|
Genco |
2 | 1 | 2 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
NOTE 11 – RETIREMENT BENEFITS
The primary objective of the Ameren pension plans and postretirement benefit plans is to provide eligible employees with pension and postretirement health care and life insurance benefits. Ameren offers defined benefit pension and postretirement benefit plans covering substantially all of its employees. Ameren uses a measurement date of December 31 for its pension and postretirement benefit plans. Ameren Missouri, Ameren Illinois and Genco, excluding EEI, each participate in Ameren's single-employer pension and other postretirement plans. Ameren's qualified pension plan is the Ameren Retirement Plan. Ameren also has an unfunded non-qualified pension plan, the Ameren Supplemental Retirement Plan, which is available for certain management employees and retirees to provide a supplemental benefit when their qualified pension plan benefits are reduced to comply with Internal Revenue Code limitations. Ameren's other postretirement plans are the Ameren Retiree Medical Plan and the Ameren Group Life Insurance Plan. Separately, EEI employees and retirees participate in EEI's single-employer pension and other postretirement plans. EEI's pension plan is the Revised Retirement Plan for Employees of Electric Energy, Inc. EEI's other postretirement plans are the Group Insurance Plan for Management Employees of Electric Energy, Inc. and the Group Insurance Plan for Bargaining Unit Employees of Electric Energy, Inc. Nonaffiliated Ameren companies do not participate in the Ameren Retirement Plan, the Ameren Supplemental Retirement Plan, the Ameren Retiree Medical Plan, and the Ameren Group Life Insurance Plan. Ameren and Genco each consolidate EEI, and therefore, EEI's plans are reflected in Ameren's and Genco's pension and postretirement balances and disclosures.
The following table presents the benefit liability recorded on the balance sheets of each of the Ameren Companies as of December 31, 2011:
|
Ameren(a) |
$ | 1,350 | ||
|
Ameren Missouri |
494 | |||
|
Ameren Illinois |
496 | |||
|
Genco |
141 |
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Ameren recognizes the underfunded status of its pension and postretirement plans as a liability on its balance sheet, with offsetting entries to accumulated OCI and regulatory assets, in accordance with authoritative accounting guidance. The following table presents the funded status of our pension and postretirement benefit plans as of December 31, 2011, and 2010. It also provides the amounts included in regulatory assets and accumulated OCI at December 31, 2011, and 2010, that have not been recognized in net periodic benefit costs.
| 2011 | 2010 | |||||||||||||||
| Pension Benefits(a) |
Postretirement Benefits(a) |
Pension Benefits(a) |
Postretirement Benefits(a) |
|||||||||||||
|
Accumulated benefit obligation at end of year |
$ | 3,645 | $ | (b | ) | $ | 3,246 | $ | (b | ) | ||||||
|
Change in benefit obligation: |
||||||||||||||||
|
Net benefit obligation at beginning of year |
$ | 3,451 | $ | 1,120 | $ | 3,255 | $ | 1,143 | ||||||||
|
Service cost |
75 | 22 | 68 | 20 | ||||||||||||
|
Interest cost |
180 | 58 | 185 | 62 | ||||||||||||
|
Plan amendments(c)(d) |
(16 | ) | - | (40 | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Actuarial (gain) loss |
348 | 96 | 165 | (53 | ) | |||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Net benefit obligation at end of year |
3,865 | 1,257 | 3,451 | 1,120 | ||||||||||||
|
Change in plan assets: |
||||||||||||||||
|
Fair value of plan assets at beginning of year |
2,722 | 797 | 2,495 | 732 | ||||||||||||
|
Actual return on plan assets |
224 | 9 | 328 | 81 | ||||||||||||
|
Employer contributions |
103 | 129 | 81 | 36 | ||||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Fair value of plan assets at end of year |
2,876 | 896 | 2,722 | 797 | ||||||||||||
|
Funded status – deficiency |
989 | 361 | 729 | 323 | ||||||||||||
|
Accrued benefit cost at December 31 |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in the balance sheet consist of: |
||||||||||||||||
|
Current liability |
$ | 3 | $ | 3 | $ | 4 | $ | 3 | ||||||||
|
Noncurrent liability |
986 | 358 | 725 | 320 | ||||||||||||
|
Total |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in regulatory assets consist of: |
||||||||||||||||
|
Net actuarial loss |
$ | 734 | $ | 177 | $ | 507 | $ | 86 | ||||||||
|
Prior service cost (credit) |
(7 | ) | (28 | ) | (11 | ) | (32 | ) | ||||||||
|
Transition obligation |
- | 2 | - | 5 | ||||||||||||
|
Amounts (pretax) recognized in accumulated OCI consist of: |
||||||||||||||||
|
Net actuarial loss |
79 | 43 | 24 | 13 | ||||||||||||
|
Prior service cost (credit) |
(15 | ) | (7 | ) | 4 | (10 | ) | |||||||||
|
Total |
$ | 791 | $ | 187 | $ | 524 | $ | 62 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Not applicable. |
| (c) | In 2011, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 430 labor union-represented employees from a traditional, final pay formula to a cash balance formula. |
| (d) | In 2010, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 700 management employees from a traditional, final pay formula to a cash balance formula. |
The following table presents the assumptions used to determine our benefit obligations at December 31, 2011, and 2010:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Discount rate at measurement date |
4.50 | % | 5.25 | % | 4.50 | % | 5.25 | % | ||||||||
|
Increase in future compensation |
3.50 | 3.50 | 3.50 | 3.50 | ||||||||||||
|
Medical cost trend rate (initial) |
- | - | 5.50 | 6.00 | ||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | 5.00 | 5.00 | ||||||||||||
|
Years to ultimate rate |
- | - | 10 year | 2 years | ||||||||||||
Ameren determines discount rate assumptions by using an interest rate yield curve pursuant to authoritative accounting guidance on the determination of discount rates used for defined benefit plan obligations. The yield curve is based on the yields of more than 500 high-quality corporate bonds with maturities between zero and 30 years. A theoretical spot-rate curve constructed from this yield curve is then used as a guide to develop a discount rate matching the plans' payout structure.
Funding
Pension benefits are based on the employees' years of service and compensation. Ameren's pension plan is funded in compliance with income tax regulations and federal funding or regulatory requirements. As a result, Ameren expects to fund its pension plan at a level equal to the greater of the pension expense or the legally required minimum contribution. Considering Ameren's assumptions at December 31, 2011, its investment performance in 2011, and its pension funding policy, Ameren expects to make annual contributions of $90 million to $150 million in each of the next five years, with aggregate estimated contributions of $580 million. We expect Ameren Missouri's, Ameren Illinois' and Genco's portion of the future funding requirements to be 51%, 33%, and 12%, respectively. These amounts are estimates. The estimates may change based on actual investment performance, changes in interest rates, changes in our assumptions, any pertinent changes in government regulations, and any voluntary contributions. Our funding policy for postretirement benefits is primarily to fund the Voluntary Employee Beneficiary Association (VEBA) trusts to match the annual postretirement expense.
The following table presents the cash contributions made to our defined benefit retirement plan and to our postretirement plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 103 | $ | 81 | $ | 99 | $ | 129 | $ | 36 | $ | 49 | ||||||||||||
|
AMO |
43 | 36 | 42 | 9 | 11 | 13 | ||||||||||||||||||
|
AIC |
28 | 23 | 25 | 118 | 20 | 28 | ||||||||||||||||||
|
Genco |
12 | 4 | 10 | - | - | - | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Investment Strategy and Policies
Ameren manages plan assets in accordance with the "prudent investor" guidelines contained in ERISA. The investment committee, to the extent authority is delegated to it by the finance committee of Ameren's board of directors, implements investment strategy and asset allocation guidelines for the plan assets. The investment committee includes members of senior management. The investment committee's goals are twofold: first, to ensure that sufficient funds are available to provide the benefits at the time they are payable, and second, to maximize total return on plan assets and minimize expense volatility consistent with its tolerance for risk. Ameren delegates investment management to specialists in each asset class. As appropriate, Ameren provides the investment manager with guidelines that specify allowable and prohibited investment types. The investment committee regularly monitors manager performance and compliance with investment guidelines.
The expected return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Projected rates of return for each asset class were estimated after an analysis of historical experience, future expectations, and the volatility of the various asset classes. After considering the target asset allocation for each asset class, we adjusted the overall expected rate of return for the portfolio for historical and expected experience of active portfolio management results compared with benchmark returns and for the effect of expenses paid from plan assets. Ameren will utilize an expected return on plan assets for its pension plan assets and postretirement plan assets of 7.75% and 7.50%, respectively, in 2012. No plan assets are expected to be returned to Ameren during 2012.
Ameren's investment committee strives to assemble a portfolio of diversified assets that does not create a significant concentration of risks. The investment committee develops asset allocation guidelines between asset classes, and it creates diversification through investments in assets that differ by type (equity, debt, real estate, private equity), duration, market capitalization, country, style (growth or value) and industry, among other factors. The diversification of assets is displayed in the target allocation table below. The investment committee also routinely rebalances the plan assets to adhere to the diversification goals. The investment committee's strategy reduces the concentration of investment risk; however, Ameren is still subject to overall market risk. The following table presents our target allocations for 2012 and our pension and postretirement plans' asset categories as of December 31, 2011, and 2010.
| Percentage of Plan Assets at December 31, | ||||||||||||
|
Asset Category |
Target Allocation 2012 |
2011 | 2010 | |||||||||
|
Pension Plan: |
||||||||||||
|
Cash and cash equivalents |
0 - 5 | % | 2 | % | 1 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
29 - 39 | 33 | 31 | |||||||||
|
U.S. small and mid-capitalization |
2 - 12 | 7 | 11 | |||||||||
|
International and emerging markets |
9 - 19 | 11 | 15 | |||||||||
|
Total equity |
50 - 60 | 51 | 57 | |||||||||
|
Debt securities |
35 - 45 | 42 | 37 | |||||||||
|
Real estate |
0 - 9 | 4 | 4 | |||||||||
|
Private equity |
0 -4 | 1 | 1 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
|
Postretirement Plans: |
||||||||||||
|
Cash and cash equivalents |
0 - 10 | % | 4 | % | 4 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
33 - 43 | 38 | 39 | |||||||||
|
U.S. small and mid-capitalization |
3 - 13 | 8 | 10 | |||||||||
|
International |
10 - 20 | 13 | 14 | |||||||||
|
Total equity |
55 - 65 | 59 | 63 | |||||||||
|
Debt securities |
30 - 40 | 37 | 33 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
In general, the U.S. large capitalization equity investments are passively managed or indexed, whereas the international, emerging markets, U.S. small capitalization, and U.S. mid-capitalization equity investments are actively managed by investment managers. Debt securities include a broad range of fixed income vehicles. Debt security investments in high-yield securities, emerging market securities, and non-U.S. dollar-denominated securities are owned by the plans, but in limited quantities to reduce risk. Most of the debt security investments are under active management by investment managers. Real estate investments include private real estate vehicles; however, Ameren does not, by policy, hold direct investments in real estate property. Ameren's investment in private equity funds consists of 10 different limited partnerships, with invested capital ranging from $0.1 million to $7 million each, which invest primarily in a diversified number of small U.S.-based companies. No further commitments may be made to private equity investments without approval by the finance committee of the board of directors. Additionally, Ameren's investment committee allows investment managers to use derivatives, such as index futures, exchange traded funds, foreign exchange futures, and options, in certain situations, to increase or to reduce market exposure in an efficient and timely manner.
Fair Value Measurements of Plan Assets
Investments in the pension and postretirement benefit plans were stated at fair value as of December 31, 2011. The fair value of an asset is the amount that would be received upon sale in an orderly transaction between market participants at the measurement date. Cash and cash equivalents have initial maturities of three months or less and are recorded at cost plus accrued interest. The carrying amounts of cash and cash equivalents approximate fair value because of the short-term nature of these instruments. Investments traded in active markets on national or international securities exchanges are valued at closing prices on the last business day on or before the measurement date. Securities traded in over-the-counter markets are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Derivative contracts are valued at fair value, as determined by the investment managers (or independent third parties on behalf of the investment managers), who use proprietary models and take into consideration exchange quotations on underlying instruments, dealer quotations, and other market information. The fair value of real estate is based on annual appraisal reports prepared by an independent real estate appraiser.
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 31 | $ | - | $ | 31 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
72 | 922 | - | 994 | ||||||||||||
|
U.S. small and mid-capitalization |
202 | 11 | - | 213 | ||||||||||||
|
International and emerging markets |
115 | 213 | - | 328 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 720 | - | 720 | ||||||||||||
|
Municipal bonds |
- | 176 | - | 176 | ||||||||||||
|
U.S. treasury and agency securities |
- | 230 | - | 230 | ||||||||||||
|
Other |
- | 121 | - | 121 | ||||||||||||
|
Real estate |
- | - | 108 | 108 | ||||||||||||
|
Private equity |
- | - | 23 | 23 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 389 | $ | 2,424 | $ | 131 | $ | 2,944 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(91 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
23 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,876 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 20 | $ | - | $ | 20 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
70 | 812 | - | 882 | ||||||||||||
|
U.S. small and mid-capitalization |
299 | 10 | - | 309 | ||||||||||||
|
International and emerging markets |
129 | 284 | - | 413 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 646 | - | 646 | ||||||||||||
|
Municipal bonds |
- | 129 | - | 129 | ||||||||||||
|
U.S. treasury and agency securities |
- | 154 | - | 154 | ||||||||||||
|
Other |
- | 100 | - | 100 | ||||||||||||
|
Real estate |
- | - | 98 | 98 | ||||||||||||
|
Private equity |
- | - | 28 | 28 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 498 | $ | 2,155 | $ | 126 | $ | 2,779 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(85 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
28 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,722 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table summarizes the changes in the fair value of the pension plan assets classified as Level 3 in the fair value hierarchy for each of the years ended December 31, 2011, and 2010:
|
Beginning Balance at January 1, |
Actual Return on Plan Assets Related to Assets Still Held at the Reporting Date |
Actual Return on Plan Assets Related to Assets Sold During the Period |
Purchases, Sales, and Settlements, net |
Net of Level 3 |
Ending Balance at December 31, |
|||||||||||||||||||
|
2011: |
||||||||||||||||||||||||
|
Real estate |
$ | 98 | $ | 10 | $ | - | $ | - | $ | - | $ | 108 | ||||||||||||
|
Private equity |
28 | (10 | ) | 11 | (6 | ) | - | 23 | ||||||||||||||||
|
2010: |
||||||||||||||||||||||||
|
Other debt securities |
$ | 1 | $ | - | $ | - | $ | (1 | ) | $ | - | $ | - | |||||||||||
|
Real estate |
90 | 7 | - | 1 | - | 98 | ||||||||||||||||||
|
Private equity |
33 | (5 | ) | 7 | (7 | ) | - | 28 | ||||||||||||||||
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | 1 | $ | 66 | $ | - | $ | 67 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
235 | 78 | - | 313 | ||||||||||||
|
U.S. small and mid-capitalization |
57 | - | - | 57 | ||||||||||||
|
International |
44 | 56 | - | 100 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 61 | - | 61 | ||||||||||||
|
Municipal bonds |
- | 86 | - | 86 | ||||||||||||
|
U.S. treasury and agency securities |
- | 82 | - | 82 | ||||||||||||
|
Asset-backed securities |
- | 23 | - | 23 | ||||||||||||
|
Other |
- | 49 | - | 49 | ||||||||||||
|
Total |
$ | 337 | $ | 501 | $ | - | $ | 838 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
91 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(33 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 896 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 35 | $ | - | $ | 35 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
215 | 72 | - | 287 | ||||||||||||
|
U.S. small and mid-capitalization |
66 | - | - | 66 | ||||||||||||
|
International |
43 | 51 | - | 94 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 59 | - | 59 | ||||||||||||
|
Municipal bonds |
- | 58 | - | 58 | ||||||||||||
|
U.S. treasury and agency securities |
- | 59 | - | 59 | ||||||||||||
|
Asset-backed securities |
- | 31 | - | 31 | ||||||||||||
|
Other |
- | 29 | - | 29 | ||||||||||||
|
Total |
$ | 324 | $ | 394 | $ | - | $ | 718 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
85 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(6 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 797 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
Net Periodic Benefit Cost
The following table presents the components of the net periodic benefit cost of our pension and postretirement benefit plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
2011: |
||||||||
|
Service cost |
$ | 75 | $ | 22 | ||||
|
Interest cost |
180 | 58 | ||||||
|
Expected return on plan assets |
(216 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
(1 | ) | (8 | ) | ||||
|
Actuarial loss |
42 | 5 | ||||||
|
Net periodic benefit cost |
$ | 80 | $ | 25 | ||||
|
2010: |
||||||||
|
Service cost |
$ | 68 | $ | 20 | ||||
|
Interest cost |
185 | 62 | ||||||
|
Expected return on plan assets |
(212 | ) | (56 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
6 | (8 | ) | |||||
|
Actuarial loss |
18 | 1 | ||||||
|
Net periodic benefit cost |
$ | 65 | $ | 21 | ||||
|
2009: |
||||||||
|
Service cost |
$ | 68 | $ | 19 | ||||
|
Interest cost |
186 | 66 | ||||||
|
Expected return on plan assets |
(206 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
9 | (8 | ) | |||||
|
Actuarial loss |
24 | 9 | ||||||
|
Net periodic benefit cost |
$ | 81 | $ | 34 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The current year expected return on plan assets is determined primarily by adjusting the prior-year market-related asset value for current year contributions, disbursements, and expected return, plus 25% of the actual return in excess of (or less than) expected return for the four prior years.
The estimated amounts that will be amortized from regulatory assets and accumulated OCI into net periodic benefit cost in 2012 are as follows:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
Regulatory assets: |
||||||||
|
Transition obligation |
$ | - | $ | 2 | ||||
|
Prior service cost (credit) |
(1 | ) | (4 | ) | ||||
|
Net actuarial loss |
87 | 23 | ||||||
|
Accumulated OCI: |
||||||||
|
Transition obligation |
- | - | ||||||
|
Prior service cost (credit) |
(1 | ) | (1 | ) | ||||
|
Net actuarial loss |
6 | 3 | ||||||
|
Total |
$ | 91 | $ | 23 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Prior service cost is amortized on a straight-line basis over the average future service of active participants benefiting under the plan amendment. The net actuarial loss subject to amortization is amortized on a straight-line basis over 10 years.
Ameren Missouri, Ameren Illinois and Genco are responsible for their share of the pension and postretirement benefit costs. The following table presents the pension costs and the postretirement benefit costs incurred for the years ended December 31, 2011, 2010, and 2009:
| Pension Costs | Postretirement Costs | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 80 | $ | 65 | $ | 81 | $ | 25 | $ | 21 | $ | 34 | ||||||||||||
|
Ameren Missouri |
51 | 42 | 50 | 11 | 11 | 15 | ||||||||||||||||||
|
Ameren Illinois |
16 | 10 | 14 | 11 | 7 | 16 | ||||||||||||||||||
|
Genco |
8 | 9 | 11 | 3 | 2 | 3 | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The expected pension and postretirement benefit payments from qualified trust and company funds and the federal subsidy for postretirement benefits related to prescription drug benefits, which reflect expected future service, as of December 31, 2011, are as follows:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||
| Paid from Qualified Trust |
Paid from Company Funds |
Paid from Qualified Trust |
Paid from Company Funds |
Federal Subsidy |
||||||||||||||||
|
2012 |
223 | 3 | 68 | 3 | 5 | |||||||||||||||
|
2013 |
225 | 3 | 71 | 3 | 5 | |||||||||||||||
|
2014 |
230 | 3 | 74 | 3 | 5 | |||||||||||||||
|
2015 |
231 | 3 | 77 | 3 | 6 | |||||||||||||||
|
2016 |
232 | 3 | 80 | 3 | 6 | |||||||||||||||
|
2017 - 2021 |
1,167 | 12 | 443 | 14 | 32 | |||||||||||||||
The following table presents the assumptions used to determine net periodic benefit cost for our pension and postretirement benefit plans for the years ended December 31, 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Discount rate at measurement date |
5.25 | % | 5.75 | % | 5.75 | % | 5.25 | % | 5.75 | % | 5.75 | % | ||||||||||||
|
Expected return on plan assets |
8.00 | 8.00 | 8.00 | 7.75 | 8.00 | 8.00 | ||||||||||||||||||
|
Increase in future compensation |
3.50 | 3.50 | 4.00 | 3.50 | 3.50 | 4.00 | ||||||||||||||||||
|
Medical cost trend rate (initial) |
- | - | - | 6.00 | 6.50 | 7.00 | ||||||||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | - | 5.00 | 5.00 | 5.00 | ||||||||||||||||||
|
Years to ultimate rate |
- | - | - | 2 years | 3 years | 4 years | ||||||||||||||||||
The table below reflects the sensitivity of Ameren's plans to potential changes in key assumptions:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| Service Cost and Interest Cost |
Projected Benefit Obligation |
Service Cost and Interest Cost |
Postretirement Benefit Obligation |
|||||||||||||
|
0.25% decrease in discount rate |
$ | (2 | ) | $ | 110 | $ | - | $ | 38 | |||||||
|
0.25% increase in salary scale |
2 | 14 | - | - | ||||||||||||
|
1.00% increase in annual medical trend |
- | - | 3 | 42 | ||||||||||||
|
1.00% decrease in annual medical trend |
- | - | (3 | ) | (41 | ) | ||||||||||
Other
Ameren sponsors a 401(k) plan for eligible employees. The Ameren plan covered all eligible employees of the Ameren Companies at December 31, 2011. The plans allowed employees to contribute a portion of their compensation in accordance with specific guidelines. Ameren matched a percentage of the employee contributions up to certain limits. The following table presents the portion of the 401(k) matching contribution to the Ameren plan attributable to each of the Ameren Companies for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 28 | $ | 27 | $ | 24 | ||||||
|
Ameren Missouri |
16 | 16 | 14 | |||||||||
|
Ameren Illinois |
8 | 8 | 7 | |||||||||
|
Genco |
2 | 1 | 2 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
NOTE 11 – RETIREMENT BENEFITS
The primary objective of the Ameren pension plans and postretirement benefit plans is to provide eligible employees with pension and postretirement health care and life insurance benefits. Ameren offers defined benefit pension and postretirement benefit plans covering substantially all of its employees. Ameren uses a measurement date of December 31 for its pension and postretirement benefit plans. Ameren Missouri, Ameren Illinois and Genco, excluding EEI, each participate in Ameren's single-employer pension and other postretirement plans. Ameren's qualified pension plan is the Ameren Retirement Plan. Ameren also has an unfunded non-qualified pension plan, the Ameren Supplemental Retirement Plan, which is available for certain management employees and retirees to provide a supplemental benefit when their qualified pension plan benefits are reduced to comply with Internal Revenue Code limitations. Ameren's other postretirement plans are the Ameren Retiree Medical Plan and the Ameren Group Life Insurance Plan. Separately, EEI employees and retirees participate in EEI's single-employer pension and other postretirement plans. EEI's pension plan is the Revised Retirement Plan for Employees of Electric Energy, Inc. EEI's other postretirement plans are the Group Insurance Plan for Management Employees of Electric Energy, Inc. and the Group Insurance Plan for Bargaining Unit Employees of Electric Energy, Inc. Nonaffiliated Ameren companies do not participate in the Ameren Retirement Plan, the Ameren Supplemental Retirement Plan, the Ameren Retiree Medical Plan, and the Ameren Group Life Insurance Plan. Ameren and Genco each consolidate EEI, and therefore, EEI's plans are reflected in Ameren's and Genco's pension and postretirement balances and disclosures.
The following table presents the benefit liability recorded on the balance sheets of each of the Ameren Companies as of December 31, 2011:
|
Ameren(a) |
$ | 1,350 | ||
|
Ameren Missouri |
494 | |||
|
Ameren Illinois |
496 | |||
|
Genco |
141 |
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Ameren recognizes the underfunded status of its pension and postretirement plans as a liability on its balance sheet, with offsetting entries to accumulated OCI and regulatory assets, in accordance with authoritative accounting guidance. The following table presents the funded status of our pension and postretirement benefit plans as of December 31, 2011, and 2010. It also provides the amounts included in regulatory assets and accumulated OCI at December 31, 2011, and 2010, that have not been recognized in net periodic benefit costs.
| 2011 | 2010 | |||||||||||||||
| Pension Benefits(a) |
Postretirement Benefits(a) |
Pension Benefits(a) |
Postretirement Benefits(a) |
|||||||||||||
|
Accumulated benefit obligation at end of year |
$ | 3,645 | $ | (b | ) | $ | 3,246 | $ | (b | ) | ||||||
|
Change in benefit obligation: |
||||||||||||||||
|
Net benefit obligation at beginning of year |
$ | 3,451 | $ | 1,120 | $ | 3,255 | $ | 1,143 | ||||||||
|
Service cost |
75 | 22 | 68 | 20 | ||||||||||||
|
Interest cost |
180 | 58 | 185 | 62 | ||||||||||||
|
Plan amendments(c)(d) |
(16 | ) | - | (40 | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Actuarial (gain) loss |
348 | 96 | 165 | (53 | ) | |||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Net benefit obligation at end of year |
3,865 | 1,257 | 3,451 | 1,120 | ||||||||||||
|
Change in plan assets: |
||||||||||||||||
|
Fair value of plan assets at beginning of year |
2,722 | 797 | 2,495 | 732 | ||||||||||||
|
Actual return on plan assets |
224 | 9 | 328 | 81 | ||||||||||||
|
Employer contributions |
103 | 129 | 81 | 36 | ||||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Fair value of plan assets at end of year |
2,876 | 896 | 2,722 | 797 | ||||||||||||
|
Funded status – deficiency |
989 | 361 | 729 | 323 | ||||||||||||
|
Accrued benefit cost at December 31 |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in the balance sheet consist of: |
||||||||||||||||
|
Current liability |
$ | 3 | $ | 3 | $ | 4 | $ | 3 | ||||||||
|
Noncurrent liability |
986 | 358 | 725 | 320 | ||||||||||||
|
Total |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in regulatory assets consist of: |
||||||||||||||||
|
Net actuarial loss |
$ | 734 | $ | 177 | $ | 507 | $ | 86 | ||||||||
|
Prior service cost (credit) |
(7 | ) | (28 | ) | (11 | ) | (32 | ) | ||||||||
|
Transition obligation |
- | 2 | - | 5 | ||||||||||||
|
Amounts (pretax) recognized in accumulated OCI consist of: |
||||||||||||||||
|
Net actuarial loss |
79 | 43 | 24 | 13 | ||||||||||||
|
Prior service cost (credit) |
(15 | ) | (7 | ) | 4 | (10 | ) | |||||||||
|
Total |
$ | 791 | $ | 187 | $ | 524 | $ | 62 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Not applicable. |
| (c) | In 2011, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 430 labor union-represented employees from a traditional, final pay formula to a cash balance formula. |
| (d) | In 2010, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 700 management employees from a traditional, final pay formula to a cash balance formula. |
The following table presents the assumptions used to determine our benefit obligations at December 31, 2011, and 2010:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Discount rate at measurement date |
4.50 | % | 5.25 | % | 4.50 | % | 5.25 | % | ||||||||
|
Increase in future compensation |
3.50 | 3.50 | 3.50 | 3.50 | ||||||||||||
|
Medical cost trend rate (initial) |
- | - | 5.50 | 6.00 | ||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | 5.00 | 5.00 | ||||||||||||
|
Years to ultimate rate |
- | - | 10 year | 2 years | ||||||||||||
Ameren determines discount rate assumptions by using an interest rate yield curve pursuant to authoritative accounting guidance on the determination of discount rates used for defined benefit plan obligations. The yield curve is based on the yields of more than 500 high-quality corporate bonds with maturities between zero and 30 years. A theoretical spot-rate curve constructed from this yield curve is then used as a guide to develop a discount rate matching the plans' payout structure.
Funding
Pension benefits are based on the employees' years of service and compensation. Ameren's pension plan is funded in compliance with income tax regulations and federal funding or regulatory requirements. As a result, Ameren expects to fund its pension plan at a level equal to the greater of the pension expense or the legally required minimum contribution. Considering Ameren's assumptions at December 31, 2011, its investment performance in 2011, and its pension funding policy, Ameren expects to make annual contributions of $90 million to $150 million in each of the next five years, with aggregate estimated contributions of $580 million. We expect Ameren Missouri's, Ameren Illinois' and Genco's portion of the future funding requirements to be 51%, 33%, and 12%, respectively. These amounts are estimates. The estimates may change based on actual investment performance, changes in interest rates, changes in our assumptions, any pertinent changes in government regulations, and any voluntary contributions. Our funding policy for postretirement benefits is primarily to fund the Voluntary Employee Beneficiary Association (VEBA) trusts to match the annual postretirement expense.
The following table presents the cash contributions made to our defined benefit retirement plan and to our postretirement plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 103 | $ | 81 | $ | 99 | $ | 129 | $ | 36 | $ | 49 | ||||||||||||
|
AMO |
43 | 36 | 42 | 9 | 11 | 13 | ||||||||||||||||||
|
AIC |
28 | 23 | 25 | 118 | 20 | 28 | ||||||||||||||||||
|
Genco |
12 | 4 | 10 | - | - | - | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Investment Strategy and Policies
Ameren manages plan assets in accordance with the "prudent investor" guidelines contained in ERISA. The investment committee, to the extent authority is delegated to it by the finance committee of Ameren's board of directors, implements investment strategy and asset allocation guidelines for the plan assets. The investment committee includes members of senior management. The investment committee's goals are twofold: first, to ensure that sufficient funds are available to provide the benefits at the time they are payable, and second, to maximize total return on plan assets and minimize expense volatility consistent with its tolerance for risk. Ameren delegates investment management to specialists in each asset class. As appropriate, Ameren provides the investment manager with guidelines that specify allowable and prohibited investment types. The investment committee regularly monitors manager performance and compliance with investment guidelines.
The expected return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Projected rates of return for each asset class were estimated after an analysis of historical experience, future expectations, and the volatility of the various asset classes. After considering the target asset allocation for each asset class, we adjusted the overall expected rate of return for the portfolio for historical and expected experience of active portfolio management results compared with benchmark returns and for the effect of expenses paid from plan assets. Ameren will utilize an expected return on plan assets for its pension plan assets and postretirement plan assets of 7.75% and 7.50%, respectively, in 2012. No plan assets are expected to be returned to Ameren during 2012.
Ameren's investment committee strives to assemble a portfolio of diversified assets that does not create a significant concentration of risks. The investment committee develops asset allocation guidelines between asset classes, and it creates diversification through investments in assets that differ by type (equity, debt, real estate, private equity), duration, market capitalization, country, style (growth or value) and industry, among other factors. The diversification of assets is displayed in the target allocation table below. The investment committee also routinely rebalances the plan assets to adhere to the diversification goals. The investment committee's strategy reduces the concentration of investment risk; however, Ameren is still subject to overall market risk. The following table presents our target allocations for 2012 and our pension and postretirement plans' asset categories as of December 31, 2011, and 2010.
| Percentage of Plan Assets at December 31, | ||||||||||||
|
Asset Category |
Target Allocation 2012 |
2011 | 2010 | |||||||||
|
Pension Plan: |
||||||||||||
|
Cash and cash equivalents |
0 - 5 | % | 2 | % | 1 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
29 - 39 | 33 | 31 | |||||||||
|
U.S. small and mid-capitalization |
2 - 12 | 7 | 11 | |||||||||
|
International and emerging markets |
9 - 19 | 11 | 15 | |||||||||
|
Total equity |
50 - 60 | 51 | 57 | |||||||||
|
Debt securities |
35 - 45 | 42 | 37 | |||||||||
|
Real estate |
0 - 9 | 4 | 4 | |||||||||
|
Private equity |
0 -4 | 1 | 1 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
|
Postretirement Plans: |
||||||||||||
|
Cash and cash equivalents |
0 - 10 | % | 4 | % | 4 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
33 - 43 | 38 | 39 | |||||||||
|
U.S. small and mid-capitalization |
3 - 13 | 8 | 10 | |||||||||
|
International |
10 - 20 | 13 | 14 | |||||||||
|
Total equity |
55 - 65 | 59 | 63 | |||||||||
|
Debt securities |
30 - 40 | 37 | 33 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
In general, the U.S. large capitalization equity investments are passively managed or indexed, whereas the international, emerging markets, U.S. small capitalization, and U.S. mid-capitalization equity investments are actively managed by investment managers. Debt securities include a broad range of fixed income vehicles. Debt security investments in high-yield securities, emerging market securities, and non-U.S. dollar-denominated securities are owned by the plans, but in limited quantities to reduce risk. Most of the debt security investments are under active management by investment managers. Real estate investments include private real estate vehicles; however, Ameren does not, by policy, hold direct investments in real estate property. Ameren's investment in private equity funds consists of 10 different limited partnerships, with invested capital ranging from $0.1 million to $7 million each, which invest primarily in a diversified number of small U.S.-based companies. No further commitments may be made to private equity investments without approval by the finance committee of the board of directors. Additionally, Ameren's investment committee allows investment managers to use derivatives, such as index futures, exchange traded funds, foreign exchange futures, and options, in certain situations, to increase or to reduce market exposure in an efficient and timely manner.
Fair Value Measurements of Plan Assets
Investments in the pension and postretirement benefit plans were stated at fair value as of December 31, 2011. The fair value of an asset is the amount that would be received upon sale in an orderly transaction between market participants at the measurement date. Cash and cash equivalents have initial maturities of three months or less and are recorded at cost plus accrued interest. The carrying amounts of cash and cash equivalents approximate fair value because of the short-term nature of these instruments. Investments traded in active markets on national or international securities exchanges are valued at closing prices on the last business day on or before the measurement date. Securities traded in over-the-counter markets are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Derivative contracts are valued at fair value, as determined by the investment managers (or independent third parties on behalf of the investment managers), who use proprietary models and take into consideration exchange quotations on underlying instruments, dealer quotations, and other market information. The fair value of real estate is based on annual appraisal reports prepared by an independent real estate appraiser.
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 31 | $ | - | $ | 31 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
72 | 922 | - | 994 | ||||||||||||
|
U.S. small and mid-capitalization |
202 | 11 | - | 213 | ||||||||||||
|
International and emerging markets |
115 | 213 | - | 328 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 720 | - | 720 | ||||||||||||
|
Municipal bonds |
- | 176 | - | 176 | ||||||||||||
|
U.S. treasury and agency securities |
- | 230 | - | 230 | ||||||||||||
|
Other |
- | 121 | - | 121 | ||||||||||||
|
Real estate |
- | - | 108 | 108 | ||||||||||||
|
Private equity |
- | - | 23 | 23 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 389 | $ | 2,424 | $ | 131 | $ | 2,944 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(91 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
23 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,876 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 20 | $ | - | $ | 20 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
70 | 812 | - | 882 | ||||||||||||
|
U.S. small and mid-capitalization |
299 | 10 | - | 309 | ||||||||||||
|
International and emerging markets |
129 | 284 | - | 413 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 646 | - | 646 | ||||||||||||
|
Municipal bonds |
- | 129 | - | 129 | ||||||||||||
|
U.S. treasury and agency securities |
- | 154 | - | 154 | ||||||||||||
|
Other |
- | 100 | - | 100 | ||||||||||||
|
Real estate |
- | - | 98 | 98 | ||||||||||||
|
Private equity |
- | - | 28 | 28 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 498 | $ | 2,155 | $ | 126 | $ | 2,779 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(85 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
28 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,722 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table summarizes the changes in the fair value of the pension plan assets classified as Level 3 in the fair value hierarchy for each of the years ended December 31, 2011, and 2010:
|
Beginning Balance at January 1, |
Actual Return on Plan Assets Related to Assets Still Held at the Reporting Date |
Actual Return on Plan Assets Related to Assets Sold During the Period |
Purchases, Sales, and Settlements, net |
Net of Level 3 |
Ending Balance at December 31, |
|||||||||||||||||||
|
2011: |
||||||||||||||||||||||||
|
Real estate |
$ | 98 | $ | 10 | $ | - | $ | - | $ | - | $ | 108 | ||||||||||||
|
Private equity |
28 | (10 | ) | 11 | (6 | ) | - | 23 | ||||||||||||||||
|
2010: |
||||||||||||||||||||||||
|
Other debt securities |
$ | 1 | $ | - | $ | - | $ | (1 | ) | $ | - | $ | - | |||||||||||
|
Real estate |
90 | 7 | - | 1 | - | 98 | ||||||||||||||||||
|
Private equity |
33 | (5 | ) | 7 | (7 | ) | - | 28 | ||||||||||||||||
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2011:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | 1 | $ | 66 | $ | - | $ | 67 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
235 | 78 | - | 313 | ||||||||||||
|
U.S. small and mid-capitalization |
57 | - | - | 57 | ||||||||||||
|
International |
44 | 56 | - | 100 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 61 | - | 61 | ||||||||||||
|
Municipal bonds |
- | 86 | - | 86 | ||||||||||||
|
U.S. treasury and agency securities |
- | 82 | - | 82 | ||||||||||||
|
Asset-backed securities |
- | 23 | - | 23 | ||||||||||||
|
Other |
- | 49 | - | 49 | ||||||||||||
|
Total |
$ | 337 | $ | 501 | $ | - | $ | 838 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
91 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(33 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 896 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 35 | $ | - | $ | 35 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
215 | 72 | - | 287 | ||||||||||||
|
U.S. small and mid-capitalization |
66 | - | - | 66 | ||||||||||||
|
International |
43 | 51 | - | 94 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 59 | - | 59 | ||||||||||||
|
Municipal bonds |
- | 58 | - | 58 | ||||||||||||
|
U.S. treasury and agency securities |
- | 59 | - | 59 | ||||||||||||
|
Asset-backed securities |
- | 31 | - | 31 | ||||||||||||
|
Other |
- | 29 | - | 29 | ||||||||||||
|
Total |
$ | 324 | $ | 394 | $ | - | $ | 718 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
85 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(6 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 797 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
Net Periodic Benefit Cost
The following table presents the components of the net periodic benefit cost of our pension and postretirement benefit plans during 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
2011: |
||||||||
|
Service cost |
$ | 75 | $ | 22 | ||||
|
Interest cost |
180 | 58 | ||||||
|
Expected return on plan assets |
(216 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
(1 | ) | (8 | ) | ||||
|
Actuarial loss |
42 | 5 | ||||||
|
Net periodic benefit cost |
$ | 80 | $ | 25 | ||||
|
2010: |
||||||||
|
Service cost |
$ | 68 | $ | 20 | ||||
|
Interest cost |
185 | 62 | ||||||
|
Expected return on plan assets |
(212 | ) | (56 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
6 | (8 | ) | |||||
|
Actuarial loss |
18 | 1 | ||||||
|
Net periodic benefit cost |
$ | 65 | $ | 21 | ||||
|
2009: |
||||||||
|
Service cost |
$ | 68 | $ | 19 | ||||
|
Interest cost |
186 | 66 | ||||||
|
Expected return on plan assets |
(206 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
9 | (8 | ) | |||||
|
Actuarial loss |
24 | 9 | ||||||
|
Net periodic benefit cost |
$ | 81 | $ | 34 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The current year expected return on plan assets is determined primarily by adjusting the prior-year market-related asset value for current year contributions, disbursements, and expected return, plus 25% of the actual return in excess of (or less than) expected return for the four prior years.
The estimated amounts that will be amortized from regulatory assets and accumulated OCI into net periodic benefit cost in 2012 are as follows:
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
Regulatory assets: |
||||||||
|
Transition obligation |
$ | - | $ | 2 | ||||
|
Prior service cost (credit) |
(1 | ) | (4 | ) | ||||
|
Net actuarial loss |
87 | 23 | ||||||
|
Accumulated OCI: |
||||||||
|
Transition obligation |
- | - | ||||||
|
Prior service cost (credit) |
(1 | ) | (1 | ) | ||||
|
Net actuarial loss |
6 | 3 | ||||||
|
Total |
$ | 91 | $ | 23 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
Prior service cost is amortized on a straight-line basis over the average future service of active participants benefiting under the plan amendment. The net actuarial loss subject to amortization is amortized on a straight-line basis over 10 years.
Ameren Missouri, Ameren Illinois and Genco are responsible for their share of the pension and postretirement benefit costs. The following table presents the pension costs and the postretirement benefit costs incurred for the years ended December 31, 2011, 2010, and 2009:
| Pension Costs | Postretirement Costs | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 80 | $ | 65 | $ | 81 | $ | 25 | $ | 21 | $ | 34 | ||||||||||||
|
Ameren Missouri |
51 | 42 | 50 | 11 | 11 | 15 | ||||||||||||||||||
|
Ameren Illinois |
16 | 10 | 14 | 11 | 7 | 16 | ||||||||||||||||||
|
Genco |
8 | 9 | 11 | 3 | 2 | 3 | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
The expected pension and postretirement benefit payments from qualified trust and company funds and the federal subsidy for postretirement benefits related to prescription drug benefits, which reflect expected future service, as of December 31, 2011, are as follows:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||
| Paid from Qualified Trust |
Paid from Company Funds |
Paid from Qualified Trust |
Paid from Company Funds |
Federal Subsidy |
||||||||||||||||
|
2012 |
223 | 3 | 68 | 3 | 5 | |||||||||||||||
|
2013 |
225 | 3 | 71 | 3 | 5 | |||||||||||||||
|
2014 |
230 | 3 | 74 | 3 | 5 | |||||||||||||||
|
2015 |
231 | 3 | 77 | 3 | 6 | |||||||||||||||
|
2016 |
232 | 3 | 80 | 3 | 6 | |||||||||||||||
|
2017 - 2021 |
1,167 | 12 | 443 | 14 | 32 | |||||||||||||||
The following table presents the assumptions used to determine net periodic benefit cost for our pension and postretirement benefit plans for the years ended December 31, 2011, 2010, and 2009:
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Discount rate at measurement date |
5.25 | % | 5.75 | % | 5.75 | % | 5.25 | % | 5.75 | % | 5.75 | % | ||||||||||||
|
Expected return on plan assets |
8.00 | 8.00 | 8.00 | 7.75 | 8.00 | 8.00 | ||||||||||||||||||
|
Increase in future compensation |
3.50 | 3.50 | 4.00 | 3.50 | 3.50 | 4.00 | ||||||||||||||||||
|
Medical cost trend rate (initial) |
- | - | - | 6.00 | 6.50 | 7.00 | ||||||||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | - | 5.00 | 5.00 | 5.00 | ||||||||||||||||||
|
Years to ultimate rate |
- | - | - | 2 years | 3 years | 4 years | ||||||||||||||||||
The table below reflects the sensitivity of Ameren's plans to potential changes in key assumptions:
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| Service Cost and Interest Cost |
Projected Benefit Obligation |
Service Cost and Interest Cost |
Postretirement Benefit Obligation |
|||||||||||||
|
0.25% decrease in discount rate |
$ | (2 | ) | $ | 110 | $ | - | $ | 38 | |||||||
|
0.25% increase in salary scale |
2 | 14 | - | - | ||||||||||||
|
1.00% increase in annual medical trend |
- | - | 3 | 42 | ||||||||||||
|
1.00% decrease in annual medical trend |
- | - | (3 | ) | (41 | ) | ||||||||||
Other
Ameren sponsors a 401(k) plan for eligible employees. The Ameren plan covered all eligible employees of the Ameren Companies at December 31, 2011. The plans allowed employees to contribute a portion of their compensation in accordance with specific guidelines. Ameren matched a percentage of the employee contributions up to certain limits. The following table presents the portion of the 401(k) matching contribution to the Ameren plan attributable to each of the Ameren Companies for the years ended December 31, 2011, 2010, and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 28 | $ | 27 | $ | 24 | ||||||
|
Ameren Missouri |
16 | 16 | 14 | |||||||||
|
Ameren Illinois |
8 | 8 | 7 | |||||||||
|
Genco |
2 | 1 | 2 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
|
|||
NOTE 12 – STOCK-BASED COMPENSATION
Ameren's long-term incentive plan for eligible employees, called the Long-term Incentive Plan of 1998 (1998 Plan), was replaced prospectively by the 2006 Omnibus Incentive Compensation Plan (2006 Plan) effective May 2, 2006. The 2006 Plan provides for a maximum of 4 million common shares to be available for grant to eligible employees and directors. No new awards may be granted under the 1998 Plan. Previously granted awards have vested in accordance with their original terms and conditions. The 2006 Plan awards may be stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, cash-based awards, and other stock-based awards.
A summary of nonvested shares at December 31, 2011, and changes during the year ended December 31, 2011, under the 1998 Plan and the 2006 Plan are presented below:
| Performance Share Units(a) | Restricted Shares(b) | |||||||||||||||
| Share Units | Weighted-average Fair Value per Unit |
Shares | Weighted-average Fair Value per Share |
|||||||||||||
|
Nonvested at January 1, 2011 |
1,142,768 | $ | 23.96 | 83,154 | $ | 49.87 | ||||||||||
|
Granted(c ) |
731,962 | 31.41 | — | — | ||||||||||||
|
Dividends |
— | — | 1,005 | 30.04 | ||||||||||||
|
Unearned or forfeited(d ) |
(565,538) | 16.28 | (560 | ) | 50.45 | |||||||||||
|
Earned and vested(e ) |
(152,361) | 29.47 | (83,599 | ) | 49.89 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Nonvested at December 31, 2011 |
1,156,831 | $ | 31.70 | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Granted under the 2006 Plan. |
| (b) | Granted under the 1998 Plan. |
| (c) | Includes performance share units (share units) granted to certain executive and nonexecutive officers and other eligible employees in January 2011 under the 2006 Plan. |
| (d) | Includes share units granted in 2009 that were not earned based on performance provisions of the award grants. |
| (e) |
Includes share units granted in 2009 that vested as of December 31, 2011, that were earned pursuant to the provisions of the award grants. Also includes share units that vested due to 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. |
Ameren recorded compensation expense of $14 million, $13 million, and $13 million for the years ended December 31, 2011, 2010, and 2009, respectively, and a related tax benefit of $5 million for each of the years ended December 31, 2011, 2010, and 2009, respectively. Ameren settled performance share units and restricted shares of $4 million, $2 million, and less than $1 million for the years ended December 31, 2011, 2010, and 2009. There were no significant compensation costs capitalized during the years ended December 31, 2011, 2010, and 2009. As of December 31, 2011, total compensation cost of $17 million related to nonvested awards not yet recognized is expected to be recognized over a weighted-average period of 20 months.
Performance Share Units
Performance share unit awards have been granted under the 2006 Plan. A share unit vests and entitles an employee to receive shares of Ameren common stock (plus accumulated dividends) if, at the end of the three-year performance period, certain specified performance or market conditions have been met and the individual remains employed by Ameren. The exact number of shares issued pursuant to a share unit vary from 0% to 200% of the target award, depending on actual company performance relative to the performance goals. For performance share units granted prior to 2009, vested performance shares units must be held for a two-year period before being paid to the employee in shares of Ameren common stock. During this two-year hold period, the employee is paid dividend equivalents on a current basis.
The fair value of each share unit awarded in January 2011 under the 2006 Plan was determined to be $31.41. That amount was based on Ameren's closing common share price of $28.19 at December 31, 2010, 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, 2011. The simulations can produce a greater fair value for the share unit than the 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 1.08%, volatility of 22% to 36% for the peer group, and Ameren's attainment of three-year average earnings per share threshold during the performance period.
The fair value of each share unit awarded in January 2010 under the 2006 Plan was determined to be $32.01. That amount was based on Ameren's closing common share price of $27.95 at December 31, 2009, and lattice simulations. Lattice simulations are used to estimate expected share payout based on Ameren's total stockholder return for a three-year performance period relative to the designated peer group beginning January 1, 2010. The significant assumptions used to calculate fair value also included a three-year risk-free rate of 1.70%, volatility of 23% to 39% for the peer group, and Ameren's attainment of three-year average earnings per share threshold during each year of the performance period.
Restricted Stock
Restricted stock awards of Ameren common stock were granted under the 1998 Plan from 2001 to 2005. Restricted shares had the potential to vest over a seven-year period from the date of grant if Ameren achieved certain performance levels. An accelerated vesting provision included in this plan reduced the vesting period from seven years to three years if the earnings growth rate exceeded a prescribed level.
|
|||
NOTE 13 – INCOME TAXES
The following table presents the principal reasons why the effective income tax rate differed from the statutory federal income tax rate for the years ended December 31, 2011, 2010, and 2009:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Production activities deduction |
- | - | - | 3 | ||||||||||||
|
Depreciation differences |
(1 | ) | (2 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
|
State tax |
4 | 3 | 5 | 6 | ||||||||||||
|
Tax credits |
- | - | - | (1 | ) | |||||||||||
|
Other permanent items(a) |
- | 1 | - | - | ||||||||||||
|
Effective income tax rate |
37 | % | 36 | % | 39 | % | 42 | % | ||||||||
|
2010: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Non-deductible impairment of goodwill |
32 | - | - | (144 | ) | |||||||||||
|
Production activities deduction |
- | - | - | 7 | ||||||||||||
|
Depreciation differences |
(4 | ) | (3 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(2 | ) | (1 | ) | (1 | ) | 4 | |||||||||
|
State tax |
8 | 3 | 5 | (14 | ) | |||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | (6 | ) | ||||||||||
|
Tax credits |
(3 | ) | - | - | 13 | |||||||||||
|
Change in federal tax law(b) |
3 | 1 | - | (19 | ) | |||||||||||
|
Other permanent items(c) |
- | - | - | (1 | ) | |||||||||||
|
Effective income tax rate |
68 | % | 35 | % | 39 | % | (125 | )% | ||||||||
|
2009: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Depreciation differences |
(1 | ) | (3 | ) | (1 | ) | - | |||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | - | |||||||||
|
State tax |
5 | 3 | 5 | 4 | ||||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | - | |||||||||||
|
Other permanent items(d) |
(1 | ) | - | (1 | ) | (1 | ) | |||||||||
|
Tax credits |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Effective income tax rate |
35 | % | 33 | % | 37 | % | 38 | % | ||||||||
| (a) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses related to lobbying and stock issuance expenses for Ameren Missouri. |
| (b) | Relates to change in taxation of prescription drug benefits to retiree participants from the enactment in 2010 of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Bill of 2010. |
| (c) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses for Genco. |
| (d) | Permanent items are treated differently for book and tax purposes and primarily include Internal Revenue Code Section 199 production activity deductions for Ameren and Genco, company-owned life insurance for Ameren and Ameren Illinois, employee stock ownership plan dividends for Ameren, and nondeductible expenses for Ameren Illinois. |
The following table presents the components of income tax expense (benefit) for the years ended December 31, 2011, 2010, and 2009:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (27 | ) | $ | 3 | $ | (24 | ) | $ | (21 | ) | |||||
|
State |
(5 | ) | 2 | (4 | ) | (7 | ) | |||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
273 | 129 | 123 | 43 | ||||||||||||
|
State |
76 | 31 | 34 | 18 | ||||||||||||
|
Deferred investment tax credits, amortization |
(7 | ) | (4 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 310 | $ | 161 | $ | 127 | $ | 32 | ||||||||
|
2010: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | 13 | $ | (14 | ) | $ | (20 | ) | $ | (5 | ) | |||||
|
State |
10 | (15 | ) | (5 | ) | 6 | ||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
274 | 206 | 132 | 22 | ||||||||||||
|
State |
36 | 27 | 32 | (2 | ) | |||||||||||
|
Deferred investment tax credits, amortization |
(8 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 325 | $ | 199 | $ | 137 | $ | 20 | ||||||||
|
2009: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (73 | ) | $ | (117 | ) | $ | (8 | ) | $ | 22 | |||||
|
State |
3 | (31 | ) | 14 | 14 | |||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
337 | 239 | 64 | 57 | ||||||||||||
|
State |
74 | 42 | 11 | 9 | ||||||||||||
|
Deferred investment tax credits, amortization |
(9 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 332 | $ | 128 | $ | 79 | $ | 101 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
The Illinois corporate income tax rate increased from 7.3% to 9.5%, starting in January 2011. The tax rate is scheduled to decrease to 7.75% in 2015, and it is scheduled to return to 7.3% in 2025. This corporate income tax rate increase in Illinois increased current income tax expense in 2011 by $6 million, $4 million and $3 million for Ameren, Ameren Illinois and Genco, respectively. As a result of this corporate income tax rate increase, accumulated deferred tax balances were revalued, resulting in a decrease in deferred tax expense of $2 million, $3 million and $- million for Ameren, Ameren Illinois, and Genco, respectively.
The following table presents the deferred tax assets and deferred tax liabilities recorded as a result of temporary differences at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,811 | $ | 2,134 | $ | 1,003 | $ | 457 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
3 | (1 | ) | 55 | (54 | ) | ||||||||||
|
Regulatory assets, net |
73 | 73 | - | - | ||||||||||||
|
Deferred employee benefit costs |
(367 | ) | (88 | ) | (109 | ) | (67 | ) | ||||||||
|
Purchase accounting |
35 | - | (27 | ) | 15 | |||||||||||
|
ARO |
(37 | ) | - | 1 | (25 | ) | ||||||||||
|
Other |
(223 | ) | 6 | (86 | ) | (22 | ) | |||||||||
|
Total net accumulated deferred income tax liabilities(b) |
$ | 3,295 | $ | 2,124 | $ | 837 | $ | 304 | ||||||||
|
2010: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,310 | $ | 1,974 | $ | 750 | $ | 378 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
2 | (2 | ) | 71 | (68 | ) | ||||||||||
|
Regulatory assets (liabilities), net |
67 | 68 | (1 | ) | - | |||||||||||
|
Deferred employee benefit costs |
(360 | ) | (87 | ) | (124 | ) | (45 | ) | ||||||||
|
Purchase accounting |
106 | - | 41 | 17 | ||||||||||||
|
ARO |
(48 | ) | (9 | ) | 1 | (27 | ) | |||||||||
|
Other |
(120 | ) | 7 | (57 | ) | 10 | ||||||||||
|
Total net accumulated deferred income tax liabilities(c) |
$ | 2,957 | $ | 1,951 | $ | 681 | $ | 265 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Includes $20 million, $8 million and $58 million as current assets recorded in the balance sheet for Ameren, Ameren Missouri and Ameren Illinois, respectively. |
| (c) | Includes $43 million as current assets recorded in the balance sheet for Ameren Illinois. Includes $71 million, $43 million and $12 million as current liabilities recorded in the balance sheets for Ameren, Ameren Missouri and Genco, respectively. |
The following table presents the components of deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2011:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Net operating loss carryforwards: |
||||||||||||||||
|
Federal(a) |
$ | 136 | $ | 50 | $ | 33 | $ | 8 | ||||||||
|
State(b) |
17 | 3 | 6 | - | ||||||||||||
|
Total net operating loss carryforwards |
$ | 153 | $ | 53 | $ | 39 | $ | 8 | ||||||||
|
Tax credit carryforwards: |
||||||||||||||||
|
Federal(c) |
$ | 72 | $ | 11 | $ | - | $ | 1 | ||||||||
|
State(d) |
28 | 1 | - | 4 | ||||||||||||
|
Total tax credit carryforwards |
$ | 100 | $ | 12 | $ | - | $ | 5 | ||||||||
| (a) | These will begin to expire in 2028. |
| (b) | These will begin to expire in 2017. |
| (c) | These will begin to expire in 2029. |
| (d) | These will begin to expire in 2012. |
Uncertain Tax Positions
A reconciliation of the change in the unrecognized tax benefit balance during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Unrecognized tax benefits – January 1, 2009 |
$ | 110 | $ | 20 | $ | - | $ | 48 | ||||||||
|
Increases based on tax positions prior to 2009 |
90 | 76 | - | 9 | ||||||||||||
|
Decreases based on tax positions prior to 2009 |
(84 | ) | (19 | ) | - | (31 | ) | |||||||||
|
Increases based on tax positions related to 2009 |
19 | 11 | - | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2009 |
$ | 135 | $ | 88 | $ | - | $ | 29 | ||||||||
|
Increases based on tax positions prior to 2010 |
72 | 40 | 27 | 4 | ||||||||||||
|
Decreases based on tax positions prior to 2010 |
(38 | ) | (12 | ) | (2 | ) | (16 | ) | ||||||||
|
Increases based on tax positions related to 2010 |
77 | 48 | 31 | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2010 |
$ | 246 | $ | 164 | $ | 56 | $ | 20 | ||||||||
|
Increases based on tax positions prior to 2011 |
22 | 15 | - | 1 | ||||||||||||
|
Decreases based on tax positions prior to 2011 |
(125 | ) | (63 | ) | (41 | ) | (12 | ) | ||||||||
|
Increases based on tax positions related to 2011 |
17 | 13 | - | 1 | ||||||||||||
|
Changes related to settlements with taxing authorities |
(10 | ) | (5 | ) | (4 | ) | - | |||||||||
|
Decreases related to the lapse of statute of limitations |
(2 | ) | - | - | (1 | ) | ||||||||||
|
Unrecognized tax benefits – December 31, 2011 |
$ | 148 | $ | 124 | $ | 11 | $ | 9 | ||||||||
|
Total unrecognized tax benefits (detriments) that, if recognized, would affect the effective tax rates as of December 31, 2009 |
$ | 6 | $ | 3 | $ | - | $ | - | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2010 |
$ | - | $ | 3 | $ | - | $ | 1 | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2011 |
$ | 1 | $ | 1 | $ | - | $ | 1 | ||||||||
The Ameren Companies recognize interest charges (income) and penalties accrued on tax liabilities on a pretax basis as interest charges (income) or miscellaneous expense in the statements of income.
A reconciliation of the change in the liability for interest on unrecognized tax benefits during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
Liability for interest – January 1, 2009 |
$ | 10 | $ | 2 | $ | - | $ | 4 | ||||||||
|
Interest charges (income) for 2009 |
(2 | ) | 2 | - | (2 | ) | ||||||||||
|
Liability for interest – December 31, 2009 |
$ | 8 | $ | 4 | $ | - | $ | 2 | ||||||||
|
Interest charges for 2010 |
9 | 6 | 2 | - | ||||||||||||
|
Liability for interest – December 31, 2010 |
$ | 17 | $ | 10 | $ | 2 | $ | 2 | ||||||||
|
Interest income for 2011 |
(11 | ) | (3 | ) | (1 | ) | (1 | ) | ||||||||
|
Interest payment |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Liability for interest – December 31, 2011 |
$ | 5 | $ | 6 | $ | 1 | $ | 1 | ||||||||
As of December 31, 2009, December 31, 2010, and December 31, 2011, the Ameren Companies have accrued no amount for penalties with respect to unrecognized tax benefits.
In the second quarter of 2011, a final settlement for the years 2005 and 2006 was reached with the Internal Revenue Service. It resulted in the reduction of uncertain tax liabilities by $39 million, $17 million, $12 million, and $4 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. Ameren's federal income tax returns for the years 2007 through 2009 are before the Appeals Office of the Internal Revenue Service. Ameren's federal income tax return for the year 2010 is currently under examination.
State income tax returns are generally subject to examination for a period of three years after filing of the return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Ameren Companies do not currently have material state income tax issues under examination, administrative appeals, or litigation.
It is expected that a partial settlement will be reached with the Appeals Office of the Internal Revenue Service in the next twelve months for the years 2007 through 2009 that would result in a decrease in uncertain tax liabilities. In addition, it is reasonably possible that other events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits for the Ameren Companies to increase or decrease. However, the Ameren Companies do not believe any such increases or decreases would be material to their results of operations, financial position, or liquidity.
NOTE 13 – INCOME TAXES
The following table presents the principal reasons why the effective income tax rate differed from the statutory federal income tax rate for the years ended December 31, 2011, 2010, and 2009:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Production activities deduction |
- | - | - | 3 | ||||||||||||
|
Depreciation differences |
(1 | ) | (2 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
|
State tax |
4 | 3 | 5 | 6 | ||||||||||||
|
Tax credits |
- | - | - | (1 | ) | |||||||||||
|
Other permanent items(a) |
- | 1 | - | - | ||||||||||||
|
Effective income tax rate |
37 | % | 36 | % | 39 | % | 42 | % | ||||||||
|
2010: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Non-deductible impairment of goodwill |
32 | - | - | (144 | ) | |||||||||||
|
Production activities deduction |
- | - | - | 7 | ||||||||||||
|
Depreciation differences |
(4 | ) | (3 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(2 | ) | (1 | ) | (1 | ) | 4 | |||||||||
|
State tax |
8 | 3 | 5 | (14 | ) | |||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | (6 | ) | ||||||||||
|
Tax credits |
(3 | ) | - | - | 13 | |||||||||||
|
Change in federal tax law(b) |
3 | 1 | - | (19 | ) | |||||||||||
|
Other permanent items(c) |
- | - | - | (1 | ) | |||||||||||
|
Effective income tax rate |
68 | % | 35 | % | 39 | % | (125 | )% | ||||||||
|
2009: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Depreciation differences |
(1 | ) | (3 | ) | (1 | ) | - | |||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | - | |||||||||
|
State tax |
5 | 3 | 5 | 4 | ||||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | - | |||||||||||
|
Other permanent items(d) |
(1 | ) | - | (1 | ) | (1 | ) | |||||||||
|
Tax credits |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Effective income tax rate |
35 | % | 33 | % | 37 | % | 38 | % | ||||||||
| (a) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses related to lobbying and stock issuance expenses for Ameren Missouri. |
| (b) | Relates to change in taxation of prescription drug benefits to retiree participants from the enactment in 2010 of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Bill of 2010. |
| (c) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses for Genco. |
| (d) | Permanent items are treated differently for book and tax purposes and primarily include Internal Revenue Code Section 199 production activity deductions for Ameren and Genco, company-owned life insurance for Ameren and Ameren Illinois, employee stock ownership plan dividends for Ameren, and nondeductible expenses for Ameren Illinois. |
The following table presents the components of income tax expense (benefit) for the years ended December 31, 2011, 2010, and 2009:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (27 | ) | $ | 3 | $ | (24 | ) | $ | (21 | ) | |||||
|
State |
(5 | ) | 2 | (4 | ) | (7 | ) | |||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
273 | 129 | 123 | 43 | ||||||||||||
|
State |
76 | 31 | 34 | 18 | ||||||||||||
|
Deferred investment tax credits, amortization |
(7 | ) | (4 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 310 | $ | 161 | $ | 127 | $ | 32 | ||||||||
|
2010: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | 13 | $ | (14 | ) | $ | (20 | ) | $ | (5 | ) | |||||
|
State |
10 | (15 | ) | (5 | ) | 6 | ||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
274 | 206 | 132 | 22 | ||||||||||||
|
State |
36 | 27 | 32 | (2 | ) | |||||||||||
|
Deferred investment tax credits, amortization |
(8 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 325 | $ | 199 | $ | 137 | $ | 20 | ||||||||
|
2009: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (73 | ) | $ | (117 | ) | $ | (8 | ) | $ | 22 | |||||
|
State |
3 | (31 | ) | 14 | 14 | |||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
337 | 239 | 64 | 57 | ||||||||||||
|
State |
74 | 42 | 11 | 9 | ||||||||||||
|
Deferred investment tax credits, amortization |
(9 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 332 | $ | 128 | $ | 79 | $ | 101 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
The Illinois corporate income tax rate increased from 7.3% to 9.5%, starting in January 2011. The tax rate is scheduled to decrease to 7.75% in 2015, and it is scheduled to return to 7.3% in 2025. This corporate income tax rate increase in Illinois increased current income tax expense in 2011 by $6 million, $4 million and $3 million for Ameren, Ameren Illinois and Genco, respectively. As a result of this corporate income tax rate increase, accumulated deferred tax balances were revalued, resulting in a decrease in deferred tax expense of $2 million, $3 million and $- million for Ameren, Ameren Illinois, and Genco, respectively.
The following table presents the deferred tax assets and deferred tax liabilities recorded as a result of temporary differences at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,811 | $ | 2,134 | $ | 1,003 | $ | 457 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
3 | (1 | ) | 55 | (54 | ) | ||||||||||
|
Regulatory assets, net |
73 | 73 | - | - | ||||||||||||
|
Deferred employee benefit costs |
(367 | ) | (88 | ) | (109 | ) | (67 | ) | ||||||||
|
Purchase accounting |
35 | - | (27 | ) | 15 | |||||||||||
|
ARO |
(37 | ) | - | 1 | (25 | ) | ||||||||||
|
Other |
(223 | ) | 6 | (86 | ) | (22 | ) | |||||||||
|
Total net accumulated deferred income tax liabilities(b) |
$ | 3,295 | $ | 2,124 | $ | 837 | $ | 304 | ||||||||
|
2010: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,310 | $ | 1,974 | $ | 750 | $ | 378 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
2 | (2 | ) | 71 | (68 | ) | ||||||||||
|
Regulatory assets (liabilities), net |
67 | 68 | (1 | ) | - | |||||||||||
|
Deferred employee benefit costs |
(360 | ) | (87 | ) | (124 | ) | (45 | ) | ||||||||
|
Purchase accounting |
106 | - | 41 | 17 | ||||||||||||
|
ARO |
(48 | ) | (9 | ) | 1 | (27 | ) | |||||||||
|
Other |
(120 | ) | 7 | (57 | ) | 10 | ||||||||||
|
Total net accumulated deferred income tax liabilities(c) |
$ | 2,957 | $ | 1,951 | $ | 681 | $ | 265 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Includes $20 million, $8 million and $58 million as current assets recorded in the balance sheet for Ameren, Ameren Missouri and Ameren Illinois, respectively. |
| (c) | Includes $43 million as current assets recorded in the balance sheet for Ameren Illinois. Includes $71 million, $43 million and $12 million as current liabilities recorded in the balance sheets for Ameren, Ameren Missouri and Genco, respectively. |
The following table presents the components of deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2011:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Net operating loss carryforwards: |
||||||||||||||||
|
Federal(a) |
$ | 136 | $ | 50 | $ | 33 | $ | 8 | ||||||||
|
State(b) |
17 | 3 | 6 | - | ||||||||||||
|
Total net operating loss carryforwards |
$ | 153 | $ | 53 | $ | 39 | $ | 8 | ||||||||
|
Tax credit carryforwards: |
||||||||||||||||
|
Federal(c) |
$ | 72 | $ | 11 | $ | - | $ | 1 | ||||||||
|
State(d) |
28 | 1 | - | 4 | ||||||||||||
|
Total tax credit carryforwards |
$ | 100 | $ | 12 | $ | - | $ | 5 | ||||||||
| (a) | These will begin to expire in 2028. |
| (b) | These will begin to expire in 2017. |
| (c) | These will begin to expire in 2029. |
| (d) | These will begin to expire in 2012. |
Uncertain Tax Positions
A reconciliation of the change in the unrecognized tax benefit balance during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Unrecognized tax benefits – January 1, 2009 |
$ | 110 | $ | 20 | $ | - | $ | 48 | ||||||||
|
Increases based on tax positions prior to 2009 |
90 | 76 | - | 9 | ||||||||||||
|
Decreases based on tax positions prior to 2009 |
(84 | ) | (19 | ) | - | (31 | ) | |||||||||
|
Increases based on tax positions related to 2009 |
19 | 11 | - | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2009 |
$ | 135 | $ | 88 | $ | - | $ | 29 | ||||||||
|
Increases based on tax positions prior to 2010 |
72 | 40 | 27 | 4 | ||||||||||||
|
Decreases based on tax positions prior to 2010 |
(38 | ) | (12 | ) | (2 | ) | (16 | ) | ||||||||
|
Increases based on tax positions related to 2010 |
77 | 48 | 31 | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2010 |
$ | 246 | $ | 164 | $ | 56 | $ | 20 | ||||||||
|
Increases based on tax positions prior to 2011 |
22 | 15 | - | 1 | ||||||||||||
|
Decreases based on tax positions prior to 2011 |
(125 | ) | (63 | ) | (41 | ) | (12 | ) | ||||||||
|
Increases based on tax positions related to 2011 |
17 | 13 | - | 1 | ||||||||||||
|
Changes related to settlements with taxing authorities |
(10 | ) | (5 | ) | (4 | ) | - | |||||||||
|
Decreases related to the lapse of statute of limitations |
(2 | ) | - | - | (1 | ) | ||||||||||
|
Unrecognized tax benefits – December 31, 2011 |
$ | 148 | $ | 124 | $ | 11 | $ | 9 | ||||||||
|
Total unrecognized tax benefits (detriments) that, if recognized, would affect the effective tax rates as of December 31, 2009 |
$ | 6 | $ | 3 | $ | - | $ | - | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2010 |
$ | - | $ | 3 | $ | - | $ | 1 | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2011 |
$ | 1 | $ | 1 | $ | - | $ | 1 | ||||||||
The Ameren Companies recognize interest charges (income) and penalties accrued on tax liabilities on a pretax basis as interest charges (income) or miscellaneous expense in the statements of income.
A reconciliation of the change in the liability for interest on unrecognized tax benefits during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
Liability for interest – January 1, 2009 |
$ | 10 | $ | 2 | $ | - | $ | 4 | ||||||||
|
Interest charges (income) for 2009 |
(2 | ) | 2 | - | (2 | ) | ||||||||||
|
Liability for interest – December 31, 2009 |
$ | 8 | $ | 4 | $ | - | $ | 2 | ||||||||
|
Interest charges for 2010 |
9 | 6 | 2 | - | ||||||||||||
|
Liability for interest – December 31, 2010 |
$ | 17 | $ | 10 | $ | 2 | $ | 2 | ||||||||
|
Interest income for 2011 |
(11 | ) | (3 | ) | (1 | ) | (1 | ) | ||||||||
|
Interest payment |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Liability for interest – December 31, 2011 |
$ | 5 | $ | 6 | $ | 1 | $ | 1 | ||||||||
As of December 31, 2009, December 31, 2010, and December 31, 2011, the Ameren Companies have accrued no amount for penalties with respect to unrecognized tax benefits.
In the second quarter of 2011, a final settlement for the years 2005 and 2006 was reached with the Internal Revenue Service. It resulted in the reduction of uncertain tax liabilities by $39 million, $17 million, $12 million, and $4 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. Ameren's federal income tax returns for the years 2007 through 2009 are before the Appeals Office of the Internal Revenue Service. Ameren's federal income tax return for the year 2010 is currently under examination.
State income tax returns are generally subject to examination for a period of three years after filing of the return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Ameren Companies do not currently have material state income tax issues under examination, administrative appeals, or litigation.
It is expected that a partial settlement will be reached with the Appeals Office of the Internal Revenue Service in the next twelve months for the years 2007 through 2009 that would result in a decrease in uncertain tax liabilities. In addition, it is reasonably possible that other events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits for the Ameren Companies to increase or decrease. However, the Ameren Companies do not believe any such increases or decreases would be material to their results of operations, financial position, or liquidity.
NOTE 13 – INCOME TAXES
The following table presents the principal reasons why the effective income tax rate differed from the statutory federal income tax rate for the years ended December 31, 2011, 2010, and 2009:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Production activities deduction |
- | - | - | 3 | ||||||||||||
|
Depreciation differences |
(1 | ) | (2 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
|
State tax |
4 | 3 | 5 | 6 | ||||||||||||
|
Tax credits |
- | - | - | (1 | ) | |||||||||||
|
Other permanent items(a) |
- | 1 | - | - | ||||||||||||
|
Effective income tax rate |
37 | % | 36 | % | 39 | % | 42 | % | ||||||||
|
2010: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Non-deductible impairment of goodwill |
32 | - | - | (144 | ) | |||||||||||
|
Production activities deduction |
- | - | - | 7 | ||||||||||||
|
Depreciation differences |
(4 | ) | (3 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(2 | ) | (1 | ) | (1 | ) | 4 | |||||||||
|
State tax |
8 | 3 | 5 | (14 | ) | |||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | (6 | ) | ||||||||||
|
Tax credits |
(3 | ) | - | - | 13 | |||||||||||
|
Change in federal tax law(b) |
3 | 1 | - | (19 | ) | |||||||||||
|
Other permanent items(c) |
- | - | - | (1 | ) | |||||||||||
|
Effective income tax rate |
68 | % | 35 | % | 39 | % | (125 | )% | ||||||||
|
2009: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Depreciation differences |
(1 | ) | (3 | ) | (1 | ) | - | |||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | - | |||||||||
|
State tax |
5 | 3 | 5 | 4 | ||||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | - | |||||||||||
|
Other permanent items(d) |
(1 | ) | - | (1 | ) | (1 | ) | |||||||||
|
Tax credits |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Effective income tax rate |
35 | % | 33 | % | 37 | % | 38 | % | ||||||||
| (a) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses related to lobbying and stock issuance expenses for Ameren Missouri. |
| (b) | Relates to change in taxation of prescription drug benefits to retiree participants from the enactment in 2010 of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Bill of 2010. |
| (c) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses for Genco. |
| (d) | Permanent items are treated differently for book and tax purposes and primarily include Internal Revenue Code Section 199 production activity deductions for Ameren and Genco, company-owned life insurance for Ameren and Ameren Illinois, employee stock ownership plan dividends for Ameren, and nondeductible expenses for Ameren Illinois. |
The following table presents the components of income tax expense (benefit) for the years ended December 31, 2011, 2010, and 2009:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (27 | ) | $ | 3 | $ | (24 | ) | $ | (21 | ) | |||||
|
State |
(5 | ) | 2 | (4 | ) | (7 | ) | |||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
273 | 129 | 123 | 43 | ||||||||||||
|
State |
76 | 31 | 34 | 18 | ||||||||||||
|
Deferred investment tax credits, amortization |
(7 | ) | (4 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 310 | $ | 161 | $ | 127 | $ | 32 | ||||||||
|
2010: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | 13 | $ | (14 | ) | $ | (20 | ) | $ | (5 | ) | |||||
|
State |
10 | (15 | ) | (5 | ) | 6 | ||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
274 | 206 | 132 | 22 | ||||||||||||
|
State |
36 | 27 | 32 | (2 | ) | |||||||||||
|
Deferred investment tax credits, amortization |
(8 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 325 | $ | 199 | $ | 137 | $ | 20 | ||||||||
|
2009: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (73 | ) | $ | (117 | ) | $ | (8 | ) | $ | 22 | |||||
|
State |
3 | (31 | ) | 14 | 14 | |||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
337 | 239 | 64 | 57 | ||||||||||||
|
State |
74 | 42 | 11 | 9 | ||||||||||||
|
Deferred investment tax credits, amortization |
(9 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 332 | $ | 128 | $ | 79 | $ | 101 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
The Illinois corporate income tax rate increased from 7.3% to 9.5%, starting in January 2011. The tax rate is scheduled to decrease to 7.75% in 2015, and it is scheduled to return to 7.3% in 2025. This corporate income tax rate increase in Illinois increased current income tax expense in 2011 by $6 million, $4 million and $3 million for Ameren, Ameren Illinois and Genco, respectively. As a result of this corporate income tax rate increase, accumulated deferred tax balances were revalued, resulting in a decrease in deferred tax expense of $2 million, $3 million and $- million for Ameren, Ameren Illinois, and Genco, respectively.
The following table presents the deferred tax assets and deferred tax liabilities recorded as a result of temporary differences at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,811 | $ | 2,134 | $ | 1,003 | $ | 457 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
3 | (1 | ) | 55 | (54 | ) | ||||||||||
|
Regulatory assets, net |
73 | 73 | - | - | ||||||||||||
|
Deferred employee benefit costs |
(367 | ) | (88 | ) | (109 | ) | (67 | ) | ||||||||
|
Purchase accounting |
35 | - | (27 | ) | 15 | |||||||||||
|
ARO |
(37 | ) | - | 1 | (25 | ) | ||||||||||
|
Other |
(223 | ) | 6 | (86 | ) | (22 | ) | |||||||||
|
Total net accumulated deferred income tax liabilities(b) |
$ | 3,295 | $ | 2,124 | $ | 837 | $ | 304 | ||||||||
|
2010: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,310 | $ | 1,974 | $ | 750 | $ | 378 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
2 | (2 | ) | 71 | (68 | ) | ||||||||||
|
Regulatory assets (liabilities), net |
67 | 68 | (1 | ) | - | |||||||||||
|
Deferred employee benefit costs |
(360 | ) | (87 | ) | (124 | ) | (45 | ) | ||||||||
|
Purchase accounting |
106 | - | 41 | 17 | ||||||||||||
|
ARO |
(48 | ) | (9 | ) | 1 | (27 | ) | |||||||||
|
Other |
(120 | ) | 7 | (57 | ) | 10 | ||||||||||
|
Total net accumulated deferred income tax liabilities(c) |
$ | 2,957 | $ | 1,951 | $ | 681 | $ | 265 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Includes $20 million, $8 million and $58 million as current assets recorded in the balance sheet for Ameren, Ameren Missouri and Ameren Illinois, respectively. |
| (c) | Includes $43 million as current assets recorded in the balance sheet for Ameren Illinois. Includes $71 million, $43 million and $12 million as current liabilities recorded in the balance sheets for Ameren, Ameren Missouri and Genco, respectively. |
The following table presents the components of deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2011:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Net operating loss carryforwards: |
||||||||||||||||
|
Federal(a) |
$ | 136 | $ | 50 | $ | 33 | $ | 8 | ||||||||
|
State(b) |
17 | 3 | 6 | - | ||||||||||||
|
Total net operating loss carryforwards |
$ | 153 | $ | 53 | $ | 39 | $ | 8 | ||||||||
|
Tax credit carryforwards: |
||||||||||||||||
|
Federal(c) |
$ | 72 | $ | 11 | $ | - | $ | 1 | ||||||||
|
State(d) |
28 | 1 | - | 4 | ||||||||||||
|
Total tax credit carryforwards |
$ | 100 | $ | 12 | $ | - | $ | 5 | ||||||||
| (a) | These will begin to expire in 2028. |
| (b) | These will begin to expire in 2017. |
| (c) | These will begin to expire in 2029. |
| (d) | These will begin to expire in 2012. |
Uncertain Tax Positions
A reconciliation of the change in the unrecognized tax benefit balance during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Unrecognized tax benefits – January 1, 2009 |
$ | 110 | $ | 20 | $ | - | $ | 48 | ||||||||
|
Increases based on tax positions prior to 2009 |
90 | 76 | - | 9 | ||||||||||||
|
Decreases based on tax positions prior to 2009 |
(84 | ) | (19 | ) | - | (31 | ) | |||||||||
|
Increases based on tax positions related to 2009 |
19 | 11 | - | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2009 |
$ | 135 | $ | 88 | $ | - | $ | 29 | ||||||||
|
Increases based on tax positions prior to 2010 |
72 | 40 | 27 | 4 | ||||||||||||
|
Decreases based on tax positions prior to 2010 |
(38 | ) | (12 | ) | (2 | ) | (16 | ) | ||||||||
|
Increases based on tax positions related to 2010 |
77 | 48 | 31 | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2010 |
$ | 246 | $ | 164 | $ | 56 | $ | 20 | ||||||||
|
Increases based on tax positions prior to 2011 |
22 | 15 | - | 1 | ||||||||||||
|
Decreases based on tax positions prior to 2011 |
(125 | ) | (63 | ) | (41 | ) | (12 | ) | ||||||||
|
Increases based on tax positions related to 2011 |
17 | 13 | - | 1 | ||||||||||||
|
Changes related to settlements with taxing authorities |
(10 | ) | (5 | ) | (4 | ) | - | |||||||||
|
Decreases related to the lapse of statute of limitations |
(2 | ) | - | - | (1 | ) | ||||||||||
|
Unrecognized tax benefits – December 31, 2011 |
$ | 148 | $ | 124 | $ | 11 | $ | 9 | ||||||||
|
Total unrecognized tax benefits (detriments) that, if recognized, would affect the effective tax rates as of December 31, 2009 |
$ | 6 | $ | 3 | $ | - | $ | - | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2010 |
$ | - | $ | 3 | $ | - | $ | 1 | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2011 |
$ | 1 | $ | 1 | $ | - | $ | 1 | ||||||||
The Ameren Companies recognize interest charges (income) and penalties accrued on tax liabilities on a pretax basis as interest charges (income) or miscellaneous expense in the statements of income.
A reconciliation of the change in the liability for interest on unrecognized tax benefits during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
Liability for interest – January 1, 2009 |
$ | 10 | $ | 2 | $ | - | $ | 4 | ||||||||
|
Interest charges (income) for 2009 |
(2 | ) | 2 | - | (2 | ) | ||||||||||
|
Liability for interest – December 31, 2009 |
$ | 8 | $ | 4 | $ | - | $ | 2 | ||||||||
|
Interest charges for 2010 |
9 | 6 | 2 | - | ||||||||||||
|
Liability for interest – December 31, 2010 |
$ | 17 | $ | 10 | $ | 2 | $ | 2 | ||||||||
|
Interest income for 2011 |
(11 | ) | (3 | ) | (1 | ) | (1 | ) | ||||||||
|
Interest payment |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Liability for interest – December 31, 2011 |
$ | 5 | $ | 6 | $ | 1 | $ | 1 | ||||||||
As of December 31, 2009, December 31, 2010, and December 31, 2011, the Ameren Companies have accrued no amount for penalties with respect to unrecognized tax benefits.
In the second quarter of 2011, a final settlement for the years 2005 and 2006 was reached with the Internal Revenue Service. It resulted in the reduction of uncertain tax liabilities by $39 million, $17 million, $12 million, and $4 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. Ameren's federal income tax returns for the years 2007 through 2009 are before the Appeals Office of the Internal Revenue Service. Ameren's federal income tax return for the year 2010 is currently under examination.
State income tax returns are generally subject to examination for a period of three years after filing of the return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Ameren Companies do not currently have material state income tax issues under examination, administrative appeals, or litigation.
It is expected that a partial settlement will be reached with the Appeals Office of the Internal Revenue Service in the next twelve months for the years 2007 through 2009 that would result in a decrease in uncertain tax liabilities. In addition, it is reasonably possible that other events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits for the Ameren Companies to increase or decrease. However, the Ameren Companies do not believe any such increases or decreases would be material to their results of operations, financial position, or liquidity.
NOTE 13 – INCOME TAXES
The following table presents the principal reasons why the effective income tax rate differed from the statutory federal income tax rate for the years ended December 31, 2011, 2010, and 2009:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Production activities deduction |
- | - | - | 3 | ||||||||||||
|
Depreciation differences |
(1 | ) | (2 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
|
State tax |
4 | 3 | 5 | 6 | ||||||||||||
|
Tax credits |
- | - | - | (1 | ) | |||||||||||
|
Other permanent items(a) |
- | 1 | - | - | ||||||||||||
|
Effective income tax rate |
37 | % | 36 | % | 39 | % | 42 | % | ||||||||
|
2010: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Non-deductible impairment of goodwill |
32 | - | - | (144 | ) | |||||||||||
|
Production activities deduction |
- | - | - | 7 | ||||||||||||
|
Depreciation differences |
(4 | ) | (3 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(2 | ) | (1 | ) | (1 | ) | 4 | |||||||||
|
State tax |
8 | 3 | 5 | (14 | ) | |||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | (6 | ) | ||||||||||
|
Tax credits |
(3 | ) | - | - | 13 | |||||||||||
|
Change in federal tax law(b) |
3 | 1 | - | (19 | ) | |||||||||||
|
Other permanent items(c) |
- | - | - | (1 | ) | |||||||||||
|
Effective income tax rate |
68 | % | 35 | % | 39 | % | (125 | )% | ||||||||
|
2009: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Depreciation differences |
(1 | ) | (3 | ) | (1 | ) | - | |||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | - | |||||||||
|
State tax |
5 | 3 | 5 | 4 | ||||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | - | |||||||||||
|
Other permanent items(d) |
(1 | ) | - | (1 | ) | (1 | ) | |||||||||
|
Tax credits |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Effective income tax rate |
35 | % | 33 | % | 37 | % | 38 | % | ||||||||
| (a) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses related to lobbying and stock issuance expenses for Ameren Missouri. |
| (b) | Relates to change in taxation of prescription drug benefits to retiree participants from the enactment in 2010 of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Bill of 2010. |
| (c) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses for Genco. |
| (d) | Permanent items are treated differently for book and tax purposes and primarily include Internal Revenue Code Section 199 production activity deductions for Ameren and Genco, company-owned life insurance for Ameren and Ameren Illinois, employee stock ownership plan dividends for Ameren, and nondeductible expenses for Ameren Illinois. |
The following table presents the components of income tax expense (benefit) for the years ended December 31, 2011, 2010, and 2009:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (27 | ) | $ | 3 | $ | (24 | ) | $ | (21 | ) | |||||
|
State |
(5 | ) | 2 | (4 | ) | (7 | ) | |||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
273 | 129 | 123 | 43 | ||||||||||||
|
State |
76 | 31 | 34 | 18 | ||||||||||||
|
Deferred investment tax credits, amortization |
(7 | ) | (4 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 310 | $ | 161 | $ | 127 | $ | 32 | ||||||||
|
2010: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | 13 | $ | (14 | ) | $ | (20 | ) | $ | (5 | ) | |||||
|
State |
10 | (15 | ) | (5 | ) | 6 | ||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
274 | 206 | 132 | 22 | ||||||||||||
|
State |
36 | 27 | 32 | (2 | ) | |||||||||||
|
Deferred investment tax credits, amortization |
(8 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 325 | $ | 199 | $ | 137 | $ | 20 | ||||||||
|
2009: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (73 | ) | $ | (117 | ) | $ | (8 | ) | $ | 22 | |||||
|
State |
3 | (31 | ) | 14 | 14 | |||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
337 | 239 | 64 | 57 | ||||||||||||
|
State |
74 | 42 | 11 | 9 | ||||||||||||
|
Deferred investment tax credits, amortization |
(9 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 332 | $ | 128 | $ | 79 | $ | 101 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
The Illinois corporate income tax rate increased from 7.3% to 9.5%, starting in January 2011. The tax rate is scheduled to decrease to 7.75% in 2015, and it is scheduled to return to 7.3% in 2025. This corporate income tax rate increase in Illinois increased current income tax expense in 2011 by $6 million, $4 million and $3 million for Ameren, Ameren Illinois and Genco, respectively. As a result of this corporate income tax rate increase, accumulated deferred tax balances were revalued, resulting in a decrease in deferred tax expense of $2 million, $3 million and $- million for Ameren, Ameren Illinois, and Genco, respectively.
The following table presents the deferred tax assets and deferred tax liabilities recorded as a result of temporary differences at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,811 | $ | 2,134 | $ | 1,003 | $ | 457 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
3 | (1 | ) | 55 | (54 | ) | ||||||||||
|
Regulatory assets, net |
73 | 73 | - | - | ||||||||||||
|
Deferred employee benefit costs |
(367 | ) | (88 | ) | (109 | ) | (67 | ) | ||||||||
|
Purchase accounting |
35 | - | (27 | ) | 15 | |||||||||||
|
ARO |
(37 | ) | - | 1 | (25 | ) | ||||||||||
|
Other |
(223 | ) | 6 | (86 | ) | (22 | ) | |||||||||
|
Total net accumulated deferred income tax liabilities(b) |
$ | 3,295 | $ | 2,124 | $ | 837 | $ | 304 | ||||||||
|
2010: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,310 | $ | 1,974 | $ | 750 | $ | 378 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
2 | (2 | ) | 71 | (68 | ) | ||||||||||
|
Regulatory assets (liabilities), net |
67 | 68 | (1 | ) | - | |||||||||||
|
Deferred employee benefit costs |
(360 | ) | (87 | ) | (124 | ) | (45 | ) | ||||||||
|
Purchase accounting |
106 | - | 41 | 17 | ||||||||||||
|
ARO |
(48 | ) | (9 | ) | 1 | (27 | ) | |||||||||
|
Other |
(120 | ) | 7 | (57 | ) | 10 | ||||||||||
|
Total net accumulated deferred income tax liabilities(c) |
$ | 2,957 | $ | 1,951 | $ | 681 | $ | 265 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Includes $20 million, $8 million and $58 million as current assets recorded in the balance sheet for Ameren, Ameren Missouri and Ameren Illinois, respectively. |
| (c) | Includes $43 million as current assets recorded in the balance sheet for Ameren Illinois. Includes $71 million, $43 million and $12 million as current liabilities recorded in the balance sheets for Ameren, Ameren Missouri and Genco, respectively. |
The following table presents the components of deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2011:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Net operating loss carryforwards: |
||||||||||||||||
|
Federal(a) |
$ | 136 | $ | 50 | $ | 33 | $ | 8 | ||||||||
|
State(b) |
17 | 3 | 6 | - | ||||||||||||
|
Total net operating loss carryforwards |
$ | 153 | $ | 53 | $ | 39 | $ | 8 | ||||||||
|
Tax credit carryforwards: |
||||||||||||||||
|
Federal(c) |
$ | 72 | $ | 11 | $ | - | $ | 1 | ||||||||
|
State(d) |
28 | 1 | - | 4 | ||||||||||||
|
Total tax credit carryforwards |
$ | 100 | $ | 12 | $ | - | $ | 5 | ||||||||
| (a) | These will begin to expire in 2028. |
| (b) | These will begin to expire in 2017. |
| (c) | These will begin to expire in 2029. |
| (d) | These will begin to expire in 2012. |
Uncertain Tax Positions
A reconciliation of the change in the unrecognized tax benefit balance during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Unrecognized tax benefits – January 1, 2009 |
$ | 110 | $ | 20 | $ | - | $ | 48 | ||||||||
|
Increases based on tax positions prior to 2009 |
90 | 76 | - | 9 | ||||||||||||
|
Decreases based on tax positions prior to 2009 |
(84 | ) | (19 | ) | - | (31 | ) | |||||||||
|
Increases based on tax positions related to 2009 |
19 | 11 | - | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2009 |
$ | 135 | $ | 88 | $ | - | $ | 29 | ||||||||
|
Increases based on tax positions prior to 2010 |
72 | 40 | 27 | 4 | ||||||||||||
|
Decreases based on tax positions prior to 2010 |
(38 | ) | (12 | ) | (2 | ) | (16 | ) | ||||||||
|
Increases based on tax positions related to 2010 |
77 | 48 | 31 | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2010 |
$ | 246 | $ | 164 | $ | 56 | $ | 20 | ||||||||
|
Increases based on tax positions prior to 2011 |
22 | 15 | - | 1 | ||||||||||||
|
Decreases based on tax positions prior to 2011 |
(125 | ) | (63 | ) | (41 | ) | (12 | ) | ||||||||
|
Increases based on tax positions related to 2011 |
17 | 13 | - | 1 | ||||||||||||
|
Changes related to settlements with taxing authorities |
(10 | ) | (5 | ) | (4 | ) | - | |||||||||
|
Decreases related to the lapse of statute of limitations |
(2 | ) | - | - | (1 | ) | ||||||||||
|
Unrecognized tax benefits – December 31, 2011 |
$ | 148 | $ | 124 | $ | 11 | $ | 9 | ||||||||
|
Total unrecognized tax benefits (detriments) that, if recognized, would affect the effective tax rates as of December 31, 2009 |
$ | 6 | $ | 3 | $ | - | $ | - | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2010 |
$ | - | $ | 3 | $ | - | $ | 1 | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2011 |
$ | 1 | $ | 1 | $ | - | $ | 1 | ||||||||
The Ameren Companies recognize interest charges (income) and penalties accrued on tax liabilities on a pretax basis as interest charges (income) or miscellaneous expense in the statements of income.
A reconciliation of the change in the liability for interest on unrecognized tax benefits during the years ended December 31, 2009, 2010, and 2011, is as follows:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
Liability for interest – January 1, 2009 |
$ | 10 | $ | 2 | $ | - | $ | 4 | ||||||||
|
Interest charges (income) for 2009 |
(2 | ) | 2 | - | (2 | ) | ||||||||||
|
Liability for interest – December 31, 2009 |
$ | 8 | $ | 4 | $ | - | $ | 2 | ||||||||
|
Interest charges for 2010 |
9 | 6 | 2 | - | ||||||||||||
|
Liability for interest – December 31, 2010 |
$ | 17 | $ | 10 | $ | 2 | $ | 2 | ||||||||
|
Interest income for 2011 |
(11 | ) | (3 | ) | (1 | ) | (1 | ) | ||||||||
|
Interest payment |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Liability for interest – December 31, 2011 |
$ | 5 | $ | 6 | $ | 1 | $ | 1 | ||||||||
As of December 31, 2009, December 31, 2010, and December 31, 2011, the Ameren Companies have accrued no amount for penalties with respect to unrecognized tax benefits.
In the second quarter of 2011, a final settlement for the years 2005 and 2006 was reached with the Internal Revenue Service. It resulted in the reduction of uncertain tax liabilities by $39 million, $17 million, $12 million, and $4 million for Ameren, Ameren Missouri, Ameren Illinois and Genco, respectively. Ameren's federal income tax returns for the years 2007 through 2009 are before the Appeals Office of the Internal Revenue Service. Ameren's federal income tax return for the year 2010 is currently under examination.
State income tax returns are generally subject to examination for a period of three years after filing of the return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Ameren Companies do not currently have material state income tax issues under examination, administrative appeals, or litigation.
It is expected that a partial settlement will be reached with the Appeals Office of the Internal Revenue Service in the next twelve months for the years 2007 through 2009 that would result in a decrease in uncertain tax liabilities. In addition, it is reasonably possible that other events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits for the Ameren Companies to increase or decrease. However, the Ameren Companies do not believe any such increases or decreases would be material to their results of operations, financial position, or liquidity.
|
|||
NOTE 14 – RELATED PARTY TRANSACTIONS
The Ameren Companies have engaged in, and may in the future engage in, affiliate transactions in the normal course of business. These transactions primarily consist of natural gas and power purchases and sales, services received or rendered, and borrowings and lendings. Transactions between affiliates are reported as intercompany transactions on their financial statements, but are eliminated in consolidation for Ameren's financial statements. Below are the material related party agreements.
Electric Power Supply Agreements
Genco Power Supply Agreements
The following table presents the amount of physical gigawatthour sales under Genco's related party electric power supply agreements with Marketing Company, including EEI's power supply agreement with Marketing Company, for the years ended December 31, 2011, 2010, and 2009:
| December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Genco sales to Marketing Company |
21,040 | 21,656 | 19,598 | |||||||||
Genco entered into a power supply agreement, as amended (PSA), with Marketing Company, whereby Genco agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from Genco's generation fleet. Marketing Company entered into a similar PSA with AERG. Under the PSAs, revenues allocated between Genco and AERG are based on reimbursable expenses and generation. Each PSA will continue through December 31, 2022, and from year to year thereafter unless either party to the respective PSA elects to terminate the PSA by providing the other party with no less than six months advance written notice.
In December 2005, EEI entered into a PSA with Marketing Company, whereby EEI agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from EEI's generation fleet. The price that Marketing Company pays for capacity is set annually based upon prevailing market prices. Marketing Company pays spot market prices for the associated energy. In addition, EEI will at times purchase energy from Marketing Company to fulfill obligations to a nonaffiliated party. This PSA will continue through May 31, 2016, unless either party elects to terminate the PSA by providing the other party with no less than four years advance written notice or five days' written notice in the event of a default, unless the default is cured within 30 business days.
Capacity Supply Agreements
Ameren Illinois, as an electric load-serving entity, must acquire capacity sufficient to meet its obligations to customers.
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary capacity requirements for the period from June 1, 2008, through May 31, 2009. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFPs. Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements for $6 million. In addition, Ameren Missouri contracted to supply a portion of the Ameren Illinois' capacity for $1 million.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2009, through May 31, 2012. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2009, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $4 million, $9 million, and $8 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively. In April 2009, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $2 million, $2 million, and $1 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2010, through May 31, 2013. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2010, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $1 million, $2 million, and $3 million for the 12 months ending May 31, 2011, 2012, and 2013, respectively. In April 2010, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for less than $1 million for the period from June 1, 2010, through May 31, 2013.
Energy Swaps and Energy Products
Ameren Illinois, as an electric load-serving entity, must acquire energy sufficient to meet its obligations to customers.
As part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company (for the benefit of Genco and AERG) to lock in energy prices for 400 to 1,000 megawatts annually of its round-the-clock power requirements during the period June 1, 2008, to December 31, 2012, at then-relevant market prices. These financial contracts do not include capacity, are not load-following products, and do not involve the physical delivery of energy. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives subject to regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities for Ameren Illinois and OCI at Marketing Company. See Note 7 – Derivative Financial Instruments for additional information on these derivatives. Below are the remaining contracted volumes and prices per megawatthour as of December 31, 2011:
| Period | Volume | Price per Megawatthour |
||||||
|
January 1, 2012 – December 31, 2012 |
1,000 MW | $ | 53.08 | |||||
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary financial energy swaps required for the period from June 1, 2008, through May 31, 2009. Marketing Company was a winning supplier in Ameren Illinois' energy swap RFP process. Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for about 2 million megawatthours at approximately $60 per megawatthour.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps from June 1, 2009, through May 31, 2011. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2009, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for approximately 80,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2010, and for approximately 89,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2011.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps for the period from June 1, 2010, through May 31, 2013. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2010, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois will pay for approximately 924,000 megawatthours at approximately $33 per megawatthour during the 12 months ending May 31, 2011, and for approximately 296,000 megawatthours at approximately $40 per megawatthour during the 12 months ending May 31, 2012.
Energy Products
In 2011, Ameren Illinois used a RFP process administered by the IPA to procure energy products that will settle physically from June 1, 2011, through May 31, 2014. Marketing Company and Ameren Missouri were winning suppliers in Ameren Illinois' energy product RFP process. In May 2011, Marketing Company and Ameren Illinois entered into energy product agreements by which Marketing Company will sell and Ameren Illinois will purchase approximately 1,747,200 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 1,840,800 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2013, and approximately 650,000 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2014. In May 2011, Ameren Missouri and Ameren Illinois entered into energy product agreements by which Ameren Missouri will sell and Ameren Illinois will purchase approximately 16,800 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 40,800 megawatthours at approximately $29 per megawatthour during the 12 months ending May 31, 2013, and approximately 40,800 megawatthours at approximately $28 per megawatthour during the 12 months ending May 31, 2014. The 2012 and 2013 energy product agreements between Ameren Missouri and Ameren Illinois are for off-peak hours only.
In February 2012, a rate stability procurement for energy products that will settle physically was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Marketing Company was a winning supplier in Ameren Illinois' energy product procurement process. In February 2012, Marketing Company and Ameren Illinois entered into energy product agreements pursuant to which Marketing Company will sell and Ameren Illinois will purchase approximately 3,942,000 megawatthours at approximately $30 per megawatthour during the 12 months ending May 31, 2014, approximately 3,504,000 megawatthours at approximately $32 per megawatthour during the 12 months ending May 31, 2015, and approximately 1,317,600 megawatthours at approximately $34 per megawatthour during the 12 months ending May 31, 2016. The energy product agreements were based on around-the-clock prices.
Interconnection and Transmission Agreements
Ameren Missouri and Ameren Illinois are parties to an interconnection agreement for the use of their respective transmission lines and other facilities for the distribution of power. These agreements have no contractual expiration date, but may be terminated by either party with three years' notice.
Joint Ownership Agreement
ATXI and Ameren Illinois have a joint ownership agreement to construct, own, operate, and maintain certain electric transmission assets in Illinois. Under the terms of this agreement, Ameren Illinois and ATXI are responsible for their applicable share of all costs related to the construction, operation, and maintenance of electric transmission systems. Ameren is the primary beneficiary of ATXI, and therefore consolidates ATXI. Currently, there are no construction projects or joint ownership of existing assets under this agreement.
In January 2011, ATXI repaid advances for the construction of transmission assets to Ameren Illinois in the amount of $52 million, including $3 million of accrued interest.
In March 2011, Ameren Illinois and ATXI signed an agreement to transfer, at cost, all of ATXI's construction work in progress assets related to the construction of a transmission line to Ameren Illinois for $20 million. In April 2011, Ameren Illinois paid ATXI for these assets.
Support Services Agreements
Ameren Services provides support services to its affiliates. The costs of support services, including wages, employee benefits, professional services, and other expenses, are based on, or are an allocation of, actual costs incurred. AFS provided support services to its affiliates through December 31, 2010. Effective January 1, 2011, the services previously performed by AFS are performed within the Ameren Missouri, Ameren Illinois and Merchant Generation business segments. In addition, Ameren Missouri, Ameren Illinois and Genco provide affiliates, primarily Ameren Services, with access to their facilities for administrative purposes. The cost of the rent and facility services are based on, or are an allocation of, actual costs incurred.
Gas Sales and Transportation Agreement
Under a gas transportation agreement, Genco acquires gas transportation service from Ameren Missouri. This agreement expires in February 2016.
Money Pools
See Note 5 – Long-term Debt and Equity Financings for discussion of affiliate borrowing arrangements.
Collateral Postings
Under the terms of the 2011, 2010, and 2009 Illinois power procurement agreements entered into through a RFP process administered by the IPA, suppliers must post collateral under certain market conditions to protect Ameren Illinois in the event of nonperformance. The collateral postings are unilateral, meaning that only the suppliers would be required to post collateral. Therefore, Ameren Missouri, as a winning supplier of capacity and energy products, and Marketing Company, as a winning supplier of capacity, financial energy swaps, and energy products, may be required to post collateral. As of December 31, 2011, and 2010, there were no collateral postings required of Ameren Missouri or Marketing Company related to the 2011, 2010, and 2009 Illinois power procurement agreements.
Intercompany Transfers
On October 1, 2010, Ameren Illinois distributed AERG's common stock to Ameren in connection with the Ameren Illinois Merger. Ameren subsequently contributed the AERG common stock to AER. The distribution of AERG
common stock was accounted for as a transaction between entities under common control; therefore, Ameren Illinois transferred AERG to Ameren based on AERG's carrying
value. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
The following table presents the impact on Ameren Missouri, Ameren Illinois and Genco, of related party transactions for the years ended December 31, 2011, 2010, and 2009. It is based primarily on the agreements discussed above and the money pool arrangements discussed in Note 4 – Short-Term Debt and Liquidity.
| Agreement | Income Statement Line Item | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
Genco and EEI power supply |
Operating Revenues | 2011 | $ | (a | ) | $ | (a | ) | $ | 1,006 | ||||||||
|
agreements with Marketing Company |
2010 | (a | ) | (a | ) | 1,059 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1,071 | |||||||||||||
|
Ameren Missouri power supply agreements |
Operating Revenues | 2011 | 2 | (a | ) | (a | ) | |||||||||||
|
with Ameren Illinois |
2010 | 2 | (a | ) | (a | ) | ||||||||||||
| 2009 | 3 | (a | ) | (a | ) | |||||||||||||
|
Ameren Missouri and Genco gas |
Operating Revenues | 2011 | 1 | (a | ) | (a | ) | |||||||||||
|
transportation agreement |
2010 | 1 | (a | ) | (a | ) | ||||||||||||
| 2009 | 1 | (a | ) | (a | ) | |||||||||||||
|
Genco gas sales to Medina Valley |
Operating Revenues | 2011 | (a | ) | (a | ) | 3 | |||||||||||
| 2010 | (a | ) | (a | ) | 2 | |||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Genco gas sales to distribution companies |
Operating Revenues | 2011 | (a | ) | (a | ) | - | |||||||||||
| 2010 | (a | ) | (a | ) | 1 | |||||||||||||
| 2009 | (a | ) | (a | ) | 2 | |||||||||||||
|
Ameren Missouri, Ameren Illinois |
Operating Revenues | 2011 | 16 | 1 | - | |||||||||||||
|
and Genco rent and facility services |
2010 | 16 | 1 | 1 | ||||||||||||||
| 2009 | 18 | 1 | 1 | |||||||||||||||
|
Total Operating Revenues |
2011 | $ | 19 | $ | 1 | $ | 1,009 | |||||||||||
| 2010 | 19 | 1 | 1,063 | |||||||||||||||
| 2009 | 22 | 1 | 1,075 | |||||||||||||||
|
Ameren Missouri and Genco gas |
Fuel | 2011 | $ | (a | ) | $ | (a | ) | $ | 1 | ||||||||
|
transportation agreement |
2010 | (a | ) | (a | ) | 1 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Ameren Illinois power supply agreements |
Purchased Power | 2011 | $ | (a | ) | $ | 232 | $ | (a | ) | ||||||||
|
with Marketing Company |
2010 | (a | ) | 233 | (a | ) | ||||||||||||
| 2009 | (a | ) | 400 | (a | ) | |||||||||||||
|
Ameren Illinois power supply |
Purchased Power | 2011 | (a | ) | 2 | (a | ) | |||||||||||
|
agreements with Ameren Missouri |
2010 | (a | ) | 2 | (a | ) | ||||||||||||
| 2009 | (a | ) | 3 | (a | ) | |||||||||||||
|
Ameren Illinois ancillary services agreement |
Purchased Power | 2011 | (a | ) | - | (a | ) | |||||||||||
|
with Marketing Company |
2010 | (a | ) | - | (a | ) | ||||||||||||
| 2009 | (a | ) | (b | ) | (a | ) | ||||||||||||
|
EEI power supply agreement with |
Purchased Power | 2011 | (a | ) | (a | ) | 36 | |||||||||||
|
Marketing Company |
2010 | (a | ) | (a | ) | 11 | ||||||||||||
| 2009 | (a | ) | (a | ) | 42 | |||||||||||||
|
Total Purchased Power |
2011 | $ | (a | ) | $ | 234 | $ | 37 | ||||||||||
| 2010 | (a | ) | 235 | 12 | ||||||||||||||
| 2009 | (a | ) | 403 | 43 | ||||||||||||||
|
Gas purchases from Genco |
Gas Purchased for Resale | 2011 | $ | (a | ) | $ | - | $ | (a | ) | ||||||||
| 2010 | (a | ) | 1 | (a | ) | |||||||||||||
| 2009 | (a | ) | 2 | (a | ) | |||||||||||||
|
Ameren Services support services |
Other Operations and | 2011 | $ | 114 | $ | 90 | $ | 19 | ||||||||||
|
agreement |
Maintenance |
2010 | 128 | 102 | 23 | |||||||||||||
| 2009 | 131 | 101 | 27 | |||||||||||||||
|
AFS support services agreement |
Other Operations and | 2011 | (a | ) | (a | ) | (a | ) | ||||||||||
|
Maintenance |
2010 | 7 | (b | ) | 3 | |||||||||||||
| 2009 | 7 | 6 | 3 | |||||||||||||||
|
Insurance premiums(c) |
Other Operations and | 2011 | (b | ) | (a | ) | - | |||||||||||
|
Maintenance |
2010 | 1 | (a | ) | - | |||||||||||||
| 2009 | 2 | (a | ) | 1 | ||||||||||||||
|
Total Other Operations and |
2011 | $ | 114 | $ | 90 | $ | 19 | |||||||||||
|
Maintenance Expenses |
2010 | 136 | 102 | 26 | ||||||||||||||
| 2009 | 140 | 107 | 31 | |||||||||||||||
|
Money pool borrowings (advances) |
Interest (Charges) | 2011 | $ | - | $ | - | $ | (b | ) | |||||||||
|
Income |
2010 | - | (b | ) | (b | ) | ||||||||||||
| 2009 | - | (b | ) | (1 | ) | |||||||||||||
| (a) | Not applicable. |
| (b) | Amount less than $1 million. |
| (c) | Represents insurance premiums paid to Energy Risk Assurance Company, an affiliate for replacement power, property damage, and terrorism coverage. |
NOTE 14 – RELATED PARTY TRANSACTIONS
The Ameren Companies have engaged in, and may in the future engage in, affiliate transactions in the normal course of business. These transactions primarily consist of natural gas and power purchases and sales, services received or rendered, and borrowings and lendings. Transactions between affiliates are reported as intercompany transactions on their financial statements, but are eliminated in consolidation for Ameren's financial statements. Below are the material related party agreements.
Electric Power Supply Agreements
Genco Power Supply Agreements
The following table presents the amount of physical gigawatthour sales under Genco's related party electric power supply agreements with Marketing Company, including EEI's power supply agreement with Marketing Company, for the years ended December 31, 2011, 2010, and 2009:
| December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Genco sales to Marketing Company |
21,040 | 21,656 | 19,598 | |||||||||
Genco entered into a power supply agreement, as amended (PSA), with Marketing Company, whereby Genco agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from Genco's generation fleet. Marketing Company entered into a similar PSA with AERG. Under the PSAs, revenues allocated between Genco and AERG are based on reimbursable expenses and generation. Each PSA will continue through December 31, 2022, and from year to year thereafter unless either party to the respective PSA elects to terminate the PSA by providing the other party with no less than six months advance written notice.
In December 2005, EEI entered into a PSA with Marketing Company, whereby EEI agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from EEI's generation fleet. The price that Marketing Company pays for capacity is set annually based upon prevailing market prices. Marketing Company pays spot market prices for the associated energy. In addition, EEI will at times purchase energy from Marketing Company to fulfill obligations to a nonaffiliated party. This PSA will continue through May 31, 2016, unless either party elects to terminate the PSA by providing the other party with no less than four years advance written notice or five days' written notice in the event of a default, unless the default is cured within 30 business days.
Capacity Supply Agreements
Ameren Illinois, as an electric load-serving entity, must acquire capacity sufficient to meet its obligations to customers.
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary capacity requirements for the period from June 1, 2008, through May 31, 2009. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFPs. Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements for $6 million. In addition, Ameren Missouri contracted to supply a portion of the Ameren Illinois' capacity for $1 million.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2009, through May 31, 2012. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2009, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $4 million, $9 million, and $8 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively. In April 2009, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $2 million, $2 million, and $1 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2010, through May 31, 2013. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2010, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $1 million, $2 million, and $3 million for the 12 months ending May 31, 2011, 2012, and 2013, respectively. In April 2010, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for less than $1 million for the period from June 1, 2010, through May 31, 2013.
Energy Swaps and Energy Products
Ameren Illinois, as an electric load-serving entity, must acquire energy sufficient to meet its obligations to customers.
As part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company (for the benefit of Genco and AERG) to lock in energy prices for 400 to 1,000 megawatts annually of its round-the-clock power requirements during the period June 1, 2008, to December 31, 2012, at then-relevant market prices. These financial contracts do not include capacity, are not load-following products, and do not involve the physical delivery of energy. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives subject to regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities for Ameren Illinois and OCI at Marketing Company. See Note 7 – Derivative Financial Instruments for additional information on these derivatives. Below are the remaining contracted volumes and prices per megawatthour as of December 31, 2011:
| Period | Volume | Price per Megawatthour |
||||||
|
January 1, 2012 – December 31, 2012 |
1,000 MW | $ | 53.08 | |||||
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary financial energy swaps required for the period from June 1, 2008, through May 31, 2009. Marketing Company was a winning supplier in Ameren Illinois' energy swap RFP process. Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for about 2 million megawatthours at approximately $60 per megawatthour.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps from June 1, 2009, through May 31, 2011. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2009, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for approximately 80,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2010, and for approximately 89,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2011.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps for the period from June 1, 2010, through May 31, 2013. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2010, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois will pay for approximately 924,000 megawatthours at approximately $33 per megawatthour during the 12 months ending May 31, 2011, and for approximately 296,000 megawatthours at approximately $40 per megawatthour during the 12 months ending May 31, 2012.
Energy Products
In 2011, Ameren Illinois used a RFP process administered by the IPA to procure energy products that will settle physically from June 1, 2011, through May 31, 2014. Marketing Company and Ameren Missouri were winning suppliers in Ameren Illinois' energy product RFP process. In May 2011, Marketing Company and Ameren Illinois entered into energy product agreements by which Marketing Company will sell and Ameren Illinois will purchase approximately 1,747,200 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 1,840,800 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2013, and approximately 650,000 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2014. In May 2011, Ameren Missouri and Ameren Illinois entered into energy product agreements by which Ameren Missouri will sell and Ameren Illinois will purchase approximately 16,800 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 40,800 megawatthours at approximately $29 per megawatthour during the 12 months ending May 31, 2013, and approximately 40,800 megawatthours at approximately $28 per megawatthour during the 12 months ending May 31, 2014. The 2012 and 2013 energy product agreements between Ameren Missouri and Ameren Illinois are for off-peak hours only.
In February 2012, a rate stability procurement for energy products that will settle physically was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Marketing Company was a winning supplier in Ameren Illinois' energy product procurement process. In February 2012, Marketing Company and Ameren Illinois entered into energy product agreements pursuant to which Marketing Company will sell and Ameren Illinois will purchase approximately 3,942,000 megawatthours at approximately $30 per megawatthour during the 12 months ending May 31, 2014, approximately 3,504,000 megawatthours at approximately $32 per megawatthour during the 12 months ending May 31, 2015, and approximately 1,317,600 megawatthours at approximately $34 per megawatthour during the 12 months ending May 31, 2016. The energy product agreements were based on around-the-clock prices.
Interconnection and Transmission Agreements
Ameren Missouri and Ameren Illinois are parties to an interconnection agreement for the use of their respective transmission lines and other facilities for the distribution of power. These agreements have no contractual expiration date, but may be terminated by either party with three years' notice.
Joint Ownership Agreement
ATXI and Ameren Illinois have a joint ownership agreement to construct, own, operate, and maintain certain electric transmission assets in Illinois. Under the terms of this agreement, Ameren Illinois and ATXI are responsible for their applicable share of all costs related to the construction, operation, and maintenance of electric transmission systems. Ameren is the primary beneficiary of ATXI, and therefore consolidates ATXI. Currently, there are no construction projects or joint ownership of existing assets under this agreement.
In January 2011, ATXI repaid advances for the construction of transmission assets to Ameren Illinois in the amount of $52 million, including $3 million of accrued interest.
In March 2011, Ameren Illinois and ATXI signed an agreement to transfer, at cost, all of ATXI's construction work in progress assets related to the construction of a transmission line to Ameren Illinois for $20 million. In April 2011, Ameren Illinois paid ATXI for these assets.
Support Services Agreements
Ameren Services provides support services to its affiliates. The costs of support services, including wages, employee benefits, professional services, and other expenses, are based on, or are an allocation of, actual costs incurred. AFS provided support services to its affiliates through December 31, 2010. Effective January 1, 2011, the services previously performed by AFS are performed within the Ameren Missouri, Ameren Illinois and Merchant Generation business segments. In addition, Ameren Missouri, Ameren Illinois and Genco provide affiliates, primarily Ameren Services, with access to their facilities for administrative purposes. The cost of the rent and facility services are based on, or are an allocation of, actual costs incurred.
Gas Sales and Transportation Agreement
Under a gas transportation agreement, Genco acquires gas transportation service from Ameren Missouri. This agreement expires in February 2016.
Money Pools
See Note 5 – Long-term Debt and Equity Financings for discussion of affiliate borrowing arrangements.
Collateral Postings
Under the terms of the 2011, 2010, and 2009 Illinois power procurement agreements entered into through a RFP process administered by the IPA, suppliers must post collateral under certain market conditions to protect Ameren Illinois in the event of nonperformance. The collateral postings are unilateral, meaning that only the suppliers would be required to post collateral. Therefore, Ameren Missouri, as a winning supplier of capacity and energy products, and Marketing Company, as a winning supplier of capacity, financial energy swaps, and energy products, may be required to post collateral. As of December 31, 2011, and 2010, there were no collateral postings required of Ameren Missouri or Marketing Company related to the 2011, 2010, and 2009 Illinois power procurement agreements.
Intercompany Transfers
On October 1, 2010, Ameren Illinois distributed AERG's common stock to Ameren in connection with the Ameren Illinois Merger. Ameren subsequently contributed the AERG common stock to AER. The distribution of AERG
common stock was accounted for as a transaction between entities under common control; therefore, Ameren Illinois transferred AERG to Ameren based on AERG's carrying
value. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
The following table presents the impact on Ameren Missouri, Ameren Illinois and Genco, of related party transactions for the years ended December 31, 2011, 2010, and 2009. It is based primarily on the agreements discussed above and the money pool arrangements discussed in Note 4 – Short-Term Debt and Liquidity.
| Agreement | Income Statement Line Item | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
Genco and EEI power supply |
Operating Revenues | 2011 | $ | (a | ) | $ | (a | ) | $ | 1,006 | ||||||||
|
agreements with Marketing Company |
2010 | (a | ) | (a | ) | 1,059 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1,071 | |||||||||||||
|
Ameren Missouri power supply agreements |
Operating Revenues | 2011 | 2 | (a | ) | (a | ) | |||||||||||
|
with Ameren Illinois |
2010 | 2 | (a | ) | (a | ) | ||||||||||||
| 2009 | 3 | (a | ) | (a | ) | |||||||||||||
|
Ameren Missouri and Genco gas |
Operating Revenues | 2011 | 1 | (a | ) | (a | ) | |||||||||||
|
transportation agreement |
2010 | 1 | (a | ) | (a | ) | ||||||||||||
| 2009 | 1 | (a | ) | (a | ) | |||||||||||||
|
Genco gas sales to Medina Valley |
Operating Revenues | 2011 | (a | ) | (a | ) | 3 | |||||||||||
| 2010 | (a | ) | (a | ) | 2 | |||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Genco gas sales to distribution companies |
Operating Revenues | 2011 | (a | ) | (a | ) | - | |||||||||||
| 2010 | (a | ) | (a | ) | 1 | |||||||||||||
| 2009 | (a | ) | (a | ) | 2 | |||||||||||||
|
Ameren Missouri, Ameren Illinois |
Operating Revenues | 2011 | 16 | 1 | - | |||||||||||||
|
and Genco rent and facility services |
2010 | 16 | 1 | 1 | ||||||||||||||
| 2009 | 18 | 1 | 1 | |||||||||||||||
|
Total Operating Revenues |
2011 | $ | 19 | $ | 1 | $ | 1,009 | |||||||||||
| 2010 | 19 | 1 | 1,063 | |||||||||||||||
| 2009 | 22 | 1 | 1,075 | |||||||||||||||
|
Ameren Missouri and Genco gas |
Fuel | 2011 | $ | (a | ) | $ | (a | ) | $ | 1 | ||||||||
|
transportation agreement |
2010 | (a | ) | (a | ) | 1 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Ameren Illinois power supply agreements |
Purchased Power | 2011 | $ | (a | ) | $ | 232 | $ | (a | ) | ||||||||
|
with Marketing Company |
2010 | (a | ) | 233 | (a | ) | ||||||||||||
| 2009 | (a | ) | 400 | (a | ) | |||||||||||||
|
Ameren Illinois power supply |
Purchased Power | 2011 | (a | ) | 2 | (a | ) | |||||||||||
|
agreements with Ameren Missouri |
2010 | (a | ) | 2 | (a | ) | ||||||||||||
| 2009 | (a | ) | 3 | (a | ) | |||||||||||||
|
Ameren Illinois ancillary services agreement |
Purchased Power | 2011 | (a | ) | - | (a | ) | |||||||||||
|
with Marketing Company |
2010 | (a | ) | - | (a | ) | ||||||||||||
| 2009 | (a | ) | (b | ) | (a | ) | ||||||||||||
|
EEI power supply agreement with |
Purchased Power | 2011 | (a | ) | (a | ) | 36 | |||||||||||
|
Marketing Company |
2010 | (a | ) | (a | ) | 11 | ||||||||||||
| 2009 | (a | ) | (a | ) | 42 | |||||||||||||
|
Total Purchased Power |
2011 | $ | (a | ) | $ | 234 | $ | 37 | ||||||||||
| 2010 | (a | ) | 235 | 12 | ||||||||||||||
| 2009 | (a | ) | 403 | 43 | ||||||||||||||
|
Gas purchases from Genco |
Gas Purchased for Resale | 2011 | $ | (a | ) | $ | - | $ | (a | ) | ||||||||
| 2010 | (a | ) | 1 | (a | ) | |||||||||||||
| 2009 | (a | ) | 2 | (a | ) | |||||||||||||
|
Ameren Services support services |
Other Operations and | 2011 | $ | 114 | $ | 90 | $ | 19 | ||||||||||
|
agreement |
Maintenance |
2010 | 128 | 102 | 23 | |||||||||||||
| 2009 | 131 | 101 | 27 | |||||||||||||||
|
AFS support services agreement |
Other Operations and | 2011 | (a | ) | (a | ) | (a | ) | ||||||||||
|
Maintenance |
2010 | 7 | (b | ) | 3 | |||||||||||||
| 2009 | 7 | 6 | 3 | |||||||||||||||
|
Insurance premiums(c) |
Other Operations and | 2011 | (b | ) | (a | ) | - | |||||||||||
|
Maintenance |
2010 | 1 | (a | ) | - | |||||||||||||
| 2009 | 2 | (a | ) | 1 | ||||||||||||||
|
Total Other Operations and |
2011 | $ | 114 | $ | 90 | $ | 19 | |||||||||||
|
Maintenance Expenses |
2010 | 136 | 102 | 26 | ||||||||||||||
| 2009 | 140 | 107 | 31 | |||||||||||||||
|
Money pool borrowings (advances) |
Interest (Charges) | 2011 | $ | - | $ | - | $ | (b | ) | |||||||||
|
Income |
2010 | - | (b | ) | (b | ) | ||||||||||||
| 2009 | - | (b | ) | (1 | ) | |||||||||||||
| (a) | Not applicable. |
| (b) | Amount less than $1 million. |
| (c) | Represents insurance premiums paid to Energy Risk Assurance Company, an affiliate for replacement power, property damage, and terrorism coverage. |
NOTE 14 – RELATED PARTY TRANSACTIONS
The Ameren Companies have engaged in, and may in the future engage in, affiliate transactions in the normal course of business. These transactions primarily consist of natural gas and power purchases and sales, services received or rendered, and borrowings and lendings. Transactions between affiliates are reported as intercompany transactions on their financial statements, but are eliminated in consolidation for Ameren's financial statements. Below are the material related party agreements.
Electric Power Supply Agreements
Genco Power Supply Agreements
The following table presents the amount of physical gigawatthour sales under Genco's related party electric power supply agreements with Marketing Company, including EEI's power supply agreement with Marketing Company, for the years ended December 31, 2011, 2010, and 2009:
| December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Genco sales to Marketing Company |
21,040 | 21,656 | 19,598 | |||||||||
Genco entered into a power supply agreement, as amended (PSA), with Marketing Company, whereby Genco agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from Genco's generation fleet. Marketing Company entered into a similar PSA with AERG. Under the PSAs, revenues allocated between Genco and AERG are based on reimbursable expenses and generation. Each PSA will continue through December 31, 2022, and from year to year thereafter unless either party to the respective PSA elects to terminate the PSA by providing the other party with no less than six months advance written notice.
In December 2005, EEI entered into a PSA with Marketing Company, whereby EEI agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from EEI's generation fleet. The price that Marketing Company pays for capacity is set annually based upon prevailing market prices. Marketing Company pays spot market prices for the associated energy. In addition, EEI will at times purchase energy from Marketing Company to fulfill obligations to a nonaffiliated party. This PSA will continue through May 31, 2016, unless either party elects to terminate the PSA by providing the other party with no less than four years advance written notice or five days' written notice in the event of a default, unless the default is cured within 30 business days.
Capacity Supply Agreements
Ameren Illinois, as an electric load-serving entity, must acquire capacity sufficient to meet its obligations to customers.
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary capacity requirements for the period from June 1, 2008, through May 31, 2009. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFPs. Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements for $6 million. In addition, Ameren Missouri contracted to supply a portion of the Ameren Illinois' capacity for $1 million.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2009, through May 31, 2012. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2009, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $4 million, $9 million, and $8 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively. In April 2009, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $2 million, $2 million, and $1 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2010, through May 31, 2013. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2010, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $1 million, $2 million, and $3 million for the 12 months ending May 31, 2011, 2012, and 2013, respectively. In April 2010, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for less than $1 million for the period from June 1, 2010, through May 31, 2013.
Energy Swaps and Energy Products
Ameren Illinois, as an electric load-serving entity, must acquire energy sufficient to meet its obligations to customers.
As part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company (for the benefit of Genco and AERG) to lock in energy prices for 400 to 1,000 megawatts annually of its round-the-clock power requirements during the period June 1, 2008, to December 31, 2012, at then-relevant market prices. These financial contracts do not include capacity, are not load-following products, and do not involve the physical delivery of energy. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives subject to regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities for Ameren Illinois and OCI at Marketing Company. See Note 7 – Derivative Financial Instruments for additional information on these derivatives. Below are the remaining contracted volumes and prices per megawatthour as of December 31, 2011:
| Period | Volume | Price per Megawatthour |
||||||
|
January 1, 2012 – December 31, 2012 |
1,000 MW | $ | 53.08 | |||||
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary financial energy swaps required for the period from June 1, 2008, through May 31, 2009. Marketing Company was a winning supplier in Ameren Illinois' energy swap RFP process. Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for about 2 million megawatthours at approximately $60 per megawatthour.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps from June 1, 2009, through May 31, 2011. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2009, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for approximately 80,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2010, and for approximately 89,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2011.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps for the period from June 1, 2010, through May 31, 2013. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2010, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois will pay for approximately 924,000 megawatthours at approximately $33 per megawatthour during the 12 months ending May 31, 2011, and for approximately 296,000 megawatthours at approximately $40 per megawatthour during the 12 months ending May 31, 2012.
Energy Products
In 2011, Ameren Illinois used a RFP process administered by the IPA to procure energy products that will settle physically from June 1, 2011, through May 31, 2014. Marketing Company and Ameren Missouri were winning suppliers in Ameren Illinois' energy product RFP process. In May 2011, Marketing Company and Ameren Illinois entered into energy product agreements by which Marketing Company will sell and Ameren Illinois will purchase approximately 1,747,200 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 1,840,800 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2013, and approximately 650,000 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2014. In May 2011, Ameren Missouri and Ameren Illinois entered into energy product agreements by which Ameren Missouri will sell and Ameren Illinois will purchase approximately 16,800 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 40,800 megawatthours at approximately $29 per megawatthour during the 12 months ending May 31, 2013, and approximately 40,800 megawatthours at approximately $28 per megawatthour during the 12 months ending May 31, 2014. The 2012 and 2013 energy product agreements between Ameren Missouri and Ameren Illinois are for off-peak hours only.
In February 2012, a rate stability procurement for energy products that will settle physically was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Marketing Company was a winning supplier in Ameren Illinois' energy product procurement process. In February 2012, Marketing Company and Ameren Illinois entered into energy product agreements pursuant to which Marketing Company will sell and Ameren Illinois will purchase approximately 3,942,000 megawatthours at approximately $30 per megawatthour during the 12 months ending May 31, 2014, approximately 3,504,000 megawatthours at approximately $32 per megawatthour during the 12 months ending May 31, 2015, and approximately 1,317,600 megawatthours at approximately $34 per megawatthour during the 12 months ending May 31, 2016. The energy product agreements were based on around-the-clock prices.
Interconnection and Transmission Agreements
Ameren Missouri and Ameren Illinois are parties to an interconnection agreement for the use of their respective transmission lines and other facilities for the distribution of power. These agreements have no contractual expiration date, but may be terminated by either party with three years' notice.
Joint Ownership Agreement
ATXI and Ameren Illinois have a joint ownership agreement to construct, own, operate, and maintain certain electric transmission assets in Illinois. Under the terms of this agreement, Ameren Illinois and ATXI are responsible for their applicable share of all costs related to the construction, operation, and maintenance of electric transmission systems. Ameren is the primary beneficiary of ATXI, and therefore consolidates ATXI. Currently, there are no construction projects or joint ownership of existing assets under this agreement.
In January 2011, ATXI repaid advances for the construction of transmission assets to Ameren Illinois in the amount of $52 million, including $3 million of accrued interest.
In March 2011, Ameren Illinois and ATXI signed an agreement to transfer, at cost, all of ATXI's construction work in progress assets related to the construction of a transmission line to Ameren Illinois for $20 million. In April 2011, Ameren Illinois paid ATXI for these assets.
Support Services Agreements
Ameren Services provides support services to its affiliates. The costs of support services, including wages, employee benefits, professional services, and other expenses, are based on, or are an allocation of, actual costs incurred. AFS provided support services to its affiliates through December 31, 2010. Effective January 1, 2011, the services previously performed by AFS are performed within the Ameren Missouri, Ameren Illinois and Merchant Generation business segments. In addition, Ameren Missouri, Ameren Illinois and Genco provide affiliates, primarily Ameren Services, with access to their facilities for administrative purposes. The cost of the rent and facility services are based on, or are an allocation of, actual costs incurred.
Gas Sales and Transportation Agreement
Under a gas transportation agreement, Genco acquires gas transportation service from Ameren Missouri. This agreement expires in February 2016.
Money Pools
See Note 5 – Long-term Debt and Equity Financings for discussion of affiliate borrowing arrangements.
Collateral Postings
Under the terms of the 2011, 2010, and 2009 Illinois power procurement agreements entered into through a RFP process administered by the IPA, suppliers must post collateral under certain market conditions to protect Ameren Illinois in the event of nonperformance. The collateral postings are unilateral, meaning that only the suppliers would be required to post collateral. Therefore, Ameren Missouri, as a winning supplier of capacity and energy products, and Marketing Company, as a winning supplier of capacity, financial energy swaps, and energy products, may be required to post collateral. As of December 31, 2011, and 2010, there were no collateral postings required of Ameren Missouri or Marketing Company related to the 2011, 2010, and 2009 Illinois power procurement agreements.
Intercompany Transfers
On October 1, 2010, Ameren Illinois distributed AERG's common stock to Ameren in connection with the Ameren Illinois Merger. Ameren subsequently contributed the AERG common stock to AER. The distribution of AERG
common stock was accounted for as a transaction between entities under common control; therefore, Ameren Illinois transferred AERG to Ameren based on AERG's carrying
value. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
The following table presents the impact on Ameren Missouri, Ameren Illinois and Genco, of related party transactions for the years ended December 31, 2011, 2010, and 2009. It is based primarily on the agreements discussed above and the money pool arrangements discussed in Note 4 – Short-Term Debt and Liquidity.
| Agreement | Income Statement Line Item | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
Genco and EEI power supply |
Operating Revenues | 2011 | $ | (a | ) | $ | (a | ) | $ | 1,006 | ||||||||
|
agreements with Marketing Company |
2010 | (a | ) | (a | ) | 1,059 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1,071 | |||||||||||||
|
Ameren Missouri power supply agreements |
Operating Revenues | 2011 | 2 | (a | ) | (a | ) | |||||||||||
|
with Ameren Illinois |
2010 | 2 | (a | ) | (a | ) | ||||||||||||
| 2009 | 3 | (a | ) | (a | ) | |||||||||||||
|
Ameren Missouri and Genco gas |
Operating Revenues | 2011 | 1 | (a | ) | (a | ) | |||||||||||
|
transportation agreement |
2010 | 1 | (a | ) | (a | ) | ||||||||||||
| 2009 | 1 | (a | ) | (a | ) | |||||||||||||
|
Genco gas sales to Medina Valley |
Operating Revenues | 2011 | (a | ) | (a | ) | 3 | |||||||||||
| 2010 | (a | ) | (a | ) | 2 | |||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Genco gas sales to distribution companies |
Operating Revenues | 2011 | (a | ) | (a | ) | - | |||||||||||
| 2010 | (a | ) | (a | ) | 1 | |||||||||||||
| 2009 | (a | ) | (a | ) | 2 | |||||||||||||
|
Ameren Missouri, Ameren Illinois |
Operating Revenues | 2011 | 16 | 1 | - | |||||||||||||
|
and Genco rent and facility services |
2010 | 16 | 1 | 1 | ||||||||||||||
| 2009 | 18 | 1 | 1 | |||||||||||||||
|
Total Operating Revenues |
2011 | $ | 19 | $ | 1 | $ | 1,009 | |||||||||||
| 2010 | 19 | 1 | 1,063 | |||||||||||||||
| 2009 | 22 | 1 | 1,075 | |||||||||||||||
|
Ameren Missouri and Genco gas |
Fuel | 2011 | $ | (a | ) | $ | (a | ) | $ | 1 | ||||||||
|
transportation agreement |
2010 | (a | ) | (a | ) | 1 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Ameren Illinois power supply agreements |
Purchased Power | 2011 | $ | (a | ) | $ | 232 | $ | (a | ) | ||||||||
|
with Marketing Company |
2010 | (a | ) | 233 | (a | ) | ||||||||||||
| 2009 | (a | ) | 400 | (a | ) | |||||||||||||
|
Ameren Illinois power supply |
Purchased Power | 2011 | (a | ) | 2 | (a | ) | |||||||||||
|
agreements with Ameren Missouri |
2010 | (a | ) | 2 | (a | ) | ||||||||||||
| 2009 | (a | ) | 3 | (a | ) | |||||||||||||
|
Ameren Illinois ancillary services agreement |
Purchased Power | 2011 | (a | ) | - | (a | ) | |||||||||||
|
with Marketing Company |
2010 | (a | ) | - | (a | ) | ||||||||||||
| 2009 | (a | ) | (b | ) | (a | ) | ||||||||||||
|
EEI power supply agreement with |
Purchased Power | 2011 | (a | ) | (a | ) | 36 | |||||||||||
|
Marketing Company |
2010 | (a | ) | (a | ) | 11 | ||||||||||||
| 2009 | (a | ) | (a | ) | 42 | |||||||||||||
|
Total Purchased Power |
2011 | $ | (a | ) | $ | 234 | $ | 37 | ||||||||||
| 2010 | (a | ) | 235 | 12 | ||||||||||||||
| 2009 | (a | ) | 403 | 43 | ||||||||||||||
|
Gas purchases from Genco |
Gas Purchased for Resale | 2011 | $ | (a | ) | $ | - | $ | (a | ) | ||||||||
| 2010 | (a | ) | 1 | (a | ) | |||||||||||||
| 2009 | (a | ) | 2 | (a | ) | |||||||||||||
|
Ameren Services support services |
Other Operations and | 2011 | $ | 114 | $ | 90 | $ | 19 | ||||||||||
|
agreement |
Maintenance |
2010 | 128 | 102 | 23 | |||||||||||||
| 2009 | 131 | 101 | 27 | |||||||||||||||
|
AFS support services agreement |
Other Operations and | 2011 | (a | ) | (a | ) | (a | ) | ||||||||||
|
Maintenance |
2010 | 7 | (b | ) | 3 | |||||||||||||
| 2009 | 7 | 6 | 3 | |||||||||||||||
|
Insurance premiums(c) |
Other Operations and | 2011 | (b | ) | (a | ) | - | |||||||||||
|
Maintenance |
2010 | 1 | (a | ) | - | |||||||||||||
| 2009 | 2 | (a | ) | 1 | ||||||||||||||
|
Total Other Operations and |
2011 | $ | 114 | $ | 90 | $ | 19 | |||||||||||
|
Maintenance Expenses |
2010 | 136 | 102 | 26 | ||||||||||||||
| 2009 | 140 | 107 | 31 | |||||||||||||||
|
Money pool borrowings (advances) |
Interest (Charges) | 2011 | $ | - | $ | - | $ | (b | ) | |||||||||
|
Income |
2010 | - | (b | ) | (b | ) | ||||||||||||
| 2009 | - | (b | ) | (1 | ) | |||||||||||||
| (a) | Not applicable. |
| (b) | Amount less than $1 million. |
| (c) | Represents insurance premiums paid to Energy Risk Assurance Company, an affiliate for replacement power, property damage, and terrorism coverage. |
NOTE 14 – RELATED PARTY TRANSACTIONS
The Ameren Companies have engaged in, and may in the future engage in, affiliate transactions in the normal course of business. These transactions primarily consist of natural gas and power purchases and sales, services received or rendered, and borrowings and lendings. Transactions between affiliates are reported as intercompany transactions on their financial statements, but are eliminated in consolidation for Ameren's financial statements. Below are the material related party agreements.
Electric Power Supply Agreements
Genco Power Supply Agreements
The following table presents the amount of physical gigawatthour sales under Genco's related party electric power supply agreements with Marketing Company, including EEI's power supply agreement with Marketing Company, for the years ended December 31, 2011, 2010, and 2009:
| December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Genco sales to Marketing Company |
21,040 | 21,656 | 19,598 | |||||||||
Genco entered into a power supply agreement, as amended (PSA), with Marketing Company, whereby Genco agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from Genco's generation fleet. Marketing Company entered into a similar PSA with AERG. Under the PSAs, revenues allocated between Genco and AERG are based on reimbursable expenses and generation. Each PSA will continue through December 31, 2022, and from year to year thereafter unless either party to the respective PSA elects to terminate the PSA by providing the other party with no less than six months advance written notice.
In December 2005, EEI entered into a PSA with Marketing Company, whereby EEI agreed to sell and Marketing Company agreed to purchase all of the capacity and energy available from EEI's generation fleet. The price that Marketing Company pays for capacity is set annually based upon prevailing market prices. Marketing Company pays spot market prices for the associated energy. In addition, EEI will at times purchase energy from Marketing Company to fulfill obligations to a nonaffiliated party. This PSA will continue through May 31, 2016, unless either party elects to terminate the PSA by providing the other party with no less than four years advance written notice or five days' written notice in the event of a default, unless the default is cured within 30 business days.
Capacity Supply Agreements
Ameren Illinois, as an electric load-serving entity, must acquire capacity sufficient to meet its obligations to customers.
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary capacity requirements for the period from June 1, 2008, through May 31, 2009. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFPs. Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements for $6 million. In addition, Ameren Missouri contracted to supply a portion of the Ameren Illinois' capacity for $1 million.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2009, through May 31, 2012. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2009, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $4 million, $9 million, and $8 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively. In April 2009, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $2 million, $2 million, and $1 million for the 12 months ending May 31, 2010, 2011, and 2012, respectively.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to contract capacity for the period from June 1, 2010, through May 31, 2013. Both Marketing Company and Ameren Missouri were among the winning suppliers in the capacity RFP process. In April 2010, Marketing Company contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for $1 million, $2 million, and $3 million for the 12 months ending May 31, 2011, 2012, and 2013, respectively. In April 2010, Ameren Missouri contracted to supply a portion of Ameren Illinois' capacity requirements to Ameren Illinois for less than $1 million for the period from June 1, 2010, through May 31, 2013.
Energy Swaps and Energy Products
Ameren Illinois, as an electric load-serving entity, must acquire energy sufficient to meet its obligations to customers.
As part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company (for the benefit of Genco and AERG) to lock in energy prices for 400 to 1,000 megawatts annually of its round-the-clock power requirements during the period June 1, 2008, to December 31, 2012, at then-relevant market prices. These financial contracts do not include capacity, are not load-following products, and do not involve the physical delivery of energy. These financial contracts are derivative instruments. They are accounted for as cash flow hedges by Marketing Company and as derivatives subject to regulatory deferral by Ameren Illinois. Consequently, Ameren Illinois and Marketing Company record the fair value of the contracts on their respective balance sheets and the changes to the fair value in regulatory assets or liabilities for Ameren Illinois and OCI at Marketing Company. See Note 7 – Derivative Financial Instruments for additional information on these derivatives. Below are the remaining contracted volumes and prices per megawatthour as of December 31, 2011:
| Period | Volume | Price per Megawatthour |
||||||
|
January 1, 2012 – December 31, 2012 |
1,000 MW | $ | 53.08 | |||||
Ameren Illinois used RFP processes in early 2008, pursuant to the 2007 Illinois Electric Settlement Agreement, to contract for the necessary financial energy swaps required for the period from June 1, 2008, through May 31, 2009. Marketing Company was a winning supplier in Ameren Illinois' energy swap RFP process. Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for about 2 million megawatthours at approximately $60 per megawatthour.
In 2009, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps from June 1, 2009, through May 31, 2011. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2009, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois paid for approximately 80,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2010, and for approximately 89,000 megawatthours at approximately $48 per megawatthour during the 12 months ending May 31, 2011.
In 2010, Ameren Illinois used a RFP process, administered by the IPA, to procure financial energy swaps for the period from June 1, 2010, through May 31, 2013. Marketing Company was a winning supplier in the financial energy swap RFP process. In May 2010, Marketing Company entered into financial instruments that fixed the price that Ameren Illinois will pay for approximately 924,000 megawatthours at approximately $33 per megawatthour during the 12 months ending May 31, 2011, and for approximately 296,000 megawatthours at approximately $40 per megawatthour during the 12 months ending May 31, 2012.
Energy Products
In 2011, Ameren Illinois used a RFP process administered by the IPA to procure energy products that will settle physically from June 1, 2011, through May 31, 2014. Marketing Company and Ameren Missouri were winning suppliers in Ameren Illinois' energy product RFP process. In May 2011, Marketing Company and Ameren Illinois entered into energy product agreements by which Marketing Company will sell and Ameren Illinois will purchase approximately 1,747,200 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 1,840,800 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2013, and approximately 650,000 megawatthours at approximately $42 per megawatthour during the 12 months ending May 31, 2014. In May 2011, Ameren Missouri and Ameren Illinois entered into energy product agreements by which Ameren Missouri will sell and Ameren Illinois will purchase approximately 16,800 megawatthours at approximately $37 per megawatthour during the 12 months ending May 31, 2012, approximately 40,800 megawatthours at approximately $29 per megawatthour during the 12 months ending May 31, 2013, and approximately 40,800 megawatthours at approximately $28 per megawatthour during the 12 months ending May 31, 2014. The 2012 and 2013 energy product agreements between Ameren Missouri and Ameren Illinois are for off-peak hours only.
In February 2012, a rate stability procurement for energy products that will settle physically was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Marketing Company was a winning supplier in Ameren Illinois' energy product procurement process. In February 2012, Marketing Company and Ameren Illinois entered into energy product agreements pursuant to which Marketing Company will sell and Ameren Illinois will purchase approximately 3,942,000 megawatthours at approximately $30 per megawatthour during the 12 months ending May 31, 2014, approximately 3,504,000 megawatthours at approximately $32 per megawatthour during the 12 months ending May 31, 2015, and approximately 1,317,600 megawatthours at approximately $34 per megawatthour during the 12 months ending May 31, 2016. The energy product agreements were based on around-the-clock prices.
Interconnection and Transmission Agreements
Ameren Missouri and Ameren Illinois are parties to an interconnection agreement for the use of their respective transmission lines and other facilities for the distribution of power. These agreements have no contractual expiration date, but may be terminated by either party with three years' notice.
Joint Ownership Agreement
ATXI and Ameren Illinois have a joint ownership agreement to construct, own, operate, and maintain certain electric transmission assets in Illinois. Under the terms of this agreement, Ameren Illinois and ATXI are responsible for their applicable share of all costs related to the construction, operation, and maintenance of electric transmission systems. Ameren is the primary beneficiary of ATXI, and therefore consolidates ATXI. Currently, there are no construction projects or joint ownership of existing assets under this agreement.
In January 2011, ATXI repaid advances for the construction of transmission assets to Ameren Illinois in the amount of $52 million, including $3 million of accrued interest.
In March 2011, Ameren Illinois and ATXI signed an agreement to transfer, at cost, all of ATXI's construction work in progress assets related to the construction of a transmission line to Ameren Illinois for $20 million. In April 2011, Ameren Illinois paid ATXI for these assets.
Support Services Agreements
Ameren Services provides support services to its affiliates. The costs of support services, including wages, employee benefits, professional services, and other expenses, are based on, or are an allocation of, actual costs incurred. AFS provided support services to its affiliates through December 31, 2010. Effective January 1, 2011, the services previously performed by AFS are performed within the Ameren Missouri, Ameren Illinois and Merchant Generation business segments. In addition, Ameren Missouri, Ameren Illinois and Genco provide affiliates, primarily Ameren Services, with access to their facilities for administrative purposes. The cost of the rent and facility services are based on, or are an allocation of, actual costs incurred.
Gas Sales and Transportation Agreement
Under a gas transportation agreement, Genco acquires gas transportation service from Ameren Missouri. This agreement expires in February 2016.
Money Pools
See Note 5 – Long-term Debt and Equity Financings for discussion of affiliate borrowing arrangements.
Collateral Postings
Under the terms of the 2011, 2010, and 2009 Illinois power procurement agreements entered into through a RFP process administered by the IPA, suppliers must post collateral under certain market conditions to protect Ameren Illinois in the event of nonperformance. The collateral postings are unilateral, meaning that only the suppliers would be required to post collateral. Therefore, Ameren Missouri, as a winning supplier of capacity and energy products, and Marketing Company, as a winning supplier of capacity, financial energy swaps, and energy products, may be required to post collateral. As of December 31, 2011, and 2010, there were no collateral postings required of Ameren Missouri or Marketing Company related to the 2011, 2010, and 2009 Illinois power procurement agreements.
Intercompany Transfers
On October 1, 2010, Ameren Illinois distributed AERG's common stock to Ameren in connection with the Ameren Illinois Merger. Ameren subsequently contributed the AERG common stock to AER. The distribution of AERG
common stock was accounted for as a transaction between entities under common control; therefore, Ameren Illinois transferred AERG to Ameren based on AERG's carrying
value. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
The following table presents the impact on Ameren Missouri, Ameren Illinois and Genco, of related party transactions for the years ended December 31, 2011, 2010, and 2009. It is based primarily on the agreements discussed above and the money pool arrangements discussed in Note 4 – Short-Term Debt and Liquidity.
| Agreement | Income Statement Line Item | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
Genco and EEI power supply |
Operating Revenues | 2011 | $ | (a | ) | $ | (a | ) | $ | 1,006 | ||||||||
|
agreements with Marketing Company |
2010 | (a | ) | (a | ) | 1,059 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1,071 | |||||||||||||
|
Ameren Missouri power supply agreements |
Operating Revenues | 2011 | 2 | (a | ) | (a | ) | |||||||||||
|
with Ameren Illinois |
2010 | 2 | (a | ) | (a | ) | ||||||||||||
| 2009 | 3 | (a | ) | (a | ) | |||||||||||||
|
Ameren Missouri and Genco gas |
Operating Revenues | 2011 | 1 | (a | ) | (a | ) | |||||||||||
|
transportation agreement |
2010 | 1 | (a | ) | (a | ) | ||||||||||||
| 2009 | 1 | (a | ) | (a | ) | |||||||||||||
|
Genco gas sales to Medina Valley |
Operating Revenues | 2011 | (a | ) | (a | ) | 3 | |||||||||||
| 2010 | (a | ) | (a | ) | 2 | |||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Genco gas sales to distribution companies |
Operating Revenues | 2011 | (a | ) | (a | ) | - | |||||||||||
| 2010 | (a | ) | (a | ) | 1 | |||||||||||||
| 2009 | (a | ) | (a | ) | 2 | |||||||||||||
|
Ameren Missouri, Ameren Illinois |
Operating Revenues | 2011 | 16 | 1 | - | |||||||||||||
|
and Genco rent and facility services |
2010 | 16 | 1 | 1 | ||||||||||||||
| 2009 | 18 | 1 | 1 | |||||||||||||||
|
Total Operating Revenues |
2011 | $ | 19 | $ | 1 | $ | 1,009 | |||||||||||
| 2010 | 19 | 1 | 1,063 | |||||||||||||||
| 2009 | 22 | 1 | 1,075 | |||||||||||||||
|
Ameren Missouri and Genco gas |
Fuel | 2011 | $ | (a | ) | $ | (a | ) | $ | 1 | ||||||||
|
transportation agreement |
2010 | (a | ) | (a | ) | 1 | ||||||||||||
| 2009 | (a | ) | (a | ) | 1 | |||||||||||||
|
Ameren Illinois power supply agreements |
Purchased Power | 2011 | $ | (a | ) | $ | 232 | $ | (a | ) | ||||||||
|
with Marketing Company |
2010 | (a | ) | 233 | (a | ) | ||||||||||||
| 2009 | (a | ) | 400 | (a | ) | |||||||||||||
|
Ameren Illinois power supply |
Purchased Power | 2011 | (a | ) | 2 | (a | ) | |||||||||||
|
agreements with Ameren Missouri |
2010 | (a | ) | 2 | (a | ) | ||||||||||||
| 2009 | (a | ) | 3 | (a | ) | |||||||||||||
|
Ameren Illinois ancillary services agreement |
Purchased Power | 2011 | (a | ) | - | (a | ) | |||||||||||
|
with Marketing Company |
2010 | (a | ) | - | (a | ) | ||||||||||||
| 2009 | (a | ) | (b | ) | (a | ) | ||||||||||||
|
EEI power supply agreement with |
Purchased Power | 2011 | (a | ) | (a | ) | 36 | |||||||||||
|
Marketing Company |
2010 | (a | ) | (a | ) | 11 | ||||||||||||
| 2009 | (a | ) | (a | ) | 42 | |||||||||||||
|
Total Purchased Power |
2011 | $ | (a | ) | $ | 234 | $ | 37 | ||||||||||
| 2010 | (a | ) | 235 | 12 | ||||||||||||||
| 2009 | (a | ) | 403 | 43 | ||||||||||||||
|
Gas purchases from Genco |
Gas Purchased for Resale | 2011 | $ | (a | ) | $ | - | $ | (a | ) | ||||||||
| 2010 | (a | ) | 1 | (a | ) | |||||||||||||
| 2009 | (a | ) | 2 | (a | ) | |||||||||||||
|
Ameren Services support services |
Other Operations and | 2011 | $ | 114 | $ | 90 | $ | 19 | ||||||||||
|
agreement |
Maintenance |
2010 | 128 | 102 | 23 | |||||||||||||
| 2009 | 131 | 101 | 27 | |||||||||||||||
|
AFS support services agreement |
Other Operations and | 2011 | (a | ) | (a | ) | (a | ) | ||||||||||
|
Maintenance |
2010 | 7 | (b | ) | 3 | |||||||||||||
| 2009 | 7 | 6 | 3 | |||||||||||||||
|
Insurance premiums(c) |
Other Operations and | 2011 | (b | ) | (a | ) | - | |||||||||||
|
Maintenance |
2010 | 1 | (a | ) | - | |||||||||||||
| 2009 | 2 | (a | ) | 1 | ||||||||||||||
|
Total Other Operations and |
2011 | $ | 114 | $ | 90 | $ | 19 | |||||||||||
|
Maintenance Expenses |
2010 | 136 | 102 | 26 | ||||||||||||||
| 2009 | 140 | 107 | 31 | |||||||||||||||
|
Money pool borrowings (advances) |
Interest (Charges) | 2011 | $ | - | $ | - | $ | (b | ) | |||||||||
|
Income |
2010 | - | (b | ) | (b | ) | ||||||||||||
| 2009 | - | (b | ) | (1 | ) | |||||||||||||
| (a) | Not applicable. |
| (b) | Amount less than $1 million. |
| (c) | Represents insurance premiums paid to Energy Risk Assurance Company, an affiliate for replacement power, property damage, and terrorism coverage. |
|
|||
NOTE 15 – COMMITMENTS AND CONTINGENCIES
We are involved in legal, tax and regulatory proceedings before various courts, regulatory commissions, 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 these notes to our financial statements, will not have a material adverse effect on our results of operations, financial position, or liquidity.
See also Note 1 – Summary of Significant Accounting Policies, Note 2 – Rate and Regulatory Matters, Note 10 – Callaway Energy Center and Note 14 – Related Party Transactions in this report.
Callaway Energy Center
The following table presents insurance coverage at Ameren Missouri's Callaway energy center at December 31, 2011. The property coverage and the nuclear liability coverage must be renewed on April 1 and January 1, respectively, of each year.
| Type and Source of Coverage | Maximum Coverages | Maximum Assessments for Single Incidents | ||||||
|
Public liability and nuclear worker liability: |
||||||||
|
American Nuclear Insurers |
$ | 375 | $ - | |||||
|
Pool participation |
12,219 | (a) | 118 | (b) | ||||
| $ | 12,594 | (c) | $ 118 | |||||
|
Property damage: |
||||||||
|
Nuclear Electric Insurance Ltd. |
$ | 2,750 | (d) | $ 23 | ||||
|
Replacement power: |
||||||||
|
Nuclear Electric Insurance Ltd |
$ | 490 | (e) | $ 9 | ||||
|
Energy Risk Assurance Company |
$ | 64 | (f) | $ - | ||||
| (a) | Provided through mandatory participation in an industrywide retrospective premium assessment program. |
| (b) | Retrospective premium under Price-Anderson. 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 U.S. commercial reactor, payable at $17.5 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 $118 million per incident for each licensed reactor it operates with a maximum of $17.5 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) | Provides for $500 million in property damage and decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. |
| (e) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. Weekly indemnity up to $4.5 million for 52 weeks, which commences after the first eight 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. |
| (f) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. The coverage commences after the first 52 weeks of insurance coverage from Nuclear Electric Insurance Ltd. and is for a weekly indemnity of $900,000 for 71 weeks in excess of the $3.6 million per week set forth above. Energy Risk Assurance Company is an affiliate and has reinsured this coverage with third-party insurance companies. See Note 14 – Related Party Transactions for more information on this affiliate transaction. |
The Price-Anderson Act is a federal law that limits the liability for claims from an incident involving any licensed United States commercial nuclear power facility. 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 five-year inflationary adjustment as prescribed by the most recent Price-Anderson Act renewal was effective October 29, 2008. 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 Price-Anderson.
Losses resulting from terrorist attacks are covered under Nuclear Electric Insurance Ltd.'s policies, subject to an industrywide aggregate policy limit of $3.24 billion within a 12-month period for coverage for such terrorist acts.
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.
Leases
We lease various facilities, office equipment, plant equipment, and rail cars under operating leases. The following table presents our lease obligations at December 31, 2011:
| Total | 2012 | 2013 | 2014 | 2015 | 2016 | After 5 Years | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
307 | 38 | 32 | 26 | 26 | 25 | 160 | |||||||||||||||||||||
|
Total lease obligations |
$ | 616 | $ | 43 | $ | 37 | $ | 31 | $ | 32 | $ | 31 | $ | 442 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
134 | 13 | 12 | 12 | 12 | 12 | 73 | |||||||||||||||||||||
|
Total lease obligations |
$ | 443 | $ | 18 | $ | 17 | $ | 17 | $ | 18 | $ | 18 | $ | 355 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 7 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 2 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 131 | $ | 11 | $ | 11 | $ | 11 | $ | 10 | $ | 11 | $ | 77 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | See Properties under Part I, Item 2, and Note 3 – Property and Plant, Net of this report for additional information. |
| (c) | Amounts related to certain real estate leases and railroad licenses have indefinite payment periods. Ameren's $2 million annual obligation for these items is included in the 2012 through 2016 columns. The amounts for the indefinite payments are not included in the After 5 Years column because that period is indefinite. |
The following table presents total rental expense, included in operating expenses, for the years ended December 31, 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 47 | $ | 52 | $ | 50 | ||||||
|
Ameren Missouri |
29 | 29 | 30 | |||||||||
|
Ameren Illinois |
17 | 19 | 19 | |||||||||
|
Genco |
12 | 13 | 15 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Other Obligations
To supply a portion of the fuel requirements of our generating plants, we have entered into various long-term commitments for the procurement of coal, natural gas, nuclear fuel, and methane gas. We also have entered into various long-term commitments for purchased power and natural gas for distribution. The table below presents our estimated fuel, purchased power, and other commitments at December 31, 2011. Ameren's and Ameren Missouri's coal commitments include multiyear agreements to procure ultra-low-sulfur coal and related transportation from the Powder River Basin in Wyoming. Ameren's and Ameren Missouri's purchased power obligations include a 102-MW power purchase agreement with a wind farm operator that expires in 2024. Ameren's and Ameren Illinois' purchased power obligations include the Ameren Illinois power purchase agreements entered into as part of the IPA-administered power procurement process. Included in the Other column are minimum purchase commitments under contracts for equipment, design and construction, meter reading services, and an Ameren tax credit obligation at December 31, 2011. Ameren's tax credit obligation is a $17 million note payable issued for an investment in a commercial real estate development partnership to acquire tax credits. This note payable was netted against the related investment in "Other assets" on Ameren's balance sheet at December 31, 2011, as Ameren has a legally enforceable right to offset under authoritative accounting guidance.
| Coal | Natural Gas |
Nuclear Fuel |
Purchased Power |
Methane Gas |
Other | Total | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
2012 |
$ | 1,120 | $ | 398 | $ | 36 | $ | 196 | $ | 1 | $ | 221 | $ | 1,972 | ||||||||||||||
|
2013 |
792 | 295 | 37 | 309 | 3 | 80 | 1,516 | |||||||||||||||||||||
|
2014 |
692 | 220 | 96 | 125 | 3 | 75 | 1,211 | |||||||||||||||||||||
|
2015 |
687 | 116 | 90 | 51 | 3 | 52 | 999 | |||||||||||||||||||||
|
2016 |
674 | 39 | 100 | 52 | 3 | 62 | 930 | |||||||||||||||||||||
|
Thereafter |
968 | 134 | 298 | 746 | 94 | 246 | 2,486 | |||||||||||||||||||||
|
Total |
$ | 4,933 | $ | 1,202 | $ | 657 | $ | 1,479 | $ | 107 | $ | 736 | $ | 9,114 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
2012 |
$ | 623 | $ | 63 | $ | 36 | $ | 19 | $ | 1 | $ | 78 | $ | 820 | ||||||||||||||
|
2013 |
605 | 48 | 37 | 19 | 3 | 50 | 762 | |||||||||||||||||||||
|
2014 |
625 | 36 | 96 | 19 | 3 | 47 | 826 | |||||||||||||||||||||
|
2015 |
614 | 19 | 90 | 19 | 3 | 28 | 773 | |||||||||||||||||||||
|
2016 |
644 | 7 | 100 | 19 | 3 | 38 | 811 | |||||||||||||||||||||
|
Thereafter |
921 | 30 | 298 | 155 | 94 | 144 | 1,642 | |||||||||||||||||||||
|
Total |
$ | 4,032 | $ | 203 | $ | 657 | $ | 250 | $ | 107 | $ | 385 | $ | 5,634 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
2012 |
$ | - | $ | 324 | $ | - | $ | 177 | $ | - | $ | 24 | $ | 525 | ||||||||||||||
|
2013 |
- | 243 | - | 290 | - | 22 | 555 | |||||||||||||||||||||
|
2014 |
- | 180 | - | 106 | - | 22 | 308 | |||||||||||||||||||||
|
2015 |
- | 94 | - | 32 | - | 24 | 150 | |||||||||||||||||||||
|
2016 |
- | 31 | - | 33 | - | 24 | 88 | |||||||||||||||||||||
|
Thereafter |
- | 105 | - | 591 | - | 102 | 798 | |||||||||||||||||||||
|
Total |
$ | - | $ | 977 | $ | - | $ | 1,229 | $ | - | $ | 218 | $ | 2,424 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
2012 |
$ | 355 | $ | 9 | $ | - | $ | - | $ | - | $ | 98 | $ | 462 | ||||||||||||||
|
2013 |
108 | 4 | - | - | - | 5 | 117 | |||||||||||||||||||||
|
2014 |
40 | 3 | - | - | - | 5 | 48 | |||||||||||||||||||||
|
2015 |
45 | 2 | - | - | - | - | 47 | |||||||||||||||||||||
|
2016 |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Thereafter |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Total |
$ | 548 | $ | 18 | $ | - | $ | - | $ | - | $ | 108 | $ | 674 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Also, as part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company to lock in energy prices for 400 to 1,000 megawatts annually of their round-the-clock power requirements from 2008 to 2012. These commitments are not reflected in the above table. See Note 7 – Derivative Financial Instruments and Note 14 – Related Party Transactions for additional information.
In February 2012, a rate stability procurement for energy products and renewable energy credits was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Ameren Illinois contracted to purchase approximately 13 million megawatthours of energy products at an average price of approximately $31 per megawatthour. Ameren Illinois is currently reviewing the results of the renewable energy credits procurement proceeding.
Ameren Illinois has entered into an agreement to purchase approximately 15.5 billion cubic feet of synthetic natural gas annually over a 10-year period beginning in 2016 for its natural gas customers. The agreement is contingent on the counterparty reaching certain milestones during the project development and the construction of the plant that will produce the synthetic natural gas. Construction has not begun on the plant; therefore, Ameren Illinois' obligations are not yet certain at this time. The agreement was entered into pursuant to an Illinois law which became effective August 2, 2011, and provides that all contract costs for synthetic natural gas incurred by Ameren Illinois are reasonable and prudent and recoverable through the PGA and are not subject to review or disallowance by the ICC.
Environmental Matters
We are subject to various environmental laws and regulations enforced by federal, state, and local authorities. From the beginning phases of siting and development to the ongoing operation of existing or new electric generating, transmission and distribution facilities, natural gas storage, transmission and distribution facilities, our activities involve compliance with diverse environmental laws and regulations. These laws and regulations address emissions, impacts to air, land and water, noise, protected natural and cultural resources (such as wetlands, endangered species and other protected wildlife, and archeological and historical resources), and chemical and waste handling. Complex and lengthy processes are required to obtain approvals, permits, or licenses for new, existing or modified facilities. Additionally, the use and handling of various chemicals or hazardous materials (including wastes) requires release prevention plans and emergency response procedures.
In addition to existing laws and regulations, including the Illinois MPS that applies to our energy centers in Illinois, the EPA is developing numerous new environmental regulations that will have a significant impact on the electric utility industry. These regulations could be particularly burdensome for certain companies, including Ameren, Ameren Missouri and Genco, that operate coal-fired energy centers. Significant new rules proposed or promulgated since the beginning of 2010 include the regulation of greenhouse gas emissions; revised national ambient air quality standards for SO2 and NO2 emissions; the CSAPR, which requires further reductions of SO2 and NOx emissions from power plants; a regulation governing management of CCR and coal ash impoundments; the MATS, which requires reduction of emissions of mercury, toxic metals, and acid gases from power plants; revised NSPS for particulate matter, SO2, and NOx emissions from new sources; and new regulations under the Clean Water Act that could require significant capital expenditures such as new water intake structures or cooling towers at our energy centers. The EPA also plans to propose an additional rule, applicable to new and existing electric generating units, governing NSPS and emission guidelines for greenhouse gas emissions. These new regulations may be litigated, so the timing of their implementation is uncertain, as evidenced by the stay of the CSAPR by the United States Court of Appeals for the District of Columbia on December 30, 2011. Although many details of these future regulations are unknown, the combined effects of the new and proposed environmental regulations may result in significant capital expenditures and/or increased operating costs over the next five to ten years for Ameren, Ameren Missouri and Genco. Actions required to ensure that our facilities and operations are in compliance with environmental laws and regulations could be prohibitively expensive. If they are, these regulations could require us to close or to significantly alter the operation of our energy centers, which could have an adverse effect on our results of operations, financial position, and liquidity, including the impairment of plant assets. Failure to comply with environmental laws and regulations might also result in the imposition of fines, penalties, and injunctive measures.
The estimates in the table below contain all of the known capital costs to comply with existing environmental regulations and our assessment of the potential impacts of the EPA's proposed regulation for CCR, the recently finalized MATS, the stayed CSAPR as currently designed, and the revised national ambient air quality standards for SO2 and NOx emissions as of December 31, 2011. The estimates in the table below assume that CCR will continue to be regarded as nonhazardous. The estimates in the table below do not include the impacts of new regulations proposed by the EPA under the Clean Water Act in March 2011 regarding cooling water intake structures as our evaluation of those impacts is ongoing. The estimates shown in the table below could change significantly depending upon a variety of factors including:
| Ÿ |
additional federal or state requirements; |
| Ÿ |
regulation of greenhouse gas emissions; |
| Ÿ |
new national ambient air quality standards or changes to existing standards for ozone, fine particulates, SO2, and NOx emissions; |
| Ÿ |
additional rules governing air pollutant transport; |
| Ÿ |
finalized regulations under the Clean Water Act; |
| Ÿ |
CCR being classified as hazardous; |
| Ÿ |
whether the CSAPR is implemented and whether any modifications are made to its existing requirements; |
| Ÿ |
new technology; |
| Ÿ |
expected power prices; |
| Ÿ |
variations in costs of material or labor; and |
| Ÿ |
alternative compliance strategies or investment decisions. |
| 2012 | 2013 - 2016 | 2017 - 2021 | Total | |||||||||||||||||||||||||
|
AMO(a) |
$ | 55 | $ | 325 - | $ | 400 | $ | 845 - | $ | 1,030 | $ | 1,225 - | $ | 1,485 | ||||||||||||||
|
Genco |
150 | 100 - | 125 | 245 - | 295 | 495 - | 570 | |||||||||||||||||||||
|
AERG |
5 | 20 - | 25 | 80 - | 100 | 105 - | 130 | |||||||||||||||||||||
|
Ameren |
$ | 210 | $ | 445 - | $ | 550 | $ | 1,170 - | $ | 1,425 | $ | 1,825 - | $ | 2,185 | ||||||||||||||
| (a) | Ameren Missouri's expenditures are expected to be recoverable from ratepayers. |
The decision to make pollution control equipment investments at our Merchant Generation business depends on whether the expected future market price for power reflects the increased cost for environmental compliance. In early 2012, there has been a decline in the market price for wholesale power because of factors such as declining natural gas prices and the stay of the CSAPR. As a result of this decline in the market price for power, as well as uncertain environmental regulations, Genco is decelerating the construction of two scrubbers at of its Newton energy center. These scrubbers were originally expected to be installed in late 2013 and spring 2014. The ultimate installation of these scrubbers, now estimated to occur between 2017 and 2021 in the table above, has been postponed until such time as the incremental investment necessary for completion is justified by visible market conditions. However, Genco will continue to incur capital costs related to the construction of these scrubbers. The table above includes Genco's estimated costs of approximately $150 million in 2012 and approximately $20 million annually, excluding capitalized interest, from 2013 through 2016 for the construction of the two scrubbers. In addition to Genco's reduction in estimated capital expenditures, AERG is deferring precipitator upgrades at its E.D. Edwards energy center beyond 2016.
The following sections describe the more significant environmental rules that affect our operations.
Clean Air Act
Both federal and state laws require significant reductions in SO2 and NOx emissions that result from burning fossil fuels. In March 2005, the EPA issued regulations with respect to SO2 and NOx emissions (the CAIR). The CAIR required generating facilities in 28 states, including Missouri and Illinois, and the District of Columbia to participate in cap-and-trade programs to reduce annual SO2 emissions, annual NOx emissions, and ozone season NOx emissions.
In December 2008, the United States Court of Appeals for the District of Columbia remanded the CAIR to the EPA for further action to remedy the rule's flaws, but allowed the CAIR's cap-and-trade programs to remain effective until they are replaced by the EPA. In July 2011, the EPA issued the CSAPR as the CAIR replacement. The CSAPR was to become effective on January 1, 2012, for SO2 and annual NOx reductions and on May 1, 2012, for ozone season NOx reductions. In the CSAPR, the EPA developed federal implementation plans for each state covered by this rule; however, each impacted state can develop its own implementation rule starting as early as 2013. The CSAPR establishes emission allowance budgets for each of the states subject to the regulation, including Missouri and Illinois. With the CSAPR, the EPA abandoned CAIR's regional approach to cutting emissions and instead set a pollution budget for each of the impacted states based on the EPA's analysis of each upwind state's contribution to air quality in downwind states. For Missouri and Illinois, emission reductions were required in two phases beginning in 2012, with further reductions in 2014. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, in the SO2 program, in the annual NOx, or in ozone season NOx program. Multiple legal challenges were filed requesting to have CSAPR partially or entirely vacated and to stay the implementation of the CSAPR while the court considers the challenges. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. The stay does not invalidate the rule, but only delays its implementation until a final court ruling is issued. The United States Court of Appeals for the District of Columbia has expedited its consideration of the regulation and will hear arguments on the validity of CSAPR in April 2012. The ultimate outcome of the challenges to the regulation is uncertain. The court could uphold CSAPR or remand it back to the EPA for partial or entire revision. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR.
On December 21, 2011, the EPA issued the final MATS under the Clean Air Act, which require emission reductions for mercury and other hazardous air pollutants, such as acid gases, toxic metals, and particulate matter by setting emission limits equal to the average emissions of the best performing 12% of existing coal and oil-fired electric generating units. Also, the rule requires reductions in hydrogen chloride emissions, which were not regulated previously, and it may require continuous monitoring systems that are not currently in place. The MATS do not require a specific control technology to achieve the emission reductions. The MATS will apply to each unit at a coal-fired power plant; however, emission compliance can be averaged for the entire power plant. Compliance is required by April 2015 or, with a case-by-case extension, by April 2016.
Separately, in January and June 2010, the EPA finalized new ambient air quality standards for SO2 and NO2. It also announced plans for further reductions in the annual national ambient air quality standards for ozone and fine particulates. The state of Illinois and the state of Missouri will be required to develop separate attainment plans to comply with the new ambient air quality standards. Ameren, Ameren Missouri and Genco continue to assess the impacts of these new standards. In September 2011, the EPA withdrew its draft annual national ambient air quality standard for ozone and announced that it was implementing the 2008 national ambient air quality standard for ozone. The EPA is required to revisit this standard again in 2013.
Ameren Missouri's current environmental compliance plan for air emissions from its energy centers includes burning ultra-low-sulfur coal and installing new or optimizing existing pollution control equipment. In July 2011, Ameren Missouri contracted to procure significantly higher volumes of lower-sulfur-content coal than Ameren Missouri's energy centers have historically burned, which will allow Ameren Missouri to eliminate or postpone capital expenditures for pollution control equipment while still achieving required emissions levels. In 2010, Ameren Missouri completed the installation of two scrubbers at its Sioux energy center to reduce SO2 emissions. Currently, Ameren Missouri's compliance plan assumes the installation of two scrubbers within its coal-fired fleet during the next 10 years and precipitator upgrades at multiple energy centers. However, Ameren Missouri is currently evaluating its operations and options to determine how to comply with the additional emission reductions requirements in 2014 set forth in the CSAPR, if ultimately enacted, the MATS, and other recently finalized or proposed EPA regulations.
Existing Illinois state regulations already required Ameren and Genco to reduce their emissions of mercury under the MPS. Ameren's and Genco's review of the MATS indicates that the scope of the federal standards is broader than the MPS, as no exemption exists for smaller coal-fired plants. Additionally, the MATS are more stringent than the MPS because compliance with the MATS is measured on a quarterly basis and, in some cases, a thirty-day rolling basis and not annually, as allowed under state requirements. At the end of 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers was primarily due to the expected cost of complying with CSAPR and MATS. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Genco and AERG expect to install additional, or optimize existing, pollution control equipment, or modify operations to meet new and incremental emission reduction requirements under the MPS, the MATS, or the CSAPR as they become effective. Under the MPS, as amended, Illinois generators are required to reduce mercury, SO2, and NOx emissions by 2015. To comply with the MPS and other air emissions laws and regulations, Genco and AERG are installing equipment designed to reduce their emissions of mercury, NOx, and SO2. Genco and AERG have installed a total of three scrubbers at two energy centers. Two additional scrubbers are being constructed at Genco's Newton energy center. As discussed above, the timing of the installation of these scrubbers as well as precipitator upgrades at AERG's E.D. Edwards energy center have been extended. The closure of Genco's Meredosia and Hutsonville energy centers will allow the Merchant Generation segment additional flexibility in the methods to achieve compliance with environmental standards. Merchant Generation and Genco will continue to review and adjust their compliance plans in light of evolving outlooks for power and capacity prices, delivered fuel costs, environment standards and compliance technologies, among other factors.
The completion of Ameren's, Ameren Missouri's and Genco's review of recently finalized environmental regulations and compliance measures could result in significant increases in capital expenditures and operating costs. The compliance costs could be prohibitive at some of our energy centers as the expected return from these investments, at current market prices for energy and capacity, might not justify the required capital expenditures or their continued operation, which could result in the impairment of long-lived assets.
Emission Allowances
The Clean Air Act created marketable commodities called allowances under the acid rain program, the NOx budget trading program, the CAIR, and the CSAPR. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, either the SO2, annual NOx, or ozone season NOx programs. As noted above, on December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR including its allowance program. See Note 1 – Summary of Significant Accounting Policies for the SO2 and NOx emission allowance book values that were classified as intangible assets as of December 31, 2011 and 2010, and Note 17 – Goodwill, Impairment and Other Charges for information regarding the emission allowance impairments recorded during 2011 and 2010.
Environmental regulations including the CAIR and the CSAPR, the timing of the installation of pollution control equipment, fuel mix, and the level of operations, will have a significant impact on the number of allowances required for ongoing operations. The CAIR uses the acid rain program's allowances for SO2 emissions and created annual and ozone season NOx allowances. The CSAPR, however, will not rely upon the acid rain program, the NOx budget trading program, or CAIR allowances for its allowance allocation program. Instead, the EPA issued a new type of emissions allowance for each program under the CSAPR. Any unused SO2 allowances, annual NOx allowances, and ozone season NOx allowances issued under CAIR cannot be used for compliance with CSAPR. Ameren, Ameren Missouri and Genco expect to have adequate CAIR allowances for 2012 to avoid needing to make external purchases.
Should the CSAPR become effective as issued, Ameren, Ameren Missouri and Genco are studying their compliance options to identify additional opportunities that may exist for compliance in an economical fashion. Ameren, Ameren Missouri and Genco may be required to purchase emission allowances, if available, to install new or optimize existing pollution control equipment, to limit generation, or take other actions to achieve compliance with the CSAPR in future phase-in years.
Global Climate Change
State and federal authorities, including the United States Congress, have considered initiatives to limit greenhouse gas emissions and to address global climate change. Potential impacts from any climate change legislation or regulation could vary, depending upon proposed CO2 emission limits, the timing of implementation of those limits, the method of distributing any allowances, the degree to which offsets are allowed and available, and provisions for cost-containment measures, such as a "safety valve" provision that provides a maximum price for emission allowances. As a result of our diverse fuel portfolio, our emissions of greenhouse gases vary among our energy centers, but coal-fired power plants are significant sources of CO2. The enactment of a climate change law could result in a significant rise in household costs and rates for electricity could rise significantly. The burden could fall particularly hard on electricity consumers and upon the economy in the Midwest because of the region's reliance on electricity generated by coal-fired power plants. Natural gas emits about half as much CO2 as coal when burned to produce electricity. Therefore, climate change regulation could cause the conversion of coal-fired power plants to natural gas, or the construction of new natural gas plants to replace coal-fired power plants. As a result, economywide shifts to natural gas as a fuel source for electricity generation also could affect the cost of heating for our utility customers and many industrial processes that use natural gas.
In December 2009, the EPA issued its "endangerment finding" under the Clean Air Act which stated that greenhouse gas emissions, including CO2, endanger human health and welfare and that emissions of greenhouse gases from motor vehicles contribute to that endangerment. In March 2010, the EPA issued a determination that greenhouse gas emissions from stationary sources, such as power plants, would be subject to regulation under the Clean Air Act effective the beginning of 2011. As a result of these actions, we are required to consider the emissions of greenhouse gases in any air permit application.
Recognizing the difficulties presented by regulating at once virtually all emitters of greenhouse gases, the EPA finalized in May 2010 regulations, known as the "Tailoring Rule," that established new higher thresholds for regulating greenhouse gas emissions from stationary sources, such as power plants. The Tailoring Rule became effective in January 2011. The rule requires any source that already has an operating permit to have greenhouse-gas-specific provisions added to its permits upon renewal. Currently, all Ameren energy centers have operating permits that, when renewed, may be modified to address greenhouse gas emissions. The Tailoring Rule also provides that if projects performed at major sources result in an increase in emissions of greenhouse gases of at least 75,000 tons per year, measured in CO2 equivalents, such projects could trigger permitting requirements under the NSR programs and the application of best available control technology, if any, to control greenhouse gas emissions. New major sources are also required to obtain such a permit and to install the best available control technology if their greenhouse gas emissions exceed the applicable emissions threshold. Separately, in December 2010, the EPA announced a settlement agreement under which it would propose NSPS for greenhouse gas emissions at new and existing fossil fuel-fired power plants by July 26, 2011 and issue a final standard by May 2012. The EPA has not yet proposed a rule and has not specified a new estimate of when it will issue that standard. It is uncertain whether reductions to greenhouse gas emissions would be required at Ameren's, Ameren Missouri's or Genco's energy centers as a result of any of the EPA's new and future rules. Legal challenges to the EPA's greenhouse gas rules have been filed. Any federal climate change legislation that is enacted may preempt the EPA's regulation of greenhouse gas emissions, including the Tailoring Rule, particularly as it relates to power plant greenhouse gas emissions. The extent to which the Tailoring Rule could have a material impact on our energy centers depends upon how state agencies apply the EPA's guidelines as to what constitutes the best available control technology for greenhouse gas emissions from power plants and whether physical changes or changes in operations subject to the rule occur at our energy centers. Although the EPA has stated its intention to regulate greenhouse gas emissions from stationary sources, such as power plants, congressional action could block or delay that effort.
Future federal and state legislation or regulations that mandate limits on the emission of greenhouse gases would likely result in significant increases in capital expenditures and operating costs, which, in turn, could lead to increased liquidity needs and higher financing costs. Moreover, to the extent Ameren Missouri requests recovery of these costs through rates, its regulators might delay or deny timely recovery of these costs. Excessive costs to comply with future legislation or regulations might force Ameren, Ameren Missouri and Genco as well as other similarly situated electric power generators to close some coal-fired facilities earlier than planned, which could lead to possible impairment of assets and reduced revenues. As a result, mandatory limits could have a material adverse impact on Ameren's, Ameren Missouri's, and Genco's results of operations, financial position, and liquidity.
Recent federal court decisions have considered the application of common law causes of action, such as nuisance, to address damages resulting from global climate change. In June 2011, the United States Supreme Court in State of Connecticut v. American Electric Power rejected state efforts to impose liability for CO2 and greenhouse gases emissions under federal common law. That ruling, however, did not address whether private citizens could pursue causes of action based on state common law. In June 2011, a case called Comer v. Murphy Oil (Comer) was filed in the United States District Court for the Southern District of Mississippi. In this litigation, a Mississippi property owner sued several industrial companies, including Ameren Missouri and Genco, alleging that CO2 emissions created the atmospheric conditions that intensified Hurricane Katrina. Although we are unable to predict the outcome of the Comer litigation on our results of operations, financial position, and liquidity, Ameren believes that it has meritorious defenses. Numerous procedural and substantive challenges are expected in the Comer litigation.
The impact on us of future initiatives related to greenhouse gas emissions and global climate change is unknown. Compliance costs could increase as future federal legislative, federal regulatory, and state-sponsored initiatives to control greenhouse gases continue to progress, making it more likely that some form of greenhouse gas emissions control will eventually be required. Since these initiatives continue to evolve, the impact on our coal-fired energy centers and our customers' costs is unknown, but any impact would probably be negative. Our costs of complying with any mandated federal or state greenhouse gas program could have a material impact on our future results of operations, financial position, and liquidity.
NSR and Clean Air Litigation
The EPA is engaged in an enforcement initiative to determine whether coal-fired power plants failed to comply with the requirements of the NSR and NSPS provisions under the Clean Air Act when the plants implemented modifications. The EPA's inquiries focus on whether projects performed at power plants should have triggered various permitting requirements and the installation of pollution control equipment.
In April 2005, Genco received a request from the EPA for information pursuant to Section 114(a) of the Clean Air Act. The request sought detailed operating and maintenance history data with respect to Genco's Coffeen, Hutsonville, Meredosia, Newton, and Joppa energy centers and AERG's E.D. Edwards and Duck Creek energy centers. In 2006, the EPA issued a second Section 114(a) request to Genco regarding projects at the Newton energy center. All of these facilities are coal-fired energy centers. In September 2008, the EPA issued a third Section 114(a) request regarding projects at all of Ameren's coal-fired energy centers in Illinois. We completed our response to the information requests, but we are unable to predict the outcome of this matter.
Following the issuance of a Notice of Violation, 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 alleges that in performing projects at its Rush Island coal-fired energy center, Ameren Missouri violated provisions of the Clean Air Act and Missouri law. In January 2012, the United States District Court granted, in part, Ameren Missouri's motion to dismiss various aspects of the EPA's penalty claims. The EPA's claims for injunctive relief, including to require the installation of pollution control equipment, remain. At present, the complaint does not include Ameren Missouri's other coal-fired energy centers, but the EPA has issued Notices of Violation under its NSR enforcement initiative against the company's Labadie, Meramec, and Sioux coal-fired energy centers. Litigation of this matter could take many years to resolve. Ameren Missouri believes its defenses to the allegations described in the complaint as well as the Notices of Violation are meritorious. Ameren Missouri will defend itself vigorously. However, there can be no assurances that it will be successful in its efforts.
Ultimate resolution of these matters could have a material adverse impact on the future results of operations, financial position, and liquidity of Ameren, Ameren Missouri and Genco. A resolution could result in increased capital expenditures for the installation of pollution control equipment, increased operations and maintenance expenses, and penalties. We are unable to predict the ultimate resolution of these matters or the costs that might be incurred. However, Ameren Missouri has concluded that, while a loss may be reasonably possible, the likelihood of loss is not probable. Therefore, no reserve has been established.
Clean Water Act
In March 2011, the EPA announced a proposed rule applicable to cooling water intake structures at existing power plants that have the ability to withdraw more than 2 million gallons of water per day from a body of water and use at least 25 percent of that water exclusively for cooling. Under the proposed rule, affected facilities would be required either to meet mortality limits for aquatic life impinged on the plant's intake screens or to reduce intake velocity to 0.5 feet per second. The proposed rule also requires plants to meet site-specific entrainment standards or to reduce the cooling water intake flow commensurate with the intake flow of a closed-cycle cooling system. The final rule is scheduled to be issued in July 2012, with compliance expected within eight years thereafter. All coal-fired, nuclear, and combined cycle energy centers at Ameren, Ameren Missouri and Genco with cooling water systems are subject to this proposed rule. The proposed rule did not mandate cooling towers at existing facilities, as other technology options potentially could meet the site-specific standards. Ameren, Ameren Missouri and Genco are currently evaluating the proposed rule, and their assessment of the proposed rule's impacts is ongoing. Therefore, we cannot predict at this time the capital or operating costs associated with compliance. The proposed rule could have an adverse effect on our results of operations, financial position, and liquidity if its implementation requires the installation of cooling towers at our electric generating stations.
In September 2009, the EPA announced its plan to revise the effluent guidelines applicable to steam electric generating units under the Clean Water Act. Effluent guidelines are national standards for wastewater discharges to surface water that are based on the effectiveness of available control technology. The EPA is engaged in information collection and analysis activities in support of this rulemaking. It has indicated that it expects to issue a proposed rule in July 2012 and to finalize the rule in 2014. We are unable at this time to predict the impact of this development.
Remediation
We are involved in a number of remediation actions to clean up hazardous waste sites as required by federal and state law. Such statutes require that responsible parties 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 the federal or state governments as a potentially responsible party (PRP) at several contaminated sites. Several of these sites involve facilities that were transferred by our rate-regulated utility operations in Illinois to Genco in May 2000 and to AERG in October 2003. As part of each transfer, Ameren Illinois contractually agreed to indemnify Genco and AERG for remediation costs associated with preexisting environmental contamination at the transferred sites.
As of December 31, 2011, Ameren and Ameren Illinois owned or were otherwise responsible for 44 former MGP sites in Illinois. These are in various stages of investigation, evaluation, and remediation. Based on current estimated plans, Ameren and Ameren Illinois could substantially conclude remediation efforts at most of these sites by 2015. The ICC permits 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. To be recoverable, such costs must be prudently and properly incurred. Costs are subject to annual review by the ICC.
As of December 31, 2011, Ameren and Ameren Missouri own or are otherwise responsible for 10 MGP sites in Missouri and one site in Iowa. Ameren Missouri does not currently have a rate rider mechanism that permits recovery of remediation costs associated with MGP sites from utility customers. Ameren Missouri does not have any retail utility operations in Iowa that would provide a source of recovery of these remediation costs.
The following table presents, as of December 31, 2011, the estimated probable obligation to remediate these MGP sites.
| Estimate |
Recorded |
|||||||||||
| Low | High | |||||||||||
|
Ameren |
$ | 107 | $ | 183 | $ | 107 | ||||||
|
Ameren Missouri |
3 | 4 | 3 | |||||||||
|
Ameren Illinois |
104 | 179 | 104 | |||||||||
| (a) | Recorded liability represents the estimated minimum probable obligations, as no other amount within the range provided a better estimate. |
Ameren Illinois is responsible for the cleanup of a former coal ash landfill in Coffeen, Illinois. As of December 31, 2011, Ameren Illinois estimated that obligation 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 a landfill, underground storage tanks, and a water treatment plant in Illinois. As of December 31, 2011, Ameren Illinois recorded a liability of $0.8 million to represent its best estimate of the obligation for these sites.
Ameren Missouri has responsibility for the investigation and potential cleanup of two waste sites in Missouri as a result of federal agency mandates. One of the cleanup sites is a former coal tar distillery located in St. Louis, Missouri. In 2008, the EPA issued an administrative order to Ameren Missouri pertaining to this distillery operated by Koppers Company or its predecessor and successor companies. Ameren Missouri is the current owner of the site, but Ameren Missouri did not conduct any of the manufacturing operations involving coal tar or its byproducts. Ameren Missouri, along with two other PRPs, is currently performing a site investigation. As of December 31, 2011, Ameren Missouri estimated its obligation at $2 million to $5 million. Ameren Missouri has a liability of $2 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate. Ameren Missouri's other active federal agency-mandated cleanup site in Missouri is a site in Cape Girardeau. Ameren Missouri was a customer of an electrical equipment repair and disposal company that previously operated a facility at this site. A trust was established in the early 1990s by several businesses and governmental agencies to fund the cleanup of this site, which was completed in 2005. Ameren Missouri anticipates this trust fund will be sufficient to complete the remaining adjacent off-site cleanup and therefore has no recorded liability at December 31, 2011, related to this site.
Ameren Missouri also has a federal agency mandate to complete a site investigation for a site in Illinois. In 2000, the EPA notified Ameren Missouri and numerous other companies, including Solutia, that former landfills and lagoons in Sauget, Illinois, may contain soil and groundwater contamination. These sites are known as Sauget Area 2. From about 1926 until 1976, Ameren Missouri operated an energy center adjacent to Sauget Area 2. Ameren Missouri currently owns a parcel of property that was once used as a landfill. Under the terms of an Administrative Order on Consent, Ameren Missouri has joined with other PRPs to evaluate the extent of potential contamination with respect to Sauget Area 2.
The Sauget Area 2 investigations overseen by the EPA have been completed. The results have been submitted to the EPA, and a record of decision is expected in 2012. Once the EPA has selected a remedy, if any, it would begin negotiations with various PRPs regarding implementation. Over the last several years, numerous other parties have joined the PRP group. In addition, Pharmacia Corporation and Monsanto Company have agreed to assume the liabilities related to Solutia's former chemical waste landfill in the Sauget Area 2. As of December 31, 2011, Ameren Missouri estimated its obligation at $0.3 million to $10 million. Ameren Missouri has a liability of $0.3 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate.
In December 2004, AERG submitted a plan to the Illinois EPA to address groundwater and surface water issues associated with the recycle pond, ash ponds, and reservoir at the Duck Creek energy center. In 2010, AERG closed the recycle pond system. Remediation work on the recycle pond was completed in the first quarter of 2011, and therefore no liability exists as of December 31, 2011.
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 protection laws. We are unable to determine whether such practices will result in future environmental commitments or affect our results of operations, financial position, or liquidity.
Ash Management
There has been activity at both state and federal levels regarding additional regulation of ash pond facilities and CCR. In May 2010, the EPA announced proposed new regulations regarding the regulatory framework for the management and disposal of CCR, which could affect future disposal and handling costs at our energy centers. Those proposed regulations include two options for managing CCRs under either solid or hazardous waste regulations, but either alternative would allow for some continued beneficial uses, such as recycling of CCR without classifying it as waste. As part of its proposal, the EPA is considering alternative regulatory approaches that require coal-fired power plants either to close surface impoundments, such as ash ponds, or to retrofit such facilities with liners. Existing impoundments and landfills used for the disposal of CCR would be subject to groundwater monitoring requirements and requirements related to closure and postclosure care under the proposed regulations. Additionally, in January 2010, EPA announced its intent to develop regulations establishing financial responsibility requirements for the electric generation industry, among other industries, and it specifically discussed CCR as a reason for developing the new requirements. Ameren, Ameren Missouri and Genco are currently evaluating all of the proposed regulations to determine whether current management of CCR, including beneficial reuse, and the use of the ash ponds should be altered. Ameren, Ameren Missouri and Genco also are evaluating the potential costs associated with compliance with the proposed regulation of CCR impoundments and landfills, which could be material, if such regulations are adopted.
In addition, the Illinois EPA requested that Ameren, Ameren Missouri and Genco establish groundwater monitoring plans for their ash impoundments in Illinois. Ameren and the Illinois EPA have established a framework for closure of ash ponds in Illinois, including the ash ponds at Venice, Hutsonville, and Duck Creek, when such facilities are ultimately taken out of service. Ameren, Ameren Missouri and Genco have recorded AROs, based on current laws, for the estimated costs of the retirement of their ash ponds.
Pumped-storage Hydroelectric Facility Breach
In December 2005, there was a breach of the upper reservoir at Ameren Missouri's Taum Sauk pumped-storage hydroelectric energy center. This resulted in significant flooding in the local area, which damaged a state park. Ameren Missouri settled with FERC and the state of Missouri all issues associated with the December 2005 Taum Sauk incident. The rebuilt Taum Sauk energy center became fully operational in April 2010.
Ameren Missouri included certain capitalized costs associated with enhancements, or costs that would have been incurred absent the breach, at the rebuilt Taum Sauk energy center not recovered from property insurers in its 2010 electric rate case filing. However, in the July 2011 rate order, the MoPSC disallowed all of these capitalized costs associated with the rebuilding of the Taum Sauk energy center. As a result of the order, Ameren and Ameren Missouri each recorded a pretax charge to earnings in 2011 of $89 million to reflect this disallowance. See Note 2 – Rate and Regulatory Matters for additional information about the appeal of the MoPSC's July 2011 electric rate order.
Ameren Missouri had property and liability insurance coverage for the Taum Sauk incident, subject to certain limits and deductibles. Insurance did not cover some lost electric margins or penalties paid to FERC. Ameren Missouri believes that the total cost for cleanup, damage and liabilities, excluding costs to rebuild the upper reservoir, is $209 million, which is the amount Ameren Missouri had paid as of December 31, 2011. As of December 31, 2011, Ameren Missouri had recorded expenses of $37 million, primarily in prior years (2011 – $1 million, 2010 – $1 million, 2009 – $2 million), for items not covered by insurance. Ameren Missouri recorded a $172 million receivable for amounts recoverable from insurance companies under liability coverage. As of December 31, 2011, Ameren Missouri had received $104 million from insurance companies for liability claims, which reduced the insurance receivable balance subject to liability coverage to $68 million.
In June 2010, Ameren Missouri sued an insurance company that was providing Ameren Missouri with liability coverage on the date of the Taum Sauk incident. In the litigation, filed in the United States District Court for the Eastern District of Missouri, Ameren Missouri claimed the insurance company breached its duty to indemnify Ameren Missouri for the losses experienced from the incident. In January 2011, the court ruled that the parties must first pursue alternative dispute resolution under the terms of their coverage agreement. In February 2011, Ameren Missouri filed an appeal of the January ruling with the United States Court of Appeals for the Eighth Circuit, seeking the ability to pursue resolution of this dispute outside of a dispute resolution process under the terms of its coverage agreement.
Until Ameren's remaining liability insurance claims and the related litigation are resolved, we are unable to determine the total impact the breach could have on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity beyond those amounts already recognized.
Asbestos-related Litigation
Ameren, Ameren Missouri, Ameren Illinois and EEI have been named, along with numerous other parties, in a number of lawsuits filed by plaintiffs claiming varying degrees of injury from asbestos exposure. Most have been filed in the Circuit Court of Madison County, Illinois. The total number of defendants named in each case varies, with as many as 272 parties named in some pending cases and as few as two in others. In the cases pending as of December 31, 2011, the average number of parties was 80.
The claims filed against Ameren, Ameren Missouri, Ameren Illinois and Genco allege injury from asbestos exposure during the plaintiffs' activities at our present or former electric generating plants. Former CIPS plants are now owned by Genco, and former CILCO plants are now owned by AERG. As a part of the transfer of ownership of the CIPS and CILCO generating plants, CIPS and CILCO, now Ameren Illinois, contractually agreed to indemnify Genco and AERG, for liabilities associated with asbestos-related claims arising from activities prior to the transfer. Each lawsuit seeks unspecified damages that, if awarded at trial, typically would be shared among the various defendants.
The following table presents the pending asbestos-related lawsuits filed against the Ameren Companies as of December 31, 2011:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | Total(a) | ||||
|
4 |
53 | 77 | (b) | 93 |
| (a) | Total does not equal the sum of the subsidiary unit lawsuits because some of the lawsuits name multiple Ameren entities as defendants. |
| (b) | As of December 31, 2011, six asbestos-related lawsuits were pending against EEI. The general liability insurance maintained by EEI provides coverage with respect to liabilities arising from asbestos-related claims. |
At December 31, 2011, Ameren, Ameren Missouri, Ameren Illinois and Genco had liabilities of $18 million, $6 million, $12 million, and $- million, respectively, recorded to represent their best estimate of their obligations related to asbestos claims.
Ameren Illinois has a tariff rider to recover the costs of asbestos-related litigation claims, subject to the following terms: 90% of cash expenditures in excess of the amount included in base electric rates are to be recovered from a trust fund that was established when Ameren acquired IP. At December 31, 2011, the trust fund balance was $23 million, including accumulated interest. If cash expenditures are less than the amount in base rates, Ameren Illinois will contribute 90% of the difference to the fund. Once the trust fund is depleted, 90% of allowed cash expenditures in excess of base rates will be recovered through charges assessed to customers under the tariff rider. Following the Ameren Illinois Merger, this rider is applicable only for claims that occurred within IP's historical service territory. Similarly, the rider will permit recovery only from customers within IP's historical service territory.
Illinois Sales and Use Tax Exemptions and Credits
In Exelon Corporation v. Department of Revenue, the Illinois Supreme Court decided in 2009 that electricity is tangible personal property for purposes of the Illinois income tax investment credit. In March 2010, the United States Supreme Court refused to hear the case, and the decision became final. During the second quarter of 2010, Genco and AERG began claiming Illinois sales and use tax exemptions and credits for purchase transactions related to their generation operations. The basis for those claims is that the determination in the Exelon case that electricity is tangible personal property applies to sales and use tax manufacturing exemptions and credits. On November 2, 2011, EEI received a notice of proposed tax liability, documenting the state of Illinois' position that EEI did not qualify for the manufacturing exemption it used during 2010. Genco is challenging the State of Illinois' position. In December 2011, EEI filed a request for review by the Informal Conference Board of the Illinois Department of Revenue. Ameren and Genco do not believe that it is probable that the state of Illinois will prevail and therefore have not recorded a charge to earnings for the loss contingency. From the second quarter of 2010 through December 31, 2011, Ameren and Genco claimed manufacturing exemptions and credits of $27 million and $19 million, respectively.
NOTE 15 – COMMITMENTS AND CONTINGENCIES
We are involved in legal, tax and regulatory proceedings before various courts, regulatory commissions, 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 these notes to our financial statements, will not have a material adverse effect on our results of operations, financial position, or liquidity.
See also Note 1 – Summary of Significant Accounting Policies, Note 2 – Rate and Regulatory Matters, Note 10 – Callaway Energy Center and Note 14 – Related Party Transactions in this report.
Callaway Energy Center
The following table presents insurance coverage at Ameren Missouri's Callaway energy center at December 31, 2011. The property coverage and the nuclear liability coverage must be renewed on April 1 and January 1, respectively, of each year.
| Type and Source of Coverage | Maximum Coverages | Maximum Assessments for Single Incidents | ||||||
|
Public liability and nuclear worker liability: |
||||||||
|
American Nuclear Insurers |
$ | 375 | $ - | |||||
|
Pool participation |
12,219 | (a) | 118 | (b) | ||||
| $ | 12,594 | (c) | $ 118 | |||||
|
Property damage: |
||||||||
|
Nuclear Electric Insurance Ltd. |
$ | 2,750 | (d) | $ 23 | ||||
|
Replacement power: |
||||||||
|
Nuclear Electric Insurance Ltd |
$ | 490 | (e) | $ 9 | ||||
|
Energy Risk Assurance Company |
$ | 64 | (f) | $ - | ||||
| (a) | Provided through mandatory participation in an industrywide retrospective premium assessment program. |
| (b) | Retrospective premium under Price-Anderson. 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 U.S. commercial reactor, payable at $17.5 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 $118 million per incident for each licensed reactor it operates with a maximum of $17.5 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) | Provides for $500 million in property damage and decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. |
| (e) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. Weekly indemnity up to $4.5 million for 52 weeks, which commences after the first eight 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. |
| (f) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. The coverage commences after the first 52 weeks of insurance coverage from Nuclear Electric Insurance Ltd. and is for a weekly indemnity of $900,000 for 71 weeks in excess of the $3.6 million per week set forth above. Energy Risk Assurance Company is an affiliate and has reinsured this coverage with third-party insurance companies. See Note 14 – Related Party Transactions for more information on this affiliate transaction. |
The Price-Anderson Act is a federal law that limits the liability for claims from an incident involving any licensed United States commercial nuclear power facility. 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 five-year inflationary adjustment as prescribed by the most recent Price-Anderson Act renewal was effective October 29, 2008. 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 Price-Anderson.
Losses resulting from terrorist attacks are covered under Nuclear Electric Insurance Ltd.'s policies, subject to an industrywide aggregate policy limit of $3.24 billion within a 12-month period for coverage for such terrorist acts.
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.
Leases
We lease various facilities, office equipment, plant equipment, and rail cars under operating leases. The following table presents our lease obligations at December 31, 2011:
| Total | 2012 | 2013 | 2014 | 2015 | 2016 | After 5 Years | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
307 | 38 | 32 | 26 | 26 | 25 | 160 | |||||||||||||||||||||
|
Total lease obligations |
$ | 616 | $ | 43 | $ | 37 | $ | 31 | $ | 32 | $ | 31 | $ | 442 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
134 | 13 | 12 | 12 | 12 | 12 | 73 | |||||||||||||||||||||
|
Total lease obligations |
$ | 443 | $ | 18 | $ | 17 | $ | 17 | $ | 18 | $ | 18 | $ | 355 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 7 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 2 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 131 | $ | 11 | $ | 11 | $ | 11 | $ | 10 | $ | 11 | $ | 77 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | See Properties under Part I, Item 2, and Note 3 – Property and Plant, Net of this report for additional information. |
| (c) | Amounts related to certain real estate leases and railroad licenses have indefinite payment periods. Ameren's $2 million annual obligation for these items is included in the 2012 through 2016 columns. The amounts for the indefinite payments are not included in the After 5 Years column because that period is indefinite. |
The following table presents total rental expense, included in operating expenses, for the years ended December 31, 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 47 | $ | 52 | $ | 50 | ||||||
|
Ameren Missouri |
29 | 29 | 30 | |||||||||
|
Ameren Illinois |
17 | 19 | 19 | |||||||||
|
Genco |
12 | 13 | 15 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Other Obligations
To supply a portion of the fuel requirements of our generating plants, we have entered into various long-term commitments for the procurement of coal, natural gas, nuclear fuel, and methane gas. We also have entered into various long-term commitments for purchased power and natural gas for distribution. The table below presents our estimated fuel, purchased power, and other commitments at December 31, 2011. Ameren's and Ameren Missouri's coal commitments include multiyear agreements to procure ultra-low-sulfur coal and related transportation from the Powder River Basin in Wyoming. Ameren's and Ameren Missouri's purchased power obligations include a 102-MW power purchase agreement with a wind farm operator that expires in 2024. Ameren's and Ameren Illinois' purchased power obligations include the Ameren Illinois power purchase agreements entered into as part of the IPA-administered power procurement process. Included in the Other column are minimum purchase commitments under contracts for equipment, design and construction, meter reading services, and an Ameren tax credit obligation at December 31, 2011. Ameren's tax credit obligation is a $17 million note payable issued for an investment in a commercial real estate development partnership to acquire tax credits. This note payable was netted against the related investment in "Other assets" on Ameren's balance sheet at December 31, 2011, as Ameren has a legally enforceable right to offset under authoritative accounting guidance.
| Coal | Natural Gas |
Nuclear Fuel |
Purchased Power |
Methane Gas |
Other | Total | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
2012 |
$ | 1,120 | $ | 398 | $ | 36 | $ | 196 | $ | 1 | $ | 221 | $ | 1,972 | ||||||||||||||
|
2013 |
792 | 295 | 37 | 309 | 3 | 80 | 1,516 | |||||||||||||||||||||
|
2014 |
692 | 220 | 96 | 125 | 3 | 75 | 1,211 | |||||||||||||||||||||
|
2015 |
687 | 116 | 90 | 51 | 3 | 52 | 999 | |||||||||||||||||||||
|
2016 |
674 | 39 | 100 | 52 | 3 | 62 | 930 | |||||||||||||||||||||
|
Thereafter |
968 | 134 | 298 | 746 | 94 | 246 | 2,486 | |||||||||||||||||||||
|
Total |
$ | 4,933 | $ | 1,202 | $ | 657 | $ | 1,479 | $ | 107 | $ | 736 | $ | 9,114 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
2012 |
$ | 623 | $ | 63 | $ | 36 | $ | 19 | $ | 1 | $ | 78 | $ | 820 | ||||||||||||||
|
2013 |
605 | 48 | 37 | 19 | 3 | 50 | 762 | |||||||||||||||||||||
|
2014 |
625 | 36 | 96 | 19 | 3 | 47 | 826 | |||||||||||||||||||||
|
2015 |
614 | 19 | 90 | 19 | 3 | 28 | 773 | |||||||||||||||||||||
|
2016 |
644 | 7 | 100 | 19 | 3 | 38 | 811 | |||||||||||||||||||||
|
Thereafter |
921 | 30 | 298 | 155 | 94 | 144 | 1,642 | |||||||||||||||||||||
|
Total |
$ | 4,032 | $ | 203 | $ | 657 | $ | 250 | $ | 107 | $ | 385 | $ | 5,634 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
2012 |
$ | - | $ | 324 | $ | - | $ | 177 | $ | - | $ | 24 | $ | 525 | ||||||||||||||
|
2013 |
- | 243 | - | 290 | - | 22 | 555 | |||||||||||||||||||||
|
2014 |
- | 180 | - | 106 | - | 22 | 308 | |||||||||||||||||||||
|
2015 |
- | 94 | - | 32 | - | 24 | 150 | |||||||||||||||||||||
|
2016 |
- | 31 | - | 33 | - | 24 | 88 | |||||||||||||||||||||
|
Thereafter |
- | 105 | - | 591 | - | 102 | 798 | |||||||||||||||||||||
|
Total |
$ | - | $ | 977 | $ | - | $ | 1,229 | $ | - | $ | 218 | $ | 2,424 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
2012 |
$ | 355 | $ | 9 | $ | - | $ | - | $ | - | $ | 98 | $ | 462 | ||||||||||||||
|
2013 |
108 | 4 | - | - | - | 5 | 117 | |||||||||||||||||||||
|
2014 |
40 | 3 | - | - | - | 5 | 48 | |||||||||||||||||||||
|
2015 |
45 | 2 | - | - | - | - | 47 | |||||||||||||||||||||
|
2016 |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Thereafter |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Total |
$ | 548 | $ | 18 | $ | - | $ | - | $ | - | $ | 108 | $ | 674 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Also, as part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company to lock in energy prices for 400 to 1,000 megawatts annually of their round-the-clock power requirements from 2008 to 2012. These commitments are not reflected in the above table. See Note 7 – Derivative Financial Instruments and Note 14 – Related Party Transactions for additional information.
In February 2012, a rate stability procurement for energy products and renewable energy credits was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Ameren Illinois contracted to purchase approximately 13 million megawatthours of energy products at an average price of approximately $31 per megawatthour. Ameren Illinois is currently reviewing the results of the renewable energy credits procurement proceeding.
Ameren Illinois has entered into an agreement to purchase approximately 15.5 billion cubic feet of synthetic natural gas annually over a 10-year period beginning in 2016 for its natural gas customers. The agreement is contingent on the counterparty reaching certain milestones during the project development and the construction of the plant that will produce the synthetic natural gas. Construction has not begun on the plant; therefore, Ameren Illinois' obligations are not yet certain at this time. The agreement was entered into pursuant to an Illinois law which became effective August 2, 2011, and provides that all contract costs for synthetic natural gas incurred by Ameren Illinois are reasonable and prudent and recoverable through the PGA and are not subject to review or disallowance by the ICC.
Environmental Matters
We are subject to various environmental laws and regulations enforced by federal, state, and local authorities. From the beginning phases of siting and development to the ongoing operation of existing or new electric generating, transmission and distribution facilities, natural gas storage, transmission and distribution facilities, our activities involve compliance with diverse environmental laws and regulations. These laws and regulations address emissions, impacts to air, land and water, noise, protected natural and cultural resources (such as wetlands, endangered species and other protected wildlife, and archeological and historical resources), and chemical and waste handling. Complex and lengthy processes are required to obtain approvals, permits, or licenses for new, existing or modified facilities. Additionally, the use and handling of various chemicals or hazardous materials (including wastes) requires release prevention plans and emergency response procedures.
In addition to existing laws and regulations, including the Illinois MPS that applies to our energy centers in Illinois, the EPA is developing numerous new environmental regulations that will have a significant impact on the electric utility industry. These regulations could be particularly burdensome for certain companies, including Ameren, Ameren Missouri and Genco, that operate coal-fired energy centers. Significant new rules proposed or promulgated since the beginning of 2010 include the regulation of greenhouse gas emissions; revised national ambient air quality standards for SO2 and NO2 emissions; the CSAPR, which requires further reductions of SO2 and NOx emissions from power plants; a regulation governing management of CCR and coal ash impoundments; the MATS, which requires reduction of emissions of mercury, toxic metals, and acid gases from power plants; revised NSPS for particulate matter, SO2, and NOx emissions from new sources; and new regulations under the Clean Water Act that could require significant capital expenditures such as new water intake structures or cooling towers at our energy centers. The EPA also plans to propose an additional rule, applicable to new and existing electric generating units, governing NSPS and emission guidelines for greenhouse gas emissions. These new regulations may be litigated, so the timing of their implementation is uncertain, as evidenced by the stay of the CSAPR by the United States Court of Appeals for the District of Columbia on December 30, 2011. Although many details of these future regulations are unknown, the combined effects of the new and proposed environmental regulations may result in significant capital expenditures and/or increased operating costs over the next five to ten years for Ameren, Ameren Missouri and Genco. Actions required to ensure that our facilities and operations are in compliance with environmental laws and regulations could be prohibitively expensive. If they are, these regulations could require us to close or to significantly alter the operation of our energy centers, which could have an adverse effect on our results of operations, financial position, and liquidity, including the impairment of plant assets. Failure to comply with environmental laws and regulations might also result in the imposition of fines, penalties, and injunctive measures.
The estimates in the table below contain all of the known capital costs to comply with existing environmental regulations and our assessment of the potential impacts of the EPA's proposed regulation for CCR, the recently finalized MATS, the stayed CSAPR as currently designed, and the revised national ambient air quality standards for SO2 and NOx emissions as of December 31, 2011. The estimates in the table below assume that CCR will continue to be regarded as nonhazardous. The estimates in the table below do not include the impacts of new regulations proposed by the EPA under the Clean Water Act in March 2011 regarding cooling water intake structures as our evaluation of those impacts is ongoing. The estimates shown in the table below could change significantly depending upon a variety of factors including:
| Ÿ |
additional federal or state requirements; |
| Ÿ |
regulation of greenhouse gas emissions; |
| Ÿ |
new national ambient air quality standards or changes to existing standards for ozone, fine particulates, SO2, and NOx emissions; |
| Ÿ |
additional rules governing air pollutant transport; |
| Ÿ |
finalized regulations under the Clean Water Act; |
| Ÿ |
CCR being classified as hazardous; |
| Ÿ |
whether the CSAPR is implemented and whether any modifications are made to its existing requirements; |
| Ÿ |
new technology; |
| Ÿ |
expected power prices; |
| Ÿ |
variations in costs of material or labor; and |
| Ÿ |
alternative compliance strategies or investment decisions. |
| 2012 | 2013 - 2016 | 2017 - 2021 | Total | |||||||||||||||||||||||||
|
AMO(a) |
$ | 55 | $ | 325 - | $ | 400 | $ | 845 - | $ | 1,030 | $ | 1,225 - | $ | 1,485 | ||||||||||||||
|
Genco |
150 | 100 - | 125 | 245 - | 295 | 495 - | 570 | |||||||||||||||||||||
|
AERG |
5 | 20 - | 25 | 80 - | 100 | 105 - | 130 | |||||||||||||||||||||
|
Ameren |
$ | 210 | $ | 445 - | $ | 550 | $ | 1,170 - | $ | 1,425 | $ | 1,825 - | $ | 2,185 | ||||||||||||||
| (a) | Ameren Missouri's expenditures are expected to be recoverable from ratepayers. |
The decision to make pollution control equipment investments at our Merchant Generation business depends on whether the expected future market price for power reflects the increased cost for environmental compliance. In early 2012, there has been a decline in the market price for wholesale power because of factors such as declining natural gas prices and the stay of the CSAPR. As a result of this decline in the market price for power, as well as uncertain environmental regulations, Genco is decelerating the construction of two scrubbers at of its Newton energy center. These scrubbers were originally expected to be installed in late 2013 and spring 2014. The ultimate installation of these scrubbers, now estimated to occur between 2017 and 2021 in the table above, has been postponed until such time as the incremental investment necessary for completion is justified by visible market conditions. However, Genco will continue to incur capital costs related to the construction of these scrubbers. The table above includes Genco's estimated costs of approximately $150 million in 2012 and approximately $20 million annually, excluding capitalized interest, from 2013 through 2016 for the construction of the two scrubbers. In addition to Genco's reduction in estimated capital expenditures, AERG is deferring precipitator upgrades at its E.D. Edwards energy center beyond 2016.
The following sections describe the more significant environmental rules that affect our operations.
Clean Air Act
Both federal and state laws require significant reductions in SO2 and NOx emissions that result from burning fossil fuels. In March 2005, the EPA issued regulations with respect to SO2 and NOx emissions (the CAIR). The CAIR required generating facilities in 28 states, including Missouri and Illinois, and the District of Columbia to participate in cap-and-trade programs to reduce annual SO2 emissions, annual NOx emissions, and ozone season NOx emissions.
In December 2008, the United States Court of Appeals for the District of Columbia remanded the CAIR to the EPA for further action to remedy the rule's flaws, but allowed the CAIR's cap-and-trade programs to remain effective until they are replaced by the EPA. In July 2011, the EPA issued the CSAPR as the CAIR replacement. The CSAPR was to become effective on January 1, 2012, for SO2 and annual NOx reductions and on May 1, 2012, for ozone season NOx reductions. In the CSAPR, the EPA developed federal implementation plans for each state covered by this rule; however, each impacted state can develop its own implementation rule starting as early as 2013. The CSAPR establishes emission allowance budgets for each of the states subject to the regulation, including Missouri and Illinois. With the CSAPR, the EPA abandoned CAIR's regional approach to cutting emissions and instead set a pollution budget for each of the impacted states based on the EPA's analysis of each upwind state's contribution to air quality in downwind states. For Missouri and Illinois, emission reductions were required in two phases beginning in 2012, with further reductions in 2014. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, in the SO2 program, in the annual NOx, or in ozone season NOx program. Multiple legal challenges were filed requesting to have CSAPR partially or entirely vacated and to stay the implementation of the CSAPR while the court considers the challenges. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. The stay does not invalidate the rule, but only delays its implementation until a final court ruling is issued. The United States Court of Appeals for the District of Columbia has expedited its consideration of the regulation and will hear arguments on the validity of CSAPR in April 2012. The ultimate outcome of the challenges to the regulation is uncertain. The court could uphold CSAPR or remand it back to the EPA for partial or entire revision. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR.
On December 21, 2011, the EPA issued the final MATS under the Clean Air Act, which require emission reductions for mercury and other hazardous air pollutants, such as acid gases, toxic metals, and particulate matter by setting emission limits equal to the average emissions of the best performing 12% of existing coal and oil-fired electric generating units. Also, the rule requires reductions in hydrogen chloride emissions, which were not regulated previously, and it may require continuous monitoring systems that are not currently in place. The MATS do not require a specific control technology to achieve the emission reductions. The MATS will apply to each unit at a coal-fired power plant; however, emission compliance can be averaged for the entire power plant. Compliance is required by April 2015 or, with a case-by-case extension, by April 2016.
Separately, in January and June 2010, the EPA finalized new ambient air quality standards for SO2 and NO2. It also announced plans for further reductions in the annual national ambient air quality standards for ozone and fine particulates. The state of Illinois and the state of Missouri will be required to develop separate attainment plans to comply with the new ambient air quality standards. Ameren, Ameren Missouri and Genco continue to assess the impacts of these new standards. In September 2011, the EPA withdrew its draft annual national ambient air quality standard for ozone and announced that it was implementing the 2008 national ambient air quality standard for ozone. The EPA is required to revisit this standard again in 2013.
Ameren Missouri's current environmental compliance plan for air emissions from its energy centers includes burning ultra-low-sulfur coal and installing new or optimizing existing pollution control equipment. In July 2011, Ameren Missouri contracted to procure significantly higher volumes of lower-sulfur-content coal than Ameren Missouri's energy centers have historically burned, which will allow Ameren Missouri to eliminate or postpone capital expenditures for pollution control equipment while still achieving required emissions levels. In 2010, Ameren Missouri completed the installation of two scrubbers at its Sioux energy center to reduce SO2 emissions. Currently, Ameren Missouri's compliance plan assumes the installation of two scrubbers within its coal-fired fleet during the next 10 years and precipitator upgrades at multiple energy centers. However, Ameren Missouri is currently evaluating its operations and options to determine how to comply with the additional emission reductions requirements in 2014 set forth in the CSAPR, if ultimately enacted, the MATS, and other recently finalized or proposed EPA regulations.
Existing Illinois state regulations already required Ameren and Genco to reduce their emissions of mercury under the MPS. Ameren's and Genco's review of the MATS indicates that the scope of the federal standards is broader than the MPS, as no exemption exists for smaller coal-fired plants. Additionally, the MATS are more stringent than the MPS because compliance with the MATS is measured on a quarterly basis and, in some cases, a thirty-day rolling basis and not annually, as allowed under state requirements. At the end of 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers was primarily due to the expected cost of complying with CSAPR and MATS. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Genco and AERG expect to install additional, or optimize existing, pollution control equipment, or modify operations to meet new and incremental emission reduction requirements under the MPS, the MATS, or the CSAPR as they become effective. Under the MPS, as amended, Illinois generators are required to reduce mercury, SO2, and NOx emissions by 2015. To comply with the MPS and other air emissions laws and regulations, Genco and AERG are installing equipment designed to reduce their emissions of mercury, NOx, and SO2. Genco and AERG have installed a total of three scrubbers at two energy centers. Two additional scrubbers are being constructed at Genco's Newton energy center. As discussed above, the timing of the installation of these scrubbers as well as precipitator upgrades at AERG's E.D. Edwards energy center have been extended. The closure of Genco's Meredosia and Hutsonville energy centers will allow the Merchant Generation segment additional flexibility in the methods to achieve compliance with environmental standards. Merchant Generation and Genco will continue to review and adjust their compliance plans in light of evolving outlooks for power and capacity prices, delivered fuel costs, environment standards and compliance technologies, among other factors.
The completion of Ameren's, Ameren Missouri's and Genco's review of recently finalized environmental regulations and compliance measures could result in significant increases in capital expenditures and operating costs. The compliance costs could be prohibitive at some of our energy centers as the expected return from these investments, at current market prices for energy and capacity, might not justify the required capital expenditures or their continued operation, which could result in the impairment of long-lived assets.
Emission Allowances
The Clean Air Act created marketable commodities called allowances under the acid rain program, the NOx budget trading program, the CAIR, and the CSAPR. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, either the SO2, annual NOx, or ozone season NOx programs. As noted above, on December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR including its allowance program. See Note 1 – Summary of Significant Accounting Policies for the SO2 and NOx emission allowance book values that were classified as intangible assets as of December 31, 2011 and 2010, and Note 17 – Goodwill, Impairment and Other Charges for information regarding the emission allowance impairments recorded during 2011 and 2010.
Environmental regulations including the CAIR and the CSAPR, the timing of the installation of pollution control equipment, fuel mix, and the level of operations, will have a significant impact on the number of allowances required for ongoing operations. The CAIR uses the acid rain program's allowances for SO2 emissions and created annual and ozone season NOx allowances. The CSAPR, however, will not rely upon the acid rain program, the NOx budget trading program, or CAIR allowances for its allowance allocation program. Instead, the EPA issued a new type of emissions allowance for each program under the CSAPR. Any unused SO2 allowances, annual NOx allowances, and ozone season NOx allowances issued under CAIR cannot be used for compliance with CSAPR. Ameren, Ameren Missouri and Genco expect to have adequate CAIR allowances for 2012 to avoid needing to make external purchases.
Should the CSAPR become effective as issued, Ameren, Ameren Missouri and Genco are studying their compliance options to identify additional opportunities that may exist for compliance in an economical fashion. Ameren, Ameren Missouri and Genco may be required to purchase emission allowances, if available, to install new or optimize existing pollution control equipment, to limit generation, or take other actions to achieve compliance with the CSAPR in future phase-in years.
Global Climate Change
State and federal authorities, including the United States Congress, have considered initiatives to limit greenhouse gas emissions and to address global climate change. Potential impacts from any climate change legislation or regulation could vary, depending upon proposed CO2 emission limits, the timing of implementation of those limits, the method of distributing any allowances, the degree to which offsets are allowed and available, and provisions for cost-containment measures, such as a "safety valve" provision that provides a maximum price for emission allowances. As a result of our diverse fuel portfolio, our emissions of greenhouse gases vary among our energy centers, but coal-fired power plants are significant sources of CO2. The enactment of a climate change law could result in a significant rise in household costs and rates for electricity could rise significantly. The burden could fall particularly hard on electricity consumers and upon the economy in the Midwest because of the region's reliance on electricity generated by coal-fired power plants. Natural gas emits about half as much CO2 as coal when burned to produce electricity. Therefore, climate change regulation could cause the conversion of coal-fired power plants to natural gas, or the construction of new natural gas plants to replace coal-fired power plants. As a result, economywide shifts to natural gas as a fuel source for electricity generation also could affect the cost of heating for our utility customers and many industrial processes that use natural gas.
In December 2009, the EPA issued its "endangerment finding" under the Clean Air Act which stated that greenhouse gas emissions, including CO2, endanger human health and welfare and that emissions of greenhouse gases from motor vehicles contribute to that endangerment. In March 2010, the EPA issued a determination that greenhouse gas emissions from stationary sources, such as power plants, would be subject to regulation under the Clean Air Act effective the beginning of 2011. As a result of these actions, we are required to consider the emissions of greenhouse gases in any air permit application.
Recognizing the difficulties presented by regulating at once virtually all emitters of greenhouse gases, the EPA finalized in May 2010 regulations, known as the "Tailoring Rule," that established new higher thresholds for regulating greenhouse gas emissions from stationary sources, such as power plants. The Tailoring Rule became effective in January 2011. The rule requires any source that already has an operating permit to have greenhouse-gas-specific provisions added to its permits upon renewal. Currently, all Ameren energy centers have operating permits that, when renewed, may be modified to address greenhouse gas emissions. The Tailoring Rule also provides that if projects performed at major sources result in an increase in emissions of greenhouse gases of at least 75,000 tons per year, measured in CO2 equivalents, such projects could trigger permitting requirements under the NSR programs and the application of best available control technology, if any, to control greenhouse gas emissions. New major sources are also required to obtain such a permit and to install the best available control technology if their greenhouse gas emissions exceed the applicable emissions threshold. Separately, in December 2010, the EPA announced a settlement agreement under which it would propose NSPS for greenhouse gas emissions at new and existing fossil fuel-fired power plants by July 26, 2011 and issue a final standard by May 2012. The EPA has not yet proposed a rule and has not specified a new estimate of when it will issue that standard. It is uncertain whether reductions to greenhouse gas emissions would be required at Ameren's, Ameren Missouri's or Genco's energy centers as a result of any of the EPA's new and future rules. Legal challenges to the EPA's greenhouse gas rules have been filed. Any federal climate change legislation that is enacted may preempt the EPA's regulation of greenhouse gas emissions, including the Tailoring Rule, particularly as it relates to power plant greenhouse gas emissions. The extent to which the Tailoring Rule could have a material impact on our energy centers depends upon how state agencies apply the EPA's guidelines as to what constitutes the best available control technology for greenhouse gas emissions from power plants and whether physical changes or changes in operations subject to the rule occur at our energy centers. Although the EPA has stated its intention to regulate greenhouse gas emissions from stationary sources, such as power plants, congressional action could block or delay that effort.
Future federal and state legislation or regulations that mandate limits on the emission of greenhouse gases would likely result in significant increases in capital expenditures and operating costs, which, in turn, could lead to increased liquidity needs and higher financing costs. Moreover, to the extent Ameren Missouri requests recovery of these costs through rates, its regulators might delay or deny timely recovery of these costs. Excessive costs to comply with future legislation or regulations might force Ameren, Ameren Missouri and Genco as well as other similarly situated electric power generators to close some coal-fired facilities earlier than planned, which could lead to possible impairment of assets and reduced revenues. As a result, mandatory limits could have a material adverse impact on Ameren's, Ameren Missouri's, and Genco's results of operations, financial position, and liquidity.
Recent federal court decisions have considered the application of common law causes of action, such as nuisance, to address damages resulting from global climate change. In June 2011, the United States Supreme Court in State of Connecticut v. American Electric Power rejected state efforts to impose liability for CO2 and greenhouse gases emissions under federal common law. That ruling, however, did not address whether private citizens could pursue causes of action based on state common law. In June 2011, a case called Comer v. Murphy Oil (Comer) was filed in the United States District Court for the Southern District of Mississippi. In this litigation, a Mississippi property owner sued several industrial companies, including Ameren Missouri and Genco, alleging that CO2 emissions created the atmospheric conditions that intensified Hurricane Katrina. Although we are unable to predict the outcome of the Comer litigation on our results of operations, financial position, and liquidity, Ameren believes that it has meritorious defenses. Numerous procedural and substantive challenges are expected in the Comer litigation.
The impact on us of future initiatives related to greenhouse gas emissions and global climate change is unknown. Compliance costs could increase as future federal legislative, federal regulatory, and state-sponsored initiatives to control greenhouse gases continue to progress, making it more likely that some form of greenhouse gas emissions control will eventually be required. Since these initiatives continue to evolve, the impact on our coal-fired energy centers and our customers' costs is unknown, but any impact would probably be negative. Our costs of complying with any mandated federal or state greenhouse gas program could have a material impact on our future results of operations, financial position, and liquidity.
NSR and Clean Air Litigation
The EPA is engaged in an enforcement initiative to determine whether coal-fired power plants failed to comply with the requirements of the NSR and NSPS provisions under the Clean Air Act when the plants implemented modifications. The EPA's inquiries focus on whether projects performed at power plants should have triggered various permitting requirements and the installation of pollution control equipment.
In April 2005, Genco received a request from the EPA for information pursuant to Section 114(a) of the Clean Air Act. The request sought detailed operating and maintenance history data with respect to Genco's Coffeen, Hutsonville, Meredosia, Newton, and Joppa energy centers and AERG's E.D. Edwards and Duck Creek energy centers. In 2006, the EPA issued a second Section 114(a) request to Genco regarding projects at the Newton energy center. All of these facilities are coal-fired energy centers. In September 2008, the EPA issued a third Section 114(a) request regarding projects at all of Ameren's coal-fired energy centers in Illinois. We completed our response to the information requests, but we are unable to predict the outcome of this matter.
Following the issuance of a Notice of Violation, 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 alleges that in performing projects at its Rush Island coal-fired energy center, Ameren Missouri violated provisions of the Clean Air Act and Missouri law. In January 2012, the United States District Court granted, in part, Ameren Missouri's motion to dismiss various aspects of the EPA's penalty claims. The EPA's claims for injunctive relief, including to require the installation of pollution control equipment, remain. At present, the complaint does not include Ameren Missouri's other coal-fired energy centers, but the EPA has issued Notices of Violation under its NSR enforcement initiative against the company's Labadie, Meramec, and Sioux coal-fired energy centers. Litigation of this matter could take many years to resolve. Ameren Missouri believes its defenses to the allegations described in the complaint as well as the Notices of Violation are meritorious. Ameren Missouri will defend itself vigorously. However, there can be no assurances that it will be successful in its efforts.
Ultimate resolution of these matters could have a material adverse impact on the future results of operations, financial position, and liquidity of Ameren, Ameren Missouri and Genco. A resolution could result in increased capital expenditures for the installation of pollution control equipment, increased operations and maintenance expenses, and penalties. We are unable to predict the ultimate resolution of these matters or the costs that might be incurred. However, Ameren Missouri has concluded that, while a loss may be reasonably possible, the likelihood of loss is not probable. Therefore, no reserve has been established.
Clean Water Act
In March 2011, the EPA announced a proposed rule applicable to cooling water intake structures at existing power plants that have the ability to withdraw more than 2 million gallons of water per day from a body of water and use at least 25 percent of that water exclusively for cooling. Under the proposed rule, affected facilities would be required either to meet mortality limits for aquatic life impinged on the plant's intake screens or to reduce intake velocity to 0.5 feet per second. The proposed rule also requires plants to meet site-specific entrainment standards or to reduce the cooling water intake flow commensurate with the intake flow of a closed-cycle cooling system. The final rule is scheduled to be issued in July 2012, with compliance expected within eight years thereafter. All coal-fired, nuclear, and combined cycle energy centers at Ameren, Ameren Missouri and Genco with cooling water systems are subject to this proposed rule. The proposed rule did not mandate cooling towers at existing facilities, as other technology options potentially could meet the site-specific standards. Ameren, Ameren Missouri and Genco are currently evaluating the proposed rule, and their assessment of the proposed rule's impacts is ongoing. Therefore, we cannot predict at this time the capital or operating costs associated with compliance. The proposed rule could have an adverse effect on our results of operations, financial position, and liquidity if its implementation requires the installation of cooling towers at our electric generating stations.
In September 2009, the EPA announced its plan to revise the effluent guidelines applicable to steam electric generating units under the Clean Water Act. Effluent guidelines are national standards for wastewater discharges to surface water that are based on the effectiveness of available control technology. The EPA is engaged in information collection and analysis activities in support of this rulemaking. It has indicated that it expects to issue a proposed rule in July 2012 and to finalize the rule in 2014. We are unable at this time to predict the impact of this development.
Remediation
We are involved in a number of remediation actions to clean up hazardous waste sites as required by federal and state law. Such statutes require that responsible parties 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 the federal or state governments as a potentially responsible party (PRP) at several contaminated sites. Several of these sites involve facilities that were transferred by our rate-regulated utility operations in Illinois to Genco in May 2000 and to AERG in October 2003. As part of each transfer, Ameren Illinois contractually agreed to indemnify Genco and AERG for remediation costs associated with preexisting environmental contamination at the transferred sites.
As of December 31, 2011, Ameren and Ameren Illinois owned or were otherwise responsible for 44 former MGP sites in Illinois. These are in various stages of investigation, evaluation, and remediation. Based on current estimated plans, Ameren and Ameren Illinois could substantially conclude remediation efforts at most of these sites by 2015. The ICC permits 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. To be recoverable, such costs must be prudently and properly incurred. Costs are subject to annual review by the ICC.
As of December 31, 2011, Ameren and Ameren Missouri own or are otherwise responsible for 10 MGP sites in Missouri and one site in Iowa. Ameren Missouri does not currently have a rate rider mechanism that permits recovery of remediation costs associated with MGP sites from utility customers. Ameren Missouri does not have any retail utility operations in Iowa that would provide a source of recovery of these remediation costs.
The following table presents, as of December 31, 2011, the estimated probable obligation to remediate these MGP sites.
| Estimate |
Recorded |
|||||||||||
| Low | High | |||||||||||
|
Ameren |
$ | 107 | $ | 183 | $ | 107 | ||||||
|
Ameren Missouri |
3 | 4 | 3 | |||||||||
|
Ameren Illinois |
104 | 179 | 104 | |||||||||
| (a) | Recorded liability represents the estimated minimum probable obligations, as no other amount within the range provided a better estimate. |
Ameren Illinois is responsible for the cleanup of a former coal ash landfill in Coffeen, Illinois. As of December 31, 2011, Ameren Illinois estimated that obligation 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 a landfill, underground storage tanks, and a water treatment plant in Illinois. As of December 31, 2011, Ameren Illinois recorded a liability of $0.8 million to represent its best estimate of the obligation for these sites.
Ameren Missouri has responsibility for the investigation and potential cleanup of two waste sites in Missouri as a result of federal agency mandates. One of the cleanup sites is a former coal tar distillery located in St. Louis, Missouri. In 2008, the EPA issued an administrative order to Ameren Missouri pertaining to this distillery operated by Koppers Company or its predecessor and successor companies. Ameren Missouri is the current owner of the site, but Ameren Missouri did not conduct any of the manufacturing operations involving coal tar or its byproducts. Ameren Missouri, along with two other PRPs, is currently performing a site investigation. As of December 31, 2011, Ameren Missouri estimated its obligation at $2 million to $5 million. Ameren Missouri has a liability of $2 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate. Ameren Missouri's other active federal agency-mandated cleanup site in Missouri is a site in Cape Girardeau. Ameren Missouri was a customer of an electrical equipment repair and disposal company that previously operated a facility at this site. A trust was established in the early 1990s by several businesses and governmental agencies to fund the cleanup of this site, which was completed in 2005. Ameren Missouri anticipates this trust fund will be sufficient to complete the remaining adjacent off-site cleanup and therefore has no recorded liability at December 31, 2011, related to this site.
Ameren Missouri also has a federal agency mandate to complete a site investigation for a site in Illinois. In 2000, the EPA notified Ameren Missouri and numerous other companies, including Solutia, that former landfills and lagoons in Sauget, Illinois, may contain soil and groundwater contamination. These sites are known as Sauget Area 2. From about 1926 until 1976, Ameren Missouri operated an energy center adjacent to Sauget Area 2. Ameren Missouri currently owns a parcel of property that was once used as a landfill. Under the terms of an Administrative Order on Consent, Ameren Missouri has joined with other PRPs to evaluate the extent of potential contamination with respect to Sauget Area 2.
The Sauget Area 2 investigations overseen by the EPA have been completed. The results have been submitted to the EPA, and a record of decision is expected in 2012. Once the EPA has selected a remedy, if any, it would begin negotiations with various PRPs regarding implementation. Over the last several years, numerous other parties have joined the PRP group. In addition, Pharmacia Corporation and Monsanto Company have agreed to assume the liabilities related to Solutia's former chemical waste landfill in the Sauget Area 2. As of December 31, 2011, Ameren Missouri estimated its obligation at $0.3 million to $10 million. Ameren Missouri has a liability of $0.3 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate.
In December 2004, AERG submitted a plan to the Illinois EPA to address groundwater and surface water issues associated with the recycle pond, ash ponds, and reservoir at the Duck Creek energy center. In 2010, AERG closed the recycle pond system. Remediation work on the recycle pond was completed in the first quarter of 2011, and therefore no liability exists as of December 31, 2011.
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 protection laws. We are unable to determine whether such practices will result in future environmental commitments or affect our results of operations, financial position, or liquidity.
Ash Management
There has been activity at both state and federal levels regarding additional regulation of ash pond facilities and CCR. In May 2010, the EPA announced proposed new regulations regarding the regulatory framework for the management and disposal of CCR, which could affect future disposal and handling costs at our energy centers. Those proposed regulations include two options for managing CCRs under either solid or hazardous waste regulations, but either alternative would allow for some continued beneficial uses, such as recycling of CCR without classifying it as waste. As part of its proposal, the EPA is considering alternative regulatory approaches that require coal-fired power plants either to close surface impoundments, such as ash ponds, or to retrofit such facilities with liners. Existing impoundments and landfills used for the disposal of CCR would be subject to groundwater monitoring requirements and requirements related to closure and postclosure care under the proposed regulations. Additionally, in January 2010, EPA announced its intent to develop regulations establishing financial responsibility requirements for the electric generation industry, among other industries, and it specifically discussed CCR as a reason for developing the new requirements. Ameren, Ameren Missouri and Genco are currently evaluating all of the proposed regulations to determine whether current management of CCR, including beneficial reuse, and the use of the ash ponds should be altered. Ameren, Ameren Missouri and Genco also are evaluating the potential costs associated with compliance with the proposed regulation of CCR impoundments and landfills, which could be material, if such regulations are adopted.
In addition, the Illinois EPA requested that Ameren, Ameren Missouri and Genco establish groundwater monitoring plans for their ash impoundments in Illinois. Ameren and the Illinois EPA have established a framework for closure of ash ponds in Illinois, including the ash ponds at Venice, Hutsonville, and Duck Creek, when such facilities are ultimately taken out of service. Ameren, Ameren Missouri and Genco have recorded AROs, based on current laws, for the estimated costs of the retirement of their ash ponds.
Pumped-storage Hydroelectric Facility Breach
In December 2005, there was a breach of the upper reservoir at Ameren Missouri's Taum Sauk pumped-storage hydroelectric energy center. This resulted in significant flooding in the local area, which damaged a state park. Ameren Missouri settled with FERC and the state of Missouri all issues associated with the December 2005 Taum Sauk incident. The rebuilt Taum Sauk energy center became fully operational in April 2010.
Ameren Missouri included certain capitalized costs associated with enhancements, or costs that would have been incurred absent the breach, at the rebuilt Taum Sauk energy center not recovered from property insurers in its 2010 electric rate case filing. However, in the July 2011 rate order, the MoPSC disallowed all of these capitalized costs associated with the rebuilding of the Taum Sauk energy center. As a result of the order, Ameren and Ameren Missouri each recorded a pretax charge to earnings in 2011 of $89 million to reflect this disallowance. See Note 2 – Rate and Regulatory Matters for additional information about the appeal of the MoPSC's July 2011 electric rate order.
Ameren Missouri had property and liability insurance coverage for the Taum Sauk incident, subject to certain limits and deductibles. Insurance did not cover some lost electric margins or penalties paid to FERC. Ameren Missouri believes that the total cost for cleanup, damage and liabilities, excluding costs to rebuild the upper reservoir, is $209 million, which is the amount Ameren Missouri had paid as of December 31, 2011. As of December 31, 2011, Ameren Missouri had recorded expenses of $37 million, primarily in prior years (2011 – $1 million, 2010 – $1 million, 2009 – $2 million), for items not covered by insurance. Ameren Missouri recorded a $172 million receivable for amounts recoverable from insurance companies under liability coverage. As of December 31, 2011, Ameren Missouri had received $104 million from insurance companies for liability claims, which reduced the insurance receivable balance subject to liability coverage to $68 million.
In June 2010, Ameren Missouri sued an insurance company that was providing Ameren Missouri with liability coverage on the date of the Taum Sauk incident. In the litigation, filed in the United States District Court for the Eastern District of Missouri, Ameren Missouri claimed the insurance company breached its duty to indemnify Ameren Missouri for the losses experienced from the incident. In January 2011, the court ruled that the parties must first pursue alternative dispute resolution under the terms of their coverage agreement. In February 2011, Ameren Missouri filed an appeal of the January ruling with the United States Court of Appeals for the Eighth Circuit, seeking the ability to pursue resolution of this dispute outside of a dispute resolution process under the terms of its coverage agreement.
Until Ameren's remaining liability insurance claims and the related litigation are resolved, we are unable to determine the total impact the breach could have on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity beyond those amounts already recognized.
Asbestos-related Litigation
Ameren, Ameren Missouri, Ameren Illinois and EEI have been named, along with numerous other parties, in a number of lawsuits filed by plaintiffs claiming varying degrees of injury from asbestos exposure. Most have been filed in the Circuit Court of Madison County, Illinois. The total number of defendants named in each case varies, with as many as 272 parties named in some pending cases and as few as two in others. In the cases pending as of December 31, 2011, the average number of parties was 80.
The claims filed against Ameren, Ameren Missouri, Ameren Illinois and Genco allege injury from asbestos exposure during the plaintiffs' activities at our present or former electric generating plants. Former CIPS plants are now owned by Genco, and former CILCO plants are now owned by AERG. As a part of the transfer of ownership of the CIPS and CILCO generating plants, CIPS and CILCO, now Ameren Illinois, contractually agreed to indemnify Genco and AERG, for liabilities associated with asbestos-related claims arising from activities prior to the transfer. Each lawsuit seeks unspecified damages that, if awarded at trial, typically would be shared among the various defendants.
The following table presents the pending asbestos-related lawsuits filed against the Ameren Companies as of December 31, 2011:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | Total(a) | ||||
|
4 |
53 | 77 | (b) | 93 |
| (a) | Total does not equal the sum of the subsidiary unit lawsuits because some of the lawsuits name multiple Ameren entities as defendants. |
| (b) | As of December 31, 2011, six asbestos-related lawsuits were pending against EEI. The general liability insurance maintained by EEI provides coverage with respect to liabilities arising from asbestos-related claims. |
At December 31, 2011, Ameren, Ameren Missouri, Ameren Illinois and Genco had liabilities of $18 million, $6 million, $12 million, and $- million, respectively, recorded to represent their best estimate of their obligations related to asbestos claims.
Ameren Illinois has a tariff rider to recover the costs of asbestos-related litigation claims, subject to the following terms: 90% of cash expenditures in excess of the amount included in base electric rates are to be recovered from a trust fund that was established when Ameren acquired IP. At December 31, 2011, the trust fund balance was $23 million, including accumulated interest. If cash expenditures are less than the amount in base rates, Ameren Illinois will contribute 90% of the difference to the fund. Once the trust fund is depleted, 90% of allowed cash expenditures in excess of base rates will be recovered through charges assessed to customers under the tariff rider. Following the Ameren Illinois Merger, this rider is applicable only for claims that occurred within IP's historical service territory. Similarly, the rider will permit recovery only from customers within IP's historical service territory.
Illinois Sales and Use Tax Exemptions and Credits
In Exelon Corporation v. Department of Revenue, the Illinois Supreme Court decided in 2009 that electricity is tangible personal property for purposes of the Illinois income tax investment credit. In March 2010, the United States Supreme Court refused to hear the case, and the decision became final. During the second quarter of 2010, Genco and AERG began claiming Illinois sales and use tax exemptions and credits for purchase transactions related to their generation operations. The basis for those claims is that the determination in the Exelon case that electricity is tangible personal property applies to sales and use tax manufacturing exemptions and credits. On November 2, 2011, EEI received a notice of proposed tax liability, documenting the state of Illinois' position that EEI did not qualify for the manufacturing exemption it used during 2010. Genco is challenging the State of Illinois' position. In December 2011, EEI filed a request for review by the Informal Conference Board of the Illinois Department of Revenue. Ameren and Genco do not believe that it is probable that the state of Illinois will prevail and therefore have not recorded a charge to earnings for the loss contingency. From the second quarter of 2010 through December 31, 2011, Ameren and Genco claimed manufacturing exemptions and credits of $27 million and $19 million, respectively.
NOTE 15 – COMMITMENTS AND CONTINGENCIES
We are involved in legal, tax and regulatory proceedings before various courts, regulatory commissions, 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 these notes to our financial statements, will not have a material adverse effect on our results of operations, financial position, or liquidity.
See also Note 1 – Summary of Significant Accounting Policies, Note 2 – Rate and Regulatory Matters, Note 10 – Callaway Energy Center and Note 14 – Related Party Transactions in this report.
Callaway Energy Center
The following table presents insurance coverage at Ameren Missouri's Callaway energy center at December 31, 2011. The property coverage and the nuclear liability coverage must be renewed on April 1 and January 1, respectively, of each year.
| Type and Source of Coverage | Maximum Coverages | Maximum Assessments for Single Incidents | ||||||
|
Public liability and nuclear worker liability: |
||||||||
|
American Nuclear Insurers |
$ | 375 | $ - | |||||
|
Pool participation |
12,219 | (a) | 118 | (b) | ||||
| $ | 12,594 | (c) | $ 118 | |||||
|
Property damage: |
||||||||
|
Nuclear Electric Insurance Ltd. |
$ | 2,750 | (d) | $ 23 | ||||
|
Replacement power: |
||||||||
|
Nuclear Electric Insurance Ltd |
$ | 490 | (e) | $ 9 | ||||
|
Energy Risk Assurance Company |
$ | 64 | (f) | $ - | ||||
| (a) | Provided through mandatory participation in an industrywide retrospective premium assessment program. |
| (b) | Retrospective premium under Price-Anderson. 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 U.S. commercial reactor, payable at $17.5 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 $118 million per incident for each licensed reactor it operates with a maximum of $17.5 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) | Provides for $500 million in property damage and decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. |
| (e) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. Weekly indemnity up to $4.5 million for 52 weeks, which commences after the first eight 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. |
| (f) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. The coverage commences after the first 52 weeks of insurance coverage from Nuclear Electric Insurance Ltd. and is for a weekly indemnity of $900,000 for 71 weeks in excess of the $3.6 million per week set forth above. Energy Risk Assurance Company is an affiliate and has reinsured this coverage with third-party insurance companies. See Note 14 – Related Party Transactions for more information on this affiliate transaction. |
The Price-Anderson Act is a federal law that limits the liability for claims from an incident involving any licensed United States commercial nuclear power facility. 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 five-year inflationary adjustment as prescribed by the most recent Price-Anderson Act renewal was effective October 29, 2008. 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 Price-Anderson.
Losses resulting from terrorist attacks are covered under Nuclear Electric Insurance Ltd.'s policies, subject to an industrywide aggregate policy limit of $3.24 billion within a 12-month period for coverage for such terrorist acts.
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.
Leases
We lease various facilities, office equipment, plant equipment, and rail cars under operating leases. The following table presents our lease obligations at December 31, 2011:
| Total | 2012 | 2013 | 2014 | 2015 | 2016 | After 5 Years | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
307 | 38 | 32 | 26 | 26 | 25 | 160 | |||||||||||||||||||||
|
Total lease obligations |
$ | 616 | $ | 43 | $ | 37 | $ | 31 | $ | 32 | $ | 31 | $ | 442 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
134 | 13 | 12 | 12 | 12 | 12 | 73 | |||||||||||||||||||||
|
Total lease obligations |
$ | 443 | $ | 18 | $ | 17 | $ | 17 | $ | 18 | $ | 18 | $ | 355 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 7 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 2 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 131 | $ | 11 | $ | 11 | $ | 11 | $ | 10 | $ | 11 | $ | 77 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | See Properties under Part I, Item 2, and Note 3 – Property and Plant, Net of this report for additional information. |
| (c) | Amounts related to certain real estate leases and railroad licenses have indefinite payment periods. Ameren's $2 million annual obligation for these items is included in the 2012 through 2016 columns. The amounts for the indefinite payments are not included in the After 5 Years column because that period is indefinite. |
The following table presents total rental expense, included in operating expenses, for the years ended December 31, 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 47 | $ | 52 | $ | 50 | ||||||
|
Ameren Missouri |
29 | 29 | 30 | |||||||||
|
Ameren Illinois |
17 | 19 | 19 | |||||||||
|
Genco |
12 | 13 | 15 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Other Obligations
To supply a portion of the fuel requirements of our generating plants, we have entered into various long-term commitments for the procurement of coal, natural gas, nuclear fuel, and methane gas. We also have entered into various long-term commitments for purchased power and natural gas for distribution. The table below presents our estimated fuel, purchased power, and other commitments at December 31, 2011. Ameren's and Ameren Missouri's coal commitments include multiyear agreements to procure ultra-low-sulfur coal and related transportation from the Powder River Basin in Wyoming. Ameren's and Ameren Missouri's purchased power obligations include a 102-MW power purchase agreement with a wind farm operator that expires in 2024. Ameren's and Ameren Illinois' purchased power obligations include the Ameren Illinois power purchase agreements entered into as part of the IPA-administered power procurement process. Included in the Other column are minimum purchase commitments under contracts for equipment, design and construction, meter reading services, and an Ameren tax credit obligation at December 31, 2011. Ameren's tax credit obligation is a $17 million note payable issued for an investment in a commercial real estate development partnership to acquire tax credits. This note payable was netted against the related investment in "Other assets" on Ameren's balance sheet at December 31, 2011, as Ameren has a legally enforceable right to offset under authoritative accounting guidance.
| Coal | Natural Gas |
Nuclear Fuel |
Purchased Power |
Methane Gas |
Other | Total | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
2012 |
$ | 1,120 | $ | 398 | $ | 36 | $ | 196 | $ | 1 | $ | 221 | $ | 1,972 | ||||||||||||||
|
2013 |
792 | 295 | 37 | 309 | 3 | 80 | 1,516 | |||||||||||||||||||||
|
2014 |
692 | 220 | 96 | 125 | 3 | 75 | 1,211 | |||||||||||||||||||||
|
2015 |
687 | 116 | 90 | 51 | 3 | 52 | 999 | |||||||||||||||||||||
|
2016 |
674 | 39 | 100 | 52 | 3 | 62 | 930 | |||||||||||||||||||||
|
Thereafter |
968 | 134 | 298 | 746 | 94 | 246 | 2,486 | |||||||||||||||||||||
|
Total |
$ | 4,933 | $ | 1,202 | $ | 657 | $ | 1,479 | $ | 107 | $ | 736 | $ | 9,114 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
2012 |
$ | 623 | $ | 63 | $ | 36 | $ | 19 | $ | 1 | $ | 78 | $ | 820 | ||||||||||||||
|
2013 |
605 | 48 | 37 | 19 | 3 | 50 | 762 | |||||||||||||||||||||
|
2014 |
625 | 36 | 96 | 19 | 3 | 47 | 826 | |||||||||||||||||||||
|
2015 |
614 | 19 | 90 | 19 | 3 | 28 | 773 | |||||||||||||||||||||
|
2016 |
644 | 7 | 100 | 19 | 3 | 38 | 811 | |||||||||||||||||||||
|
Thereafter |
921 | 30 | 298 | 155 | 94 | 144 | 1,642 | |||||||||||||||||||||
|
Total |
$ | 4,032 | $ | 203 | $ | 657 | $ | 250 | $ | 107 | $ | 385 | $ | 5,634 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
2012 |
$ | - | $ | 324 | $ | - | $ | 177 | $ | - | $ | 24 | $ | 525 | ||||||||||||||
|
2013 |
- | 243 | - | 290 | - | 22 | 555 | |||||||||||||||||||||
|
2014 |
- | 180 | - | 106 | - | 22 | 308 | |||||||||||||||||||||
|
2015 |
- | 94 | - | 32 | - | 24 | 150 | |||||||||||||||||||||
|
2016 |
- | 31 | - | 33 | - | 24 | 88 | |||||||||||||||||||||
|
Thereafter |
- | 105 | - | 591 | - | 102 | 798 | |||||||||||||||||||||
|
Total |
$ | - | $ | 977 | $ | - | $ | 1,229 | $ | - | $ | 218 | $ | 2,424 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
2012 |
$ | 355 | $ | 9 | $ | - | $ | - | $ | - | $ | 98 | $ | 462 | ||||||||||||||
|
2013 |
108 | 4 | - | - | - | 5 | 117 | |||||||||||||||||||||
|
2014 |
40 | 3 | - | - | - | 5 | 48 | |||||||||||||||||||||
|
2015 |
45 | 2 | - | - | - | - | 47 | |||||||||||||||||||||
|
2016 |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Thereafter |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Total |
$ | 548 | $ | 18 | $ | - | $ | - | $ | - | $ | 108 | $ | 674 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Also, as part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company to lock in energy prices for 400 to 1,000 megawatts annually of their round-the-clock power requirements from 2008 to 2012. These commitments are not reflected in the above table. See Note 7 – Derivative Financial Instruments and Note 14 – Related Party Transactions for additional information.
In February 2012, a rate stability procurement for energy products and renewable energy credits was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Ameren Illinois contracted to purchase approximately 13 million megawatthours of energy products at an average price of approximately $31 per megawatthour. Ameren Illinois is currently reviewing the results of the renewable energy credits procurement proceeding.
Ameren Illinois has entered into an agreement to purchase approximately 15.5 billion cubic feet of synthetic natural gas annually over a 10-year period beginning in 2016 for its natural gas customers. The agreement is contingent on the counterparty reaching certain milestones during the project development and the construction of the plant that will produce the synthetic natural gas. Construction has not begun on the plant; therefore, Ameren Illinois' obligations are not yet certain at this time. The agreement was entered into pursuant to an Illinois law which became effective August 2, 2011, and provides that all contract costs for synthetic natural gas incurred by Ameren Illinois are reasonable and prudent and recoverable through the PGA and are not subject to review or disallowance by the ICC.
Environmental Matters
We are subject to various environmental laws and regulations enforced by federal, state, and local authorities. From the beginning phases of siting and development to the ongoing operation of existing or new electric generating, transmission and distribution facilities, natural gas storage, transmission and distribution facilities, our activities involve compliance with diverse environmental laws and regulations. These laws and regulations address emissions, impacts to air, land and water, noise, protected natural and cultural resources (such as wetlands, endangered species and other protected wildlife, and archeological and historical resources), and chemical and waste handling. Complex and lengthy processes are required to obtain approvals, permits, or licenses for new, existing or modified facilities. Additionally, the use and handling of various chemicals or hazardous materials (including wastes) requires release prevention plans and emergency response procedures.
In addition to existing laws and regulations, including the Illinois MPS that applies to our energy centers in Illinois, the EPA is developing numerous new environmental regulations that will have a significant impact on the electric utility industry. These regulations could be particularly burdensome for certain companies, including Ameren, Ameren Missouri and Genco, that operate coal-fired energy centers. Significant new rules proposed or promulgated since the beginning of 2010 include the regulation of greenhouse gas emissions; revised national ambient air quality standards for SO2 and NO2 emissions; the CSAPR, which requires further reductions of SO2 and NOx emissions from power plants; a regulation governing management of CCR and coal ash impoundments; the MATS, which requires reduction of emissions of mercury, toxic metals, and acid gases from power plants; revised NSPS for particulate matter, SO2, and NOx emissions from new sources; and new regulations under the Clean Water Act that could require significant capital expenditures such as new water intake structures or cooling towers at our energy centers. The EPA also plans to propose an additional rule, applicable to new and existing electric generating units, governing NSPS and emission guidelines for greenhouse gas emissions. These new regulations may be litigated, so the timing of their implementation is uncertain, as evidenced by the stay of the CSAPR by the United States Court of Appeals for the District of Columbia on December 30, 2011. Although many details of these future regulations are unknown, the combined effects of the new and proposed environmental regulations may result in significant capital expenditures and/or increased operating costs over the next five to ten years for Ameren, Ameren Missouri and Genco. Actions required to ensure that our facilities and operations are in compliance with environmental laws and regulations could be prohibitively expensive. If they are, these regulations could require us to close or to significantly alter the operation of our energy centers, which could have an adverse effect on our results of operations, financial position, and liquidity, including the impairment of plant assets. Failure to comply with environmental laws and regulations might also result in the imposition of fines, penalties, and injunctive measures.
The estimates in the table below contain all of the known capital costs to comply with existing environmental regulations and our assessment of the potential impacts of the EPA's proposed regulation for CCR, the recently finalized MATS, the stayed CSAPR as currently designed, and the revised national ambient air quality standards for SO2 and NOx emissions as of December 31, 2011. The estimates in the table below assume that CCR will continue to be regarded as nonhazardous. The estimates in the table below do not include the impacts of new regulations proposed by the EPA under the Clean Water Act in March 2011 regarding cooling water intake structures as our evaluation of those impacts is ongoing. The estimates shown in the table below could change significantly depending upon a variety of factors including:
| Ÿ |
additional federal or state requirements; |
| Ÿ |
regulation of greenhouse gas emissions; |
| Ÿ |
new national ambient air quality standards or changes to existing standards for ozone, fine particulates, SO2, and NOx emissions; |
| Ÿ |
additional rules governing air pollutant transport; |
| Ÿ |
finalized regulations under the Clean Water Act; |
| Ÿ |
CCR being classified as hazardous; |
| Ÿ |
whether the CSAPR is implemented and whether any modifications are made to its existing requirements; |
| Ÿ |
new technology; |
| Ÿ |
expected power prices; |
| Ÿ |
variations in costs of material or labor; and |
| Ÿ |
alternative compliance strategies or investment decisions. |
| 2012 | 2013 - 2016 | 2017 - 2021 | Total | |||||||||||||||||||||||||
|
AMO(a) |
$ | 55 | $ | 325 - | $ | 400 | $ | 845 - | $ | 1,030 | $ | 1,225 - | $ | 1,485 | ||||||||||||||
|
Genco |
150 | 100 - | 125 | 245 - | 295 | 495 - | 570 | |||||||||||||||||||||
|
AERG |
5 | 20 - | 25 | 80 - | 100 | 105 - | 130 | |||||||||||||||||||||
|
Ameren |
$ | 210 | $ | 445 - | $ | 550 | $ | 1,170 - | $ | 1,425 | $ | 1,825 - | $ | 2,185 | ||||||||||||||
| (a) | Ameren Missouri's expenditures are expected to be recoverable from ratepayers. |
The decision to make pollution control equipment investments at our Merchant Generation business depends on whether the expected future market price for power reflects the increased cost for environmental compliance. In early 2012, there has been a decline in the market price for wholesale power because of factors such as declining natural gas prices and the stay of the CSAPR. As a result of this decline in the market price for power, as well as uncertain environmental regulations, Genco is decelerating the construction of two scrubbers at of its Newton energy center. These scrubbers were originally expected to be installed in late 2013 and spring 2014. The ultimate installation of these scrubbers, now estimated to occur between 2017 and 2021 in the table above, has been postponed until such time as the incremental investment necessary for completion is justified by visible market conditions. However, Genco will continue to incur capital costs related to the construction of these scrubbers. The table above includes Genco's estimated costs of approximately $150 million in 2012 and approximately $20 million annually, excluding capitalized interest, from 2013 through 2016 for the construction of the two scrubbers. In addition to Genco's reduction in estimated capital expenditures, AERG is deferring precipitator upgrades at its E.D. Edwards energy center beyond 2016.
The following sections describe the more significant environmental rules that affect our operations.
Clean Air Act
Both federal and state laws require significant reductions in SO2 and NOx emissions that result from burning fossil fuels. In March 2005, the EPA issued regulations with respect to SO2 and NOx emissions (the CAIR). The CAIR required generating facilities in 28 states, including Missouri and Illinois, and the District of Columbia to participate in cap-and-trade programs to reduce annual SO2 emissions, annual NOx emissions, and ozone season NOx emissions.
In December 2008, the United States Court of Appeals for the District of Columbia remanded the CAIR to the EPA for further action to remedy the rule's flaws, but allowed the CAIR's cap-and-trade programs to remain effective until they are replaced by the EPA. In July 2011, the EPA issued the CSAPR as the CAIR replacement. The CSAPR was to become effective on January 1, 2012, for SO2 and annual NOx reductions and on May 1, 2012, for ozone season NOx reductions. In the CSAPR, the EPA developed federal implementation plans for each state covered by this rule; however, each impacted state can develop its own implementation rule starting as early as 2013. The CSAPR establishes emission allowance budgets for each of the states subject to the regulation, including Missouri and Illinois. With the CSAPR, the EPA abandoned CAIR's regional approach to cutting emissions and instead set a pollution budget for each of the impacted states based on the EPA's analysis of each upwind state's contribution to air quality in downwind states. For Missouri and Illinois, emission reductions were required in two phases beginning in 2012, with further reductions in 2014. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, in the SO2 program, in the annual NOx, or in ozone season NOx program. Multiple legal challenges were filed requesting to have CSAPR partially or entirely vacated and to stay the implementation of the CSAPR while the court considers the challenges. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. The stay does not invalidate the rule, but only delays its implementation until a final court ruling is issued. The United States Court of Appeals for the District of Columbia has expedited its consideration of the regulation and will hear arguments on the validity of CSAPR in April 2012. The ultimate outcome of the challenges to the regulation is uncertain. The court could uphold CSAPR or remand it back to the EPA for partial or entire revision. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR.
On December 21, 2011, the EPA issued the final MATS under the Clean Air Act, which require emission reductions for mercury and other hazardous air pollutants, such as acid gases, toxic metals, and particulate matter by setting emission limits equal to the average emissions of the best performing 12% of existing coal and oil-fired electric generating units. Also, the rule requires reductions in hydrogen chloride emissions, which were not regulated previously, and it may require continuous monitoring systems that are not currently in place. The MATS do not require a specific control technology to achieve the emission reductions. The MATS will apply to each unit at a coal-fired power plant; however, emission compliance can be averaged for the entire power plant. Compliance is required by April 2015 or, with a case-by-case extension, by April 2016.
Separately, in January and June 2010, the EPA finalized new ambient air quality standards for SO2 and NO2. It also announced plans for further reductions in the annual national ambient air quality standards for ozone and fine particulates. The state of Illinois and the state of Missouri will be required to develop separate attainment plans to comply with the new ambient air quality standards. Ameren, Ameren Missouri and Genco continue to assess the impacts of these new standards. In September 2011, the EPA withdrew its draft annual national ambient air quality standard for ozone and announced that it was implementing the 2008 national ambient air quality standard for ozone. The EPA is required to revisit this standard again in 2013.
Ameren Missouri's current environmental compliance plan for air emissions from its energy centers includes burning ultra-low-sulfur coal and installing new or optimizing existing pollution control equipment. In July 2011, Ameren Missouri contracted to procure significantly higher volumes of lower-sulfur-content coal than Ameren Missouri's energy centers have historically burned, which will allow Ameren Missouri to eliminate or postpone capital expenditures for pollution control equipment while still achieving required emissions levels. In 2010, Ameren Missouri completed the installation of two scrubbers at its Sioux energy center to reduce SO2 emissions. Currently, Ameren Missouri's compliance plan assumes the installation of two scrubbers within its coal-fired fleet during the next 10 years and precipitator upgrades at multiple energy centers. However, Ameren Missouri is currently evaluating its operations and options to determine how to comply with the additional emission reductions requirements in 2014 set forth in the CSAPR, if ultimately enacted, the MATS, and other recently finalized or proposed EPA regulations.
Existing Illinois state regulations already required Ameren and Genco to reduce their emissions of mercury under the MPS. Ameren's and Genco's review of the MATS indicates that the scope of the federal standards is broader than the MPS, as no exemption exists for smaller coal-fired plants. Additionally, the MATS are more stringent than the MPS because compliance with the MATS is measured on a quarterly basis and, in some cases, a thirty-day rolling basis and not annually, as allowed under state requirements. At the end of 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers was primarily due to the expected cost of complying with CSAPR and MATS. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Genco and AERG expect to install additional, or optimize existing, pollution control equipment, or modify operations to meet new and incremental emission reduction requirements under the MPS, the MATS, or the CSAPR as they become effective. Under the MPS, as amended, Illinois generators are required to reduce mercury, SO2, and NOx emissions by 2015. To comply with the MPS and other air emissions laws and regulations, Genco and AERG are installing equipment designed to reduce their emissions of mercury, NOx, and SO2. Genco and AERG have installed a total of three scrubbers at two energy centers. Two additional scrubbers are being constructed at Genco's Newton energy center. As discussed above, the timing of the installation of these scrubbers as well as precipitator upgrades at AERG's E.D. Edwards energy center have been extended. The closure of Genco's Meredosia and Hutsonville energy centers will allow the Merchant Generation segment additional flexibility in the methods to achieve compliance with environmental standards. Merchant Generation and Genco will continue to review and adjust their compliance plans in light of evolving outlooks for power and capacity prices, delivered fuel costs, environment standards and compliance technologies, among other factors.
The completion of Ameren's, Ameren Missouri's and Genco's review of recently finalized environmental regulations and compliance measures could result in significant increases in capital expenditures and operating costs. The compliance costs could be prohibitive at some of our energy centers as the expected return from these investments, at current market prices for energy and capacity, might not justify the required capital expenditures or their continued operation, which could result in the impairment of long-lived assets.
Emission Allowances
The Clean Air Act created marketable commodities called allowances under the acid rain program, the NOx budget trading program, the CAIR, and the CSAPR. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, either the SO2, annual NOx, or ozone season NOx programs. As noted above, on December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR including its allowance program. See Note 1 – Summary of Significant Accounting Policies for the SO2 and NOx emission allowance book values that were classified as intangible assets as of December 31, 2011 and 2010, and Note 17 – Goodwill, Impairment and Other Charges for information regarding the emission allowance impairments recorded during 2011 and 2010.
Environmental regulations including the CAIR and the CSAPR, the timing of the installation of pollution control equipment, fuel mix, and the level of operations, will have a significant impact on the number of allowances required for ongoing operations. The CAIR uses the acid rain program's allowances for SO2 emissions and created annual and ozone season NOx allowances. The CSAPR, however, will not rely upon the acid rain program, the NOx budget trading program, or CAIR allowances for its allowance allocation program. Instead, the EPA issued a new type of emissions allowance for each program under the CSAPR. Any unused SO2 allowances, annual NOx allowances, and ozone season NOx allowances issued under CAIR cannot be used for compliance with CSAPR. Ameren, Ameren Missouri and Genco expect to have adequate CAIR allowances for 2012 to avoid needing to make external purchases.
Should the CSAPR become effective as issued, Ameren, Ameren Missouri and Genco are studying their compliance options to identify additional opportunities that may exist for compliance in an economical fashion. Ameren, Ameren Missouri and Genco may be required to purchase emission allowances, if available, to install new or optimize existing pollution control equipment, to limit generation, or take other actions to achieve compliance with the CSAPR in future phase-in years.
Global Climate Change
State and federal authorities, including the United States Congress, have considered initiatives to limit greenhouse gas emissions and to address global climate change. Potential impacts from any climate change legislation or regulation could vary, depending upon proposed CO2 emission limits, the timing of implementation of those limits, the method of distributing any allowances, the degree to which offsets are allowed and available, and provisions for cost-containment measures, such as a "safety valve" provision that provides a maximum price for emission allowances. As a result of our diverse fuel portfolio, our emissions of greenhouse gases vary among our energy centers, but coal-fired power plants are significant sources of CO2. The enactment of a climate change law could result in a significant rise in household costs and rates for electricity could rise significantly. The burden could fall particularly hard on electricity consumers and upon the economy in the Midwest because of the region's reliance on electricity generated by coal-fired power plants. Natural gas emits about half as much CO2 as coal when burned to produce electricity. Therefore, climate change regulation could cause the conversion of coal-fired power plants to natural gas, or the construction of new natural gas plants to replace coal-fired power plants. As a result, economywide shifts to natural gas as a fuel source for electricity generation also could affect the cost of heating for our utility customers and many industrial processes that use natural gas.
In December 2009, the EPA issued its "endangerment finding" under the Clean Air Act which stated that greenhouse gas emissions, including CO2, endanger human health and welfare and that emissions of greenhouse gases from motor vehicles contribute to that endangerment. In March 2010, the EPA issued a determination that greenhouse gas emissions from stationary sources, such as power plants, would be subject to regulation under the Clean Air Act effective the beginning of 2011. As a result of these actions, we are required to consider the emissions of greenhouse gases in any air permit application.
Recognizing the difficulties presented by regulating at once virtually all emitters of greenhouse gases, the EPA finalized in May 2010 regulations, known as the "Tailoring Rule," that established new higher thresholds for regulating greenhouse gas emissions from stationary sources, such as power plants. The Tailoring Rule became effective in January 2011. The rule requires any source that already has an operating permit to have greenhouse-gas-specific provisions added to its permits upon renewal. Currently, all Ameren energy centers have operating permits that, when renewed, may be modified to address greenhouse gas emissions. The Tailoring Rule also provides that if projects performed at major sources result in an increase in emissions of greenhouse gases of at least 75,000 tons per year, measured in CO2 equivalents, such projects could trigger permitting requirements under the NSR programs and the application of best available control technology, if any, to control greenhouse gas emissions. New major sources are also required to obtain such a permit and to install the best available control technology if their greenhouse gas emissions exceed the applicable emissions threshold. Separately, in December 2010, the EPA announced a settlement agreement under which it would propose NSPS for greenhouse gas emissions at new and existing fossil fuel-fired power plants by July 26, 2011 and issue a final standard by May 2012. The EPA has not yet proposed a rule and has not specified a new estimate of when it will issue that standard. It is uncertain whether reductions to greenhouse gas emissions would be required at Ameren's, Ameren Missouri's or Genco's energy centers as a result of any of the EPA's new and future rules. Legal challenges to the EPA's greenhouse gas rules have been filed. Any federal climate change legislation that is enacted may preempt the EPA's regulation of greenhouse gas emissions, including the Tailoring Rule, particularly as it relates to power plant greenhouse gas emissions. The extent to which the Tailoring Rule could have a material impact on our energy centers depends upon how state agencies apply the EPA's guidelines as to what constitutes the best available control technology for greenhouse gas emissions from power plants and whether physical changes or changes in operations subject to the rule occur at our energy centers. Although the EPA has stated its intention to regulate greenhouse gas emissions from stationary sources, such as power plants, congressional action could block or delay that effort.
Future federal and state legislation or regulations that mandate limits on the emission of greenhouse gases would likely result in significant increases in capital expenditures and operating costs, which, in turn, could lead to increased liquidity needs and higher financing costs. Moreover, to the extent Ameren Missouri requests recovery of these costs through rates, its regulators might delay or deny timely recovery of these costs. Excessive costs to comply with future legislation or regulations might force Ameren, Ameren Missouri and Genco as well as other similarly situated electric power generators to close some coal-fired facilities earlier than planned, which could lead to possible impairment of assets and reduced revenues. As a result, mandatory limits could have a material adverse impact on Ameren's, Ameren Missouri's, and Genco's results of operations, financial position, and liquidity.
Recent federal court decisions have considered the application of common law causes of action, such as nuisance, to address damages resulting from global climate change. In June 2011, the United States Supreme Court in State of Connecticut v. American Electric Power rejected state efforts to impose liability for CO2 and greenhouse gases emissions under federal common law. That ruling, however, did not address whether private citizens could pursue causes of action based on state common law. In June 2011, a case called Comer v. Murphy Oil (Comer) was filed in the United States District Court for the Southern District of Mississippi. In this litigation, a Mississippi property owner sued several industrial companies, including Ameren Missouri and Genco, alleging that CO2 emissions created the atmospheric conditions that intensified Hurricane Katrina. Although we are unable to predict the outcome of the Comer litigation on our results of operations, financial position, and liquidity, Ameren believes that it has meritorious defenses. Numerous procedural and substantive challenges are expected in the Comer litigation.
The impact on us of future initiatives related to greenhouse gas emissions and global climate change is unknown. Compliance costs could increase as future federal legislative, federal regulatory, and state-sponsored initiatives to control greenhouse gases continue to progress, making it more likely that some form of greenhouse gas emissions control will eventually be required. Since these initiatives continue to evolve, the impact on our coal-fired energy centers and our customers' costs is unknown, but any impact would probably be negative. Our costs of complying with any mandated federal or state greenhouse gas program could have a material impact on our future results of operations, financial position, and liquidity.
NSR and Clean Air Litigation
The EPA is engaged in an enforcement initiative to determine whether coal-fired power plants failed to comply with the requirements of the NSR and NSPS provisions under the Clean Air Act when the plants implemented modifications. The EPA's inquiries focus on whether projects performed at power plants should have triggered various permitting requirements and the installation of pollution control equipment.
In April 2005, Genco received a request from the EPA for information pursuant to Section 114(a) of the Clean Air Act. The request sought detailed operating and maintenance history data with respect to Genco's Coffeen, Hutsonville, Meredosia, Newton, and Joppa energy centers and AERG's E.D. Edwards and Duck Creek energy centers. In 2006, the EPA issued a second Section 114(a) request to Genco regarding projects at the Newton energy center. All of these facilities are coal-fired energy centers. In September 2008, the EPA issued a third Section 114(a) request regarding projects at all of Ameren's coal-fired energy centers in Illinois. We completed our response to the information requests, but we are unable to predict the outcome of this matter.
Following the issuance of a Notice of Violation, 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 alleges that in performing projects at its Rush Island coal-fired energy center, Ameren Missouri violated provisions of the Clean Air Act and Missouri law. In January 2012, the United States District Court granted, in part, Ameren Missouri's motion to dismiss various aspects of the EPA's penalty claims. The EPA's claims for injunctive relief, including to require the installation of pollution control equipment, remain. At present, the complaint does not include Ameren Missouri's other coal-fired energy centers, but the EPA has issued Notices of Violation under its NSR enforcement initiative against the company's Labadie, Meramec, and Sioux coal-fired energy centers. Litigation of this matter could take many years to resolve. Ameren Missouri believes its defenses to the allegations described in the complaint as well as the Notices of Violation are meritorious. Ameren Missouri will defend itself vigorously. However, there can be no assurances that it will be successful in its efforts.
Ultimate resolution of these matters could have a material adverse impact on the future results of operations, financial position, and liquidity of Ameren, Ameren Missouri and Genco. A resolution could result in increased capital expenditures for the installation of pollution control equipment, increased operations and maintenance expenses, and penalties. We are unable to predict the ultimate resolution of these matters or the costs that might be incurred. However, Ameren Missouri has concluded that, while a loss may be reasonably possible, the likelihood of loss is not probable. Therefore, no reserve has been established.
Clean Water Act
In March 2011, the EPA announced a proposed rule applicable to cooling water intake structures at existing power plants that have the ability to withdraw more than 2 million gallons of water per day from a body of water and use at least 25 percent of that water exclusively for cooling. Under the proposed rule, affected facilities would be required either to meet mortality limits for aquatic life impinged on the plant's intake screens or to reduce intake velocity to 0.5 feet per second. The proposed rule also requires plants to meet site-specific entrainment standards or to reduce the cooling water intake flow commensurate with the intake flow of a closed-cycle cooling system. The final rule is scheduled to be issued in July 2012, with compliance expected within eight years thereafter. All coal-fired, nuclear, and combined cycle energy centers at Ameren, Ameren Missouri and Genco with cooling water systems are subject to this proposed rule. The proposed rule did not mandate cooling towers at existing facilities, as other technology options potentially could meet the site-specific standards. Ameren, Ameren Missouri and Genco are currently evaluating the proposed rule, and their assessment of the proposed rule's impacts is ongoing. Therefore, we cannot predict at this time the capital or operating costs associated with compliance. The proposed rule could have an adverse effect on our results of operations, financial position, and liquidity if its implementation requires the installation of cooling towers at our electric generating stations.
In September 2009, the EPA announced its plan to revise the effluent guidelines applicable to steam electric generating units under the Clean Water Act. Effluent guidelines are national standards for wastewater discharges to surface water that are based on the effectiveness of available control technology. The EPA is engaged in information collection and analysis activities in support of this rulemaking. It has indicated that it expects to issue a proposed rule in July 2012 and to finalize the rule in 2014. We are unable at this time to predict the impact of this development.
Remediation
We are involved in a number of remediation actions to clean up hazardous waste sites as required by federal and state law. Such statutes require that responsible parties 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 the federal or state governments as a potentially responsible party (PRP) at several contaminated sites. Several of these sites involve facilities that were transferred by our rate-regulated utility operations in Illinois to Genco in May 2000 and to AERG in October 2003. As part of each transfer, Ameren Illinois contractually agreed to indemnify Genco and AERG for remediation costs associated with preexisting environmental contamination at the transferred sites.
As of December 31, 2011, Ameren and Ameren Illinois owned or were otherwise responsible for 44 former MGP sites in Illinois. These are in various stages of investigation, evaluation, and remediation. Based on current estimated plans, Ameren and Ameren Illinois could substantially conclude remediation efforts at most of these sites by 2015. The ICC permits 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. To be recoverable, such costs must be prudently and properly incurred. Costs are subject to annual review by the ICC.
As of December 31, 2011, Ameren and Ameren Missouri own or are otherwise responsible for 10 MGP sites in Missouri and one site in Iowa. Ameren Missouri does not currently have a rate rider mechanism that permits recovery of remediation costs associated with MGP sites from utility customers. Ameren Missouri does not have any retail utility operations in Iowa that would provide a source of recovery of these remediation costs.
The following table presents, as of December 31, 2011, the estimated probable obligation to remediate these MGP sites.
| Estimate |
Recorded |
|||||||||||
| Low | High | |||||||||||
|
Ameren |
$ | 107 | $ | 183 | $ | 107 | ||||||
|
Ameren Missouri |
3 | 4 | 3 | |||||||||
|
Ameren Illinois |
104 | 179 | 104 | |||||||||
| (a) | Recorded liability represents the estimated minimum probable obligations, as no other amount within the range provided a better estimate. |
Ameren Illinois is responsible for the cleanup of a former coal ash landfill in Coffeen, Illinois. As of December 31, 2011, Ameren Illinois estimated that obligation 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 a landfill, underground storage tanks, and a water treatment plant in Illinois. As of December 31, 2011, Ameren Illinois recorded a liability of $0.8 million to represent its best estimate of the obligation for these sites.
Ameren Missouri has responsibility for the investigation and potential cleanup of two waste sites in Missouri as a result of federal agency mandates. One of the cleanup sites is a former coal tar distillery located in St. Louis, Missouri. In 2008, the EPA issued an administrative order to Ameren Missouri pertaining to this distillery operated by Koppers Company or its predecessor and successor companies. Ameren Missouri is the current owner of the site, but Ameren Missouri did not conduct any of the manufacturing operations involving coal tar or its byproducts. Ameren Missouri, along with two other PRPs, is currently performing a site investigation. As of December 31, 2011, Ameren Missouri estimated its obligation at $2 million to $5 million. Ameren Missouri has a liability of $2 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate. Ameren Missouri's other active federal agency-mandated cleanup site in Missouri is a site in Cape Girardeau. Ameren Missouri was a customer of an electrical equipment repair and disposal company that previously operated a facility at this site. A trust was established in the early 1990s by several businesses and governmental agencies to fund the cleanup of this site, which was completed in 2005. Ameren Missouri anticipates this trust fund will be sufficient to complete the remaining adjacent off-site cleanup and therefore has no recorded liability at December 31, 2011, related to this site.
Ameren Missouri also has a federal agency mandate to complete a site investigation for a site in Illinois. In 2000, the EPA notified Ameren Missouri and numerous other companies, including Solutia, that former landfills and lagoons in Sauget, Illinois, may contain soil and groundwater contamination. These sites are known as Sauget Area 2. From about 1926 until 1976, Ameren Missouri operated an energy center adjacent to Sauget Area 2. Ameren Missouri currently owns a parcel of property that was once used as a landfill. Under the terms of an Administrative Order on Consent, Ameren Missouri has joined with other PRPs to evaluate the extent of potential contamination with respect to Sauget Area 2.
The Sauget Area 2 investigations overseen by the EPA have been completed. The results have been submitted to the EPA, and a record of decision is expected in 2012. Once the EPA has selected a remedy, if any, it would begin negotiations with various PRPs regarding implementation. Over the last several years, numerous other parties have joined the PRP group. In addition, Pharmacia Corporation and Monsanto Company have agreed to assume the liabilities related to Solutia's former chemical waste landfill in the Sauget Area 2. As of December 31, 2011, Ameren Missouri estimated its obligation at $0.3 million to $10 million. Ameren Missouri has a liability of $0.3 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate.
In December 2004, AERG submitted a plan to the Illinois EPA to address groundwater and surface water issues associated with the recycle pond, ash ponds, and reservoir at the Duck Creek energy center. In 2010, AERG closed the recycle pond system. Remediation work on the recycle pond was completed in the first quarter of 2011, and therefore no liability exists as of December 31, 2011.
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 protection laws. We are unable to determine whether such practices will result in future environmental commitments or affect our results of operations, financial position, or liquidity.
Ash Management
There has been activity at both state and federal levels regarding additional regulation of ash pond facilities and CCR. In May 2010, the EPA announced proposed new regulations regarding the regulatory framework for the management and disposal of CCR, which could affect future disposal and handling costs at our energy centers. Those proposed regulations include two options for managing CCRs under either solid or hazardous waste regulations, but either alternative would allow for some continued beneficial uses, such as recycling of CCR without classifying it as waste. As part of its proposal, the EPA is considering alternative regulatory approaches that require coal-fired power plants either to close surface impoundments, such as ash ponds, or to retrofit such facilities with liners. Existing impoundments and landfills used for the disposal of CCR would be subject to groundwater monitoring requirements and requirements related to closure and postclosure care under the proposed regulations. Additionally, in January 2010, EPA announced its intent to develop regulations establishing financial responsibility requirements for the electric generation industry, among other industries, and it specifically discussed CCR as a reason for developing the new requirements. Ameren, Ameren Missouri and Genco are currently evaluating all of the proposed regulations to determine whether current management of CCR, including beneficial reuse, and the use of the ash ponds should be altered. Ameren, Ameren Missouri and Genco also are evaluating the potential costs associated with compliance with the proposed regulation of CCR impoundments and landfills, which could be material, if such regulations are adopted.
In addition, the Illinois EPA requested that Ameren, Ameren Missouri and Genco establish groundwater monitoring plans for their ash impoundments in Illinois. Ameren and the Illinois EPA have established a framework for closure of ash ponds in Illinois, including the ash ponds at Venice, Hutsonville, and Duck Creek, when such facilities are ultimately taken out of service. Ameren, Ameren Missouri and Genco have recorded AROs, based on current laws, for the estimated costs of the retirement of their ash ponds.
Pumped-storage Hydroelectric Facility Breach
In December 2005, there was a breach of the upper reservoir at Ameren Missouri's Taum Sauk pumped-storage hydroelectric energy center. This resulted in significant flooding in the local area, which damaged a state park. Ameren Missouri settled with FERC and the state of Missouri all issues associated with the December 2005 Taum Sauk incident. The rebuilt Taum Sauk energy center became fully operational in April 2010.
Ameren Missouri included certain capitalized costs associated with enhancements, or costs that would have been incurred absent the breach, at the rebuilt Taum Sauk energy center not recovered from property insurers in its 2010 electric rate case filing. However, in the July 2011 rate order, the MoPSC disallowed all of these capitalized costs associated with the rebuilding of the Taum Sauk energy center. As a result of the order, Ameren and Ameren Missouri each recorded a pretax charge to earnings in 2011 of $89 million to reflect this disallowance. See Note 2 – Rate and Regulatory Matters for additional information about the appeal of the MoPSC's July 2011 electric rate order.
Ameren Missouri had property and liability insurance coverage for the Taum Sauk incident, subject to certain limits and deductibles. Insurance did not cover some lost electric margins or penalties paid to FERC. Ameren Missouri believes that the total cost for cleanup, damage and liabilities, excluding costs to rebuild the upper reservoir, is $209 million, which is the amount Ameren Missouri had paid as of December 31, 2011. As of December 31, 2011, Ameren Missouri had recorded expenses of $37 million, primarily in prior years (2011 – $1 million, 2010 – $1 million, 2009 – $2 million), for items not covered by insurance. Ameren Missouri recorded a $172 million receivable for amounts recoverable from insurance companies under liability coverage. As of December 31, 2011, Ameren Missouri had received $104 million from insurance companies for liability claims, which reduced the insurance receivable balance subject to liability coverage to $68 million.
In June 2010, Ameren Missouri sued an insurance company that was providing Ameren Missouri with liability coverage on the date of the Taum Sauk incident. In the litigation, filed in the United States District Court for the Eastern District of Missouri, Ameren Missouri claimed the insurance company breached its duty to indemnify Ameren Missouri for the losses experienced from the incident. In January 2011, the court ruled that the parties must first pursue alternative dispute resolution under the terms of their coverage agreement. In February 2011, Ameren Missouri filed an appeal of the January ruling with the United States Court of Appeals for the Eighth Circuit, seeking the ability to pursue resolution of this dispute outside of a dispute resolution process under the terms of its coverage agreement.
Until Ameren's remaining liability insurance claims and the related litigation are resolved, we are unable to determine the total impact the breach could have on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity beyond those amounts already recognized.
Asbestos-related Litigation
Ameren, Ameren Missouri, Ameren Illinois and EEI have been named, along with numerous other parties, in a number of lawsuits filed by plaintiffs claiming varying degrees of injury from asbestos exposure. Most have been filed in the Circuit Court of Madison County, Illinois. The total number of defendants named in each case varies, with as many as 272 parties named in some pending cases and as few as two in others. In the cases pending as of December 31, 2011, the average number of parties was 80.
The claims filed against Ameren, Ameren Missouri, Ameren Illinois and Genco allege injury from asbestos exposure during the plaintiffs' activities at our present or former electric generating plants. Former CIPS plants are now owned by Genco, and former CILCO plants are now owned by AERG. As a part of the transfer of ownership of the CIPS and CILCO generating plants, CIPS and CILCO, now Ameren Illinois, contractually agreed to indemnify Genco and AERG, for liabilities associated with asbestos-related claims arising from activities prior to the transfer. Each lawsuit seeks unspecified damages that, if awarded at trial, typically would be shared among the various defendants.
The following table presents the pending asbestos-related lawsuits filed against the Ameren Companies as of December 31, 2011:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | Total(a) | ||||
|
4 |
53 | 77 | (b) | 93 |
| (a) | Total does not equal the sum of the subsidiary unit lawsuits because some of the lawsuits name multiple Ameren entities as defendants. |
| (b) | As of December 31, 2011, six asbestos-related lawsuits were pending against EEI. The general liability insurance maintained by EEI provides coverage with respect to liabilities arising from asbestos-related claims. |
At December 31, 2011, Ameren, Ameren Missouri, Ameren Illinois and Genco had liabilities of $18 million, $6 million, $12 million, and $- million, respectively, recorded to represent their best estimate of their obligations related to asbestos claims.
Ameren Illinois has a tariff rider to recover the costs of asbestos-related litigation claims, subject to the following terms: 90% of cash expenditures in excess of the amount included in base electric rates are to be recovered from a trust fund that was established when Ameren acquired IP. At December 31, 2011, the trust fund balance was $23 million, including accumulated interest. If cash expenditures are less than the amount in base rates, Ameren Illinois will contribute 90% of the difference to the fund. Once the trust fund is depleted, 90% of allowed cash expenditures in excess of base rates will be recovered through charges assessed to customers under the tariff rider. Following the Ameren Illinois Merger, this rider is applicable only for claims that occurred within IP's historical service territory. Similarly, the rider will permit recovery only from customers within IP's historical service territory.
Illinois Sales and Use Tax Exemptions and Credits
In Exelon Corporation v. Department of Revenue, the Illinois Supreme Court decided in 2009 that electricity is tangible personal property for purposes of the Illinois income tax investment credit. In March 2010, the United States Supreme Court refused to hear the case, and the decision became final. During the second quarter of 2010, Genco and AERG began claiming Illinois sales and use tax exemptions and credits for purchase transactions related to their generation operations. The basis for those claims is that the determination in the Exelon case that electricity is tangible personal property applies to sales and use tax manufacturing exemptions and credits. On November 2, 2011, EEI received a notice of proposed tax liability, documenting the state of Illinois' position that EEI did not qualify for the manufacturing exemption it used during 2010. Genco is challenging the State of Illinois' position. In December 2011, EEI filed a request for review by the Informal Conference Board of the Illinois Department of Revenue. Ameren and Genco do not believe that it is probable that the state of Illinois will prevail and therefore have not recorded a charge to earnings for the loss contingency. From the second quarter of 2010 through December 31, 2011, Ameren and Genco claimed manufacturing exemptions and credits of $27 million and $19 million, respectively.
NOTE 15 – COMMITMENTS AND CONTINGENCIES
We are involved in legal, tax and regulatory proceedings before various courts, regulatory commissions, 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 these notes to our financial statements, will not have a material adverse effect on our results of operations, financial position, or liquidity.
See also Note 1 – Summary of Significant Accounting Policies, Note 2 – Rate and Regulatory Matters, Note 10 – Callaway Energy Center and Note 14 – Related Party Transactions in this report.
Callaway Energy Center
The following table presents insurance coverage at Ameren Missouri's Callaway energy center at December 31, 2011. The property coverage and the nuclear liability coverage must be renewed on April 1 and January 1, respectively, of each year.
| Type and Source of Coverage | Maximum Coverages | Maximum Assessments for Single Incidents | ||||||
|
Public liability and nuclear worker liability: |
||||||||
|
American Nuclear Insurers |
$ | 375 | $ - | |||||
|
Pool participation |
12,219 | (a) | 118 | (b) | ||||
| $ | 12,594 | (c) | $ 118 | |||||
|
Property damage: |
||||||||
|
Nuclear Electric Insurance Ltd. |
$ | 2,750 | (d) | $ 23 | ||||
|
Replacement power: |
||||||||
|
Nuclear Electric Insurance Ltd |
$ | 490 | (e) | $ 9 | ||||
|
Energy Risk Assurance Company |
$ | 64 | (f) | $ - | ||||
| (a) | Provided through mandatory participation in an industrywide retrospective premium assessment program. |
| (b) | Retrospective premium under Price-Anderson. 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 U.S. commercial reactor, payable at $17.5 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 $118 million per incident for each licensed reactor it operates with a maximum of $17.5 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) | Provides for $500 million in property damage and decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. |
| (e) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. Weekly indemnity up to $4.5 million for 52 weeks, which commences after the first eight 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. |
| (f) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. The coverage commences after the first 52 weeks of insurance coverage from Nuclear Electric Insurance Ltd. and is for a weekly indemnity of $900,000 for 71 weeks in excess of the $3.6 million per week set forth above. Energy Risk Assurance Company is an affiliate and has reinsured this coverage with third-party insurance companies. See Note 14 – Related Party Transactions for more information on this affiliate transaction. |
The Price-Anderson Act is a federal law that limits the liability for claims from an incident involving any licensed United States commercial nuclear power facility. 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 five-year inflationary adjustment as prescribed by the most recent Price-Anderson Act renewal was effective October 29, 2008. 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 Price-Anderson.
Losses resulting from terrorist attacks are covered under Nuclear Electric Insurance Ltd.'s policies, subject to an industrywide aggregate policy limit of $3.24 billion within a 12-month period for coverage for such terrorist acts.
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.
Leases
We lease various facilities, office equipment, plant equipment, and rail cars under operating leases. The following table presents our lease obligations at December 31, 2011:
| Total | 2012 | 2013 | 2014 | 2015 | 2016 | After 5 Years | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
307 | 38 | 32 | 26 | 26 | 25 | 160 | |||||||||||||||||||||
|
Total lease obligations |
$ | 616 | $ | 43 | $ | 37 | $ | 31 | $ | 32 | $ | 31 | $ | 442 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
134 | 13 | 12 | 12 | 12 | 12 | 73 | |||||||||||||||||||||
|
Total lease obligations |
$ | 443 | $ | 18 | $ | 17 | $ | 17 | $ | 18 | $ | 18 | $ | 355 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 7 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 2 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 131 | $ | 11 | $ | 11 | $ | 11 | $ | 10 | $ | 11 | $ | 77 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | See Properties under Part I, Item 2, and Note 3 – Property and Plant, Net of this report for additional information. |
| (c) | Amounts related to certain real estate leases and railroad licenses have indefinite payment periods. Ameren's $2 million annual obligation for these items is included in the 2012 through 2016 columns. The amounts for the indefinite payments are not included in the After 5 Years column because that period is indefinite. |
The following table presents total rental expense, included in operating expenses, for the years ended December 31, 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 47 | $ | 52 | $ | 50 | ||||||
|
Ameren Missouri |
29 | 29 | 30 | |||||||||
|
Ameren Illinois |
17 | 19 | 19 | |||||||||
|
Genco |
12 | 13 | 15 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Other Obligations
To supply a portion of the fuel requirements of our generating plants, we have entered into various long-term commitments for the procurement of coal, natural gas, nuclear fuel, and methane gas. We also have entered into various long-term commitments for purchased power and natural gas for distribution. The table below presents our estimated fuel, purchased power, and other commitments at December 31, 2011. Ameren's and Ameren Missouri's coal commitments include multiyear agreements to procure ultra-low-sulfur coal and related transportation from the Powder River Basin in Wyoming. Ameren's and Ameren Missouri's purchased power obligations include a 102-MW power purchase agreement with a wind farm operator that expires in 2024. Ameren's and Ameren Illinois' purchased power obligations include the Ameren Illinois power purchase agreements entered into as part of the IPA-administered power procurement process. Included in the Other column are minimum purchase commitments under contracts for equipment, design and construction, meter reading services, and an Ameren tax credit obligation at December 31, 2011. Ameren's tax credit obligation is a $17 million note payable issued for an investment in a commercial real estate development partnership to acquire tax credits. This note payable was netted against the related investment in "Other assets" on Ameren's balance sheet at December 31, 2011, as Ameren has a legally enforceable right to offset under authoritative accounting guidance.
| Coal | Natural Gas |
Nuclear Fuel |
Purchased Power |
Methane Gas |
Other | Total | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
2012 |
$ | 1,120 | $ | 398 | $ | 36 | $ | 196 | $ | 1 | $ | 221 | $ | 1,972 | ||||||||||||||
|
2013 |
792 | 295 | 37 | 309 | 3 | 80 | 1,516 | |||||||||||||||||||||
|
2014 |
692 | 220 | 96 | 125 | 3 | 75 | 1,211 | |||||||||||||||||||||
|
2015 |
687 | 116 | 90 | 51 | 3 | 52 | 999 | |||||||||||||||||||||
|
2016 |
674 | 39 | 100 | 52 | 3 | 62 | 930 | |||||||||||||||||||||
|
Thereafter |
968 | 134 | 298 | 746 | 94 | 246 | 2,486 | |||||||||||||||||||||
|
Total |
$ | 4,933 | $ | 1,202 | $ | 657 | $ | 1,479 | $ | 107 | $ | 736 | $ | 9,114 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
2012 |
$ | 623 | $ | 63 | $ | 36 | $ | 19 | $ | 1 | $ | 78 | $ | 820 | ||||||||||||||
|
2013 |
605 | 48 | 37 | 19 | 3 | 50 | 762 | |||||||||||||||||||||
|
2014 |
625 | 36 | 96 | 19 | 3 | 47 | 826 | |||||||||||||||||||||
|
2015 |
614 | 19 | 90 | 19 | 3 | 28 | 773 | |||||||||||||||||||||
|
2016 |
644 | 7 | 100 | 19 | 3 | 38 | 811 | |||||||||||||||||||||
|
Thereafter |
921 | 30 | 298 | 155 | 94 | 144 | 1,642 | |||||||||||||||||||||
|
Total |
$ | 4,032 | $ | 203 | $ | 657 | $ | 250 | $ | 107 | $ | 385 | $ | 5,634 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
2012 |
$ | - | $ | 324 | $ | - | $ | 177 | $ | - | $ | 24 | $ | 525 | ||||||||||||||
|
2013 |
- | 243 | - | 290 | - | 22 | 555 | |||||||||||||||||||||
|
2014 |
- | 180 | - | 106 | - | 22 | 308 | |||||||||||||||||||||
|
2015 |
- | 94 | - | 32 | - | 24 | 150 | |||||||||||||||||||||
|
2016 |
- | 31 | - | 33 | - | 24 | 88 | |||||||||||||||||||||
|
Thereafter |
- | 105 | - | 591 | - | 102 | 798 | |||||||||||||||||||||
|
Total |
$ | - | $ | 977 | $ | - | $ | 1,229 | $ | - | $ | 218 | $ | 2,424 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
2012 |
$ | 355 | $ | 9 | $ | - | $ | - | $ | - | $ | 98 | $ | 462 | ||||||||||||||
|
2013 |
108 | 4 | - | - | - | 5 | 117 | |||||||||||||||||||||
|
2014 |
40 | 3 | - | - | - | 5 | 48 | |||||||||||||||||||||
|
2015 |
45 | 2 | - | - | - | - | 47 | |||||||||||||||||||||
|
2016 |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Thereafter |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Total |
$ | 548 | $ | 18 | $ | - | $ | - | $ | - | $ | 108 | $ | 674 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
Also, as part of the 2007 Illinois Electric Settlement Agreement, Ameren Illinois entered into financial contracts with Marketing Company to lock in energy prices for 400 to 1,000 megawatts annually of their round-the-clock power requirements from 2008 to 2012. These commitments are not reflected in the above table. See Note 7 – Derivative Financial Instruments and Note 14 – Related Party Transactions for additional information.
In February 2012, a rate stability procurement for energy products and renewable energy credits was administered by the IPA for the June 2013 through May 2017 period to meet certain requirements for purchased power related to the IEIMA. Ameren Illinois contracted to purchase approximately 13 million megawatthours of energy products at an average price of approximately $31 per megawatthour. Ameren Illinois is currently reviewing the results of the renewable energy credits procurement proceeding.
Ameren Illinois has entered into an agreement to purchase approximately 15.5 billion cubic feet of synthetic natural gas annually over a 10-year period beginning in 2016 for its natural gas customers. The agreement is contingent on the counterparty reaching certain milestones during the project development and the construction of the plant that will produce the synthetic natural gas. Construction has not begun on the plant; therefore, Ameren Illinois' obligations are not yet certain at this time. The agreement was entered into pursuant to an Illinois law which became effective August 2, 2011, and provides that all contract costs for synthetic natural gas incurred by Ameren Illinois are reasonable and prudent and recoverable through the PGA and are not subject to review or disallowance by the ICC.
Environmental Matters
We are subject to various environmental laws and regulations enforced by federal, state, and local authorities. From the beginning phases of siting and development to the ongoing operation of existing or new electric generating, transmission and distribution facilities, natural gas storage, transmission and distribution facilities, our activities involve compliance with diverse environmental laws and regulations. These laws and regulations address emissions, impacts to air, land and water, noise, protected natural and cultural resources (such as wetlands, endangered species and other protected wildlife, and archeological and historical resources), and chemical and waste handling. Complex and lengthy processes are required to obtain approvals, permits, or licenses for new, existing or modified facilities. Additionally, the use and handling of various chemicals or hazardous materials (including wastes) requires release prevention plans and emergency response procedures.
In addition to existing laws and regulations, including the Illinois MPS that applies to our energy centers in Illinois, the EPA is developing numerous new environmental regulations that will have a significant impact on the electric utility industry. These regulations could be particularly burdensome for certain companies, including Ameren, Ameren Missouri and Genco, that operate coal-fired energy centers. Significant new rules proposed or promulgated since the beginning of 2010 include the regulation of greenhouse gas emissions; revised national ambient air quality standards for SO2 and NO2 emissions; the CSAPR, which requires further reductions of SO2 and NOx emissions from power plants; a regulation governing management of CCR and coal ash impoundments; the MATS, which requires reduction of emissions of mercury, toxic metals, and acid gases from power plants; revised NSPS for particulate matter, SO2, and NOx emissions from new sources; and new regulations under the Clean Water Act that could require significant capital expenditures such as new water intake structures or cooling towers at our energy centers. The EPA also plans to propose an additional rule, applicable to new and existing electric generating units, governing NSPS and emission guidelines for greenhouse gas emissions. These new regulations may be litigated, so the timing of their implementation is uncertain, as evidenced by the stay of the CSAPR by the United States Court of Appeals for the District of Columbia on December 30, 2011. Although many details of these future regulations are unknown, the combined effects of the new and proposed environmental regulations may result in significant capital expenditures and/or increased operating costs over the next five to ten years for Ameren, Ameren Missouri and Genco. Actions required to ensure that our facilities and operations are in compliance with environmental laws and regulations could be prohibitively expensive. If they are, these regulations could require us to close or to significantly alter the operation of our energy centers, which could have an adverse effect on our results of operations, financial position, and liquidity, including the impairment of plant assets. Failure to comply with environmental laws and regulations might also result in the imposition of fines, penalties, and injunctive measures.
The estimates in the table below contain all of the known capital costs to comply with existing environmental regulations and our assessment of the potential impacts of the EPA's proposed regulation for CCR, the recently finalized MATS, the stayed CSAPR as currently designed, and the revised national ambient air quality standards for SO2 and NOx emissions as of December 31, 2011. The estimates in the table below assume that CCR will continue to be regarded as nonhazardous. The estimates in the table below do not include the impacts of new regulations proposed by the EPA under the Clean Water Act in March 2011 regarding cooling water intake structures as our evaluation of those impacts is ongoing. The estimates shown in the table below could change significantly depending upon a variety of factors including:
| Ÿ |
additional federal or state requirements; |
| Ÿ |
regulation of greenhouse gas emissions; |
| Ÿ |
new national ambient air quality standards or changes to existing standards for ozone, fine particulates, SO2, and NOx emissions; |
| Ÿ |
additional rules governing air pollutant transport; |
| Ÿ |
finalized regulations under the Clean Water Act; |
| Ÿ |
CCR being classified as hazardous; |
| Ÿ |
whether the CSAPR is implemented and whether any modifications are made to its existing requirements; |
| Ÿ |
new technology; |
| Ÿ |
expected power prices; |
| Ÿ |
variations in costs of material or labor; and |
| Ÿ |
alternative compliance strategies or investment decisions. |
| 2012 | 2013 - 2016 | 2017 - 2021 | Total | |||||||||||||||||||||||||
|
AMO(a) |
$ | 55 | $ | 325 - | $ | 400 | $ | 845 - | $ | 1,030 | $ | 1,225 - | $ | 1,485 | ||||||||||||||
|
Genco |
150 | 100 - | 125 | 245 - | 295 | 495 - | 570 | |||||||||||||||||||||
|
AERG |
5 | 20 - | 25 | 80 - | 100 | 105 - | 130 | |||||||||||||||||||||
|
Ameren |
$ | 210 | $ | 445 - | $ | 550 | $ | 1,170 - | $ | 1,425 | $ | 1,825 - | $ | 2,185 | ||||||||||||||
| (a) | Ameren Missouri's expenditures are expected to be recoverable from ratepayers. |
The decision to make pollution control equipment investments at our Merchant Generation business depends on whether the expected future market price for power reflects the increased cost for environmental compliance. In early 2012, there has been a decline in the market price for wholesale power because of factors such as declining natural gas prices and the stay of the CSAPR. As a result of this decline in the market price for power, as well as uncertain environmental regulations, Genco is decelerating the construction of two scrubbers at of its Newton energy center. These scrubbers were originally expected to be installed in late 2013 and spring 2014. The ultimate installation of these scrubbers, now estimated to occur between 2017 and 2021 in the table above, has been postponed until such time as the incremental investment necessary for completion is justified by visible market conditions. However, Genco will continue to incur capital costs related to the construction of these scrubbers. The table above includes Genco's estimated costs of approximately $150 million in 2012 and approximately $20 million annually, excluding capitalized interest, from 2013 through 2016 for the construction of the two scrubbers. In addition to Genco's reduction in estimated capital expenditures, AERG is deferring precipitator upgrades at its E.D. Edwards energy center beyond 2016.
The following sections describe the more significant environmental rules that affect our operations.
Clean Air Act
Both federal and state laws require significant reductions in SO2 and NOx emissions that result from burning fossil fuels. In March 2005, the EPA issued regulations with respect to SO2 and NOx emissions (the CAIR). The CAIR required generating facilities in 28 states, including Missouri and Illinois, and the District of Columbia to participate in cap-and-trade programs to reduce annual SO2 emissions, annual NOx emissions, and ozone season NOx emissions.
In December 2008, the United States Court of Appeals for the District of Columbia remanded the CAIR to the EPA for further action to remedy the rule's flaws, but allowed the CAIR's cap-and-trade programs to remain effective until they are replaced by the EPA. In July 2011, the EPA issued the CSAPR as the CAIR replacement. The CSAPR was to become effective on January 1, 2012, for SO2 and annual NOx reductions and on May 1, 2012, for ozone season NOx reductions. In the CSAPR, the EPA developed federal implementation plans for each state covered by this rule; however, each impacted state can develop its own implementation rule starting as early as 2013. The CSAPR establishes emission allowance budgets for each of the states subject to the regulation, including Missouri and Illinois. With the CSAPR, the EPA abandoned CAIR's regional approach to cutting emissions and instead set a pollution budget for each of the impacted states based on the EPA's analysis of each upwind state's contribution to air quality in downwind states. For Missouri and Illinois, emission reductions were required in two phases beginning in 2012, with further reductions in 2014. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, in the SO2 program, in the annual NOx, or in ozone season NOx program. Multiple legal challenges were filed requesting to have CSAPR partially or entirely vacated and to stay the implementation of the CSAPR while the court considers the challenges. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. The stay does not invalidate the rule, but only delays its implementation until a final court ruling is issued. The United States Court of Appeals for the District of Columbia has expedited its consideration of the regulation and will hear arguments on the validity of CSAPR in April 2012. The ultimate outcome of the challenges to the regulation is uncertain. The court could uphold CSAPR or remand it back to the EPA for partial or entire revision. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR.
On December 21, 2011, the EPA issued the final MATS under the Clean Air Act, which require emission reductions for mercury and other hazardous air pollutants, such as acid gases, toxic metals, and particulate matter by setting emission limits equal to the average emissions of the best performing 12% of existing coal and oil-fired electric generating units. Also, the rule requires reductions in hydrogen chloride emissions, which were not regulated previously, and it may require continuous monitoring systems that are not currently in place. The MATS do not require a specific control technology to achieve the emission reductions. The MATS will apply to each unit at a coal-fired power plant; however, emission compliance can be averaged for the entire power plant. Compliance is required by April 2015 or, with a case-by-case extension, by April 2016.
Separately, in January and June 2010, the EPA finalized new ambient air quality standards for SO2 and NO2. It also announced plans for further reductions in the annual national ambient air quality standards for ozone and fine particulates. The state of Illinois and the state of Missouri will be required to develop separate attainment plans to comply with the new ambient air quality standards. Ameren, Ameren Missouri and Genco continue to assess the impacts of these new standards. In September 2011, the EPA withdrew its draft annual national ambient air quality standard for ozone and announced that it was implementing the 2008 national ambient air quality standard for ozone. The EPA is required to revisit this standard again in 2013.
Ameren Missouri's current environmental compliance plan for air emissions from its energy centers includes burning ultra-low-sulfur coal and installing new or optimizing existing pollution control equipment. In July 2011, Ameren Missouri contracted to procure significantly higher volumes of lower-sulfur-content coal than Ameren Missouri's energy centers have historically burned, which will allow Ameren Missouri to eliminate or postpone capital expenditures for pollution control equipment while still achieving required emissions levels. In 2010, Ameren Missouri completed the installation of two scrubbers at its Sioux energy center to reduce SO2 emissions. Currently, Ameren Missouri's compliance plan assumes the installation of two scrubbers within its coal-fired fleet during the next 10 years and precipitator upgrades at multiple energy centers. However, Ameren Missouri is currently evaluating its operations and options to determine how to comply with the additional emission reductions requirements in 2014 set forth in the CSAPR, if ultimately enacted, the MATS, and other recently finalized or proposed EPA regulations.
Existing Illinois state regulations already required Ameren and Genco to reduce their emissions of mercury under the MPS. Ameren's and Genco's review of the MATS indicates that the scope of the federal standards is broader than the MPS, as no exemption exists for smaller coal-fired plants. Additionally, the MATS are more stringent than the MPS because compliance with the MATS is measured on a quarterly basis and, in some cases, a thirty-day rolling basis and not annually, as allowed under state requirements. At the end of 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers was primarily due to the expected cost of complying with CSAPR and MATS. See Note 17 – Goodwill, Impairment and Other Charges for additional information.
Genco and AERG expect to install additional, or optimize existing, pollution control equipment, or modify operations to meet new and incremental emission reduction requirements under the MPS, the MATS, or the CSAPR as they become effective. Under the MPS, as amended, Illinois generators are required to reduce mercury, SO2, and NOx emissions by 2015. To comply with the MPS and other air emissions laws and regulations, Genco and AERG are installing equipment designed to reduce their emissions of mercury, NOx, and SO2. Genco and AERG have installed a total of three scrubbers at two energy centers. Two additional scrubbers are being constructed at Genco's Newton energy center. As discussed above, the timing of the installation of these scrubbers as well as precipitator upgrades at AERG's E.D. Edwards energy center have been extended. The closure of Genco's Meredosia and Hutsonville energy centers will allow the Merchant Generation segment additional flexibility in the methods to achieve compliance with environmental standards. Merchant Generation and Genco will continue to review and adjust their compliance plans in light of evolving outlooks for power and capacity prices, delivered fuel costs, environment standards and compliance technologies, among other factors.
The completion of Ameren's, Ameren Missouri's and Genco's review of recently finalized environmental regulations and compliance measures could result in significant increases in capital expenditures and operating costs. The compliance costs could be prohibitive at some of our energy centers as the expected return from these investments, at current market prices for energy and capacity, might not justify the required capital expenditures or their continued operation, which could result in the impairment of long-lived assets.
Emission Allowances
The Clean Air Act created marketable commodities called allowances under the acid rain program, the NOx budget trading program, the CAIR, and the CSAPR. With the CSAPR, the EPA adopted a cap-and-trade approach that allows intrastate and limited interstate trading of emission allowances with other sources within the same program, that is, either the SO2, annual NOx, or ozone season NOx programs. As noted above, on December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until the CSAPR appeal process is concluded, the EPA will continue to administer the CAIR including its allowance program. See Note 1 – Summary of Significant Accounting Policies for the SO2 and NOx emission allowance book values that were classified as intangible assets as of December 31, 2011 and 2010, and Note 17 – Goodwill, Impairment and Other Charges for information regarding the emission allowance impairments recorded during 2011 and 2010.
Environmental regulations including the CAIR and the CSAPR, the timing of the installation of pollution control equipment, fuel mix, and the level of operations, will have a significant impact on the number of allowances required for ongoing operations. The CAIR uses the acid rain program's allowances for SO2 emissions and created annual and ozone season NOx allowances. The CSAPR, however, will not rely upon the acid rain program, the NOx budget trading program, or CAIR allowances for its allowance allocation program. Instead, the EPA issued a new type of emissions allowance for each program under the CSAPR. Any unused SO2 allowances, annual NOx allowances, and ozone season NOx allowances issued under CAIR cannot be used for compliance with CSAPR. Ameren, Ameren Missouri and Genco expect to have adequate CAIR allowances for 2012 to avoid needing to make external purchases.
Should the CSAPR become effective as issued, Ameren, Ameren Missouri and Genco are studying their compliance options to identify additional opportunities that may exist for compliance in an economical fashion. Ameren, Ameren Missouri and Genco may be required to purchase emission allowances, if available, to install new or optimize existing pollution control equipment, to limit generation, or take other actions to achieve compliance with the CSAPR in future phase-in years.
Global Climate Change
State and federal authorities, including the United States Congress, have considered initiatives to limit greenhouse gas emissions and to address global climate change. Potential impacts from any climate change legislation or regulation could vary, depending upon proposed CO2 emission limits, the timing of implementation of those limits, the method of distributing any allowances, the degree to which offsets are allowed and available, and provisions for cost-containment measures, such as a "safety valve" provision that provides a maximum price for emission allowances. As a result of our diverse fuel portfolio, our emissions of greenhouse gases vary among our energy centers, but coal-fired power plants are significant sources of CO2. The enactment of a climate change law could result in a significant rise in household costs and rates for electricity could rise significantly. The burden could fall particularly hard on electricity consumers and upon the economy in the Midwest because of the region's reliance on electricity generated by coal-fired power plants. Natural gas emits about half as much CO2 as coal when burned to produce electricity. Therefore, climate change regulation could cause the conversion of coal-fired power plants to natural gas, or the construction of new natural gas plants to replace coal-fired power plants. As a result, economywide shifts to natural gas as a fuel source for electricity generation also could affect the cost of heating for our utility customers and many industrial processes that use natural gas.
In December 2009, the EPA issued its "endangerment finding" under the Clean Air Act which stated that greenhouse gas emissions, including CO2, endanger human health and welfare and that emissions of greenhouse gases from motor vehicles contribute to that endangerment. In March 2010, the EPA issued a determination that greenhouse gas emissions from stationary sources, such as power plants, would be subject to regulation under the Clean Air Act effective the beginning of 2011. As a result of these actions, we are required to consider the emissions of greenhouse gases in any air permit application.
Recognizing the difficulties presented by regulating at once virtually all emitters of greenhouse gases, the EPA finalized in May 2010 regulations, known as the "Tailoring Rule," that established new higher thresholds for regulating greenhouse gas emissions from stationary sources, such as power plants. The Tailoring Rule became effective in January 2011. The rule requires any source that already has an operating permit to have greenhouse-gas-specific provisions added to its permits upon renewal. Currently, all Ameren energy centers have operating permits that, when renewed, may be modified to address greenhouse gas emissions. The Tailoring Rule also provides that if projects performed at major sources result in an increase in emissions of greenhouse gases of at least 75,000 tons per year, measured in CO2 equivalents, such projects could trigger permitting requirements under the NSR programs and the application of best available control technology, if any, to control greenhouse gas emissions. New major sources are also required to obtain such a permit and to install the best available control technology if their greenhouse gas emissions exceed the applicable emissions threshold. Separately, in December 2010, the EPA announced a settlement agreement under which it would propose NSPS for greenhouse gas emissions at new and existing fossil fuel-fired power plants by July 26, 2011 and issue a final standard by May 2012. The EPA has not yet proposed a rule and has not specified a new estimate of when it will issue that standard. It is uncertain whether reductions to greenhouse gas emissions would be required at Ameren's, Ameren Missouri's or Genco's energy centers as a result of any of the EPA's new and future rules. Legal challenges to the EPA's greenhouse gas rules have been filed. Any federal climate change legislation that is enacted may preempt the EPA's regulation of greenhouse gas emissions, including the Tailoring Rule, particularly as it relates to power plant greenhouse gas emissions. The extent to which the Tailoring Rule could have a material impact on our energy centers depends upon how state agencies apply the EPA's guidelines as to what constitutes the best available control technology for greenhouse gas emissions from power plants and whether physical changes or changes in operations subject to the rule occur at our energy centers. Although the EPA has stated its intention to regulate greenhouse gas emissions from stationary sources, such as power plants, congressional action could block or delay that effort.
Future federal and state legislation or regulations that mandate limits on the emission of greenhouse gases would likely result in significant increases in capital expenditures and operating costs, which, in turn, could lead to increased liquidity needs and higher financing costs. Moreover, to the extent Ameren Missouri requests recovery of these costs through rates, its regulators might delay or deny timely recovery of these costs. Excessive costs to comply with future legislation or regulations might force Ameren, Ameren Missouri and Genco as well as other similarly situated electric power generators to close some coal-fired facilities earlier than planned, which could lead to possible impairment of assets and reduced revenues. As a result, mandatory limits could have a material adverse impact on Ameren's, Ameren Missouri's, and Genco's results of operations, financial position, and liquidity.
Recent federal court decisions have considered the application of common law causes of action, such as nuisance, to address damages resulting from global climate change. In June 2011, the United States Supreme Court in State of Connecticut v. American Electric Power rejected state efforts to impose liability for CO2 and greenhouse gases emissions under federal common law. That ruling, however, did not address whether private citizens could pursue causes of action based on state common law. In June 2011, a case called Comer v. Murphy Oil (Comer) was filed in the United States District Court for the Southern District of Mississippi. In this litigation, a Mississippi property owner sued several industrial companies, including Ameren Missouri and Genco, alleging that CO2 emissions created the atmospheric conditions that intensified Hurricane Katrina. Although we are unable to predict the outcome of the Comer litigation on our results of operations, financial position, and liquidity, Ameren believes that it has meritorious defenses. Numerous procedural and substantive challenges are expected in the Comer litigation.
The impact on us of future initiatives related to greenhouse gas emissions and global climate change is unknown. Compliance costs could increase as future federal legislative, federal regulatory, and state-sponsored initiatives to control greenhouse gases continue to progress, making it more likely that some form of greenhouse gas emissions control will eventually be required. Since these initiatives continue to evolve, the impact on our coal-fired energy centers and our customers' costs is unknown, but any impact would probably be negative. Our costs of complying with any mandated federal or state greenhouse gas program could have a material impact on our future results of operations, financial position, and liquidity.
NSR and Clean Air Litigation
The EPA is engaged in an enforcement initiative to determine whether coal-fired power plants failed to comply with the requirements of the NSR and NSPS provisions under the Clean Air Act when the plants implemented modifications. The EPA's inquiries focus on whether projects performed at power plants should have triggered various permitting requirements and the installation of pollution control equipment.
In April 2005, Genco received a request from the EPA for information pursuant to Section 114(a) of the Clean Air Act. The request sought detailed operating and maintenance history data with respect to Genco's Coffeen, Hutsonville, Meredosia, Newton, and Joppa energy centers and AERG's E.D. Edwards and Duck Creek energy centers. In 2006, the EPA issued a second Section 114(a) request to Genco regarding projects at the Newton energy center. All of these facilities are coal-fired energy centers. In September 2008, the EPA issued a third Section 114(a) request regarding projects at all of Ameren's coal-fired energy centers in Illinois. We completed our response to the information requests, but we are unable to predict the outcome of this matter.
Following the issuance of a Notice of Violation, 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 alleges that in performing projects at its Rush Island coal-fired energy center, Ameren Missouri violated provisions of the Clean Air Act and Missouri law. In January 2012, the United States District Court granted, in part, Ameren Missouri's motion to dismiss various aspects of the EPA's penalty claims. The EPA's claims for injunctive relief, including to require the installation of pollution control equipment, remain. At present, the complaint does not include Ameren Missouri's other coal-fired energy centers, but the EPA has issued Notices of Violation under its NSR enforcement initiative against the company's Labadie, Meramec, and Sioux coal-fired energy centers. Litigation of this matter could take many years to resolve. Ameren Missouri believes its defenses to the allegations described in the complaint as well as the Notices of Violation are meritorious. Ameren Missouri will defend itself vigorously. However, there can be no assurances that it will be successful in its efforts.
Ultimate resolution of these matters could have a material adverse impact on the future results of operations, financial position, and liquidity of Ameren, Ameren Missouri and Genco. A resolution could result in increased capital expenditures for the installation of pollution control equipment, increased operations and maintenance expenses, and penalties. We are unable to predict the ultimate resolution of these matters or the costs that might be incurred. However, Ameren Missouri has concluded that, while a loss may be reasonably possible, the likelihood of loss is not probable. Therefore, no reserve has been established.
Clean Water Act
In March 2011, the EPA announced a proposed rule applicable to cooling water intake structures at existing power plants that have the ability to withdraw more than 2 million gallons of water per day from a body of water and use at least 25 percent of that water exclusively for cooling. Under the proposed rule, affected facilities would be required either to meet mortality limits for aquatic life impinged on the plant's intake screens or to reduce intake velocity to 0.5 feet per second. The proposed rule also requires plants to meet site-specific entrainment standards or to reduce the cooling water intake flow commensurate with the intake flow of a closed-cycle cooling system. The final rule is scheduled to be issued in July 2012, with compliance expected within eight years thereafter. All coal-fired, nuclear, and combined cycle energy centers at Ameren, Ameren Missouri and Genco with cooling water systems are subject to this proposed rule. The proposed rule did not mandate cooling towers at existing facilities, as other technology options potentially could meet the site-specific standards. Ameren, Ameren Missouri and Genco are currently evaluating the proposed rule, and their assessment of the proposed rule's impacts is ongoing. Therefore, we cannot predict at this time the capital or operating costs associated with compliance. The proposed rule could have an adverse effect on our results of operations, financial position, and liquidity if its implementation requires the installation of cooling towers at our electric generating stations.
In September 2009, the EPA announced its plan to revise the effluent guidelines applicable to steam electric generating units under the Clean Water Act. Effluent guidelines are national standards for wastewater discharges to surface water that are based on the effectiveness of available control technology. The EPA is engaged in information collection and analysis activities in support of this rulemaking. It has indicated that it expects to issue a proposed rule in July 2012 and to finalize the rule in 2014. We are unable at this time to predict the impact of this development.
Remediation
We are involved in a number of remediation actions to clean up hazardous waste sites as required by federal and state law. Such statutes require that responsible parties 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 the federal or state governments as a potentially responsible party (PRP) at several contaminated sites. Several of these sites involve facilities that were transferred by our rate-regulated utility operations in Illinois to Genco in May 2000 and to AERG in October 2003. As part of each transfer, Ameren Illinois contractually agreed to indemnify Genco and AERG for remediation costs associated with preexisting environmental contamination at the transferred sites.
As of December 31, 2011, Ameren and Ameren Illinois owned or were otherwise responsible for 44 former MGP sites in Illinois. These are in various stages of investigation, evaluation, and remediation. Based on current estimated plans, Ameren and Ameren Illinois could substantially conclude remediation efforts at most of these sites by 2015. The ICC permits 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. To be recoverable, such costs must be prudently and properly incurred. Costs are subject to annual review by the ICC.
As of December 31, 2011, Ameren and Ameren Missouri own or are otherwise responsible for 10 MGP sites in Missouri and one site in Iowa. Ameren Missouri does not currently have a rate rider mechanism that permits recovery of remediation costs associated with MGP sites from utility customers. Ameren Missouri does not have any retail utility operations in Iowa that would provide a source of recovery of these remediation costs.
The following table presents, as of December 31, 2011, the estimated probable obligation to remediate these MGP sites.
| Estimate |
Recorded |
|||||||||||
| Low | High | |||||||||||
|
Ameren |
$ | 107 | $ | 183 | $ | 107 | ||||||
|
Ameren Missouri |
3 | 4 | 3 | |||||||||
|
Ameren Illinois |
104 | 179 | 104 | |||||||||
| (a) | Recorded liability represents the estimated minimum probable obligations, as no other amount within the range provided a better estimate. |
Ameren Illinois is responsible for the cleanup of a former coal ash landfill in Coffeen, Illinois. As of December 31, 2011, Ameren Illinois estimated that obligation 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 a landfill, underground storage tanks, and a water treatment plant in Illinois. As of December 31, 2011, Ameren Illinois recorded a liability of $0.8 million to represent its best estimate of the obligation for these sites.
Ameren Missouri has responsibility for the investigation and potential cleanup of two waste sites in Missouri as a result of federal agency mandates. One of the cleanup sites is a former coal tar distillery located in St. Louis, Missouri. In 2008, the EPA issued an administrative order to Ameren Missouri pertaining to this distillery operated by Koppers Company or its predecessor and successor companies. Ameren Missouri is the current owner of the site, but Ameren Missouri did not conduct any of the manufacturing operations involving coal tar or its byproducts. Ameren Missouri, along with two other PRPs, is currently performing a site investigation. As of December 31, 2011, Ameren Missouri estimated its obligation at $2 million to $5 million. Ameren Missouri has a liability of $2 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate. Ameren Missouri's other active federal agency-mandated cleanup site in Missouri is a site in Cape Girardeau. Ameren Missouri was a customer of an electrical equipment repair and disposal company that previously operated a facility at this site. A trust was established in the early 1990s by several businesses and governmental agencies to fund the cleanup of this site, which was completed in 2005. Ameren Missouri anticipates this trust fund will be sufficient to complete the remaining adjacent off-site cleanup and therefore has no recorded liability at December 31, 2011, related to this site.
Ameren Missouri also has a federal agency mandate to complete a site investigation for a site in Illinois. In 2000, the EPA notified Ameren Missouri and numerous other companies, including Solutia, that former landfills and lagoons in Sauget, Illinois, may contain soil and groundwater contamination. These sites are known as Sauget Area 2. From about 1926 until 1976, Ameren Missouri operated an energy center adjacent to Sauget Area 2. Ameren Missouri currently owns a parcel of property that was once used as a landfill. Under the terms of an Administrative Order on Consent, Ameren Missouri has joined with other PRPs to evaluate the extent of potential contamination with respect to Sauget Area 2.
The Sauget Area 2 investigations overseen by the EPA have been completed. The results have been submitted to the EPA, and a record of decision is expected in 2012. Once the EPA has selected a remedy, if any, it would begin negotiations with various PRPs regarding implementation. Over the last several years, numerous other parties have joined the PRP group. In addition, Pharmacia Corporation and Monsanto Company have agreed to assume the liabilities related to Solutia's former chemical waste landfill in the Sauget Area 2. As of December 31, 2011, Ameren Missouri estimated its obligation at $0.3 million to $10 million. Ameren Missouri has a liability of $0.3 million recorded to represent its estimated minimum obligation, as no other amount within the range was a better estimate.
In December 2004, AERG submitted a plan to the Illinois EPA to address groundwater and surface water issues associated with the recycle pond, ash ponds, and reservoir at the Duck Creek energy center. In 2010, AERG closed the recycle pond system. Remediation work on the recycle pond was completed in the first quarter of 2011, and therefore no liability exists as of December 31, 2011.
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 protection laws. We are unable to determine whether such practices will result in future environmental commitments or affect our results of operations, financial position, or liquidity.
Ash Management
There has been activity at both state and federal levels regarding additional regulation of ash pond facilities and CCR. In May 2010, the EPA announced proposed new regulations regarding the regulatory framework for the management and disposal of CCR, which could affect future disposal and handling costs at our energy centers. Those proposed regulations include two options for managing CCRs under either solid or hazardous waste regulations, but either alternative would allow for some continued beneficial uses, such as recycling of CCR without classifying it as waste. As part of its proposal, the EPA is considering alternative regulatory approaches that require coal-fired power plants either to close surface impoundments, such as ash ponds, or to retrofit such facilities with liners. Existing impoundments and landfills used for the disposal of CCR would be subject to groundwater monitoring requirements and requirements related to closure and postclosure care under the proposed regulations. Additionally, in January 2010, EPA announced its intent to develop regulations establishing financial responsibility requirements for the electric generation industry, among other industries, and it specifically discussed CCR as a reason for developing the new requirements. Ameren, Ameren Missouri and Genco are currently evaluating all of the proposed regulations to determine whether current management of CCR, including beneficial reuse, and the use of the ash ponds should be altered. Ameren, Ameren Missouri and Genco also are evaluating the potential costs associated with compliance with the proposed regulation of CCR impoundments and landfills, which could be material, if such regulations are adopted.
In addition, the Illinois EPA requested that Ameren, Ameren Missouri and Genco establish groundwater monitoring plans for their ash impoundments in Illinois. Ameren and the Illinois EPA have established a framework for closure of ash ponds in Illinois, including the ash ponds at Venice, Hutsonville, and Duck Creek, when such facilities are ultimately taken out of service. Ameren, Ameren Missouri and Genco have recorded AROs, based on current laws, for the estimated costs of the retirement of their ash ponds.
Pumped-storage Hydroelectric Facility Breach
In December 2005, there was a breach of the upper reservoir at Ameren Missouri's Taum Sauk pumped-storage hydroelectric energy center. This resulted in significant flooding in the local area, which damaged a state park. Ameren Missouri settled with FERC and the state of Missouri all issues associated with the December 2005 Taum Sauk incident. The rebuilt Taum Sauk energy center became fully operational in April 2010.
Ameren Missouri included certain capitalized costs associated with enhancements, or costs that would have been incurred absent the breach, at the rebuilt Taum Sauk energy center not recovered from property insurers in its 2010 electric rate case filing. However, in the July 2011 rate order, the MoPSC disallowed all of these capitalized costs associated with the rebuilding of the Taum Sauk energy center. As a result of the order, Ameren and Ameren Missouri each recorded a pretax charge to earnings in 2011 of $89 million to reflect this disallowance. See Note 2 – Rate and Regulatory Matters for additional information about the appeal of the MoPSC's July 2011 electric rate order.
Ameren Missouri had property and liability insurance coverage for the Taum Sauk incident, subject to certain limits and deductibles. Insurance did not cover some lost electric margins or penalties paid to FERC. Ameren Missouri believes that the total cost for cleanup, damage and liabilities, excluding costs to rebuild the upper reservoir, is $209 million, which is the amount Ameren Missouri had paid as of December 31, 2011. As of December 31, 2011, Ameren Missouri had recorded expenses of $37 million, primarily in prior years (2011 – $1 million, 2010 – $1 million, 2009 – $2 million), for items not covered by insurance. Ameren Missouri recorded a $172 million receivable for amounts recoverable from insurance companies under liability coverage. As of December 31, 2011, Ameren Missouri had received $104 million from insurance companies for liability claims, which reduced the insurance receivable balance subject to liability coverage to $68 million.
In June 2010, Ameren Missouri sued an insurance company that was providing Ameren Missouri with liability coverage on the date of the Taum Sauk incident. In the litigation, filed in the United States District Court for the Eastern District of Missouri, Ameren Missouri claimed the insurance company breached its duty to indemnify Ameren Missouri for the losses experienced from the incident. In January 2011, the court ruled that the parties must first pursue alternative dispute resolution under the terms of their coverage agreement. In February 2011, Ameren Missouri filed an appeal of the January ruling with the United States Court of Appeals for the Eighth Circuit, seeking the ability to pursue resolution of this dispute outside of a dispute resolution process under the terms of its coverage agreement.
Until Ameren's remaining liability insurance claims and the related litigation are resolved, we are unable to determine the total impact the breach could have on Ameren's and Ameren Missouri's results of operations, financial position, and liquidity beyond those amounts already recognized.
Asbestos-related Litigation
Ameren, Ameren Missouri, Ameren Illinois and EEI have been named, along with numerous other parties, in a number of lawsuits filed by plaintiffs claiming varying degrees of injury from asbestos exposure. Most have been filed in the Circuit Court of Madison County, Illinois. The total number of defendants named in each case varies, with as many as 272 parties named in some pending cases and as few as two in others. In the cases pending as of December 31, 2011, the average number of parties was 80.
The claims filed against Ameren, Ameren Missouri, Ameren Illinois and Genco allege injury from asbestos exposure during the plaintiffs' activities at our present or former electric generating plants. Former CIPS plants are now owned by Genco, and former CILCO plants are now owned by AERG. As a part of the transfer of ownership of the CIPS and CILCO generating plants, CIPS and CILCO, now Ameren Illinois, contractually agreed to indemnify Genco and AERG, for liabilities associated with asbestos-related claims arising from activities prior to the transfer. Each lawsuit seeks unspecified damages that, if awarded at trial, typically would be shared among the various defendants.
The following table presents the pending asbestos-related lawsuits filed against the Ameren Companies as of December 31, 2011:
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | Total(a) | ||||
|
4 |
53 | 77 | (b) | 93 |
| (a) | Total does not equal the sum of the subsidiary unit lawsuits because some of the lawsuits name multiple Ameren entities as defendants. |
| (b) | As of December 31, 2011, six asbestos-related lawsuits were pending against EEI. The general liability insurance maintained by EEI provides coverage with respect to liabilities arising from asbestos-related claims. |
At December 31, 2011, Ameren, Ameren Missouri, Ameren Illinois and Genco had liabilities of $18 million, $6 million, $12 million, and $- million, respectively, recorded to represent their best estimate of their obligations related to asbestos claims.
Ameren Illinois has a tariff rider to recover the costs of asbestos-related litigation claims, subject to the following terms: 90% of cash expenditures in excess of the amount included in base electric rates are to be recovered from a trust fund that was established when Ameren acquired IP. At December 31, 2011, the trust fund balance was $23 million, including accumulated interest. If cash expenditures are less than the amount in base rates, Ameren Illinois will contribute 90% of the difference to the fund. Once the trust fund is depleted, 90% of allowed cash expenditures in excess of base rates will be recovered through charges assessed to customers under the tariff rider. Following the Ameren Illinois Merger, this rider is applicable only for claims that occurred within IP's historical service territory. Similarly, the rider will permit recovery only from customers within IP's historical service territory.
Illinois Sales and Use Tax Exemptions and Credits
In Exelon Corporation v. Department of Revenue, the Illinois Supreme Court decided in 2009 that electricity is tangible personal property for purposes of the Illinois income tax investment credit. In March 2010, the United States Supreme Court refused to hear the case, and the decision became final. During the second quarter of 2010, Genco and AERG began claiming Illinois sales and use tax exemptions and credits for purchase transactions related to their generation operations. The basis for those claims is that the determination in the Exelon case that electricity is tangible personal property applies to sales and use tax manufacturing exemptions and credits. On November 2, 2011, EEI received a notice of proposed tax liability, documenting the state of Illinois' position that EEI did not qualify for the manufacturing exemption it used during 2010. Genco is challenging the State of Illinois' position. In December 2011, EEI filed a request for review by the Informal Conference Board of the Illinois Department of Revenue. Ameren and Genco do not believe that it is probable that the state of Illinois will prevail and therefore have not recorded a charge to earnings for the loss contingency. From the second quarter of 2010 through December 31, 2011, Ameren and Genco claimed manufacturing exemptions and credits of $27 million and $19 million, respectively.
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NOTE 16 – CORPORATE REORGANIZATION AND DISCONTINUED OPERATIONS
On October 1, 2010, after receiving all necessary approvals, Ameren, CIPS, CILCO, IP, AERG and AER completed a two-step corporate internal reorganization. The first step of the reorganization was the Ameren Illinois Merger. The second step of the reorganization involved the distribution of AERG stock from Ameren Illinois to Ameren (the AERG distribution) and the subsequent contribution by Ameren of the AERG stock to AER.
Upon the Ameren Illinois Merger, the debt and other obligations of CILCO and IP under their mortgage indentures, senior note indentures, and pollution control bond agreements become debt and obligations of Ameren Illinois. The property owned by CILCO and IP immediately before the Ameren Illinois Merger that was subject to the lien of their respective mortgage indentures remained subject to such lien, which continued to secure the bonds outstanding under such mortgage indenture subject to the release and other provisions of such mortgage indenture. The senior secured notes of IP and CILCO remained secured by the mortgage bonds held by their respective senior note trustee, subject to the release and other provisions of the respective senior note indenture. The debt and other obligations of CIPS remained debt and obligations of Ameren Illinois. Ameren Illinois secured the senior notes issued by CIPS with the benefit of a lien under the IP mortgage indenture. Ameren Illinois has also encumbered substantially all of the real estate, fixtures and equipment owned by CIPS immediately before the Ameren Illinois Merger with the lien of the IP mortgage indenture.
At the time of the Ameren Illinois Merger, the common stock of CILCO and IP, all wholly owned by Ameren, was canceled without consideration. Then, pursuant to the merger agreement: (i) every two shares of each series of IP preferred stock outstanding immediately prior to the Ameren Illinois Merger were automatically converted into one share of a newly created series of Ameren Illinois preferred stock having the same payment and redemption terms as the existing series of IP preferred stock, except to the extent that IP preferred stockholders exercised their dissenters' rights in accordance with Illinois law; and (ii) each outstanding share of CIPS common and preferred stock remained outstanding, except to the extent that CIPS preferred stockholders exercised their dissenters' rights in accordance with Illinois law. Stockholders holding approximately 8,337 shares and 423 shares of CIPS and IP preferred stock, respectively, exercised their dissenters' rights.
In its application for the FERC orders approving the Ameren Illinois Merger and the AERG distribution, Ameren committed to maintain a minimum 30% equity capital structure at Ameren Illinois after the Ameren Illinois Merger and the AERG distribution.
Ameren Illinois determined that the operating results of AERG qualified for discontinued operations presentation; therefore, Ameren Illinois segregated AERG's operating results and presented them separately as discontinued operations for all periods presented prior to October 1, 2010, in this report. For Ameren's financial statements, AERG's results of operation remain classified as continuing operations. The following table summarizes the operating results of Ameren Illinois' former merchant generation subsidiary, AERG, classified as discontinued operations in Ameren Illinois' statements of income for the years ended December 31, 2010, and 2009:
| 2010 | 2009 | |||||||
|
Operating revenues |
$ | 274 | $ | 427 | ||||
|
Operating expenses |
201 | 233 | ||||||
|
Operating income |
73 | 194 | ||||||
|
Other income |
1 | — | ||||||
|
Interest charges |
14 | 16 | ||||||
|
Income taxes |
20 | 64 | ||||||
|
|
|
|
|
|||||
|
Income from discontinued operations, net of tax |
$ | 40 | $ | 114 | ||||
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|
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|
|||||
NOTE 16 CORPORATE REORGANIZATION AND DISCONTINUED OPERATIONS
On October 1, 2010, after receiving all necessary approvals, Ameren, CIPS, CILCO, IP, AERG and AER completed a two-step corporate internal reorganization. The first step of the reorganization was the Ameren Illinois Merger. The second step of the reorganization involved the distribution of AERG stock from Ameren Illinois to Ameren (the AERG distribution) and the subsequent contribution by Ameren of the AERG stock to AER.
Upon the Ameren Illinois Merger, the debt and other obligations of CILCO and IP under their mortgage indentures, senior note indentures, and pollution control bond agreements become debt and obligations of Ameren Illinois. The property owned by CILCO and IP immediately before the Ameren Illinois Merger that was subject to the lien of their respective mortgage indentures remained subject to such lien, which continued to secure the bonds outstanding under such mortgage indenture subject to the release and other provisions of such mortgage indenture. The senior secured notes of IP and CILCO remained secured by the mortgage bonds held by their respective senior note trustee, subject to the release and other provisions of the respective senior note indenture. The debt and other obligations of CIPS remained debt and obligations of Ameren Illinois. Ameren Illinois secured the senior notes issued by CIPS with the benefit of a lien under the IP mortgage indenture. Ameren Illinois has also encumbered substantially all of the real estate, fixtures and equipment owned by CIPS immediately before the Ameren Illinois Merger with the lien of the IP mortgage indenture.
At the time of the Ameren Illinois Merger, the common stock of CILCO and IP, all wholly owned by Ameren, was canceled without consideration. Then, pursuant to the merger agreement: (i) every two shares of each series of IP preferred stock outstanding immediately prior to the Ameren Illinois Merger were automatically converted into one share of a newly created series of Ameren Illinois preferred stock having the same payment and redemption terms as the existing series of IP preferred stock, except to the extent that IP preferred stockholders exercised their dissenters' rights in accordance with Illinois law; and (ii) each outstanding share of CIPS common and preferred stock remained outstanding, except to the extent that CIPS preferred stockholders exercised their dissenters' rights in accordance with Illinois law. Stockholders holding approximately 8,337 shares and 423 shares of CIPS and IP preferred stock, respectively, exercised their dissenters' rights.
In its application for the FERC orders approving the Ameren Illinois Merger and the AERG distribution, Ameren committed to maintain a minimum 30% equity capital structure at Ameren Illinois after the Ameren Illinois Merger and the AERG distribution.
Ameren Illinois determined that the operating results of AERG qualified for discontinued operations presentation; therefore, Ameren Illinois segregated AERG's operating results and presented them separately as discontinued operations for all periods presented prior to October 1, 2010, in this report. For Ameren's financial statements, AERG's results of operation remain classified as continuing operations. The following table summarizes the operating results of Ameren Illinois' former merchant generation subsidiary, AERG, classified as discontinued operations in Ameren Illinois' statements of income for the years ended December 31, 2010, and 2009:
| 2010 | 2009 | |||||||
|
Operating revenues |
$ | 274 | $ | 427 | ||||
|
Operating expenses |
201 | 233 | ||||||
|
Operating income |
73 | 194 | ||||||
|
Other income |
1 | |||||||
|
Interest charges |
14 | 16 | ||||||
|
Income taxes |
20 | 64 | ||||||
|
|
|
|
|
|||||
|
Income from discontinued operations, net of tax |
$ | 40 | $ | 114 | ||||
|
|
|
|
|
|||||
|
|||
NOTE 17 – GOODWILL, IMPAIRMENT AND OTHER CHARGES
The following table summarizes the pretax charges recognized for the years ended December 31, 2011, 2010, and 2009:
| Goodwill | Long-Lived Assets and Related Charges |
Emission Allowances |
Total | |||||||||||||
|
2011: |
||||||||||||||||
|
Ameren(a) |
$ | — | $ | 123 | $ | 2 | $ | 125 | ||||||||
|
Ameren Missouri |
— | 89 | — | 89 | ||||||||||||
|
Genco |
— | 34 | 1 | 35 | ||||||||||||
|
2010: |
||||||||||||||||
|
Ameren(a) |
420 | 101 | 68 | 589 | ||||||||||||
|
Genco |
65 | 64 | 41 | 170 | ||||||||||||
|
2009: |
||||||||||||||||
|
Ameren(a) |
— | 7 | — | 7 | ||||||||||||
|
Genco |
— | 6 | — | 6 | ||||||||||||
| (a) | Includes amounts for registrant and nonregistrant subsidiaries. |
Each of the above charges was recorded in the statement of income as "Goodwill, impairment and other charges," with the exception of the Ameren Missouri statement of income where it was recorded as "Loss from regulatory disallowance." Each of the charges is discussed below.
The goodwill and other asset impairment charges did not result in a violation of any Ameren or Ameren subsidiary debt covenants or counterparty agreements. The charges are not expected to have a material impact on future operations.
Goodwill
Ameren has three reporting units, which also represent Ameren's reportable segments. The Ameren reporting units are Ameren Missouri, Ameren Illinois, and Merchant Generation. Genco has one reporting unit, Merchant Generation. Ameren Illinois has one reporting unit, Ameren Illinois. Ameren's reporting units have been defined and goodwill has been evaluated at the operating segment level in accordance with authoritative accounting guidance. Our reporting units represent businesses for which discrete financial information is available and reviewed regularly by management.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events and circumstances indicate that the asset might be impaired. In 2011, FASB amended its guidance to simplify the testing of goodwill for impairment. The amended guidance provides an option to perform a qualitative assessment to determine whether further impairment testing is necessary. If the qualitative evaluation yields support that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, the quantitative impairment test is not required. Ameren and Ameren Illinois adopted the qualitative goodwill evaluation model for its annual goodwill impairment test conducted as of October 31, 2011. Based on the results of Ameren's and Ameren Illinois' qualitative assessment, Ameren and Ameren Illinois believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values as of October 31, 2011, indicating no impairment of Ameren's and Ameren Illinois' goodwill. The following factors, not meant to be all-inclusive, were considered by Ameren and Ameren Illinois when assessing whether it was more likely than not that the fair value of the Ameren Illinois reporting unit exceeded its carrying value for the October 31, 2011 test:
| • |
Macroeconomic conditions, including those conditions within Ameren Illinois' service territory; |
| • |
Pending rate case outcomes and future rate case outcomes; |
| • |
Changes in laws and potential law changes, such as the IEIMA; |
| • |
Observable industry market multiples; and |
| • |
Actual and forecasted financial performance. |
During 2010, Ameren recorded a noncash impairment charge of $420 million, which represented all of the goodwill assigned to Ameren's Merchant Generation reporting unit. Genco recorded a noncash impairment charge of $65 million, which represented all the goodwill assigned to Genco's Merchant Generation reporting unit. The impairments recorded in 2010 in the Merchant Generation segment were caused by a sustained decline in market prices for electricity, industry market multiples becoming observable at lower levels than previously estimated, and potentially more stringent environmental regulations being enacted.
Ameren and Ameren Illinois will continue to monitor the actual and forecasted operating results, cash flows, market capitalization, and observable industry market multiples of their reporting units for signs of possible declines in estimated fair value and potential goodwill impairment.
The following tables provide a reconciliation of the beginning and ending carrying amounts of goodwill by reporting unit, for Ameren, Ameren Illinois and Genco for the years ended December 31, 2011 and 2010:
Ameren
| 2011 | 2010 | |||||||||||||||
| Ameren Illinois |
Ameren Illinois |
Merchant Generation |
Total(a) | |||||||||||||
|
Gross goodwill at January 1 |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Accumulated impairment losses |
— | — | — | — | ||||||||||||
|
Goodwill, net of accumulated impairment losses |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Impairment losses during year |
— | — | 420 | 420 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Goodwill, net of impairment losses at December 31 |
$ | 411 | $ | 411 | $ | — | $ | 411 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Includes amounts for Ameren registrants and nonregistrant subsidiaries. |
Ameren Illinois
| 2011 | 2010 | |||||||
| Ameren Illinois | Ameren Illinois | |||||||
|
Gross goodwill at January 1 |
$ | 411 | $ | 411 | ||||
|
Accumulated impairment losses |
— | — | ||||||
|
|
|
|
|
|||||
|
Goodwill, net of accumulated impairment losses |
$ | 411 | $ | 411 | ||||
|
Impairment losses during the year |
— | — | ||||||
|
|
|
|
|
|||||
|
Goodwill, net of impairment losses at December 31 |
$ | 411 | $ | 411 | ||||
|
|
|
|
|
|||||
Genco
| 2010 | ||||
| Merchant Generation | ||||
|
Gross goodwill at January 1 |
$ | 65 | ||
|
Accumulated impairment losses |
— | |||
|
|
|
|||
|
Goodwill, net of accumulated impairment losses |
$ | 65 | ||
|
Impairment losses during the year |
65 | |||
|
|
|
|||
|
Goodwill, net of impairment losses at December 31 |
$ | — | ||
|
|
|
|||
Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value.
During 2011, the MoPSC issued an electric rate order that disallowed the recovery of all costs of enhancements, or costs that would have been incurred absent the breach, related to the rebuilding of the Taum Sauk energy center in excess of the amount recovered from property insurance. Consequently, Ameren and Ameren Missouri each reported a pretax charge to earnings of $89 million. See Note 2 – Rate and Regulatory Matters for additional information.
At the end of 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers resulted in the elimination of 90 positions. Ameren and Genco each recorded the following pretax charges to earnings during 2011 related to the closure of these energy centers:
| • |
a $26 million noncash impairment, representing the remaining net investment in both energy centers; |
| • |
a $4 million noncash impairment of materials and supplies; and |
| • |
a $4 million estimate for future cash severance costs, which will be substantially paid during the first quarter of 2012. |
The closure of these energy centers is primarily the result of the expected cost of complying with the CSAPR and the MATS. Genco determined that environmental compliance options for these four units were uneconomical. Another factor driving the closure of these energy centers was a lack of a multiyear capacity market managed by MISO, without which Genco was not positioned to make the substantial investment for environmental controls that would be required to keep these units in service. Ameren and Genco expect to receive cash tax benefits of $22 million and $33 million, respectively, as a result of the closure of these energy centers. Previously recorded AROs for ash pond closures, river structure, and asbestos removals at these energy centers were $38 million. Ameren and Genco expect cash expenditures over the next 10 years along with associated cash tax benefits of $16 million.
During 2010, Ameren and Genco evaluated their long-lived assets and recorded noncash pretax asset impairment charges of $101 million and $64 million, respectively, to reduce the carrying value of the Meredosia and Medina Valley energy centers to their estimated fair value during 2010.
In 2009, Genco recorded asset impairment charges of $6 million as a result of the termination of a rail line extension project at a Genco subsidiary and an adjustment of the carrying value of an office building owned by Genco to its estimated fair value as of December 31, 2009. The charge related to the office building was based on the net proceeds from its sale in 2010. In addition, AERG recorded an asset impairment charge of $1 million to adjust the carrying value of its Indian Trails generation facility's estimated fair value as of December 31, 2009. This charge was based on the net proceeds from the sale of the facility in January 2010.
Intangible Assets
We evaluate emission allowances for impairment if events or changes in circumstances indicate that they will not or cannot be used in operations.
Prior to 2010, Ameren, Ameren Missouri and Genco expected to use their SO2 emission allowances for ongoing operations. In July 2010, the EPA issued the proposed CSAPR, which would restrict the use of existing SO2 emission allowances. As a result, Ameren, Ameren Missouri and Genco no longer expected all of their SO2 emission allowances would be used in operations. Therefore, during 2010, Ameren, Ameren Missouri and Genco recorded an impairment charge to reduce the carrying value of their SO2 emission allowances to their estimated fair value. Ameren's and Genco's noncash pretax impairment charge was $68 million and $41 million, respectively. Ameren Missouri recorded a $23 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to SO2 emission allowances. Therefore, the Ameren Missouri SO2 emission allowance impairment had no impact on earnings. The fair value of the SO2 emission allowances was based on observable and unobservable inputs.
In July 2011, the EPA issued CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of pre-existing SO2 and NOx allowances to the acid rain program and to the NOx budget trading program, respectively. As a result, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash pretax impairment charge of $2 million and $1 million, respectively. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact on earnings.
NOTE 17 – GOODWILL, IMPAIRMENT AND OTHER CHARGES
The following table summarizes the pretax charges recognized for the years ended December 31, 2011, 2010, and 2009:
| Goodwill | Long-Lived Assets and Related Charges |
Emission Allowances |
Total | |||||||||||||
|
2011: |
||||||||||||||||
|
Ameren(a) |
$ | — | $ | 123 | $ | 2 | $ | 125 | ||||||||
|
Ameren Missouri |
— | 89 | — | 89 | ||||||||||||
|
Genco |
— | 34 | 1 | 35 | ||||||||||||
|
2010: |
||||||||||||||||
|
Ameren(a) |
420 | 101 | 68 | 589 | ||||||||||||
|
Genco |
65 | 64 | 41 | 170 | ||||||||||||
|
2009: |
||||||||||||||||
|
Ameren(a) |
— | 7 | — | 7 | ||||||||||||
|
Genco |
— | 6 | — | 6 | ||||||||||||
| (a) | Includes amounts for registrant and nonregistrant subsidiaries. |
Each of the above charges was recorded in the statement of income as "Goodwill, impairment and other charges," with the exception of the Ameren Missouri statement of income where it was recorded as "Loss from regulatory disallowance." Each of the charges is discussed below.
The goodwill and other asset impairment charges did not result in a violation of any Ameren or Ameren subsidiary debt covenants or counterparty agreements. The charges are not expected to have a material impact on future operations.
Goodwill
Ameren has three reporting units, which also represent Ameren's reportable segments. The Ameren reporting units are Ameren Missouri, Ameren Illinois, and Merchant Generation. Genco has one reporting unit, Merchant Generation. Ameren Illinois has one reporting unit, Ameren Illinois. Ameren's reporting units have been defined and goodwill has been evaluated at the operating segment level in accordance with authoritative accounting guidance. Our reporting units represent businesses for which discrete financial information is available and reviewed regularly by management.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events and circumstances indicate that the asset might be impaired. In 2011, FASB amended its guidance to simplify the testing of goodwill for impairment. The amended guidance provides an option to perform a qualitative assessment to determine whether further impairment testing is necessary. If the qualitative evaluation yields support that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, the quantitative impairment test is not required. Ameren and Ameren Illinois adopted the qualitative goodwill evaluation model for its annual goodwill impairment test conducted as of October 31, 2011. Based on the results of Ameren's and Ameren Illinois' qualitative assessment, Ameren and Ameren Illinois believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values as of October 31, 2011, indicating no impairment of Ameren's and Ameren Illinois' goodwill. The following factors, not meant to be all-inclusive, were considered by Ameren and Ameren Illinois when assessing whether it was more likely than not that the fair value of the Ameren Illinois reporting unit exceeded its carrying value for the October 31, 2011 test:
| • |
Macroeconomic conditions, including those conditions within Ameren Illinois' service territory; |
| • |
Pending rate case outcomes and future rate case outcomes; |
| • |
Changes in laws and potential law changes, such as the IEIMA; |
| • |
Observable industry market multiples; and |
| • |
Actual and forecasted financial performance. |
During 2010, Ameren recorded a noncash impairment charge of $420 million, which represented all of the goodwill assigned to Ameren's Merchant Generation reporting unit. Genco recorded a noncash impairment charge of $65 million, which represented all the goodwill assigned to Genco's Merchant Generation reporting unit. The impairments recorded in 2010 in the Merchant Generation segment were caused by a sustained decline in market prices for electricity, industry market multiples becoming observable at lower levels than previously estimated, and potentially more stringent environmental regulations being enacted.
Ameren and Ameren Illinois will continue to monitor the actual and forecasted operating results, cash flows, market capitalization, and observable industry market multiples of their reporting units for signs of possible declines in estimated fair value and potential goodwill impairment.
The following tables provide a reconciliation of the beginning and ending carrying amounts of goodwill by reporting unit, for Ameren, Ameren Illinois and Genco for the years ended December 31, 2011 and 2010:
Ameren
| 2011 | 2010 | |||||||||||||||
| Ameren Illinois |
Ameren Illinois |
Merchant Generation |
Total(a) | |||||||||||||
|
Gross goodwill at January 1 |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Accumulated impairment losses |
— | — | — | — | ||||||||||||
|
Goodwill, net of accumulated impairment losses |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Impairment losses during year |
— | — | 420 | 420 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Goodwill, net of impairment losses at December 31 |
$ | 411 | $ | 411 | $ | — | $ | 411 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Includes amounts for Ameren registrants and nonregistrant subsidiaries. |
Ameren Illinois
| 2011 | 2010 | |||||||
| Ameren Illinois | Ameren Illinois | |||||||
|
Gross goodwill at January 1 |
$ | 411 | $ | 411 | ||||
|
Accumulated impairment losses |
— | — | ||||||
|
|
|
|
|
|||||
|
Goodwill, net of accumulated impairment losses |
$ | 411 | $ | 411 | ||||
|
Impairment losses during the year |
— | — | ||||||
|
|
|
|
|
|||||
|
Goodwill, net of impairment losses at December 31 |
$ | 411 | $ | 411 | ||||
|
|
|
|
|
|||||
Genco
| 2010 | ||||
| Merchant Generation | ||||
|
Gross goodwill at January 1 |
$ | 65 | ||
|
Accumulated impairment losses |
— | |||
|
|
|
|||
|
Goodwill, net of accumulated impairment losses |
$ | 65 | ||
|
Impairment losses during the year |
65 | |||
|
|
|
|||
|
Goodwill, net of impairment losses at December 31 |
$ | — | ||
|
|
|
|||
Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value.
During 2011, the MoPSC issued an electric rate order that disallowed the recovery of all costs of enhancements, or costs that would have been incurred absent the breach, related to the rebuilding of the Taum Sauk energy center in excess of the amount recovered from property insurance. Consequently, Ameren and Ameren Missouri each reported a pretax charge to earnings of $89 million. See Note 2 – Rate and Regulatory Matters for additional information.
At the end of 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers resulted in the elimination of 90 positions. Ameren and Genco each recorded the following pretax charges to earnings during 2011 related to the closure of these energy centers:
| • |
a $26 million noncash impairment, representing the remaining net investment in both energy centers; |
| • |
a $4 million noncash impairment of materials and supplies; and |
| • |
a $4 million estimate for future cash severance costs, which will be substantially paid during the first quarter of 2012. |
The closure of these energy centers is primarily the result of the expected cost of complying with the CSAPR and the MATS. Genco determined that environmental compliance options for these four units were uneconomical. Another factor driving the closure of these energy centers was a lack of a multiyear capacity market managed by MISO, without which Genco was not positioned to make the substantial investment for environmental controls that would be required to keep these units in service. Ameren and Genco expect to receive cash tax benefits of $22 million and $33 million, respectively, as a result of the closure of these energy centers. Previously recorded AROs for ash pond closures, river structure, and asbestos removals at these energy centers were $38 million. Ameren and Genco expect cash expenditures over the next 10 years along with associated cash tax benefits of $16 million.
During 2010, Ameren and Genco evaluated their long-lived assets and recorded noncash pretax asset impairment charges of $101 million and $64 million, respectively, to reduce the carrying value of the Meredosia and Medina Valley energy centers to their estimated fair value during 2010.
In 2009, Genco recorded asset impairment charges of $6 million as a result of the termination of a rail line extension project at a Genco subsidiary and an adjustment of the carrying value of an office building owned by Genco to its estimated fair value as of December 31, 2009. The charge related to the office building was based on the net proceeds from its sale in 2010. In addition, AERG recorded an asset impairment charge of $1 million to adjust the carrying value of its Indian Trails generation facility's estimated fair value as of December 31, 2009. This charge was based on the net proceeds from the sale of the facility in January 2010.
Intangible Assets
We evaluate emission allowances for impairment if events or changes in circumstances indicate that they will not or cannot be used in operations.
Prior to 2010, Ameren, Ameren Missouri and Genco expected to use their SO2 emission allowances for ongoing operations. In July 2010, the EPA issued the proposed CSAPR, which would restrict the use of existing SO2 emission allowances. As a result, Ameren, Ameren Missouri and Genco no longer expected all of their SO2 emission allowances would be used in operations. Therefore, during 2010, Ameren, Ameren Missouri and Genco recorded an impairment charge to reduce the carrying value of their SO2 emission allowances to their estimated fair value. Ameren's and Genco's noncash pretax impairment charge was $68 million and $41 million, respectively. Ameren Missouri recorded a $23 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to SO2 emission allowances. Therefore, the Ameren Missouri SO2 emission allowance impairment had no impact on earnings. The fair value of the SO2 emission allowances was based on observable and unobservable inputs.
In July 2011, the EPA issued CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of pre-existing SO2 and NOx allowances to the acid rain program and to the NOx budget trading program, respectively. As a result, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash pretax impairment charge of $2 million and $1 million, respectively. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact on earnings.
NOTE 17 – GOODWILL, IMPAIRMENT AND OTHER CHARGES
The following table summarizes the pretax charges recognized for the years ended December 31, 2011, 2010, and 2009:
| Goodwill | Long-Lived Assets and Related Charges |
Emission Allowances |
Total | |||||||||||||
|
2011: |
||||||||||||||||
|
Ameren(a) |
$ | — | $ | 123 | $ | 2 | $ | 125 | ||||||||
|
Ameren Missouri |
— | 89 | — | 89 | ||||||||||||
|
Genco |
— | 34 | 1 | 35 | ||||||||||||
|
2010: |
||||||||||||||||
|
Ameren(a) |
420 | 101 | 68 | 589 | ||||||||||||
|
Genco |
65 | 64 | 41 | 170 | ||||||||||||
|
2009: |
||||||||||||||||
|
Ameren(a) |
— | 7 | — | 7 | ||||||||||||
|
Genco |
— | 6 | — | 6 | ||||||||||||
| (a) | Includes amounts for registrant and nonregistrant subsidiaries. |
Each of the above charges was recorded in the statement of income as "Goodwill, impairment and other charges," with the exception of the Ameren Missouri statement of income where it was recorded as "Loss from regulatory disallowance." Each of the charges is discussed below.
The goodwill and other asset impairment charges did not result in a violation of any Ameren or Ameren subsidiary debt covenants or counterparty agreements. The charges are not expected to have a material impact on future operations.
Goodwill
Ameren has three reporting units, which also represent Ameren's reportable segments. The Ameren reporting units are Ameren Missouri, Ameren Illinois, and Merchant Generation. Genco has one reporting unit, Merchant Generation. Ameren Illinois has one reporting unit, Ameren Illinois. Ameren's reporting units have been defined and goodwill has been evaluated at the operating segment level in accordance with authoritative accounting guidance. Our reporting units represent businesses for which discrete financial information is available and reviewed regularly by management.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events and circumstances indicate that the asset might be impaired. In 2011, FASB amended its guidance to simplify the testing of goodwill for impairment. The amended guidance provides an option to perform a qualitative assessment to determine whether further impairment testing is necessary. If the qualitative evaluation yields support that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, the quantitative impairment test is not required. Ameren and Ameren Illinois adopted the qualitative goodwill evaluation model for its annual goodwill impairment test conducted as of October 31, 2011. Based on the results of Ameren's and Ameren Illinois' qualitative assessment, Ameren and Ameren Illinois believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values as of October 31, 2011, indicating no impairment of Ameren's and Ameren Illinois' goodwill. The following factors, not meant to be all-inclusive, were considered by Ameren and Ameren Illinois when assessing whether it was more likely than not that the fair value of the Ameren Illinois reporting unit exceeded its carrying value for the October 31, 2011 test:
| • |
Macroeconomic conditions, including those conditions within Ameren Illinois' service territory; |
| • |
Pending rate case outcomes and future rate case outcomes; |
| • |
Changes in laws and potential law changes, such as the IEIMA; |
| • |
Observable industry market multiples; and |
| • |
Actual and forecasted financial performance. |
During 2010, Ameren recorded a noncash impairment charge of $420 million, which represented all of the goodwill assigned to Ameren's Merchant Generation reporting unit. Genco recorded a noncash impairment charge of $65 million, which represented all the goodwill assigned to Genco's Merchant Generation reporting unit. The impairments recorded in 2010 in the Merchant Generation segment were caused by a sustained decline in market prices for electricity, industry market multiples becoming observable at lower levels than previously estimated, and potentially more stringent environmental regulations being enacted.
Ameren and Ameren Illinois will continue to monitor the actual and forecasted operating results, cash flows, market capitalization, and observable industry market multiples of their reporting units for signs of possible declines in estimated fair value and potential goodwill impairment.
The following tables provide a reconciliation of the beginning and ending carrying amounts of goodwill by reporting unit, for Ameren, Ameren Illinois and Genco for the years ended December 31, 2011 and 2010:
Ameren
| 2011 | 2010 | |||||||||||||||
| Ameren Illinois |
Ameren Illinois |
Merchant Generation |
Total(a) | |||||||||||||
|
Gross goodwill at January 1 |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Accumulated impairment losses |
— | — | — | — | ||||||||||||
|
Goodwill, net of accumulated impairment losses |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Impairment losses during year |
— | — | 420 | 420 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Goodwill, net of impairment losses at December 31 |
$ | 411 | $ | 411 | $ | — | $ | 411 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Includes amounts for Ameren registrants and nonregistrant subsidiaries. |
Ameren Illinois
| 2011 | 2010 | |||||||
| Ameren Illinois | Ameren Illinois | |||||||
|
Gross goodwill at January 1 |
$ | 411 | $ | 411 | ||||
|
Accumulated impairment losses |
— | — | ||||||
|
|
|
|
|
|||||
|
Goodwill, net of accumulated impairment losses |
$ | 411 | $ | 411 | ||||
|
Impairment losses during the year |
— | — | ||||||
|
|
|
|
|
|||||
|
Goodwill, net of impairment losses at December 31 |
$ | 411 | $ | 411 | ||||
|
|
|
|
|
|||||
Genco
| 2010 | ||||
| Merchant Generation | ||||
|
Gross goodwill at January 1 |
$ | 65 | ||
|
Accumulated impairment losses |
— | |||
|
|
|
|||
|
Goodwill, net of accumulated impairment losses |
$ | 65 | ||
|
Impairment losses during the year |
65 | |||
|
|
|
|||
|
Goodwill, net of impairment losses at December 31 |
$ | — | ||
|
|
|
|||
Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value.
During 2011, the MoPSC issued an electric rate order that disallowed the recovery of all costs of enhancements, or costs that would have been incurred absent the breach, related to the rebuilding of the Taum Sauk energy center in excess of the amount recovered from property insurance. Consequently, Ameren and Ameren Missouri each reported a pretax charge to earnings of $89 million. See Note 2 – Rate and Regulatory Matters for additional information.
At the end of 2011, Genco ceased operations of its Meredosia and Hutsonville energy centers. The closure of these energy centers resulted in the elimination of 90 positions. Ameren and Genco each recorded the following pretax charges to earnings during 2011 related to the closure of these energy centers:
| • |
a $26 million noncash impairment, representing the remaining net investment in both energy centers; |
| • |
a $4 million noncash impairment of materials and supplies; and |
| • |
a $4 million estimate for future cash severance costs, which will be substantially paid during the first quarter of 2012. |
The closure of these energy centers is primarily the result of the expected cost of complying with the CSAPR and the MATS. Genco determined that environmental compliance options for these four units were uneconomical. Another factor driving the closure of these energy centers was a lack of a multiyear capacity market managed by MISO, without which Genco was not positioned to make the substantial investment for environmental controls that would be required to keep these units in service. Ameren and Genco expect to receive cash tax benefits of $22 million and $33 million, respectively, as a result of the closure of these energy centers. Previously recorded AROs for ash pond closures, river structure, and asbestos removals at these energy centers were $38 million. Ameren and Genco expect cash expenditures over the next 10 years along with associated cash tax benefits of $16 million.
During 2010, Ameren and Genco evaluated their long-lived assets and recorded noncash pretax asset impairment charges of $101 million and $64 million, respectively, to reduce the carrying value of the Meredosia and Medina Valley energy centers to their estimated fair value during 2010.
In 2009, Genco recorded asset impairment charges of $6 million as a result of the termination of a rail line extension project at a Genco subsidiary and an adjustment of the carrying value of an office building owned by Genco to its estimated fair value as of December 31, 2009. The charge related to the office building was based on the net proceeds from its sale in 2010. In addition, AERG recorded an asset impairment charge of $1 million to adjust the carrying value of its Indian Trails generation facility's estimated fair value as of December 31, 2009. This charge was based on the net proceeds from the sale of the facility in January 2010.
Intangible Assets
We evaluate emission allowances for impairment if events or changes in circumstances indicate that they will not or cannot be used in operations.
Prior to 2010, Ameren, Ameren Missouri and Genco expected to use their SO2 emission allowances for ongoing operations. In July 2010, the EPA issued the proposed CSAPR, which would restrict the use of existing SO2 emission allowances. As a result, Ameren, Ameren Missouri and Genco no longer expected all of their SO2 emission allowances would be used in operations. Therefore, during 2010, Ameren, Ameren Missouri and Genco recorded an impairment charge to reduce the carrying value of their SO2 emission allowances to their estimated fair value. Ameren's and Genco's noncash pretax impairment charge was $68 million and $41 million, respectively. Ameren Missouri recorded a $23 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to SO2 emission allowances. Therefore, the Ameren Missouri SO2 emission allowance impairment had no impact on earnings. The fair value of the SO2 emission allowances was based on observable and unobservable inputs.
In July 2011, the EPA issued CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of pre-existing SO2 and NOx allowances to the acid rain program and to the NOx budget trading program, respectively. As a result, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash pretax impairment charge of $2 million and $1 million, respectively. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact on earnings.
|
|||
NOTE 18 – SEGMENT INFORMATION
Ameren has three reportable segments: Ameren Missouri, Ameren Illinois, and Merchant Generation. The Ameren Missouri segment for Ameren and Ameren Missouri includes all the operations of Ameren Missouri's business as described in Note 1 – Summary of Significant Accounting Policies. The Ameren Illinois segment for Ameren and Ameren Illinois consists of all of the operations of Ameren Illinois as described in Note 1 – Summary of Significant Accounting Policies. The Merchant Generation segment for Ameren consists primarily of the operations or activities of Genco, including EEI, AERG, Medina Valley and Marketing Company. The category called Other primarily includes Ameren parent company activities, Ameren Services, and ATXI.
The following table presents information about the reported revenues and specified items reflected in Ameren's net income for the years ended December 31, 2011, 2010, and 2009, and total assets as of December 31, 2011, 2010, and 2009.
Ameren
| Ameren Missouri |
Ameren Illinois Regulated Segment |
Merchant Generation |
Other |
Intersegment Eliminations |
Consolidated | |||||||||||||||||||
|
2011 |
||||||||||||||||||||||||
|
External revenues |
$ | 3,358 | $ | 2,774 | $ | 1,394 | $ | 5 | $ | - | $ | 7,531 | ||||||||||||
|
Intersegment revenues |
25 | 13 | 235 | 4 | (277 | ) | - | |||||||||||||||||
|
Depreciation and amortization |
408 | 215 | 143 | 19 | - | 785 | ||||||||||||||||||
|
Interest and dividend income |
30 | 1 | - | 44 | (43 | ) | 32 | |||||||||||||||||
|
Interest charges |
209 | 136 | 105 | 44 | (43 | ) | 451 | |||||||||||||||||
|
Income taxes (benefit) |
161 | 127 | 32 | (10 | ) | - | 310 | |||||||||||||||||
|
Net income (loss) attributable to Ameren Corporation(a) |
287 | 193 | 45 | (6 | ) | - | 519 | |||||||||||||||||
|
Capital expenditures |
550 | 351 | 153 | (24 | )(b) | - | 1,030 | |||||||||||||||||
|
Total assets |
12,757 | 7,213 | 3,833 | 1,211 | (1,369 | ) | 23,645 | |||||||||||||||||
|
2010 |
||||||||||||||||||||||||
|
External revenues |
$ | 3,176 | $ | 3,002 | $ | 1,459 | $ | 1 | $ | - | $ | 7,638 | ||||||||||||
|
Intersegment revenues |
21 | 12 | 234 | 13 | (280 | ) | - | |||||||||||||||||
|
Depreciation and amortization |
382 | 210 | 146 | 27 | - | 765 | ||||||||||||||||||
|
Interest and dividend income |
31 | 1 | 1 | 25 | (25 | ) | 33 | |||||||||||||||||
|
Interest charges |
213 | 143 | 133 | 35 | (27 | ) | 497 | |||||||||||||||||
|
Income taxes (benefit) |
199 | 137 | 6 | (17 | ) | - | 325 | |||||||||||||||||
|
Net income (loss) attributable to Ameren Corporation(a) |
364 | 208 | (409 | ) | (24 | ) | - | 139 | ||||||||||||||||
|
Capital expenditures |
624 | 281 | 101 | 36 | - | 1,042 | ||||||||||||||||||
|
Total assets |
12,504 | 7,406 | 3,934 | 1,354 | (1,687 | ) | 23,511 | |||||||||||||||||
|
2009 |
||||||||||||||||||||||||
|
External revenues |
$ | 2,847 | $ | 2,957 | $ | 1,322 | $ | 9 | $ | - | $ | 7,135 | ||||||||||||
|
Intersegment revenues |
27 | 27 | 390 | 19 | (463 | ) | - | |||||||||||||||||
|
Depreciation and amortization |
357 | 216 | 126 | 26 | - | 725 | ||||||||||||||||||
|
Interest and dividend income |
29 | 6 | - | 33 | (38 | ) | 30 | |||||||||||||||||
|
Interest charges |
229 | 153 | 119 | 48 | (41 | ) | 508 | |||||||||||||||||
|
Income taxes (benefit) |
128 | 79 | 151 | (26 | ) | - | 332 | |||||||||||||||||
|
Net income (loss) attributable to Ameren Corporation(a) |
259 | 127 | 247 | (21 | ) | - | 612 | |||||||||||||||||
|
Capital expenditures |
882 | 352 | 408 | 68 | - | 1,710 | ||||||||||||||||||
|
Total assets |
12,219 | 7,181 | 4,751 | 1,814 | (2,263 | ) | 23,702 | |||||||||||||||||
| (a) | Represents net income (loss) available to common stockholders. |
| (b) | Includes the elimination of intercompany transfers. |
|
|||
SELECTED QUARTERLY INFORMATION (Unaudited) (In millions, except per share amounts)
| Quarter Ended(a) |
Operating Revenues |
Operating Income |
Net Income (Loss) Attributable to Ameren Corporation |
Earnings (Loss) per Share – Basic and |
||||||||||||
|
Ameren |
||||||||||||||||
|
March 31, 2011 |
$ | 1,904 | $ | 227 | $ | 71 | $ | 0.29 | ||||||||
|
March 31, 2010 |
1,940 | 298 | 102 | 0.43 | ||||||||||||
|
June 30, 2011 |
1,781 | 316 | 138 | 0.57 | ||||||||||||
|
June 30, 2010 |
1,725 | 331 | 152 | 0.64 | ||||||||||||
|
September 30, 2011 |
2,268 | 550 | 285 | 1.18 | ||||||||||||
|
September 30, 2010 |
2,267 | 89 | (167 | ) | (0.70 | ) | ||||||||||
|
December 31, 2011 |
1,578 | 148 | 25 | 0.10 | ||||||||||||
|
December 31, 2010 |
1,706 | 198 | 52 | 0.21 | ||||||||||||
| (a) | The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods. This is due to the effects of rounding and changes in the number of weighted-average shares outstanding each period. |
| Quarter Ended |
Operating Revenues |
Operating Income |
Net Income (Loss) |
Net Income (Loss) to Common |
||||||||||||
|
Ameren Missouri |
||||||||||||||||
|
March 31, 2011 |
$ | 772 | $ | 77 | $ | 22 | $ | 21 | ||||||||
|
March 31, 2010 |
682 | 90 | 28 | 27 | ||||||||||||
|
June 30, 2011 |
822 | 176 | 91 | 90 | ||||||||||||
|
June 30, 2010 |
761 | 197 | 115 | 113 | ||||||||||||
|
September 30, 2011 |
1,115 | 333 | 191 | 190 | ||||||||||||
|
September 30, 2010 |
1,060 | 385 | 224 | 223 | ||||||||||||
|
December 31, 2011 |
674 | 23 | (14 | ) | (14 | ) | ||||||||||
|
December 31, 2010 |
694 | 39 | 2 | 1 | ||||||||||||
| Quarter Ended |
Operating Revenues |
Operating Income |
Income from Continuing Operations |
Net Income | Net Income Available to Common Stockholder |
|||||||||||||||
|
Ameren Illinois |
||||||||||||||||||||
|
March 31, 2011 |
$ | 808 | $ | 88 | $ | 34 | $ | 34 | $ | 33 | ||||||||||
|
March 31, 2010 |
911 | 98 | 36 | 48 | 47 | |||||||||||||||
|
June 30, 2011 |
623 | 99 | 38 | 38 | 37 | |||||||||||||||
|
June 30, 2010 |
647 | 112 | 48 | 57 | 55 | |||||||||||||||
|
September 30, 2011 |
745 | 196 | 98 | 98 | 98 | |||||||||||||||
|
September 30, 2010 |
746 | 182 | 91 | 110 | 109 | |||||||||||||||
|
December 31, 2011 |
611 | 75 | 26 | 26 | 25 | |||||||||||||||
|
December 31, 2010 |
710 | 106 | 37 | 37 | 37 | |||||||||||||||
| Quarter Ended |
Operating Revenues |
Operating Income (Loss) |
Net Income (Loss) | Net Income (Loss) Attributable to Ameren Energy Generating Company |
||||||||||||
|
Genco |
||||||||||||||||
|
March 31, 2011 |
$ | 241 | $ | 54 | $ | 22 | $ | 21 | ||||||||
|
March 31, 2010 |
266 | 62 | 24 | 23 | ||||||||||||
|
June 30, 2011 |
260 | 37 | 13 | 13 | ||||||||||||
|
June 30, 2010 |
275 | 45 | 14 | 13 | ||||||||||||
|
September 30, 2011 |
327 | 10 | (4 | ) | (5 | ) | ||||||||||
|
September 30, 2010 |
335 | (99 | ) | (100 | ) | (101 | ) | |||||||||
|
December 31, 2011 |
238 | 38 | 14 | 15 | ||||||||||||
|
December 31, 2010 |
250 | 54 | 26 | 26 | ||||||||||||
|
|||
|
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF PARENT AMEREN CORPORATION CONDENSED STATEMENT OF CASH FLOWS For the Years Ended December 31, 2011, 2010 and 2009 |
||||||||||||
| (In millions) | 2011 | Restated 2010 | Restated 2009 | |||||||||
|
Net change in cash and equivalents |
$ | (1 | ) | $ | (20 | ) | $ | 2 | ||||
|
Cash and cash equivalents at beginning of year |
4 | 24 | 22 | |||||||||
|
Cash and cash equivalents at the end of year |
$ | 3 | $ | 4 | $ | 24 | ||||||
|
Cash dividends received from consolidated subsidiaries |
$ | 730 | $ | 368 | $ | 338 | ||||||
AMEREN CORPORATION (parent company only)
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – BASIS OF PRESENTATION
Ameren Corporation (parent company only) is a public utility holding company that conducts substantially all of its business operations through its subsidiaries. As specified in Note 5 – Long-term Debt and Equity Financings under Part II, Item 8, of this report, there are restrictions on Ameren Corporation's (parent company only) ability to obtain funds from certain of its subsidiaries through dividends, loans or advances. In accordance with authoritative accounting guidance, Ameren Corporation (parent company only) has accounted for wholly owned subsidiaries using the equity method. These financial statements are presented on a condensed basis. Additional disclosures relating to the parent company financial statements are included within the combined notes under Part II, Item 8, of this report.
NOTE 2 – SHORT-TERM DEBT AND LIQUIDITY
See Note 4 – Short-term Debt and Liquidity under Part II, Item 8, of this report for a description and details of short-term debt and liquidity needs of Ameren Corporation (parent company only).
NOTE 3 – LONG-TERM OBLIGATIONS
See Note 5 – Long-term Debt and Equity Financings under Part II, Item 8, of this report for a description and details of long-term obligations of Ameren Corporation (parent company only).
NOTE 4 – COMMITMENTS AND CONTINGENCIES
See Note 15 – Commitments and Contingencies under Part II Item 8, of this report for a description of all material contingencies and guarantees outstanding of Ameren Corporation (parent company only).
NOTE 5 – GOODWILL AND OTHER ASSET IMPAIRMENTS
See Note 17 – Goodwill, Impairments and Other Charges under Part II, Item 8, of this report for a description of the impairment charges incurred by Ameren Corporation (parent company only) in 2010.
NOTE 6 – RESTATEMENTS
During 2011, Ameren Corporation (parent company only) identified an error in the cash flow statement classification of intercompany notes receivable that impacted years ended December 31, 2010, and 2009. For the year ended December 31, 2010, previously reported cash flows provided by operating activities were $522 million and cash flows used in investing activities were $33 million. As corrected herein, cash flows provided by operating activities were $241 million and cash flows provided by investing activities were $248 million. For the year ended December 31, 2009, previously reported cash flows used in operating activities were $442 million and cash flows used in investing activities were $531 million. As corrected herein, cash flows provided by operating activities were $270 million and cash flows used in investing activities were $1,243 million.
|
|||
| (a) | Uncollectible accounts charged off, less recoveries. |
|
|||
General
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren's primary assets are the common stock of its subsidiaries. Ameren's subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses in Missouri and Illinois. Dividends on Ameren's common stock and the payment of other 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.
| Ÿ |
Union Electric Company, or 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 Missouri was incorporated in Missouri in 1922 and is successor to a number of companies, the oldest of which was organized in 1881. It is the largest electric utility in the state of Missouri. It supplies electric and natural gas service to a 24,000-square-mile area in central and eastern Missouri. This area has an estimated population of 2.9 million and includes the Greater St. Louis area. Ameren Missouri supplies electric service to 1.2 million customers and natural gas service to 127,000 customers. |
| Ÿ |
Ameren Illinois Company, or Ameren Illinois, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois. Ameren Illinois was created by the merger of CILCO and IP with and into CIPS. CIPS was incorporated in Illinois in 1923 and is successor to a number of companies, the oldest of which was organized in 1902. Ameren Illinois supplies electric and natural gas utility service to portions of central and southern Illinois having an estimated population of 3.1 million in an area of 40,000 square miles. Ameren Illinois supplies electric service to 1.2 million customers and natural gas service to 809,000 customers. |
| Ÿ |
AER consists of non-rate-regulated operations, including Genco, AERG, Marketing Company and Medina Valley. The Medina Valley energy center was sold in February 2012. Genco operates a merchant electric generation business in Illinois and holds an 80% ownership interest in EEI, which it consolidates for financial reporting purposes. Genco was incorporated in Illinois in March 2000. Genco's coal and natural gas electric generating facilities are expected to have capacity of 3,095 and 1,348 megawatts, respectively, at the time of the 2012 peak summer electrical demand. |
Ameren has various other subsidiaries responsible for activities such as the provision of shared services.
On October 1, 2010, Ameren, CIPS, CILCO, IP, AERG and AER completed a two-step corporate internal reorganization. The first step of the reorganization was the Ameren Illinois Merger. Upon consummation of the Ameren Illinois Merger, the separate legal existence of CILCO and IP ended. The second step of the reorganization involved the distribution of AERG stock from Ameren Illinois to Ameren and the subsequent contribution by Ameren of the AERG stock to AER. The Ameren Illinois Merger and the distribution of AERG stock were accounted for as transactions between entities under common control. In accordance with authoritative accounting guidance, assets and liabilities transferred between entities under common control were accounted for at the historical cost basis of the common parent, Ameren, as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in Ameren Illinois included purchase accounting adjustments related to Ameren's acquisition of CILCORP in 2003. Ameren Illinois accounted for the AERG distribution as a spinoff. Ameren Illinois transferred AERG to Ameren based on AERG's carrying value. Ameren Illinois has segregated AERG's operating results and cash flows and presented them separately as discontinued operations in its consolidated statement of income and consolidated statement of cash flows, respectively, for all periods presented prior to October 1, 2010, in this report. For Ameren's financial statements, AERG's results of operations remain classified as continuing operations. See Note 16 – Corporate Reorganization and Discontinued Operations for additional information.
Effective January 1, 2010, as part of an internal reorganization, AER transferred its 80% stock ownership interest in EEI to Genco through a capital contribution. The
transfer of EEI to Genco was accounted for as a transaction between entities under common control, whereby Genco accounted for the transfer at the historical carrying value of the parent (Ameren) as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren's historical cost basis in EEI included purchase accounting adjustments relating to Ameren's acquisition of an additional 20% ownership interest in EEI in 2004. This transfer required Genco's prior-period financial statements to be retrospectively combined for all periods presented. Consequently, Genco's prior-period consolidated financial statements reflect EEI as if it had been a subsidiary of Genco. Ameren and Genco consolidate EEI for financial reporting purposes.
The financial statements of Ameren, Ameren Illinois and Genco are prepared on a consolidated basis. Ameren Missouri has no subsidiaries, and therefore its financial statements were not prepared on a consolidated basis. All significant intercompany transactions have been eliminated. 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 presentation of our results. The preparation of financial statements in conformity with GAAP requires that Ameren management 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.
Regulation
Certain Ameren subsidiaries are regulated by the MoPSC, the ICC, and FERC. In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, Ameren Missouri and Ameren Illinois defer certain costs as assets pursuant to actions of rate regulators or based on the expectation they will be able to recover such costs in rates charged to customers. Ameren Missouri and Ameren Illinois also defer certain amounts as liabilities pursuant to actions of rate regulators or based on the expectation that such amounts will be returned to customers in future rates. Regulatory assets and liabilities are amortized consistent with the period of expected regulatory treatment. See Note 2 – Rate and Regulatory Matters for additional information on regulatory assets and liabilities. In addition, other costs that Ameren Missouri and Ameren Illinois expect to recover from customers are recorded as construction work in progress and property and plant, net. See Note 3 – Property and Plant, Net.
Allowance for Funds Used During Construction
In our rate-regulated operations, we capitalize the allowance for funds used during construction, or the cost of borrowed funds and the cost of equity funds (preferred and common stockholders' equity) applicable to rate-regulated construction expenditures, as is the utility industry accounting practice. Allowance for funds used during construction does not represent a current source of cash funds. This accounting practice offsets the effect on earnings of the cost of financing current construction, and it treats such financing costs in the same manner as construction charges for labor and materials.
Under accepted ratemaking practice, cash recovery of allowance for funds used during construction and other construction costs occurs when completed projects are placed in service and reflected in customer rates. The following table presents the annual allowance for funds used during construction rates that were utilized during 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren |
8% - 9% | 8% - 9% | 6% - 9% | |||||||||
|
Ameren Missouri |
8 | 8 | 6 | |||||||||
|
Ameren Illinois |
9 | 9 | 9 | |||||||||
Investments
Ameren and Ameren Missouri evaluate for impairment the investments held in Ameren Missouri's nuclear decommissioning trust fund. Losses on assets in the trust fund could result in higher funding requirements for decommissioning costs, which Ameren Missouri believes would be recovered in electric rates paid by its customers. Accordingly, Ameren and Ameren Missouri recognize a regulatory asset on their balance sheets for losses on investments held in the nuclear decommissioning trust fund. See Note 9 – Nuclear Decommissioning Trust Fund Investments for additional information.
Environmental Costs
Liabilities for environmental costs are recorded on an undiscounted basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Costs are expensed or deferred as a regulatory asset when it is expected that the costs will be recovered from customers in future rates. If environmental expenditures are related to facilities currently in use, such as pollution control equipment, the cost is capitalized and depreciated over the expected life of the asset.
Purchased Gas, Power and Fuel Rate-adjustment Mechanisms
Ameren's utility subsidiaries have various rate-adjustment mechanisms in place that provide for the recovery of purchased natural gas and electric fuel and purchased power costs. See Note 2 – Rate and Regulatory Matters for the regulatory assets and liabilities recorded at December 31, 2011, and 2010, related to the rate-adjustment mechanisms discussed below.
In Ameren Missouri's and Ameren Illinois' retail natural gas utility jurisdictions, changes in natural gas costs are generally reflected in billings to their natural gas utility customers through PGA clauses. The difference between actual natural gas costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to natural gas utility customers in a subsequent period.
In Ameren Illinois' retail electric utility jurisdictions, changes in purchased power costs are generally reflected in billings to their electric utility customers through pass-through rate-adjustment clauses. The difference between actual purchased power costs and costs billed to customers in a given period are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to electric utility customers in a subsequent period.
Ameren Missouri has a FAC that allows an adjustment of electric rates three times per year for a pass-through to customers of 95% of changes in fuel, emission allowances and purchased power costs, net of off-system revenues, including MISO costs and revenues, greater or less than the amount set in base rates, subject to MoPSC prudency review. The differences between the cost of fuel incurred and the cost of fuel recovered from Ameren Missouri's customers are deferred as regulatory assets or liabilities. The deferred amounts are either billed or refunded to Ameren Missouri's electric utility customers in a subsequent period.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and temporary investments purchased with an original maturity of three months or less.
Allowance for Doubtful Accounts Receivable
The allowance for doubtful accounts represents our best estimate of existing accounts receivable that will ultimately be uncollectible. The allowance is calculated by applying estimated loss factors to various classes of outstanding receivables, including unbilled revenue. The loss factors used to estimate uncollectible accounts are based upon both historical collections experience and management's best estimate of future collections success given the existing and anticipated future collections environment. Ameren Illinois has a rate mechanism that adjusts rates for bad debt expense above or below those being collected in rates.
Materials and Supplies
Materials and supplies are recorded at the lower of cost or market. Cost is determined using the average-cost method. Materials and supplies are capitalized as inventory when purchased and then expensed or capitalized as plant assets when installed, as appropriate. The following table presents a breakdown of materials and supplies for each of the Ameren Companies at December 31, 2011, and 2010:
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Fuel(b) |
$ | 251 | $ | 150 | $ | — | $ | 76 | ||||||||
|
Gas stored underground |
171 | 22 | 149 | — | ||||||||||||
|
Other materials and supplies |
290 | 176 | 50 | 46 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 712 | $ | 348 | $ | 199 | $ | 122 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2010: |
||||||||||||||||
|
Fuel(b) |
$ | 255 | $ | 152 | $ | — | $ | 81 | ||||||||
|
Gas stored underground |
175 | 22 | 152 | — | ||||||||||||
|
Other materials and supplies |
277 | 167 | 46 | 49 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 707 | $ | 341 | $ | 198 | $ | 130 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Consists of coal, oil, paint, propane, and tire chips. |
Property and Plant
We capitalize the cost of additions to and betterments of units of property and plant. The cost includes labor, material, applicable taxes, and overhead. An allowance for funds used during construction, as discussed specifically below, is also capitalized as a cost of our rate-regulated assets. Interest incurred during construction is capitalized as a cost of merchant generation assets. Maintenance expenditures, including nuclear refueling and maintenance outages, are expensed as incurred. When units of depreciable property are retired, the original costs, less salvage values, are charged to accumulated depreciation. Asset removal costs incurred by our merchant generation operations that do not constitute legal obligations are expensed as incurred. Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Asset Retirement Obligations below and Note 3 – Property and Plant, Net, for additional information.
Depreciation
Depreciation is provided over the estimated lives of the various classes of depreciable property by applying composite rates on a straight-line basis to the cost basis of such property. The provision for depreciation for the Ameren Companies in 2011, 2010 and 2009 ranged from 3% to 4% of the average depreciable cost.
Goodwill and Intangible Assets
Goodwill. Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. As of December 31, 2011, Ameren's and Ameren Illinois' goodwill related to Ameren's acquisition of IP in 2004 and Ameren's acquisition of CILCORP in 2003.
We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. During the fourth quarter of 2011, Ameren and Ameren Illinois used a qualitative evaluation to assess the likelihood of a goodwill impairment based on authoritative accounting guidance issued by the FASB in 2011. That evaluation led Ameren and Ameren Illinois to believe it was more likely than not that the fair value of each of their reporting units exceeded their carrying values, resulting in no impairment in 2011. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the goodwill impairment recorded in 2010.
Intangible Assets. Ameren, Ameren Missouri and Genco classify emission allowances and renewable energy credits as intangible assets. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired. See Note 17 – Goodwill, Impairment and Other Charges for additional information including the intangible asset impairments recorded in 2011 and 2010.
At December 31, 2011, Ameren's and Ameren Missouri's intangible assets included renewable energy credits obtained through wind and solar power purchase agreements. The book value of each of Ameren's and Ameren Missouri's renewable energy credits was $7 million and less than $1 million at December 31, 2011, and 2010, respectively.
In July 2011, the EPA issued the CSAPR, which created new allowances for SO2 and NOx emissions, and restricted the use of preexisting SO2 and NOx allowances to the acid rain program and NOx budget trading program, respectively. In anticipation of the CSAPR announcement, observable market prices for existing emission allowances declined materially. Consequently, during 2011, Ameren and Genco recorded a noncash, pretax impairment charge of $2 million and $1 million, respectively, which was reflected in "Goodwill, impairment and other charges" on their statements of income. Ameren Missouri recorded a $1 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability relating to the SO2 emission allowances, which had no impact to earnings. On December 30, 2011, the United States Court of Appeals for the District of Columbia issued a stay of the CSAPR. Until that court proceeding is finalized, the EPA is expected to continue to administer the CAIR and to use CAIR's allowance program for compliance. During 2010, Ameren and Genco each recognized an impairment charge of intangible assets to reduce the carrying value of SO2 emission allowances. The charge was reflected in "Goodwill, impairment and other charges" in their statements of income. See Note 15 – Commitments and Contingencies for additional information on emission allowances and the CSAPR. The book value of each of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was less than $1 million at December 31, 2011. The book value of Ameren's, Ameren Missouri's, and Genco's CAIR emission allowances was $7 million, $2 million, and $3 million, at December 31, 2010, respectively.
Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. The following table presents amortization expense based on usage of renewable energy credits and emission allowances, net of gains from sales, for Ameren, Ameren Missouri, Ameren Illinois, and Genco during the years ended December 31, 2011, 2010, and 2009. The table below does not include the intangible asset impairment charges referenced above.
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | (a | ) | $ | 6 | $ | 2 | |||||
|
Ameren Illinois |
3 | 7 | 9 | |||||||||
|
Genco(b) |
2 | 18 | 24 | |||||||||
|
Other(b)(c) |
1 | 4 | 5 | |||||||||
|
Ameren(b) |
$ | 6 | $ | 35 | $ | 40 | ||||||
| (a) | Less than $1 million. |
| (b) | Includes allowances consumed that were recorded through purchase accounting. |
| (c) | Consists of renewable energy credit expense for Marketing Company and emission allowances expense for AERG. |
Impairment of Long-lived Assets
We evaluate long-lived assets classified as held and used for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, we recognize an impairment charge equal to the carrying value of the assets in excess of estimated fair value. In the period in which we determine an asset meets the held for sale criteria, we record an impairment charge to the extent the book value exceeds its fair value less cost to sell. See Note 17 – Goodwill, Impairment and Other Charges for information about Ameren's, Ameren Missouri's and Genco's impairments.
Unamortized Debt Discount, Premium, and Expense
Discount, premium, and expense associated with long-term debt are amortized over the lives of the related issues.
Revenue
Operating Revenues
Ameren Missouri, Ameren Illinois and Genco record operating revenue for electric or natural gas service when it is delivered to customers. We accrue an estimate of electric and natural gas revenues for service rendered but unbilled at the end of each accounting period.
Trading Activities
We present the revenues and costs associated with certain energy derivative contracts designated as trading on a net basis in "Operating Revenues – Electric" and "Operating Revenues – Other."
Nuclear Fuel
Ameren Missouri's cost of nuclear fuel is capitalized and then amortized to fuel expense on a unit-of-production basis. Spent fuel disposal cost is based on net kilowatthours generated and sold, and that cost is charged to expense.
Accounting for MISO Transactions
MISO-related purchase and sale transactions are recorded by Ameren, Ameren Missouri and Ameren Illinois using settlement information provided by MISO. These purchase and sale transactions are accounted for on a net hourly position. We record net purchases in a single hour in "Operating Expenses – Purchased power" and net sales in a single hour in "Operating Revenues – Electric" in our statements of income. On occasion, prior-period transactions will be resettled outside the routine settlement process because of a change in MISO's tariff or a material interpretation thereof. In these cases, Ameren, Ameren Missouri and Ameren Illinois recognize expenses associated with resettlements once the resettlement is probable and the resettlement amount can be estimated.
Stock-based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award. Ameren recognizes as compensation expense the estimated fair value of stock-based compensation on a straight-line basis over the requisite service period. See Note 12 – Stock-based Compensation for additional information.
Excise Taxes
Excise taxes imposed on us are reflected on Ameren Missouri customer electric bills and on Ameren Missouri and Ameren Illinois customer natural gas bills. They are recorded gross in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" on the statement of income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in "Taxes accrued" on the balance sheet. The following table presents excise taxes recorded in "Operating Revenues – Electric", "Operating Revenues – Gas" and "Operating Expenses – Taxes other than income taxes" for the years ended 2011, 2010 and 2009:
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | 137 | $ | 130 | $ | 112 | ||||||
|
Ameren Illinois |
57 | 59 | 56 | |||||||||
|
Ameren |
$ | 194 | $ | 189 | $ | 168 | ||||||
Income Taxes
Ameren uses an asset and liability approach for its financial accounting and reporting of income taxes, in
accordance with authoritative accounting guidance. Deferred tax assets and liabilities are recognized for transactions that are treated differently for financial reporting and income tax return purposes. These deferred tax assets and liabilities are based on statutory tax rates.
We recognize that regulators will probably reduce future revenues for deferred tax liabilities that were initially recorded at rates in excess of the current statutory rate. Therefore, reductions in the deferred tax liability, which were recorded because of decreases in the statutory rate, have been credited to a regulatory liability. A regulatory asset has been established to recognize the probable recovery in rates of future income taxes, resulting principally from the reversal of allowance for funds used during construction. This refers to equity and temporary differences related to property and plant acquired before 1976 that were unrecognized temporary differences prior to the adoption of the authoritative accounting guidance for income taxes.
Investment tax credits used on tax returns for prior years have been deferred for book purposes; the credits are being amortized over the useful lives of the related investment. Deferred income taxes were recorded on the temporary difference represented by the deferred investment tax credits and a corresponding regulatory liability. This recognizes the expected reduction in rate revenue for future lower income taxes associated with the amortization of the investment tax credits. See Note 13 – Income Taxes.
Ameren Missouri, Ameren Illinois and Genco are parties to a tax sharing agreement with Ameren that provides for the allocation of consolidated tax liabilities. The tax sharing agreement specifies that each party be allocated an amount of tax similar to that which would be owed had the party been separately subject to tax. Any net benefit attributable to the parent is reallocated to other members. That allocation is treated as a contribution of capital to the party receiving the benefit.
Noncontrolling Interests
Ameren's noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests are classified as a component of equity separate from Ameren's equity in its consolidated balance sheet. Genco's noncontrolling interest comprised the 20% of EEI not owned by Genco. This noncontrolling interest is classified as a component of equity separate from Genco's equity in its consolidated balance sheet.
Earnings per Share
There were no material differences between Ameren's basic and diluted earnings per share amounts in 2011, 2010, and 2009. The number of stock options, restricted stock shares, and performance share units outstanding was immaterial. There were no assumed stock option conversions in 2009 and 2010, as the remaining stock options were not dilutive. All of Ameren's stock options expired in February 2010.
Asset Retirement Obligations
Authoritative accounting guidance requires us to record the estimated fair value of legal obligations associated with the retirement of tangible long-lived assets in the period in which the liabilities are incurred and to capitalize a corresponding amount as part of the book value of the related long-lived asset. In subsequent periods, we are required to make adjustments to AROs based on changes in the estimated fair values of the obligations. Corresponding increases in asset book values are depreciated over the remaining useful life of the related asset. Uncertainties as to the probability, timing, or amount of cash flows associated with AROs affect our estimates of fair value. Ameren, Ameren Missouri and Genco have recorded AROs for retirement costs associated with Ameren Missouri's Callaway energy center decommissioning costs, asbestos removal, ash ponds, and river structures. In addition, Ameren, Ameren Missouri and Ameren Illinois have recorded AROs for the disposal of certain transformers.
Asset removal costs accrued by our rate-regulated operations that do not constitute legal obligations are classified as a regulatory liability. See Note 2 – Rate and Regulatory Matters.
The following table provides a reconciliation of the beginning and ending carrying amount of AROs for the years 2011 and 2010:
| Ameren Missouri(a) | Ameren Illinois(b) | Genco | AERG | Ameren(a) | ||||||||||||||||
|
Balance at December 31, 2009 |
$ | 331 | $ | 5 | $ | 65 | $ | 33 | $ | 434 | ||||||||||
|
Liabilities incurred |
5 | (c | ) | 3 | - | 8 | ||||||||||||||
|
Liabilities settled |
(4 | ) | (c | ) | (c | ) | (c | ) | (4 | ) | ||||||||||
|
Accretion in 2010(d) |
19 | 1 | 4 | 2 | 26 | |||||||||||||||
|
Change in estimates(e) |
12 | (3 | ) | 2 | (c | ) | 11 | |||||||||||||
|
Balance at December 31, 2010 |
$ | 363 | $ | 3 | $ | 74 | $ | 35 | $ | 475 | ||||||||||
|
Liabilities incurred |
- | - | (c | ) | - | (c | ) | |||||||||||||
|
Liabilities settled |
(1 | ) | (c | ) | (2 | ) | (c | ) | (3 | ) | ||||||||||
|
Accretion in 2011(d) |
20 | (c | ) | 5 | 2 | 27 | ||||||||||||||
|
Change in estimates(f) |
(54 | ) | (c | ) | (6 | ) | (6 | ) | (66 | ) | ||||||||||
|
Balance at December 31, 2011 |
$ | 328 | $ | 3 | $ | 71 | (g) | $ | 31 | $ | 433 | (g) | ||||||||
| (a) | The nuclear decommissioning trust fund assets of $357 million and $337 million as of December 31, 2011, and 2010, respectively, were restricted for decommissioning of the Callaway energy center. |
| (b) | Balance included in "Other deferred credits and liabilities" on the balance sheet. |
| (c) | Less than $1 million. |
| (d) | Accretion expense was recorded as an increase to regulatory assets at Ameren Missouri and Ameren Illinois. |
| (e) | Ameren Missouri and Genco changed their estimates for asbestos removal. Additionally, Genco changed the estimates related to retirement costs for its coal combustion byproduct storage areas. |
| (f) | Ameren Missouri changed estimates related to its Callaway energy center decommissioning costs because of a cost study performed in 2011 and a decline in the cost escalation factor assumptions. Additionally, Ameren Missouri, Genco and AERG changed estimates related to retirement costs for asbestos removal, river structures and their coal combustion byproduct storage areas. |
| (g) | Balance included $5 million in "Other current liabilities" on the balance sheet as of December 31, 2011. |
|
|||
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Fuel(b) |
$ | 251 | $ | 150 | $ | - | $ | 76 | ||||||||
|
Gas stored underground |
171 | 22 | 149 | - | ||||||||||||
|
Other materials and supplies |
290 | 176 | 50 | 46 | ||||||||||||
| $ | 712 | $ | 348 | $ | 199 | $ | 122 | |||||||||
|
2010: |
||||||||||||||||
|
Fuel(b) |
$ | 255 | $ | 152 | $ | - | $ | 81 | ||||||||
|
Gas stored underground |
175 | 22 | 152 | - | ||||||||||||
|
Other materials and supplies |
277 | 167 | 46 | 49 | ||||||||||||
| $ | 707 | $ | 341 | $ | 198 | $ | 130 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Consists of coal, oil, paint, propane, and tire chips. |
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren |
8% - 9% | 8% - 9% | 6% - 9% | |||||||||
|
Ameren Missouri |
8 | 8 | 6 | |||||||||
|
Ameren Illinois |
9 | 9 | 9 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | (a | ) | $ | 6 | $ | 2 | |||||
|
Ameren Illinois |
3 | 7 | 9 | |||||||||
|
Genco(b) |
2 | 18 | 24 | |||||||||
|
Other(b)(c) |
1 | 4 | 5 | |||||||||
|
Ameren(b) |
$ | 6 | $ | 35 | $ | 40 | ||||||
| (a) | Less than $1 million. |
| (b) | Includes allowances consumed that were recorded through purchase accounting. |
| (c) | Consists of renewable energy credit expense for Marketing Company and emission allowances expense for AERG. |
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren Missouri |
$ | 137 | $ | 130 | $ | 112 | ||||||
|
Ameren Illinois |
57 | 59 | 56 | |||||||||
|
Ameren |
$ | 194 | $ | 189 | $ | 168 | ||||||
| Ameren Missouri(a) | Ameren Illinois(b) | Genco | AERG | Ameren(a) | ||||||||||||||||
|
Balance at December 31, 2009 |
$ | 331 | $ | 5 | $ | 65 | $ | 33 | $ | 434 | ||||||||||
|
Liabilities incurred |
5 | (c | ) | 3 | - | 8 | ||||||||||||||
|
Liabilities settled |
(4 | ) | (c | ) | (c | ) | (c | ) | (4 | ) | ||||||||||
|
Accretion in 2010(d) |
19 | 1 | 4 | 2 | 26 | |||||||||||||||
|
Change in estimates(e) |
12 | (3 | ) | 2 | (c | ) | 11 | |||||||||||||
|
Balance at December 31, 2010 |
$ | 363 | $ | 3 | $ | 74 | $ | 35 | $ | 475 | ||||||||||
|
Liabilities incurred |
- | - | (c | ) | - | (c | ) | |||||||||||||
|
Liabilities settled |
(1 | ) | (c | ) | (2 | ) | (c | ) | (3 | ) | ||||||||||
|
Accretion in 2011(d) |
20 | (c | ) | 5 | 2 | 27 | ||||||||||||||
|
Change in estimates(f) |
(54 | ) | (c | ) | (6 | ) | (6 | ) | (66 | ) | ||||||||||
|
Balance at December 31, 2011 |
$ | 328 | $ | 3 | $ | 71 | (g) | $ | 31 | $ | 433 | (g) | ||||||||
| (a) | The nuclear decommissioning trust fund assets of $357 million and $337 million as of December 31, 2011, and 2010, respectively, were restricted for decommissioning of the Callaway energy center. |
| (b) | Balance included in "Other deferred credits and liabilities" on the balance sheet. |
| (c) | Less than $1 million. |
| (d) | Accretion expense was recorded as an increase to regulatory assets at Ameren Missouri and Ameren Illinois. |
| (e) | Ameren Missouri and Genco changed their estimates for asbestos removal. Additionally, Genco changed the estimates related to retirement costs for its coal combustion byproduct storage areas. |
| (f) | Ameren Missouri changed estimates related to its Callaway energy center decommissioning costs because of a cost study performed in 2011 and a decline in the cost escalation factor assumptions. Additionally, Ameren Missouri, Genco and AERG changed estimates related to retirement costs for asbestos removal, river structures and their coal combustion byproduct storage areas. |
| (g) | Balance included $5 million in "Other current liabilities" on the balance sheet as of December 31, 2011. |
|
|||
| 2011 | 2010 | |||||||||||||||||||||||||
| Ameren(a) |
Ameren Missouri |
Ameren Illinois |
Ameren(a) |
Ameren Missouri |
Ameren Illinois |
|||||||||||||||||||||
|
Current regulatory assets: |
||||||||||||||||||||||||||
|
Under-recovered FAC(b)(c) |
$ | 83 | $ | 83 | $ | - | $ | 158 | $ | 158 | $ | - | ||||||||||||||
|
Under-recovered Illinois electric power costs(b)(d) |
4 | - | 4 | 4 | - | 4 | ||||||||||||||||||||
|
Under-recovered PGA(b)(d) |
8 | 5 | 3 | 2 | - | 2 | ||||||||||||||||||||
|
MTM derivative losses(e) |
120 | 21 | 299 | 103 | 21 | 254 | ||||||||||||||||||||
|
Total current regulatory assets |
$ | 215 | $ | 109 | $ | 306 | $ | 267 | $ | 179 | $ | 260 | ||||||||||||||
|
Noncurrent regulatory assets: |
||||||||||||||||||||||||||
|
Pension and postretirement benefit costs(f) |
$ | 878 | $ | 382 | $ | 496 | $ | 555 | $ | 251 | $ | 304 | ||||||||||||||
|
Income taxes(g) |
239 | 234 | 5 | 230 | 225 | 5 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
6 | - | 6 | 9 | 3 | 6 | ||||||||||||||||||||
|
Callaway costs(b)(i) |
48 | 48 | - | 51 | 51 | - | ||||||||||||||||||||
|
Unamortized loss on reacquired debt(b)(j) |
47 | 21 | 26 | 53 | 25 | 28 | ||||||||||||||||||||
|
Recoverable costs – contaminated facilities(k) |
102 | - | 102 | 127 | - | 127 | ||||||||||||||||||||
|
MTM derivative losses(e) |
100 | 13 | 87 | 85 | 14 | 249 | ||||||||||||||||||||
|
SO2 emission allowances sale tracker(l) |
6 | 6 | - | 12 | 12 | - | ||||||||||||||||||||
|
Storm costs(m) |
16 | 16 | - | 23 | 23 | - | ||||||||||||||||||||
|
Demand-side costs(n) |
70 | 70 | - | 39 | 39 | - | ||||||||||||||||||||
|
Reserve for workers' compensation liabilities(o) |
13 | 7 | 6 | 14 | 8 | 6 | ||||||||||||||||||||
|
Credit facilities fees(p) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Employee separation costs(q) |
6 | 3 | 3 | 8 | 6 | 2 | ||||||||||||||||||||
|
Common stock issuance costs(r) |
10 | 10 | - | 12 | 12 | - | ||||||||||||||||||||
|
Construction accounting for pollution control equipment(b)(s) |
25 | 25 | - | 4 | 4 | - | ||||||||||||||||||||
|
Other(t) |
27 | 10 | 17 | 29 | 9 | 20 | ||||||||||||||||||||
|
Total noncurrent regulatory assets |
$ | 1,603 | $ | 855 | $ | 748 | $ | 1,263 | $ | 694 | $ | 747 | ||||||||||||||
|
Current regulatory liabilities: |
||||||||||||||||||||||||||
|
Over-recovered FAC(u) |
$ | 12 | $ | 12 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
|
Over-recovered Illinois electric power costs(d) |
66 | - | 66 | 62 | - | 62 | ||||||||||||||||||||
|
Over-recovered PGA(d) |
9 | - | 9 | 12 | 1 | 11 | ||||||||||||||||||||
|
MTM derivative gains(v) |
46 | 45 | 1 | 25 | 22 | 3 | ||||||||||||||||||||
|
Total current regulatory liabilities |
$ | 133 | $ | 57 | $ | 76 | $ | 99 | $ | 23 | $ | 76 | ||||||||||||||
|
Noncurrent regulatory liabilities: |
||||||||||||||||||||||||||
|
Income taxes(w) |
$ | 48 | $ | 44 | $ | 4 | $ | 54 | $ | 48 | $ | 6 | ||||||||||||||
|
Removal costs(x) |
1,269 | 719 | 550 | 1,177 | 655 | 522 | ||||||||||||||||||||
|
Asset retirement obligation(h) |
29 | 29 | - | - | - | - | ||||||||||||||||||||
|
MTM derivative gains(v) |
82 | 4 | 78 | 20 | 13 | 7 | ||||||||||||||||||||
|
Bad debt rider(y) |
10 | - | 10 | 5 | - | 5 | ||||||||||||||||||||
|
Pension and postretirement benefit costs tracker(z) |
38 | 38 | - | 45 | 45 | - | ||||||||||||||||||||
|
Energy efficiency rider(aa) |
24 | - | 24 | 13 | - | 13 | ||||||||||||||||||||
|
Other(bb) |
2 | 2 | - | 5 | 5 | - | ||||||||||||||||||||
|
Total noncurrent regulatory liabilities |
$ | 1,502 | $ | 836 | $ | 666 | $ | 1,319 | $ | 766 | $ | 553 | ||||||||||||||
| (a) | Includes intercompany eliminations. |
| (b) | These assets earn a return. |
| (c) | Under-recovered fuel costs for periods from July 2009 through December 2011. Specific accumulation periods aggregate the under-recovered costs over four months, any related adjustments occur over the following four months, and then recovery from customers occurs over the next eight months. |
| (d) | Costs under- or over-recovered from utility customers. Amounts will be recovered from, or refunded to, customers within one year of the deferral. |
| (e) | Deferral of commodity-related derivative MTM losses, as well as the MTM losses on financial contracts entered into by Ameren Illinois with Marketing Company. |
| (f) | These costs are being amortized in proportion to the recognition of prior service costs (credits), transition obligations (assets), and actuarial losses (gains) attributable to Ameren's pension plan and postretirement benefit plans. See Note 11 – Retirement Benefits for additional information. |
| (g) | Offset to certain deferred tax liabilities for expected recovery of future income taxes when paid. See Note 13 – Income Taxes for amortization period. |
| (h) | Recoverable or refundable removal costs for AROs at our rate-regulated operations, including net realized and unrealized gains and losses related to the nuclear decommissioning trust fund investments. See Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (i) | Ameren Missouri's Callaway energy center operations and maintenance expenses, property taxes, and carrying costs incurred between the plant in-service date and the date the plant was reflected in rates. These costs are being amortized over the remaining life of the plant's current operating license (through 2024). |
| (j) | Losses related to reacquired debt. These amounts are being amortized over the lives of the related new debt issuances or the remaining lives of the old debt issuances if no new debt was issued. |
| (k) | The recoverable portion of accrued environmental site liabilities, primarily collected from electric and natural gas customers through ICC-approved cost recovery riders. The period of recovery will depend on the timing of actual expenditures. See Note 15 – Commitments and Contingencies for additional information. |
| (l) |
A regulatory tracking mechanism for gains on sales of SO2 emission allowances, net of SO2 premiums incurred under the terms of coal procurement contracts, plus any SO2 discounts received under such contracts, as approved in a MoPSC order. The MoPSC's May 2010 electric rate order discontinued any future deferrals under this tracking mechanism. The MoPSC's July 2011 rate order approved the amortization of these costs through July 2013. |
| (m) | Actual storm costs in a test year that exceed the MoPSC staff's normalized storm costs for rate purposes. The 2006 storm costs are being amortized until July 2013. The 2008 storm costs are being amortized over five years, beginning on March 1, 2009. In addition, the balance includes January 2007 ice storm costs that Ameren Missouri will recover over five years, beginning in March 2009, as approved by the January 2009 MoPSC electric rate order. The 2009 storm costs are being amortized over five years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. |
| (n) | Demand-side costs, including the costs of developing, implementing and evaluating customer energy efficiency and demand response programs. Costs incurred from May 2008 through September 2008 are being amortized over 10 years, beginning in March 2009. Costs incurred from October 2008 through December 2009 are being amortized over six years, beginning in July 2010. Costs incurred from January 2010 through February 2011 are being amortized over six years, beginning in August 2011. The amortization period for the costs incurred after February 2011 will be determined in Ameren Missouri's pending electric rate case. |
| (o) | Reserve for workers' compensation claims. |
| (p) | Ameren Missouri's costs incurred to enter into and maintain the 2009 multiyear and supplemental credit agreements, prior to their termination in 2010. These costs are being amortized over two years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. These costs are being amortized to construction work in progress, which will be subsequently depreciated when assets are placed into service. |
| (q) | Cost incurred for the voluntary and involuntary separation programs. The 2009 Ameren Missouri-related costs are being amortized over three years, beginning in July 2010, as approved by the May 2010 MoPSC electric rate order. The 2009 Ameren Illinois-related costs are being amortized over three years, beginning in May 2010, as approved by the April 2010 ICC electric and natural gas rate order. |
| (r) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to recover its portion of Ameren's September 2009 common stock issuance costs. These costs are being amortized over five years, beginning in July 2010. |
| (s) | The MoPSC's May 2010 electric rate order allowed Ameren Missouri to continue recording an allowance for funds used during construction for pollution control equipment at its Sioux energy center until the cost of that equipment is placed in customer rates. The amortization of these costs will be over the expected life of the Sioux energy center. |
| (t) | Includes costs related to Ameren Illinois' delivery service rate cases that resulted in orders in 2008 and 2010 as well as the natural gas delivery service rate case that resulted in an order in January 2012. The natural gas costs associated with the 2008 rate case will be amortized until September 2013. The 2010 rate case costs are being amortized over a two-year period, beginning in May 2010. The 2012 natural gas rate case costs will be amortized over a two year period, beginning in January 2012. The Ameren Illinois total also includes a portion of the unamortized debt fair value adjustment recorded upon Ameren's acquisition of IP. This portion is being amortized over the remaining life of the related debt, beginning with the expiration of the electric rate freeze in Illinois on January 1, 2007. The Ameren Illinois total also includes Ameren Illinois Merger integration and optimization costs. These costs will be amortized over four years, beginning in January 2012. At Ameren Missouri, the balance includes cost associated with the retirement of renewable energy credits and solar rebates to fulfill Ameren Missouri's renewable energy portfolio requirement. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. The Ameren Missouri balance also includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2011 through December 2011 were more than the amount allowed in base rates. The amortization period for these costs will be determined in Ameren Missouri's pending electric rate case. |
| (u) | Over-recovered fuel costs from March 2009 through September 2009 as ordered by the MoPSC in April 2011. Customer refunds will conclude in May 2012. |
| (v) | Deferral of commodity-related derivative MTM gains. |
| (w) | Unamortized portion of investment tax credit and federal excess deferred taxes. See Note 13 – Income Taxes for amortization period. |
| (x) | Estimated funds collected for the eventual dismantling and removal of plant from service, net of salvage value, upon retirement related to our rate-regulated operations. See discussion in Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations. |
| (y) | A regulatory tracking mechanism for the difference between the level of bad debt expense incurred by Ameren Illinois under GAAP and the level of such costs included in electric and natural gas rates. The over-recovery relating to 2010 is being refunded to customers from June 2011 through May 2012. The over-recovery relating to 2011 will be refunded to customers from June 2012 through May 2013. |
| (z) |
A 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 built into electric rates. The 2008 costs are being amortized through February 2014. The 2009 costs are being amortized through June 2015. The 2010 costs assigned to the natural gas and electric businesses are being amortized through February 2016 and July 2016, respectively. The 2011 costs will be determined in Ameren Missouri's pending electric rate case. |
| (aa) | A regulatory tracking mechanism that allows Ameren Illinois to recover its electric and natural gas costs associated with developing, implementing and evaluating customer energy efficiency and demand response programs. This over-recovery will be refunded to customers over the following 12 months after the plan year. |
| (bb) | Balance includes a regulatory tracking mechanism for the difference between the level of vegetation management and infrastructure inspection costs incurred by Ameren Missouri under GAAP and the level of such costs included in electric rates. Ameren Missouri's vegetation management and infrastructure inspection costs from July 2010 through February 2011 were less than the amount allowed in base rates. The over-recovery incurred during that time period is being amortized over three years beginning in August 2011. The balance also includes the deferral of gains on emission allowance vintage swaps Ameren Missouri entered into during 2005. The balance of this gain was immaterial at the end of 2011. |
|
|||
| Ameren(a)(b) | Ameren Missouri(b) |
Ameren Illinois |
Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,256 | $ | 14,986 | $ | 4,600 | $ | 3,370 | ||||||||
|
Gas |
1,746 | 385 | 1,361 | - | ||||||||||||
|
Other |
466 | 113 | 91 | 39 | ||||||||||||
| 26,468 | 15,484 | 6,052 | 3,409 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,429 | 6,276 | 1,364 | 1,377 | ||||||||||||
| 17,039 | 9,208 | 4,688 | 2,032 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
255 | 255 | - | - | ||||||||||||
|
Other |
833 | 495 | 82 | 199 | ||||||||||||
|
Property and plant, net |
$ | 18,127 | $ | 9,958 | $ | 4,770 | $ | 2,231 | ||||||||
|
2010: |
||||||||||||||||
|
Property and plant, at original cost: |
||||||||||||||||
|
Electric |
$ | 24,069 | $ | 14,745 | $ | 4,436 | $ | 3,572 | ||||||||
|
Gas |
1,661 | 374 | 1,286 | - | ||||||||||||
|
Other |
424 | 91 | 61 | 48 | ||||||||||||
| 26,154 | 15,210 | 5,783 | 3,620 | |||||||||||||
|
Less: Accumulated depreciation and amortization |
9,194 | 6,052 | 1,250 | 1,518 | ||||||||||||
| 16,960 | 9,158 | 4,533 | 2,102 | |||||||||||||
|
Construction work in progress: |
||||||||||||||||
|
Nuclear fuel in process |
259 | 259 | - | - | ||||||||||||
|
Other |
634 | 358 | 43 | 146 | ||||||||||||
|
Property and plant, net |
$ | 17,853 | $ | 9,775 | $ | 4,576 | $ | 2,248 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries as well as intercompany eliminations. |
| (b) | Amounts in Ameren and Ameren Missouri include two electric generation CTs under two separate capital lease agreements. The gross asset value of those agreements was $229 million and $228 million at December 31, 2011 and 2010, respectively. The total accumulated depreciation associated with the two CTs was $52 million and $46 million at December 31, 2011 and 2010, respectively. |
| Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
2011 |
$ | 107 | $ | 73 | $ | 18 | $ | 13 | ||||||||
|
2010 |
79 | 53 | 15 | 8 | ||||||||||||
|
2009 |
143 | 86 | 29 | 23 | ||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
|
|||
|
2010 Missouri Credit Agreement ($800 million) |
Ameren (Parent) | Ameren Missouri | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | 105 | $ | — | $ | 105 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
2.30 | % | — | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a ) |
$ | 340 | $ | — | $ | 340 | ||||||
|
Peak interest rate during 2011 |
4.30 | % | — | 4.30 | % | |||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 195 | $ | — | $ | 195 | ||||||
|
Outstanding credit facility borrowings at period end |
340 | — | 340 | |||||||||
|
Weighted-average interest rate during 2010( b) |
2.31 | % | — | 2.31 | % | |||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 380 | $ | — | $ | 380 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | — | 2.31 | % | |||||||
| (a) | The timing of peak credit facility borrowings varies by company and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
The following table summarizes the borrowing activity and relevant interest rates under the 2010 Genco Credit Agreement described below for the year ended December 31, 2011:
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2011: |
||||||||||||
|
Average daily borrowings outstanding during 2011 |
$ | — | $ | 41 | $ | 41 | ||||||
|
Outstanding credit facility borrowings at period end |
— | — | — | |||||||||
|
Weighted-average interest rate during 2011 |
— | 2.30 | % | 2.30 | % | |||||||
|
Peak credit facility borrowings during 2011(a) |
$ | — | $ | 100 | $ | 100 | ||||||
|
Peak interest rate during 2011 |
— | 2.31 | % | 2.31 | % | |||||||
|
2010 Genco Credit Agreement ($500 million) |
Ameren (Parent) | Genco | Total | |||||||||
|
2010: |
||||||||||||
|
Average daily borrowings outstanding during 2010(b ) |
$ | 36 | $ | 54 | $ | 90 | ||||||
|
Outstanding credit facility borrowings at period end |
— | 100 | 100 | |||||||||
|
Weighted-average interest rate during 2010(b ) |
2.30 | % | 2.31 | % | 2.31 | % | ||||||
|
Peak credit facility borrowings during 2010(a)(b) |
$ | 385 | $ | 100 | $ | 385 | ||||||
|
Peak interest rate during 2010(b ) |
2.31 | % | 2.31 | % | 2.31 | % | ||||||
| (a) | The timing of peak credit facility borrowings varies by company, and therefore the amounts presented by company might not equal the total peak credit facility borrowings for the period. The simultaneous peak credit facility borrowings by the Ameren Companies under all credit facilities during 2011 and 2010 were $460 million and $925 million, respectively. |
| (b) | Calculated from the September 10, 2010, inception date through December 31, 2010. |
| 2010 Missouri Credit Agreement |
2010 Genco Credit Agreement |
2010 Illinois Credit Agreement |
||||||||||
|
Ameren |
$ | 500 | $ | 500 | $ | 300 | ||||||
|
Ameren Missouri |
500 | (a | ) | (a | ) | |||||||
|
Ameren Illinois |
(a | ) | (a | ) | 800 | |||||||
|
Genco |
(a | ) | 500 | (a | ) | |||||||
| (a) | Not applicable. |
|
|||
|
Ameren (Parent)(a) |
Ameren Missouri(a) |
Ameren Illinois(a)(b) |
Genco(a) |
Ameren Consolidated |
||||||||||||||||
|
2012 |
$ | - | $ | 178 | $ | 1 | $ | - | $ | 179 | ||||||||||
|
2013 |
- | 205 | 150 | - | 355 | |||||||||||||||
|
2014 |
425 | 109 | 51 | - | 585 | |||||||||||||||
|
2015 |
- | 120 | - | - | 120 | |||||||||||||||
|
2016 |
- | 266 | 129 | - | 395 | |||||||||||||||
|
Thereafter |
- | 3,077 | 1,330 | 825 | 5,232 | |||||||||||||||
|
Total |
$ | 425 | $ | 3,955 | $ | 1,661 | $ | 825 | $ | 6,866 | ||||||||||
| (a) | Excludes unamortized discount and premium of $1 million, $5 million, $8 million and $1 million at Ameren (Parent), Ameren Missouri, Ameren Illinois and Genco, respectively. |
| (b) | Excludes $5 million related to Ameren Illinois' long-term debt fair-market value adjustments, which are being amortized to interest expense over the remaining life of the debt. |
| Redemption Price (per share) | 2011 | 2010 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Without par value and stated value of $100 per share, 25 million shares authorized |
||||||||||||||||
|
$3.50 Series |
130,000 shares |
$ | 110.00 | $ | 13 | $ | 13 | |||||||||
|
$3.70 Series |
40,000 shares |
104.75 | 4 | 4 | ||||||||||||
|
$4.00 Series |
150,000 shares |
105.625 | 15 | 15 | ||||||||||||
|
$4.30 Series |
40,000 shares |
105.00 | 4 | 4 | ||||||||||||
|
$4.50 Series |
213,595 shares |
110.00(a) | 21 | 21 | ||||||||||||
|
$4.56 Series |
200,000 shares |
102.47 | 20 | 20 | ||||||||||||
|
$4.75 Series |
20,000 shares |
102.176 | 2 | 2 | ||||||||||||
|
$5.50 Series A |
14,000 shares |
110.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 80 | $ | 80 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
With par value of $100 per share, 2 million shares authorized |
||||||||||||||||
|
4.00% Series |
144,275 shares |
$ | 101.00 | $ | 14 | $ | 14 | |||||||||
|
4.08% Series |
45,224 shares |
103.00 | 5 | 5 | ||||||||||||
|
4.20% Series |
23,655 shares |
104.00 | 2 | 2 | ||||||||||||
|
4.25% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
4.26% Series |
16,621 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.42% Series |
16,190 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.70% Series |
18,429 shares |
103.00 | 2 | 2 | ||||||||||||
|
4.90% Series |
73,825 shares |
102.00 | 7 | 7 | ||||||||||||
|
4.92% Series |
49,289 shares |
103.50 | 5 | 5 | ||||||||||||
|
5.16% Series |
50,000 shares |
102.00 | 5 | 5 | ||||||||||||
|
6.625% Series |
124,273.75 shares |
100.00 | 12 | 12 | ||||||||||||
|
7.75% Series |
4,542 shares |
100.00 | 1 | 1 | ||||||||||||
|
Total |
$ | 62 | $ | 62 | ||||||||||||
|
Total Ameren |
$ | 142 | $ | 142 | ||||||||||||
| (a) | In the event of voluntary liquidation, $105.50. |
|
|||
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren:(a) |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 4 | $ | 5 | $ | 2 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
34 | 52 | 36 | |||||||||
|
Other |
3 | 5 | 5 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 69 | $ | 90 | $ | 71 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 8 | $ | 19 | $ | 12 | ||||||
|
Other |
15 | 14 | 11 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 23 | $ | 33 | $ | 23 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Missouri: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 2 | $ | 3 | $ | 1 | ||||||
|
Interest income on industrial development revenue bonds |
28 | 28 | 28 | |||||||||
|
Allowance for equity funds used during construction |
30 | 50 | 33 | |||||||||
|
Other |
1 | 2 | 1 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 61 | $ | 83 | $ | 63 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 3 | $ | 8 | $ | 3 | ||||||
|
Other |
7 | 5 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 10 | $ | 13 | $ | 7 | ||||||
|
|
|
|
|
|
|
|||||||
|
Ameren Illinois: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Interest and dividend income |
$ | 1 | $ | 1 | $ | 6 | ||||||
|
Allowance for equity funds used during construction |
4 | 2 | 2 | |||||||||
|
Other |
2 | 4 | 4 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 7 | $ | 7 | $ | 12 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Donations |
$ | 1 | $ | 5 | $ | 4 | ||||||
|
Other |
5 | 8 | 6 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | 6 | $ | 13 | $ | 10 | ||||||
|
|
|
|
|
|
|
|||||||
|
Genco: |
||||||||||||
|
Miscellaneous income: |
||||||||||||
|
Other |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous income |
$ | 1 | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Miscellaneous expense: |
||||||||||||
|
Other |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total miscellaneous expense |
$ | — | $ | 1 | $ | 1 | ||||||
|
|
|
|
|
|
|
|||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
|
|||
| Quantity (in millions, except as indicated) | ||||||||||||||||||||||||||||||||
| Commodity |
NPNS Contracts(a) |
Cash Flow Hedges(b) |
Other Derivatives(c) |
Derivatives That Qualify for Regulatory Deferral(d) |
||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
|
Coal (in tons) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
116 | 46 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Genco |
24 | 21 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
7 | 6 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
147 | 73 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | ||||||||||||||||||
|
Fuel oils (in gallons)(g) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
(e | ) | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 53 | 80 | ||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 27 | 43 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 9 | 12 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
(e | ) | (e | ) | (e | ) | (e | ) | 36 | 55 | 53 | 80 | ||||||||||||||||||||
|
Natural gas (in mmbtu) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
8 | 13 | (e | ) | (e | ) | 9 | 2 | 19 | 21 | ||||||||||||||||||||||
|
Ameren Illinois |
42 | 85 | (e | ) | (e | ) | (e | ) | (e | ) | 174 | 173 | ||||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | 7 | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
(e | ) | (e | ) | (e | ) | (e | ) | 1 | 16 | (e | ) | (e | ) | ||||||||||||||||||
|
Ameren |
50 | 98 | (e | ) | (e | ) | 17 | 21 | 193 | 194 | ||||||||||||||||||||||
|
Power (in megawatthours) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri |
1 | 2 | (e | ) | (e | ) | 1 | 1 | 6 | 5 | ||||||||||||||||||||||
|
Ameren Illinois |
11 | (e | ) | (e | ) | (e | ) | (e | ) | (e | ) | 24 | 26 | |||||||||||||||||||
|
Genco |
(e | ) | (e | ) | (e | ) | (e | ) | - | 3 | (e | ) | (e | ) | ||||||||||||||||||
|
Other(f) |
61 | 61 | 17 | 2 | 30 | 57 | (9 | ) | (13 | ) | ||||||||||||||||||||||
|
Ameren |
73 | 63 | 17 | 2 | 31 | 61 | 21 | 18 | ||||||||||||||||||||||||
|
Uranium (pounds in thousands) |
||||||||||||||||||||||||||||||||
|
Ameren Missouri & Ameren |
5,553 | 5,810 | (e | ) | (e | ) | (e | ) | (e | ) | 148 | 185 | ||||||||||||||||||||
| (a) | Contracts through December 2017, March 2015, September 2035, and October 2024 for coal, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (b) | Contracts through December 2014 for power as of December 31, 2011. |
| (c) | Contracts through October 2014, December 2012, and December 2015 for fuel oils, natural gas, and power, respectively, as of December 31, 2011. |
| (d) | Contracts through October 2014, October 2016, May 2032, and December 2013 for fuel oils, natural gas, power, and uranium, respectively, as of December 31, 2011. |
| (e) | Not applicable. |
| (f) | Includes AERG contracts for coal and fuel oils, Marketing Company contracts for natural gas and power, and intercompany eliminations for power. |
| (g) | Fuel oils consist of heating and crude oil. |
| Balance Sheet Location | Ameren(a) | Ameren Missouri |
Ameren Illinois |
Genco | ||||||||||||||
|
2011: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 8 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 16 | - | - | - | ||||||||||||||
| Total assets | $ | 24 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
Other deferred credits and liabilities | $ | 1 | $ | - | $ | - | $ | - | |||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 29 | $ | (b | ) | $ | (b | ) | $ | 10 | |||||||
| Other current assets | - | 17 | - | - | ||||||||||||||
| Other assets | 8 | 6 | - | 1 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 6 | (b | ) | (b | ) | 2 | |||||||||||
| Other current assets | - | 2 | 1 | - | ||||||||||||||
| Other assets | - | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 72 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 30 | - | - | ||||||||||||||
| Other assets | 99 | - | 77 | - | ||||||||||||||
| Total assets | $ | 214 | $ | 55 | $ | 79 | $ | 13 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 2 | $ | (b | ) | $ | - | $ | 1 | ||||||||
| Other current liabilities | - | 1 | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 106 | (b | ) | 90 | 2 | ||||||||||||
| Other current liabilities | - | 13 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 92 | 13 | 79 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 53 | (b | ) | 9 | - | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 200 | - | ||||||||||||
| Other current liabilities | - | 9 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 26 | - | 8 | - | ||||||||||||||
|
Uranium |
Other deferred credits and liabilities | 1 | 1 | - | - | |||||||||||||
| Total liabilities | $ | 280 | $ | 37 | $ | 386 | $ | 3 | ||||||||||
|
2010: |
||||||||||||||||||
|
Derivative assets designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative assets | $ | 3 | $ | (b | ) | $ | (b | ) | $ | - | |||||||
| Other assets | 2 | - | - | - | ||||||||||||||
| Total assets | $ | 5 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative liabilities designated as hedging instruments |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Power |
MTM derivative liabilities | $ | 1 | $ | (b | ) | $ | - | $ | - | ||||||||
| Total liabilities | $ | 1 | $ | - | $ | - | $ | - | ||||||||||
|
Derivative assets not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative assets | $ | 42 | $ | (b | ) | $ | (b | ) | $ | 14 | |||||||
| Other current assets | - | 24 | - | - | ||||||||||||||
| Other assets | 22 | 13 | - | 7 | ||||||||||||||
|
Natural gas |
MTM derivative assets | 4 | (b | ) | (b | ) | 1 | |||||||||||
| Other current assets | - | 1 | 1 | - | ||||||||||||||
| Other assets | 1 | - | 1 | - | ||||||||||||||
|
Power |
MTM derivative assets | 78 | (b | ) | (b | ) | 11 | |||||||||||
| Other current assets | - | 8 | 2 | - | ||||||||||||||
| Other assets | 20 | - | 6 | - | ||||||||||||||
|
Uranium |
MTM derivative assets | 2 | (b | ) | (b | ) | - | |||||||||||
| Other current assets | - | 2 | - | - | ||||||||||||||
| Total assets | $ | 169 | $ | 48 | $ | 10 | $ | 33 | ||||||||||
|
Derivative liabilities not designated as hedging instruments(c) |
||||||||||||||||||
|
Commodity contracts: |
||||||||||||||||||
|
Fuel oils |
MTM derivative liabilities | $ | 12 | $ | (b | ) | $ | - | $ | 4 | ||||||||
| Other current liabilities | - | 7 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 1 | - | - | - | ||||||||||||||
|
Natural gas |
MTM derivative liabilities | 87 | (b | ) | 73 | 2 | ||||||||||||
| Other current liabilities | - | 11 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 84 | 13 | 70 | - | ||||||||||||||
|
Power |
MTM derivative liabilities | 61 | (b | ) | 9 | 3 | ||||||||||||
| MTM derivative liabilities - affiliates | (b | ) | (b | ) | 172 | 5 | ||||||||||||
| Other current liabilities | - | 6 | - | - | ||||||||||||||
| Other deferred credits and liabilities | 7 | - | 179 | - | ||||||||||||||
| Total liabilities | $ | 252 | $ | 37 | $ | 503 | $ | 14 | ||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Balance sheet line item not applicable to registrant. |
| (c) | Includes derivatives subject to regulatory deferral. |
| Ameren | Ameren Missouri |
Ameren Illinois |
Genco | Other(a) | ||||||||||||||||
|
2011: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 19 | $ | - | $ | - | $ | - | $ | 19 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(8 | ) | - | - | (8 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(191 | ) | (24 | ) | (167 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
81 | 21 | (140 | ) | - | 200 | ||||||||||||||
|
Uranium derivative contracts(h) |
(1 | ) | (1 | ) | - | - | - | |||||||||||||
|
2010: |
||||||||||||||||||||
|
Cumulative gains (losses) deferred in accumulated OCI: |
||||||||||||||||||||
|
Power derivative contracts(b) |
$ | 8 | $ | - | $ | - | $ | - | $ | 8 | ||||||||||
|
Interest rate derivative contracts(c)(d) |
(9 | ) | - | - | (9 | ) | - | |||||||||||||
|
Cumulative gains (losses) deferred in regulatory liabilities or assets: |
||||||||||||||||||||
|
Fuel oils derivative contracts(e) |
19 | 19 | - | - | - | |||||||||||||||
|
Natural gas derivative contracts(f) |
(165 | ) | (24 | ) | (141 | ) | - | - | ||||||||||||
|
Power derivative contracts(g) |
1 | 3 | (352 | ) | - | 350 | ||||||||||||||
|
Uranium derivative contracts(h) |
2 | 2 | - | - | - | |||||||||||||||
| (a) | Includes amounts for Marketing Company and intercompany eliminations. |
| (b) | Represents net gains associated with power derivative contracts at Ameren. These contracts are a partial hedge of electricity price exposure through December 2014 as of December 31, 2011. Current gains of $5 million and $8 million were recorded at Ameren as of December 31, 2011, and December 31, 2010, respectively. |
| (c) | Includes net gains associated with interest rate swaps at Genco that were a partial hedge of the interest rate on debt issued in June 2002. The swaps cover the first 10 years of debt that has a 30-year maturity, and the gain in OCI is amortized over a 10-year period that began in June 2002. The carrying value at December 31, 2011, and December 31, 2010 was less than $1 million and less than $1 million, respectively. The balance of the gain will be amortized by June 2012. |
| (d) | Includes net losses associated with interest rate swaps at Genco. The swaps were executed during the fourth quarter of 2007 as a partial hedge of interest rate risks associated with Genco's April 2008 debt issuance. The loss on the interest rate swaps is being amortized over a 10-year period that began in April 2008. The carrying value at December 31, 2011, and December 31, 2010, was a loss of $9 million and a loss of $10 million, respectively. Over the next 12 months, $1.4 million of the loss will be amortized. |
| (e) | Represents net gains on fuel oils derivative contracts at Ameren Missouri. These contracts are a partial hedge of Ameren Missouri's transportation costs for coal through October 2014 as of December 31, 2011. Current gains deferred as regulatory liabilities include $16 million and $16 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current losses deferred as regulatory assets include $1 million and $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $13 million and $13 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. Current losses deferred as regulatory assets include $6 million and $6 million at Ameren and Ameren Missouri as of December 31, 2010, respectively. |
| (f) | Represents net losses associated with natural gas derivative contracts. These contracts are a partial hedge of natural gas requirements through October 2016 at Ameren, Ameren Missouri, and Ameren Illinois in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $1 million and $1 million at Ameren and Ameren Illinois, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $101 million, $11 million, and $90 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $2 million, $1 million, and $1 million at Ameren, Ameren Missouri, and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $84 million, $11 million, and $73 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (g) | Represents net losses associated with power derivative contracts. These contracts are a partial hedge of power price requirements through May 2032 at Ameren and Ameren Illinois and through December 2015 at Ameren Missouri, in each case as of December 31, 2011. Current gains deferred as regulatory liabilities include $29 million and $29 million at Ameren and Ameren Missouri, respectively, as of December 31, 2011. Current losses deferred as regulatory assets include $17 million, $8 million, and $209 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2011. Current gains deferred as regulatory liabilities include $8 million, $6 million, and $2 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. Current losses deferred as regulatory assets include $13 million, $3 million, and $181 million at Ameren, Ameren Missouri and Ameren Illinois, respectively, as of December 31, 2010. |
| (h) | Represents net gains(losses) on uranium derivative contracts at Ameren Missouri. These contracts are a partial hedge of our uranium requirements through December 2013 as of December 31, 2011. Current losses deferred as regulatory assets include less than $1 million and less than $1 million at Ameren and Ameren Missouri as of December 31, 2011, respectively. Current gains deferred as regulatory liabilities include $2 million at Ameren and $2 million at Ameren Missouri as of December 31, 2010. |
| Affiliates(a) |
Coal Producers |
Commodity Marketing Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 4 | $ | 26 | $ | 4 | $ | - | $ | - | $ | 71 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | 1 | - | - | - | 85 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 2 | 6 | - | 3 | - | 13 | |||||||||||||||||||||||||||
|
Other(b) |
275 | 1 | 3 | 10 | 51 | 194 | - | 87 | 621 | |||||||||||||||||||||||||||
|
Ameren |
$ | 276 | $ | 37 | $ | 89 | $ | 16 | $ | 84 | $ | 198 | $ | 3 | $ | 87 | $ | 790 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 21 | $ | 1 | $ | 2 | $ | 5 | $ | 11 | $ | 1 | $ | - | $ | 41 | ||||||||||||||||||
|
AIC |
- | - | 3 | - | 1 | - | - | - | 4 | |||||||||||||||||||||||||||
|
Genco |
- | 6 | 2 | 1 | 1 | - | 6 | - | 16 | |||||||||||||||||||||||||||
|
Other(b) |
410 | 3 | 10 | 19 | 65 | 539 | 3 | 72 | 1,121 | |||||||||||||||||||||||||||
|
Ameren |
$ | 410 | $ | 30 | $ | 16 | $ | 22 | $ | 72 | $ | 550 | $ | 10 | $ | 72 | $ | 1,182 | ||||||||||||||||||
| (a) | Primarily composed of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
| Affiliates(a) |
Coal Producers |
Commodity Companies |
Electric Utilities |
Financial Companies |
Municipalities/ Cooperatives |
Oil and Gas Companies |
Retail Companies |
Total | ||||||||||||||||||||||||||||
|
2011: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | 1 | $ | 35 | $ | 1 | $ | 3 | $ | 22 | $ | 4 | $ | - | $ | - | $ | 66 | ||||||||||||||||||
|
AIC |
- | - | 84 | - | - | - | - | - | 84 | |||||||||||||||||||||||||||
|
Genco |
- | - | - | 1 | 1 | - | 2 | - | 4 | |||||||||||||||||||||||||||
|
Other(b) |
273 | - | 3 | 5 | 42 | 187 | - | 86 | 596 | |||||||||||||||||||||||||||
|
Ameren |
$ | 274 | $ | 35 | $ | 88 | $ | 9 | $ | 65 | $ | 191 | $ | 2 | $ | 86 | $ | 750 | ||||||||||||||||||
|
2010: |
||||||||||||||||||||||||||||||||||||
|
AMO |
$ | - | $ | 8 | $ | - | $ | 1 | $ | 2 | $ | 10 | $ | - | $ | - | $ | 21 | ||||||||||||||||||
|
AIC |
- | - | 2 | - | - | - | - | - | 2 | |||||||||||||||||||||||||||
|
Genco |
- | 1 | 1 | 1 | 1 | - | 5 | - | 9 | |||||||||||||||||||||||||||
|
Other(b) |
404 | 1 | 8 | 7 | 56 | 513 | 2 | 71 | 1,062 | |||||||||||||||||||||||||||
|
Ameren |
$ | 404 | $ | 10 | $ | 11 | $ | 9 | $ | 59 | $ | 523 | $ | 7 | $ | 71 | $ | 1,094 | ||||||||||||||||||
| (a) | Primarily comprised of Marketing Company's exposure to Ameren Illinois related to financial contracts. The exposure is not eliminated at the consolidated Ameren level for purposes of this disclosure, as it is calculated without regard to the offsetting affiliate counterparty's liability position. See Note 14 – Related Party Transactions for additional information on these financial contracts. |
| (b) | Includes amounts for Marketing Company, AERG, and AFS. |
|
Aggregate Fair Value of Derivative Liabilities(a) |
Cash Collateral Posted |
Potential Aggregate Amount of Additional Collateral Required(b) |
||||||||||
|
2011: |
||||||||||||
|
Ameren Missouri |
$ | 102 | $ | 8 | $ | 86 | ||||||
|
Ameren Illinois |
220 | 96 | 125 | |||||||||
|
Genco |
55 | 1 | 58 | |||||||||
|
Other(c) |
79 | 11 | 63 | |||||||||
|
Ameren |
$ | 456 | $ | 116 | $ | 332 | ||||||
|
2010: |
||||||||||||
|
Ameren Missouri |
$ | 105 | $ | 7 | $ | 93 | ||||||
|
Ameren Illinois |
233 | 109 | 111 | |||||||||
|
Genco |
31 | - | 28 | |||||||||
|
Other(c) |
62 | 18 | 42 | |||||||||
|
Ameren |
$ | 431 | $ | 134 | $ | 274 | ||||||
| (a) | Prior to consideration of master trading and netting agreements and including NPNS contract exposures. |
| (b) | As collateral requirements with certain counterparties are based on master trading and netting agreements, the aggregate amount of additional collateral required to be posted is determined after consideration of the effects of such agreements. |
| (c) | Includes amounts for Marketing Company and Ameren (parent). |
|
Gain (Loss) Recognized in OCI(a) |
Location of (Gain) Loss Reclassified from Accumulated OCI into Income(b) |
(Gain) Loss Reclassified from Accumulated OCI into Income(b) |
Location of Gain (Loss) Recognized in Income(c) |
Gain (Loss) in Income(c) |
||||||||||||
|
2011: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | 6 | Operating Revenues - Electric | $ | 5 | Operating Revenues - Electric | $ | (10 | ) | |||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
2010: |
||||||||||||||||
|
Ameren:(d) |
||||||||||||||||
|
Power |
$ | (2 | ) | Operating Revenues - Electric | $ | (14 | ) | Operating Revenues - Electric | $ | (3 | ) | |||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
|
Genco: |
||||||||||||||||
|
Interest rate(e) |
- | Interest Charges | (f | ) | Interest Charges | - | ||||||||||
| (a) | Effective portion of gain (loss). |
| (b) | Effective portion of (gain) loss on settlements. |
| (c) | Ineffective portion of gain (loss) and amount excluded from effectiveness testing. |
| (d) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (e) | Represents interest rate swaps settled in prior periods. The cumulative gain and loss on the interest rate swaps is being amortized into income over a 10-year period. |
| (f) | Less than $1 million. |
|
Location of Gain (Loss) Recognized in Income |
Gain (Loss) Recognized in Income |
|||||||||||
| 2011 | 2010 | |||||||||||
|
Ameren(a) |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 9 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues - Electric | (2 | ) | 9 | ||||||||
| Total | $ | (1 | ) | $ | 18 | |||||||
|
Ameren Missouri |
Natural gas (generation) | Operating Expenses - Fuel | $ | (1 | ) | $ | 1 | |||||
|
Genco |
Fuel oils | Operating Expenses - Fuel | $ | (1 | ) | $ | 7 | |||||
| Natural gas (generation) | Operating Expenses - Fuel | 2 | - | |||||||||
| Power | Operating Revenues | (3 | ) | 1 | ||||||||
| Total | $ | (2 | ) | $ | 8 | |||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
|
Gain (Loss) Recognized In Regulatory Liabilities or Regulatory Assets |
||||||||||
| 2011 | 2010 | |||||||||
|
Ameren(a) |
Fuel oils | $ | - | $ | 14 | |||||
| Natural gas | (26 | ) | (91 | ) | ||||||
| Power | 80 | 12 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 51 | $ | (61 | ) | |||||
|
Ameren |
Fuel oils | $ | - | $ | 14 | |||||
|
Missouri |
Natural gas | - | (11 | ) | ||||||
| Power | 18 | 4 | ||||||||
| Uranium | (3 | ) | 4 | |||||||
| Total | $ | 15 | $ | 11 | ||||||
|
Ameren |
Natural gas | $ | (26 | ) | $ | (80 | ) | |||
|
Illinois |
Power | 212 | 70 | |||||||
| Total | $ | 186 | $ | (10 | ) | |||||
| (a) | Includes amounts for intercompany eliminations. |
|
|||
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 33 | $ | - | $ | 4 | $ | 37 | ||||||||||
|
Natural gas |
4 | - | 2 | 6 | ||||||||||||||
|
Power |
- | 2 | 193 | 195 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
20 | - | 3 | 23 | |||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | 1 | 29 | 30 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
3 | - | - | 3 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
234 | - | - | 234 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 44 | - | 44 | ||||||||||||||
|
Municipal bonds |
- | 1 | - | 1 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 65 | - | 65 | ||||||||||||||
|
Asset-backed securities |
- | 10 | - | 10 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 77 | 77 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
10 | - | 1 | 11 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | 2 | $ | - | $ | - | $ | 2 | ||||||||||
|
Natural gas |
22 | - | 176 | 198 | ||||||||||||||
|
Power |
- | 2 | 78 | 80 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
1 | - | - | 1 | |||||||||||||
|
Natural gas |
12 | - | 14 | 26 | ||||||||||||||
|
Power |
- | 1 | 8 | 9 | ||||||||||||||
|
Uranium |
- | - | 1 | 1 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 162 | 169 | |||||||||||||
|
Power |
- | - | 217 | 217 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
1 | - | - | 1 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | 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, 2010:
|
Quoted Prices in Active Markets for or Liabilities (Level 1) |
Significant Other (Level 2) |
Significant Unobservable (Level 3) |
Total | |||||||||||||||
|
Assets: |
||||||||||||||||||
|
Ameren(a) |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 64 | $ | 64 | ||||||||||
|
Natural gas |
3 | - | 2 | 5 | ||||||||||||||
|
Power |
- | 17 | 86 | 103 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 37 | 37 | |||||||||||||
|
Natural gas |
- | - | 1 | 1 | ||||||||||||||
|
Power |
- | 3 | 5 | 8 | ||||||||||||||
|
Uranium |
- | - | 2 | 2 | ||||||||||||||
| Nuclear Decommissioning Trust Fund(c): | ||||||||||||||||||
|
Cash and cash equivalents |
1 | - | - | 1 | ||||||||||||||
|
Equity securities: |
||||||||||||||||||
|
U.S. large capitalization |
228 | - | - | 228 | ||||||||||||||
|
Debt securities: |
||||||||||||||||||
|
Corporate bonds |
- | 40 | - | 40 | ||||||||||||||
|
Municipal bonds |
- | 2 | - | 2 | ||||||||||||||
|
U.S. treasury and agency securities |
- | 50 | - | 50 | ||||||||||||||
|
Asset-backed securities |
- | 14 | - | 14 | ||||||||||||||
|
Other |
- | 1 | - | 1 | ||||||||||||||
|
Ameren |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
- | - | 2 | 2 | |||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
|
Genco |
Derivative assets - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 21 | 21 | ||||||||||||||
|
Natural gas |
1 | - | - | 1 | ||||||||||||||
|
Power |
- | - | 11 | 11 | ||||||||||||||
|
Liabilities: |
||||||||||||||||||
|
Ameren(a) |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
$ | - | $ | - | $ | 13 | $ | 13 | ||||||||||
|
Natural gas |
21 | - | 150 | 171 | ||||||||||||||
|
Power |
- | 19 | 50 | 69 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Missouri |
Fuel oils |
- | - | 7 | 7 | |||||||||||||
|
Natural gas |
9 | - | 15 | 24 | ||||||||||||||
|
Power |
- | 3 | 3 | 6 | ||||||||||||||
|
Ameren |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Illinois |
Natural gas |
7 | - | 136 | 143 | |||||||||||||
|
Power |
- | - | 360 | 360 | ||||||||||||||
|
Genco |
Derivative liabilities - commodity contracts(b): | |||||||||||||||||
|
Fuel oils |
- | - | 4 | 4 | ||||||||||||||
|
Natural gas |
2 | - | - | 2 | ||||||||||||||
|
Power |
- | - | 8 | 8 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | The derivative asset and liability balances are presented net of counterparty credit considerations. |
| (c) | 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 as of December 31, 2011:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 12 | 4 | 16 | ||||||||||||||
|
Included in regulatory assets/liabilities |
19 | (a | ) | (a | ) | (a | ) | 19 | ||||||||||||
|
Total realized and unrealized gains (losses) |
19 | (a | ) | 12 | 4 | 35 | ||||||||||||||
|
Purchases |
4 | (a | ) | 1 | - | 5 | ||||||||||||||
|
Sales |
(1 | ) | (a | ) | - | - | (1 | ) | ||||||||||||
|
Settlements |
(30 | ) | (a | ) | (20 | ) | (6 | ) | (56 | ) | ||||||||||
|
Transfers into Level 3 |
- | (a | ) | - | - | - | ||||||||||||||
|
Transfers out of Level 3 |
(19 | ) | (a | ) | (9 | ) | (2 | ) | (30 | ) | ||||||||||
|
Ending balance at December 31, 2011 |
$ | 3 | $ | (a | ) | $ | 1 | $ | - | $ | 4 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31,2011 |
$ | (11 | ) | $ | (a | ) | $ | (5 | ) | $ | (2 | ) | $ | (18 | ) | |||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Realized and unrealized gains (losses): |
$ | |||||||||||||||||||
|
Included in regulatory assets/liabilities |
(8 | ) | (107 | ) | (a | ) | (a | ) | (115 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(8 | ) | (107 | ) | (a | ) | (a | ) | $ | (115 | ) | |||||||||
|
Purchases |
- | 1 | - | - | 1 | |||||||||||||||
|
Sales |
- | (1 | ) | - | - | (1 | ) | |||||||||||||
|
Settlements |
8 | 81 | - | - | 89 | |||||||||||||||
|
Ending balance at December 31, 2011 |
$ | (14 | ) | $ | (160 | ) | $ | - | $ | - | $ | (174 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | (6 | ) | $ | (72 | ) | $ | - | $ | - | $ | (78 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | (1 | ) | (12 | ) | (13 | ) | ||||||||||||
|
Included in OCI |
- | - | - | 24 | 24 | |||||||||||||||
|
Included in regulatory assets/liabilities |
17 | 7 | (a | ) | 51 | $ | 75 | |||||||||||||
|
Total realized and unrealized gains (losses) |
17 | 7 | (1 | ) | 63 | $ | 86 | |||||||||||||
|
Purchases |
30 | - | - | 35 | 65 | |||||||||||||||
|
Sales |
(1 | ) | - | - | (21 | ) | $ | (22 | ) | |||||||||||
|
Settlements |
(27 | ) | 205 | (2 | ) | (225 | ) | (49 | ) | |||||||||||
|
Transfers into Level 3 |
(1 | ) | - | - | 1 | - | ||||||||||||||
|
Transfers out of Level 3 |
1 | - | - | (2 | ) | (1 | ) | |||||||||||||
|
Ending balance at December 31, 2011 |
$ | 21 | $ | (140 | ) | $ | - | $ | 234 | $ | 115 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | 1 | $ | 13 | $ | (1 | ) | $ | 60 | $ | 73 | |||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2011 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(3 | ) | (a | ) | (a | ) | (a | ) | (3 | ) | ||||||||||
|
Purchases |
(1 | ) | (a | ) | (a | ) | (a | ) | (1 | ) | ||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2011 |
$ | (1 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (1 | ) | |||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2011 |
$ | - | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | - | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on fuel oils and natural gas derivative commodity contracts are recorded in "Operating Expenses – Fuel", while net gains and losses on power derivative commodity contracts are recorded in "Operating Revenues – Electric." |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
The following table summarizes the changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy as of December 31, 2010:
| Net derivative commodity contracts | ||||||||||||||||||||
| Ameren Missouri |
Ameren Illinois |
Genco | Other(c) | Ameren | ||||||||||||||||
|
Fuel oils: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | 32 | $ | (a | ) | $ | 21 | $ | 7 | $ | 60 | |||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | (a | ) | 3 | (2 | ) | 1 | |||||||||||||
|
Included in regulatory assets/liabilities |
8 | (a | ) | (a | ) | (a | ) | 8 | ||||||||||||
|
Total realized and unrealized gains (losses) |
8 | (a | ) | 3 | (2 | ) | 9 | |||||||||||||
|
Purchases |
18 | (a | ) | 11 | 4 | 33 | ||||||||||||||
|
Settlements |
(28 | ) | (a | ) | (18 | ) | (5 | ) | (51 | ) | ||||||||||
|
Ending balance at December 31, 2010 |
$ | 30 | $ | (a | ) | $ | 17 | $ | 4 | $ | 51 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 7 | $ | (a | ) | $ | 4 | $ | - | $ | 11 | |||||||||
|
Natural gas: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (6 | ) | $ | (61 | ) | $ | - | $ | - | $ | (67 | ) | |||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
- | - | - | - | - | |||||||||||||||
|
Included in regulatory assets/liabilities |
(20 | ) | (152 | ) | (a | ) | (a | ) | (172 | ) | ||||||||||
|
Total realized and unrealized gains (losses) |
(20 | ) | (152 | ) | - | - | (172 | ) | ||||||||||||
|
Purchases |
- | (5 | ) | - | - | $ | (5 | ) | ||||||||||||
|
Settlements |
12 | 84 | - | - | 96 | |||||||||||||||
|
Ending balance at December 31, 2010 |
$ | (14 | ) | $ | (134 | ) | $ | - | $ | - | $ | (148 | ) | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | (11 | ) | $ | (82 | ) | $ | - | $ | 1 | $ | (92 | ) | |||||||
|
Power: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (1 | ) | $ | (422 | ) | $ | 1 | $ | 460 | $ | 38 | ||||||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in earnings(b) |
$ | - | $ | - | $ | 2 | $ | 32 | $ | 34 | ||||||||||
|
Included in OCI |
- | - | - | 8 | 8 | |||||||||||||||
|
Included in regulatory assets/liabilities |
27 | (107 | ) | (a | ) | 95 | 15 | |||||||||||||
|
Total realized and unrealized gains (losses) |
27 | (107 | ) | 2 | 135 | 57 | ||||||||||||||
|
Purchases |
4 | 19 | (10 | ) | 26 | 39 | ||||||||||||||
|
Sales |
2 | - | 12 | (13 | ) | 1 | ||||||||||||||
|
Settlements |
(24 | ) | 158 | (2 | ) | (197 | ) | (65 | ) | |||||||||||
|
Transfers into Level 3 |
- | - | - | (2 | ) | (2 | ) | |||||||||||||
|
Transfers out of Level 3 |
(6 | ) | - | - | (26 | ) | (32 | ) | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (352 | ) | $ | 3 | $ | 383 | $ | 36 | |||||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (89 | ) | $ | - | $ | 81 | $ | (7 | ) | ||||||||
|
Uranium: |
||||||||||||||||||||
|
Beginning balance at January 1, 2010 |
$ | (2 | ) | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | (2 | ) | |||||
|
Realized and unrealized gains (losses): |
||||||||||||||||||||
|
Included in regulatory assets/liabilities |
3 | (a | ) | (a | ) | (a | ) | 3 | ||||||||||||
|
Total realized and unrealized gains (losses) |
3 | (a | ) | (a | ) | (a | ) | $ | 3 | |||||||||||
|
Settlements |
1 | (a | ) | (a | ) | (a | ) | 1 | ||||||||||||
|
Ending balance at December 31, 2010 |
$ | 2 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 2 | |||||||
|
Change in unrealized gains (losses) related to assets/liabilities held at December 31, 2010 |
$ | 1 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 1 | |||||||
| (a) | Not applicable. |
| (b) | Net gains and losses on heating oil and natural gas derivative commodity contracts are recorded in Operating Expenses – Fuel, while net gains and losses on power derivative commodity contracts are recorded in Operating Revenues – Electric. |
| (c) | Includes amounts for Merchant Generation nonregistrant subsidiaries and intercompany eliminations. |
| 2011 | 2010 | |||||||
|
Ameren - derivative commodity contracts:(a) |
||||||||
|
Transfers into Level 3 / Transfers out of Level 1 |
$ | - | $ | (1 | ) | |||
|
Transfers out of Level 3 / Transfers into Level 1 |
(30 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
- | (1 | ) | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
(1 | ) | (32 | ) | ||||
|
Net fair value of Level 3 transfers |
$ | (31 | ) | $ | (34 | ) | ||
|
Ameren Missouri – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
(19 | ) | - | |||||
|
Transfers into Level 3 / Transfers out of Level 2 |
(1 | ) | - | |||||
|
Transfers out of Level 3 / Transfers into Level 2 |
$ | 1 | $ | (6 | ) | |||
|
Net fair value of Level 3 transfers |
$ | (19 | ) | $ | (6 | ) | ||
|
Genco – derivative commodity contracts: |
||||||||
|
Transfers out of Level 3 / Transfers into Level 1 |
$ | (9 | ) | $ | - | |||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| 2011 | 2010 | |||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
|
Ameren:(a)(b) |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 6,856 | $ | 7,800 | $ | 7,008 | $ | 7,661 | ||||||||
|
Preferred stock |
142 | 92 | 142 | 102 | ||||||||||||
|
Ameren Missouri: |
||||||||||||||||
|
Long-term debt and capital lease obligations (including current portion) |
$ | 3,950 | $ | 4,541 | $ | 3,954 | $ | 4,281 | ||||||||
|
Preferred stock |
80 | 55 | 80 | 62 | ||||||||||||
|
Ameren Illinois: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 1,658 | $ | 1,943 | $ | 1,807 | $ | 2,067 | ||||||||
|
Preferred stock |
62 | 37 | 62 | 40 | ||||||||||||
|
Genco: |
||||||||||||||||
|
Long-term debt (including current portion) |
$ | 824 | $ | 839 | $ | 824 | $ | 826 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Preferred stock along with the 20% noncontrolling interest of EEI is recorded in Noncontrolling Interests on the balance sheet. |
|
|||
|
Security Type |
Cost | Gross Unrealized Gain |
Gross Unrealized Loss |
Fair Value | ||||||||||||
|
2011: |
||||||||||||||||
|
Debt securities |
$ | 114 | $ | 7 | $ | (a | ) | $ | 121 | |||||||
|
Equity securities |
145 | 101 | 12 | 234 | ||||||||||||
|
Cash |
3 | — | — | 3 | ||||||||||||
|
Other(b) |
(1 | ) | — | — | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 261 | $ | 108 | $ | 12 | $ | 357 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
2010: |
||||||||||||||||
|
Debt securities |
$ | 104 | $ | 4 | $ | 1 | $ | 107 | ||||||||
|
Equity securities |
141 | 95 | 8 | 228 | ||||||||||||
|
Cash |
1 | — | — | 1 | ||||||||||||
|
Other(b) |
1 | — | — | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 247 | $ | 99 | $ | 9 | $ | 337 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Amount less than $1 million. |
| (b) | Represents payables relating to pending security purchases, net of receivables related to pending securities sales and interest receivables. |
| Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
Fair Value | Gross Unrealized Losses |
|||||||||||||||||||
|
Debt securities |
$ | 7 | $ | (a | ) | $ | (a | ) | $ | (a | ) | $ | 7 | $ | (a | ) | ||||||||
|
Equity securities |
18 | 4 | 8 | 8 | 26 | 12 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Total |
$ | 25 | $ | 4 | $ | 8 | $ | 8 | $ | 33 | $ | 12 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (a) | Amount less than $1 million. |
| 2011 | 2010 | 2009 | ||||||||||
|
Proceeds from sales |
$ | 199 | $ | 256 | $ | 380 | ||||||
|
Gross realized gains |
5 | 5 | 5 | |||||||||
|
Gross realized losses |
4 | 4 | 10 | |||||||||
| Cost | Fair Value | |||||||
|
Less than 5 years |
$ | 57 | $ | 59 | ||||
|
5 years to 10 years |
34 | 36 | ||||||
|
Due after 10 years |
23 | 26 | ||||||
|
|
|
|
|
|||||
|
Total |
$ | 114 | $ | 121 | ||||
|
|
|
|
|
|||||
|
|||
|
Ameren(a) |
$ | 1,350 | ||
|
Ameren Missouri |
494 | |||
|
Ameren Illinois |
496 | |||
|
Genco |
141 |
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| 2011 | 2010 | |||||||||||||||
| Pension Benefits(a) |
Postretirement Benefits(a) |
Pension Benefits(a) |
Postretirement Benefits(a) |
|||||||||||||
|
Accumulated benefit obligation at end of year |
$ | 3,645 | $ | (b | ) | $ | 3,246 | $ | (b | ) | ||||||
|
Change in benefit obligation: |
||||||||||||||||
|
Net benefit obligation at beginning of year |
$ | 3,451 | $ | 1,120 | $ | 3,255 | $ | 1,143 | ||||||||
|
Service cost |
75 | 22 | 68 | 20 | ||||||||||||
|
Interest cost |
180 | 58 | 185 | 62 | ||||||||||||
|
Plan amendments(c)(d) |
(16 | ) | - | (40 | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Actuarial (gain) loss |
348 | 96 | 165 | (53 | ) | |||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Net benefit obligation at end of year |
3,865 | 1,257 | 3,451 | 1,120 | ||||||||||||
|
Change in plan assets: |
||||||||||||||||
|
Fair value of plan assets at beginning of year |
2,722 | 797 | 2,495 | 732 | ||||||||||||
|
Actual return on plan assets |
224 | 9 | 328 | 81 | ||||||||||||
|
Employer contributions |
103 | 129 | 81 | 36 | ||||||||||||
|
Federal subsidy on benefits paid |
(b | ) | 6 | (b | ) | 5 | ||||||||||
|
Early retiree reinsurance program receipt |
(b | ) | 3 | (b | ) | - | ||||||||||
|
Participant contributions |
- | 18 | - | 17 | ||||||||||||
|
Benefits paid |
(173 | ) | (66 | ) | (182 | ) | (74 | ) | ||||||||
|
Fair value of plan assets at end of year |
2,876 | 896 | 2,722 | 797 | ||||||||||||
|
Funded status – deficiency |
989 | 361 | 729 | 323 | ||||||||||||
|
Accrued benefit cost at December 31 |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in the balance sheet consist of: |
||||||||||||||||
|
Current liability |
$ | 3 | $ | 3 | $ | 4 | $ | 3 | ||||||||
|
Noncurrent liability |
986 | 358 | 725 | 320 | ||||||||||||
|
Total |
$ | 989 | $ | 361 | $ | 729 | $ | 323 | ||||||||
|
Amounts recognized in regulatory assets consist of: |
||||||||||||||||
|
Net actuarial loss |
$ | 734 | $ | 177 | $ | 507 | $ | 86 | ||||||||
|
Prior service cost (credit) |
(7 | ) | (28 | ) | (11 | ) | (32 | ) | ||||||||
|
Transition obligation |
- | 2 | - | 5 | ||||||||||||
|
Amounts (pretax) recognized in accumulated OCI consist of: |
||||||||||||||||
|
Net actuarial loss |
79 | 43 | 24 | 13 | ||||||||||||
|
Prior service cost (credit) |
(15 | ) | (7 | ) | 4 | (10 | ) | |||||||||
|
Total |
$ | 791 | $ | 187 | $ | 524 | $ | 62 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| (b) | Not applicable. |
| (c) | In 2011, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 430 labor union-represented employees from a traditional, final pay formula to a cash balance formula. |
| (d) | In 2010, Ameren's pension plan was amended to adjust the calculation of the future benefit obligation of approximately 700 management employees from a traditional, final pay formula to a cash balance formula. |
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Discount rate at measurement date |
4.50 | % | 5.25 | % | 4.50 | % | 5.25 | % | ||||||||
|
Increase in future compensation |
3.50 | 3.50 | 3.50 | 3.50 | ||||||||||||
|
Medical cost trend rate (initial) |
- | - | 5.50 | 6.00 | ||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | 5.00 | 5.00 | ||||||||||||
|
Years to ultimate rate |
- | - | 10 year | 2 years | ||||||||||||
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 103 | $ | 81 | $ | 99 | $ | 129 | $ | 36 | $ | 49 | ||||||||||||
|
AMO |
43 | 36 | 42 | 9 | 11 | 13 | ||||||||||||||||||
|
AIC |
28 | 23 | 25 | 118 | 20 | 28 | ||||||||||||||||||
|
Genco |
12 | 4 | 10 | - | - | - | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| Percentage of Plan Assets at December 31, | ||||||||||||
|
Asset Category |
Target Allocation 2012 |
2011 | 2010 | |||||||||
|
Pension Plan: |
||||||||||||
|
Cash and cash equivalents |
0 - 5 | % | 2 | % | 1 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
29 - 39 | 33 | 31 | |||||||||
|
U.S. small and mid-capitalization |
2 - 12 | 7 | 11 | |||||||||
|
International and emerging markets |
9 - 19 | 11 | 15 | |||||||||
|
Total equity |
50 - 60 | 51 | 57 | |||||||||
|
Debt securities |
35 - 45 | 42 | 37 | |||||||||
|
Real estate |
0 - 9 | 4 | 4 | |||||||||
|
Private equity |
0 - 4 | 1 | 1 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
|
Postretirement Plans: |
||||||||||||
|
Cash and cash equivalents |
0 - 10 | % | 4 | % | 4 | % | ||||||
|
Equity securities: |
||||||||||||
|
U.S. large capitalization |
33 - 43 | 38 | 39 | |||||||||
|
U.S. small and mid-capitalization |
3 - 13 | 8 | 10 | |||||||||
|
International |
10 - 20 | 13 | 14 | |||||||||
|
Total equity |
55 - 65 | 59 | 63 | |||||||||
|
Debt securities |
30 - 40 | 37 | 33 | |||||||||
|
Total |
100 | % | 100 | % | ||||||||
|
Beginning Balance at January 1, |
Actual Return on Plan Assets Related to Assets Still Held at the Reporting Date |
Actual Return on Plan Assets Related to Assets Sold During the Period |
Purchases, Sales, and Settlements, net |
Net of Level 3 |
Ending Balance at December 31, |
|||||||||||||||||||
|
2011: |
||||||||||||||||||||||||
|
Real estate |
$ | 98 | $ | 10 | $ | - | $ | - | $ | - | $ | 108 | ||||||||||||
|
Private equity |
28 | (10 | ) | 11 | (6 | ) | - | 23 | ||||||||||||||||
|
2010: |
||||||||||||||||||||||||
|
Other debt securities |
$ | 1 | $ | - | $ | - | $ | (1 | ) | $ | - | $ | - | |||||||||||
|
Real estate |
90 | 7 | - | 1 | - | 98 | ||||||||||||||||||
|
Private equity |
33 | (5 | ) | 7 | (7 | ) | - | 28 | ||||||||||||||||
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
Regulatory assets: |
||||||||
|
Transition obligation |
$ | - | $ | 2 | ||||
|
Prior service cost (credit) |
(1 | ) | (4 | ) | ||||
|
Net actuarial loss |
87 | 23 | ||||||
|
Accumulated OCI: |
||||||||
|
Transition obligation |
- | - | ||||||
|
Prior service cost (credit) |
(1 | ) | (1 | ) | ||||
|
Net actuarial loss |
6 | 3 | ||||||
|
Total |
$ | 91 | $ | 23 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| Pension Benefits | Postretirement Benefits | |||||||
| Ameren(a) | Ameren(a) | |||||||
|
2011: |
||||||||
|
Service cost |
$ | 75 | $ | 22 | ||||
|
Interest cost |
180 | 58 | ||||||
|
Expected return on plan assets |
(216 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
(1 | ) | (8 | ) | ||||
|
Actuarial loss |
42 | 5 | ||||||
|
Net periodic benefit cost |
$ | 80 | $ | 25 | ||||
|
2010: |
||||||||
|
Service cost |
$ | 68 | $ | 20 | ||||
|
Interest cost |
185 | 62 | ||||||
|
Expected return on plan assets |
(212 | ) | (56 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
6 | (8 | ) | |||||
|
Actuarial loss |
18 | 1 | ||||||
|
Net periodic benefit cost |
$ | 65 | $ | 21 | ||||
|
2009: |
||||||||
|
Service cost |
$ | 68 | $ | 19 | ||||
|
Interest cost |
186 | 66 | ||||||
|
Expected return on plan assets |
(206 | ) | (54 | ) | ||||
|
Amortization of: |
||||||||
|
Transition obligation |
- | 2 | ||||||
|
Prior service cost |
9 | (8 | ) | |||||
|
Actuarial loss |
24 | 9 | ||||||
|
Net periodic benefit cost |
$ | 81 | $ | 34 | ||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| Pension Costs | Postretirement Costs | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Ameren(a) |
$ | 80 | $ | 65 | $ | 81 | $ | 25 | $ | 21 | $ | 34 | ||||||||||||
|
Ameren Missouri |
51 | 42 | 50 | 11 | 11 | 15 | ||||||||||||||||||
|
Ameren Illinois |
16 | 10 | 14 | 11 | 7 | 16 | ||||||||||||||||||
|
Genco |
8 | 9 | 11 | 3 | 2 | 3 | ||||||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||
| Paid from Qualified Trust |
Paid from Company Funds |
Paid from Qualified Trust |
Paid from Company Funds |
Federal Subsidy |
||||||||||||||||
|
2012 |
223 | 3 | 68 | 3 | 5 | |||||||||||||||
|
2013 |
225 | 3 | 71 | 3 | 5 | |||||||||||||||
|
2014 |
230 | 3 | 74 | 3 | 5 | |||||||||||||||
|
2015 |
231 | 3 | 77 | 3 | 6 | |||||||||||||||
|
2016 |
232 | 3 | 80 | 3 | 6 | |||||||||||||||
|
2017 - 2021 |
1,167 | 12 | 443 | 14 | 32 | |||||||||||||||
| Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
|
Discount rate at measurement date |
5.25 | % | 5.75 | % | 5.75 | % | 5.25 | % | 5.75 | % | 5.75 | % | ||||||||||||
|
Expected return on plan assets |
8.00 | 8.00 | 8.00 | 7.75 | 8.00 | 8.00 | ||||||||||||||||||
|
Increase in future compensation |
3.50 | 3.50 | 4.00 | 3.50 | 3.50 | 4.00 | ||||||||||||||||||
|
Medical cost trend rate (initial) |
- | - | - | 6.00 | 6.50 | 7.00 | ||||||||||||||||||
|
Medical cost trend rate (ultimate) |
- | - | - | 5.00 | 5.00 | 5.00 | ||||||||||||||||||
|
Years to ultimate rate |
- | - | - | 2 years | 3 years | 4 years | ||||||||||||||||||
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| Service Cost and Interest Cost |
Projected Benefit Obligation |
Service Cost and Interest Cost |
Postretirement Benefit Obligation |
|||||||||||||
|
0.25% decrease in discount rate |
$ | (2 | ) | $ | 110 | $ | - | $ | 38 | |||||||
|
0.25% increase in salary scale |
2 | 14 | - | - | ||||||||||||
|
1.00% increase in annual medical trend |
- | - | 3 | 42 | ||||||||||||
|
1.00% decrease in annual medical trend |
- | - | (3 | ) | (41 | ) | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 28 | $ | 27 | $ | 24 | ||||||
|
Ameren Missouri |
16 | 16 | 14 | |||||||||
|
Ameren Illinois |
8 | 8 | 7 | |||||||||
|
Genco |
2 | 1 | 2 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries. |
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 31 | $ | - | $ | 31 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
72 | 922 | - | 994 | ||||||||||||
|
U.S. small and mid-capitalization |
202 | 11 | - | 213 | ||||||||||||
|
International and emerging markets |
115 | 213 | - | 328 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 720 | - | 720 | ||||||||||||
|
Municipal bonds |
- | 176 | - | 176 | ||||||||||||
|
U.S. treasury and agency securities |
- | 230 | - | 230 | ||||||||||||
|
Other |
- | 121 | - | 121 | ||||||||||||
|
Real estate |
- | - | 108 | 108 | ||||||||||||
|
Private equity |
- | - | 23 | 23 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 389 | $ | 2,424 | $ | 131 | $ | 2,944 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(91 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
23 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,876 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 20 | $ | - | $ | 20 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
70 | 812 | - | 882 | ||||||||||||
|
U.S. small and mid-capitalization |
299 | 10 | - | 309 | ||||||||||||
|
International and emerging markets |
129 | 284 | - | 413 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 646 | - | 646 | ||||||||||||
|
Municipal bonds |
- | 129 | - | 129 | ||||||||||||
|
U.S. treasury and agency securities |
- | 154 | - | 154 | ||||||||||||
|
Other |
- | 100 | - | 100 | ||||||||||||
|
Real estate |
- | - | 98 | 98 | ||||||||||||
|
Private equity |
- | - | 28 | 28 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 498 | $ | 2,155 | $ | 126 | $ | 2,779 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(85 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
28 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,722 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 31 | $ | - | $ | 31 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
72 | 922 | - | 994 | ||||||||||||
|
U.S. small and mid-capitalization |
202 | 11 | - | 213 | ||||||||||||
|
International and emerging markets |
115 | 213 | - | 328 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 720 | - | 720 | ||||||||||||
|
Municipal bonds |
- | 176 | - | 176 | ||||||||||||
|
U.S. treasury and agency securities |
- | 230 | - | 230 | ||||||||||||
|
Other |
- | 121 | - | 121 | ||||||||||||
|
Real estate |
- | - | 108 | 108 | ||||||||||||
|
Private equity |
- | - | 23 | 23 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 389 | $ | 2,424 | $ | 131 | $ | 2,944 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(91 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
23 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,876 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 20 | $ | - | $ | 20 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
70 | 812 | - | 882 | ||||||||||||
|
U.S. small and mid-capitalization |
299 | 10 | - | 309 | ||||||||||||
|
International and emerging markets |
129 | 284 | - | 413 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 646 | - | 646 | ||||||||||||
|
Municipal bonds |
- | 129 | - | 129 | ||||||||||||
|
U.S. treasury and agency securities |
- | 154 | - | 154 | ||||||||||||
|
Other |
- | 100 | - | 100 | ||||||||||||
|
Real estate |
- | - | 98 | 98 | ||||||||||||
|
Private equity |
- | - | 28 | 28 | ||||||||||||
|
Derivative assets |
1 | - | - | 1 | ||||||||||||
|
Derivative liabilities |
(1 | ) | - | - | (1 | ) | ||||||||||
|
Total |
$ | 498 | $ | 2,155 | $ | 126 | $ | 2,779 | ||||||||
|
Less: Medical benefit assets at December 31(a) |
(85 | ) | ||||||||||||||
|
Plus: Net receivables at December 31(b) |
28 | |||||||||||||||
|
Fair value of pension plans assets at year end |
$ | 2,722 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code (401(h) accounts) to fund a portion of the postretirement obligation. |
| (b) | Receivables related to pending security sales, offset by payables related to pending security purchases. |
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | 1 | $ | 66 | $ | - | $ | 67 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
235 | 78 | - | 313 | ||||||||||||
|
U.S. small and mid-capitalization |
57 | - | - | 57 | ||||||||||||
|
International |
44 | 56 | - | 100 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 61 | - | 61 | ||||||||||||
|
Municipal bonds |
- | 86 | - | 86 | ||||||||||||
|
U.S. treasury and agency securities |
- | 82 | - | 82 | ||||||||||||
|
Asset-backed securities |
- | 23 | - | 23 | ||||||||||||
|
Other |
- | 49 | - | 49 | ||||||||||||
|
Total |
$ | 337 | $ | 501 | $ | - | $ | 838 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
91 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(33 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 896 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2010:
|
Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 35 | $ | - | $ | 35 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
215 | 72 | - | 287 | ||||||||||||
|
U.S. small and mid-capitalization |
66 | - | - | 66 | ||||||||||||
|
International |
43 | 51 | - | 94 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
- | 59 | - | 59 | ||||||||||||
|
Municipal bonds |
- | 58 | - | 58 | ||||||||||||
|
U.S. treasury and agency securities |
- | 59 | - | 59 | ||||||||||||
|
Asset-backed securities |
- | 31 | - | 31 | ||||||||||||
|
Other |
- | 29 | - | 29 | ||||||||||||
|
Total |
$ | 324 | $ | 394 | $ | - | $ | 718 | ||||||||
|
Plus: Medical benefit assets at December 31(a) |
85 | |||||||||||||||
|
Less: Net payables at December 31(b) |
(6 | ) | ||||||||||||||
|
Fair value of postretirement benefit plans assets at year end |
$ | 797 | ||||||||||||||
| (a) | Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
| Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | 1 | $ | 66 | $ | — | $ | 67 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
235 | 78 | — | 313 | ||||||||||||
|
U.S. small and mid-capitalization |
57 | — | — | 57 | ||||||||||||
|
International |
44 | 56 | — | 100 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
— | 61 | — | 61 | ||||||||||||
|
Municipal bonds |
— | 86 | — | 86 | ||||||||||||
|
U.S. treasury and agency securities |
— | 82 | — | 82 | ||||||||||||
|
Asset-backed securities |
— | 23 | — | 23 | ||||||||||||
|
Other |
— | 49 | — | 49 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 337 | $ | 501 | $ | — | $ | 838 | (a)(b) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Excludes $91 million of medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Excludes $33 million of payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2010:
| Quoted Prices in Active Markets for Identified Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
Total | |||||||||||||
|
Cash and cash equivalents |
$ | — | $ | 35 | $ | — | $ | 35 | ||||||||
|
Equity securities: |
||||||||||||||||
|
U.S. large capitalization |
215 | 72 | — | 287 | ||||||||||||
|
U.S. small and mid-capitalization |
66 | — | — | 66 | ||||||||||||
|
International |
43 | 51 | — | 94 | ||||||||||||
|
Debt securities: |
||||||||||||||||
|
Corporate bonds |
— | 59 | — | 59 | ||||||||||||
|
Municipal bonds |
— | 58 | — | 58 | ||||||||||||
|
U.S. treasury and agency securities |
— | 59 | — | 59 | ||||||||||||
|
Asset-backed securities |
— | 31 | — | 31 | ||||||||||||
|
Other |
— | 29 | — | 29 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total |
$ | 324 | $ | 394 | $ | — | $ | 718 | (a)(b) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Excludes $85 million of medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above. |
| (b) | Excludes $6 million of payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales. |
|
|||
| Performance Share Units(a) | Restricted Shares(b) | |||||||||||||||
| Share Units | Weighted-average Fair Value per Unit |
Shares | Weighted-average Fair Value per Share |
|||||||||||||
|
Nonvested at January 1, 2011 |
1,142,768 | $ | 23.96 | 83,154 | $ | 49.87 | ||||||||||
|
Granted(c ) |
731,962 | 31.41 | — | — | ||||||||||||
|
Dividends |
— | — | 1,005 | 30.04 | ||||||||||||
|
Unearned or forfeited(d ) |
(565,538) | 16.28 | (560 | ) | 50.45 | |||||||||||
|
Earned and vested(e ) |
(152,361) | 29.47 | (83,599 | ) | 49.89 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Nonvested at December 31, 2011 |
1,156,831 | $ | 31.70 | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Granted under the 2006 Plan. |
| (b) | Granted under the 1998 Plan. |
| (c) | Includes performance share units (share units) granted to certain executive and nonexecutive officers and other eligible employees in January 2011 under the 2006 Plan. |
| (d) | Includes share units granted in 2009 that were not earned based on performance provisions of the award grants. |
| (e) |
Includes share units granted in 2009 that vested as of December 31, 2011, that were earned pursuant to the provisions of the award grants. Also includes share units that vested due to 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. |
|
|||
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Production activities deduction |
- | - | - | 3 | ||||||||||||
|
Depreciation differences |
(1 | ) | (2 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
|
State tax |
4 | 3 | 5 | 6 | ||||||||||||
|
Tax credits |
- | - | - | (1 | ) | |||||||||||
|
Other permanent items(a) |
- | 1 | - | - | ||||||||||||
|
Effective income tax rate |
37 | % | 36 | % | 39 | % | 42 | % | ||||||||
|
2010: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Non-deductible impairment of goodwill |
32 | - | - | (144 | ) | |||||||||||
|
Production activities deduction |
- | - | - | 7 | ||||||||||||
|
Depreciation differences |
(4 | ) | (3 | ) | - | - | ||||||||||
|
Amortization of investment tax credit |
(2 | ) | (1 | ) | (1 | ) | 4 | |||||||||
|
State tax |
8 | 3 | 5 | (14 | ) | |||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | (6 | ) | ||||||||||
|
Tax credits |
(3 | ) | - | - | 13 | |||||||||||
|
Change in federal tax law(b) |
3 | 1 | - | (19 | ) | |||||||||||
|
Other permanent items(c) |
- | - | - | (1 | ) | |||||||||||
|
Effective income tax rate |
68 | % | 35 | % | 39 | % | (125 | )% | ||||||||
|
2009: |
||||||||||||||||
|
Statutory federal income tax rate: |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
|
Increases (decreases) from: |
||||||||||||||||
|
Depreciation differences |
(1 | ) | (3 | ) | (1 | ) | - | |||||||||
|
Amortization of investment tax credit |
(1 | ) | (1 | ) | (1 | ) | - | |||||||||
|
State tax |
5 | 3 | 5 | 4 | ||||||||||||
|
Reserve for uncertain tax positions |
(1 | ) | - | - | - | |||||||||||
|
Other permanent items(d) |
(1 | ) | - | (1 | ) | (1 | ) | |||||||||
|
Tax credits |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Effective income tax rate |
35 | % | 33 | % | 37 | % | 38 | % | ||||||||
| (a) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses related to lobbying and stock issuance expenses for Ameren Missouri. |
| (b) | Relates to change in taxation of prescription drug benefits to retiree participants from the enactment in 2010 of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Bill of 2010. |
| (c) | Permanent items are treated differently for book and tax purposes and primarily include nondeductible expenses for Genco. |
| (d) | Permanent items are treated differently for book and tax purposes and primarily include Internal Revenue Code Section 199 production activity deductions for Ameren and Genco, company-owned life insurance for Ameren and Ameren Illinois, employee stock ownership plan dividends for Ameren, and nondeductible expenses for Ameren Illinois. |
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (27 | ) | $ | 3 | $ | (24 | ) | $ | (21 | ) | |||||
|
State |
(5 | ) | 2 | (4 | ) | (7 | ) | |||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
273 | 129 | 123 | 43 | ||||||||||||
|
State |
76 | 31 | 34 | 18 | ||||||||||||
|
Deferred investment tax credits, amortization |
(7 | ) | (4 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 310 | $ | 161 | $ | 127 | $ | 32 | ||||||||
|
2010: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | 13 | $ | (14 | ) | $ | (20 | ) | $ | (5 | ) | |||||
|
State |
10 | (15 | ) | (5 | ) | 6 | ||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
274 | 206 | 132 | 22 | ||||||||||||
|
State |
36 | 27 | 32 | (2 | ) | |||||||||||
|
Deferred investment tax credits, amortization |
(8 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 325 | $ | 199 | $ | 137 | $ | 20 | ||||||||
|
2009: |
||||||||||||||||
|
Current taxes: |
||||||||||||||||
|
Federal |
$ | (73 | ) | $ | (117 | ) | $ | (8 | ) | $ | 22 | |||||
|
State |
3 | (31 | ) | 14 | 14 | |||||||||||
|
Deferred taxes: |
||||||||||||||||
|
Federal |
337 | 239 | 64 | 57 | ||||||||||||
|
State |
74 | 42 | 11 | 9 | ||||||||||||
|
Deferred investment tax credits, amortization |
(9 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||
|
Total income tax expense |
$ | 332 | $ | 128 | $ | 79 | $ | 101 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| Ameren(a) | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
2011: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,811 | $ | 2,134 | $ | 1,003 | $ | 457 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
3 | (1 | ) | 55 | (54 | ) | ||||||||||
|
Regulatory assets, net |
73 | 73 | - | - | ||||||||||||
|
Deferred employee benefit costs |
(367 | ) | (88 | ) | (109 | ) | (67 | ) | ||||||||
|
Purchase accounting |
35 | - | (27 | ) | 15 | |||||||||||
|
ARO |
(37 | ) | - | 1 | (25 | ) | ||||||||||
|
Other |
(223 | ) | 6 | (86 | ) | (22 | ) | |||||||||
|
Total net accumulated deferred income tax liabilities(b) |
$ | 3,295 | $ | 2,124 | $ | 837 | $ | 304 | ||||||||
|
2010: |
||||||||||||||||
|
Accumulated deferred income taxes, net liability (asset): |
||||||||||||||||
|
Plant related |
$ | 3,310 | $ | 1,974 | $ | 750 | $ | 378 | ||||||||
|
Deferred intercompany tax gain/basis step-up |
2 | (2 | ) | 71 | (68 | ) | ||||||||||
|
Regulatory assets (liabilities), net |
67 | 68 | (1 | ) | - | |||||||||||
|
Deferred employee benefit costs |
(360 | ) | (87 | ) | (124 | ) | (45 | ) | ||||||||
|
Purchase accounting |
106 | - | 41 | 17 | ||||||||||||
|
ARO |
(48 | ) | (9 | ) | 1 | (27 | ) | |||||||||
|
Other |
(120 | ) | 7 | (57 | ) | 10 | ||||||||||
|
Total net accumulated deferred income tax liabilities(c) |
$ | 2,957 | $ | 1,951 | $ | 681 | $ | 265 | ||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | Includes $20 million, $8 million and $58 million as current assets recorded in the balance sheet for Ameren, Ameren Missouri and Ameren Illinois, respectively. |
| (c) | Includes $43 million as current assets recorded in the balance sheet for Ameren Illinois. Includes $71 million, $43 million and $12 million as current liabilities recorded in the balance sheets for Ameren, Ameren Missouri and Genco, respectively |
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Net operating loss carryforwards: |
||||||||||||||||
|
Federal(a) |
$ | 136 | $ | 50 | $ | 33 | $ | 8 | ||||||||
|
State(b) |
17 | 3 | 6 | - | ||||||||||||
|
Total net operating loss carryforwards |
$ | 153 | $ | 53 | $ | 39 | $ | 8 | ||||||||
|
Tax credit carryforwards: |
||||||||||||||||
|
Federal(c) |
$ | 72 | $ | 11 | $ | - | $ | 1 | ||||||||
|
State(d) |
28 | 1 | - | 4 | ||||||||||||
|
Total tax credit carryforwards |
$ | 100 | $ | 12 | $ | - | $ | 5 | ||||||||
| (a) | These will begin to expire in 2028. |
| (b) | These will begin to expire in 2017. |
| (c) | These will begin to expire in 2029. |
| (d) | These will begin to expire in 2012. |
| Ameren | Ameren Missouri | Ameren Illinois | Genco | |||||||||||||
|
Unrecognized tax benefits – January 1, 2009 |
$ | 110 | $ | 20 | $ | - | $ | 48 | ||||||||
|
Increases based on tax positions prior to 2009 |
90 | 76 | - | 9 | ||||||||||||
|
Decreases based on tax positions prior to 2009 |
(84 | ) | (19 | ) | - | (31 | ) | |||||||||
|
Increases based on tax positions related to 2009 |
19 | 11 | - | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2009 |
$ | 135 | $ | 88 | $ | - | $ | 29 | ||||||||
|
Increases based on tax positions prior to 2010 |
72 | 40 | 27 | 4 | ||||||||||||
|
Decreases based on tax positions prior to 2010 |
(38 | ) | (12 | ) | (2 | ) | (16 | ) | ||||||||
|
Increases based on tax positions related to 2010 |
77 | 48 | 31 | 3 | ||||||||||||
|
Changes related to settlements with taxing authorities |
- | - | - | - | ||||||||||||
|
Decreases related to the lapse of statute of limitations |
- | - | - | - | ||||||||||||
|
Unrecognized tax benefits – December 31, 2010 |
$ | 246 | $ | 164 | $ | 56 | $ | 20 | ||||||||
|
Increases based on tax positions prior to 2011 |
22 | 15 | - | 1 | ||||||||||||
|
Decreases based on tax positions prior to 2011 |
(125 | ) | (63 | ) | (41 | ) | (12 | ) | ||||||||
|
Increases based on tax positions related to 2011 |
17 | 13 | - | 1 | ||||||||||||
|
Changes related to settlements with taxing authorities |
(10 | ) | (5 | ) | (4 | ) | - | |||||||||
|
Decreases related to the lapse of statute of limitations |
(2 | ) | - | - | (1 | ) | ||||||||||
|
Unrecognized tax benefits – December 31, 2011 |
$ | 148 | $ | 124 | $ | 11 | $ | 9 | ||||||||
|
Total unrecognized tax benefits (detriments) that, if recognized, would affect the effective tax rates as of December 31, 2009 |
$ | 6 | $ | 3 | $ | - | $ | - | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2010 |
$ | - | $ | 3 | $ | - | $ | 1 | ||||||||
|
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates as of December 31, 2011 |
$ | 1 | $ | 1 | $ | - | $ | 1 | ||||||||
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | |||||||||||||
|
Liability for interest – January 1, 2009 |
$ | 10 | $ | 2 | $ | - | $ | 4 | ||||||||
|
Interest charges (income) for 2009 |
(2 | ) | 2 | - | (2 | ) | ||||||||||
|
Liability for interest – December 31, 2009 |
$ | 8 | $ | 4 | $ | - | $ | 2 | ||||||||
|
Interest charges for 2010 |
9 | 6 | 2 | - | ||||||||||||
|
Liability for interest – December 31, 2010 |
$ | 17 | $ | 10 | $ | 2 | $ | 2 | ||||||||
|
Interest income for 2011 |
(11 | ) | (3 | ) | (1 | ) | (1 | ) | ||||||||
|
Interest payment |
(1 | ) | (1 | ) | - | - | ||||||||||
|
Liability for interest – December 31, 2011 |
$ | 5 | $ | 6 | $ | 1 | $ | 1 | ||||||||
|
|||
| Type and Source of Coverage | Maximum Coverages | Maximum Assessments for Single Incidents | ||||||
|
Public liability and nuclear worker liability: |
||||||||
|
American Nuclear Insurers |
$ | 375 | $ - | |||||
|
Pool participation |
12,219 | (a) | 118 | (b) | ||||
| $ | 12,594 | (c) | $ 118 | |||||
|
Property damage: |
||||||||
|
Nuclear Electric Insurance Ltd. |
$ | 2,750 | (d) | $ 23 | ||||
|
Replacement power: |
||||||||
|
Nuclear Electric Insurance Ltd |
$ | 490 | (e) | $ 9 | ||||
|
Energy Risk Assurance Company |
$ | 64 | (f) | $ - | ||||
| (a) | Provided through mandatory participation in an industrywide retrospective premium assessment program. |
| (b) | Retrospective premium under Price-Anderson. 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 U.S. commercial reactor, payable at $17.5 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 $118 million per incident for each licensed reactor it operates with a maximum of $17.5 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) | Provides for $500 million in property damage and decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. |
| (e) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. Weekly indemnity up to $4.5 million for 52 weeks, which commences after the first eight 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. |
| (f) | Provides the replacement power cost insurance in the event of a prolonged accidental outage at our nuclear energy center. The coverage commences after the first 52 weeks of insurance coverage from Nuclear Electric Insurance Ltd. and is for a weekly indemnity of $900,000 for 71 weeks in excess of the $3.6 million per week set forth above. Energy Risk Assurance Company is an affiliate and has reinsured this coverage with third-party insurance companies. See Note 14 – Related Party Transactions for more information on this affiliate transaction. |
| Total | 2012 | 2013 | 2014 | 2015 | 2016 | After 5 Years | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
307 | 38 | 32 | 26 | 26 | 25 | 160 | |||||||||||||||||||||
|
Total lease obligations |
$ | 616 | $ | 43 | $ | 37 | $ | 31 | $ | 32 | $ | 31 | $ | 442 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
Capital lease payments(b) |
$ | 621 | $ | 33 | $ | 32 | $ | 32 | $ | 33 | $ | 33 | $ | 458 | ||||||||||||||
|
Less amount representing interest |
312 | 28 | 27 | 27 | 27 | 27 | 176 | |||||||||||||||||||||
|
Present value of minimum capital lease payments |
$ | 309 | $ | 5 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 282 | ||||||||||||||
|
Operating leases(c) |
134 | 13 | 12 | 12 | 12 | 12 | 73 | |||||||||||||||||||||
|
Total lease obligations |
$ | 443 | $ | 18 | $ | 17 | $ | 17 | $ | 18 | $ | 18 | $ | 355 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 7 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 2 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
Operating leases(c) |
$ | 131 | $ | 11 | $ | 11 | $ | 11 | $ | 10 | $ | 11 | $ | 77 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| (b) | See Properties under Part I, Item 2, and Note 3 – Property and Plant, Net of this report for additional information. |
| (c) | Amounts related to certain real estate leases and railroad licenses have indefinite payment periods. Ameren's $2 million annual obligation for these items is included in the 2012 through 2016 columns. The amounts for the indefinite payments are not included in the After 5 Years column because that period is indefinite. |
| 2011 | 2010 | 2009 | ||||||||||
|
Ameren(a) |
$ | 47 | $ | 52 | $ | 50 | ||||||
|
Ameren Missouri |
29 | 29 | 30 | |||||||||
|
Ameren Illinois |
17 | 19 | 19 | |||||||||
|
Genco |
12 | 13 | 15 | |||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| Coal | Natural Gas |
Nuclear Fuel |
Purchased Power |
Methane Gas |
Other | Total | ||||||||||||||||||||||
|
Ameren:(a) |
||||||||||||||||||||||||||||
|
2012 |
$ | 1,120 | $ | 398 | $ | 36 | $ | 196 | $ | 1 | $ | 221 | $ | 1,972 | ||||||||||||||
|
2013 |
792 | 295 | 37 | 309 | 3 | 80 | 1,516 | |||||||||||||||||||||
|
2014 |
692 | 220 | 96 | 125 | 3 | 75 | 1,211 | |||||||||||||||||||||
|
2015 |
687 | 116 | 90 | 51 | 3 | 52 | 999 | |||||||||||||||||||||
|
2016 |
674 | 39 | 100 | 52 | 3 | 62 | 930 | |||||||||||||||||||||
|
Thereafter |
968 | 134 | 298 | 746 | 94 | 246 | 2,486 | |||||||||||||||||||||
|
Total |
$ | 4,933 | $ | 1,202 | $ | 657 | $ | 1,479 | $ | 107 | $ | 736 | $ | 9,114 | ||||||||||||||
|
Ameren Missouri: |
||||||||||||||||||||||||||||
|
2012 |
$ | 623 | $ | 63 | $ | 36 | $ | 19 | $ | 1 | $ | 78 | $ | 820 | ||||||||||||||
|
2013 |
605 | 48 | 37 | 19 | 3 | 50 | 762 | |||||||||||||||||||||
|
2014 |
625 | 36 | 96 | 19 | 3 | 47 | 826 | |||||||||||||||||||||
|
2015 |
614 | 19 | 90 | 19 | 3 | 28 | 773 | |||||||||||||||||||||
|
2016 |
644 | 7 | 100 | 19 | 3 | 38 | 811 | |||||||||||||||||||||
|
Thereafter |
921 | 30 | 298 | 155 | 94 | 144 | 1,642 | |||||||||||||||||||||
|
Total |
$ | 4,032 | $ | 203 | $ | 657 | $ | 250 | $ | 107 | $ | 385 | $ | 5,634 | ||||||||||||||
|
Ameren Illinois: |
||||||||||||||||||||||||||||
|
2012 |
$ | - | $ | 324 | $ | - | $ | 177 | $ | - | $ | 24 | $ | 525 | ||||||||||||||
|
2013 |
- | 243 | - | 290 | - | 22 | 555 | |||||||||||||||||||||
|
2014 |
- | 180 | - | 106 | - | 22 | 308 | |||||||||||||||||||||
|
2015 |
- | 94 | - | 32 | - | 24 | 150 | |||||||||||||||||||||
|
2016 |
- | 31 | - | 33 | - | 24 | 88 | |||||||||||||||||||||
|
Thereafter |
- | 105 | - | 591 | - | 102 | 798 | |||||||||||||||||||||
|
Total |
$ | - | $ | 977 | $ | - | $ | 1,229 | $ | - | $ | 218 | $ | 2,424 | ||||||||||||||
|
Genco: |
||||||||||||||||||||||||||||
|
2012 |
$ | 355 | $ | 9 | $ | - | $ | - | $ | - | $ | 98 | $ | 462 | ||||||||||||||
|
2013 |
108 | 4 | - | - | - | 5 | 117 | |||||||||||||||||||||
|
2014 |
40 | 3 | - | - | - | 5 | 48 | |||||||||||||||||||||
|
2015 |
45 | 2 | - | - | - | - | 47 | |||||||||||||||||||||
|
2016 |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Thereafter |
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Total |
$ | 548 | $ | 18 | $ | - | $ | - | $ | - | $ | 108 | $ | 674 | ||||||||||||||
| (a) | Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations. |
| 2012 | 2013 - 2016 | 2017 - 2021 | Total | |||||||||||||||||||||||||
|
AMO(a) |
$ | 55 | $ | 325 - | $ | 400 | $ | 845 - | $ | 1,030 | $ | 1,225 - | $ | 1,485 | ||||||||||||||
|
Genco |
150 | 100 - | 125 | 245 - | 295 | 495 - | 570 | |||||||||||||||||||||
|
AERG |
5 | 20 - | 25 | 80 - | 100 | 105 - | 130 | |||||||||||||||||||||
|
Ameren |
$ | 210 | $ | 445 - | $ | 550 | $ | 1,170 - | $ | 1,425 | $ | 1,825 - | $ | 2,185 | ||||||||||||||
| (a) | Ameren Missouri's expenditures are expected to be recoverable from ratepayers. |
| Estimate |
Recorded |
|||||||||||
| Low | High | |||||||||||
|
Ameren |
$ | 107 | $ | 183 | $ | 107 | ||||||
|
Ameren Missouri |
3 | 4 | 3 | |||||||||
|
Ameren Illinois |
104 | 179 | 104 | |||||||||
| (a) | Recorded liability represents the estimated minimum probable obligations, as no other amount within the range provided a better estimate. |
| Ameren |
Ameren Missouri |
Ameren Illinois |
Genco | Total(a) | ||||
|
4 |
53 | 77 | (b) | 93 |
| (a) | Total does not equal the sum of the subsidiary unit lawsuits because some of the lawsuits name multiple Ameren entities as defendants. |
| (b) | As of December 31, 2011, six asbestos-related lawsuits were pending against EEI. The general liability insurance maintained by EEI provides coverage with respect to liabilities arising from asbestos-related claims. |
|
|||
| Goodwill | Long-Lived Assets and Related Charges |
Emission Allowances |
Total | |||||||||||||
|
2011: |
||||||||||||||||
|
Ameren(a) |
$ | — | $ | 123 | $ | 2 | $ | 125 | ||||||||
|
Ameren Missouri |
— | 89 | — | 89 | ||||||||||||
|
Genco |
— | 34 | 1 | 35 | ||||||||||||
|
2010: |
||||||||||||||||
|
Ameren(a) |
420 | 101 | 68 | 589 | ||||||||||||
|
Genco |
65 | 64 | 41 | 170 | ||||||||||||
|
2009: |
||||||||||||||||
|
Ameren(a) |
— | 7 | — | 7 | ||||||||||||
|
Genco |
— | 6 | — | 6 | ||||||||||||
| (a) | Includes amounts for registrant and nonregistrant subsidiaries. |
Ameren
| 2011 | 2010 | |||||||||||||||
| Ameren Illinois |
Ameren Illinois |
Merchant Generation |
Total(a) | |||||||||||||
|
Gross goodwill at January 1 |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Accumulated impairment losses |
— | — | — | — | ||||||||||||
|
Goodwill, net of accumulated impairment losses |
$ | 411 | $ | 411 | $ | 420 | $ | 831 | ||||||||
|
Impairment losses during year |
— | — | 420 | 420 | ||||||||||||
|
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|
Goodwill, net of impairment losses at December 31 |
$ | 411 | $ | 411 | $ | — | $ | 411 | ||||||||
|
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| (a) | Includes amounts for Ameren registrants and nonregistrant subsidiaries. |
|
|||
| Ameren Missouri |
Ameren Illinois Regulated Segment |
Merchant Generation |
Other |
Intersegment Eliminations |
Consolidated | |||||||||||||||||||
|
2011 |
||||||||||||||||||||||||
|
External revenues |
$ | 3,358 | $ | 2,774 | $ | 1,394 | $ | 5 | $ | - | $ | 7,531 | ||||||||||||
|
Intersegment revenues |
25 | 13 | 235 | 4 | (277 | ) | - | |||||||||||||||||
|
Depreciation and amortization |
408 | 215 | 143 | 19 | - | 785 | ||||||||||||||||||
|
Interest and dividend income |
30 | 1 | - | 44 | (43 | ) | 32 | |||||||||||||||||
|
Interest charges |
209 | 136 | 105 | 44 | (43 | ) | 451 | |||||||||||||||||
|
Income taxes (benefit) |
161 | 127 | 32 | (10 | ) | - | 310 | |||||||||||||||||
|
Net income (loss) attributable to Ameren Corporation(a) |
287 | 193 | 45 | (6 | ) | - | 519 | |||||||||||||||||
|
Capital expenditures |
550 | 351 | 153 | (24 | )(b) | - | 1,030 | |||||||||||||||||
|
Total assets |
12,757 | 7,213 | 3,833 | 1,211 | (1,369 | ) | 23,645 | |||||||||||||||||
|
2010 |
||||||||||||||||||||||||
|
External revenues |
$ | 3,176 | $ | 3,002 | $ | 1,459 | $ | 1 | $ | - | $ | 7,638 | ||||||||||||
|
Intersegment revenues |
21 | 12 | 234 | 13 | (280 | ) | - | |||||||||||||||||
|
Depreciation and amortization |
382 | 210 | 146 | 27 | - | 765 | ||||||||||||||||||
|
Interest and dividend income |
31 | 1 | 1 | 25 | (25 | ) | 33 | |||||||||||||||||
|
Interest charges |
213 | 143 | 133 | 35 | (27 | ) | 497 | |||||||||||||||||
|
Income taxes (benefit) |
199 | 137 | 6 | (17 | ) | - | 325 | |||||||||||||||||
|
Net income (loss) attributable to Ameren Corporation(a) |
364 | 208 | (409 | ) | (24 | ) | - | 139 | ||||||||||||||||
|
Capital expenditures |
624 | 281 | 101 | 36 | - | 1,042 | ||||||||||||||||||
|
Total assets |
12,504 | 7,406 | 3,934 | 1,354 | (1,687 | ) | 23,511 | |||||||||||||||||
|
2009 |
||||||||||||||||||||||||
|
External revenues |
$ | 2,847 | $ | 2,957 | $ | 1,322 | $ | 9 | $ | - | $ | 7,135 | ||||||||||||
|
Intersegment revenues |
27 | 27 | 390 | 19 | (463 | ) | - | |||||||||||||||||
|
Depreciation and amortization |
357 | 216 | 126 | 26 | - | 725 | ||||||||||||||||||
|
Interest and dividend income |
29 | 6 | - | 33 | (38 | ) | 30 | |||||||||||||||||
|
Interest charges |
229 | 153 | 119 | 48 | (41 | ) | 508 | |||||||||||||||||
|
Income taxes (benefit) |
128 | 79 | 151 | (26 | ) | - | 332 | |||||||||||||||||
|
Net income (loss) attributable to Ameren Corporation(a) |
259 | 127 | 247 | (21 | ) | - | 612 | |||||||||||||||||
|
Capital expenditures |
882 | 352 | 408 | 68 | - | 1,710 | ||||||||||||||||||
|
Total assets |
12,219 | 7,181 | 4,751 | 1,814 | (2,263 | ) | 23,702 | |||||||||||||||||
| (a) | Represents net income (loss) available to common stockholders. |
| (b) | Includes the elimination of intercompany transfers. |
|
|||
| Quarter Ended(a) |
Operating Revenues |
Operating Income |
Net Income (Loss) Attributable to Ameren Corporation |
Earnings (Loss) per Share – Basic and |
||||||||||||
|
Ameren |
||||||||||||||||
|
March 31, 2011 |
$ | 1,904 | $ | 227 | $ | 71 | $ | 0.29 | ||||||||
|
March 31, 2010 |
1,940 | 298 | 102 | 0.43 | ||||||||||||
|
June 30, 2011 |
1,781 | 316 | 138 | 0.57 | ||||||||||||
|
June 30, 2010 |
1,725 | 331 | 152 | 0.64 | ||||||||||||
|
September 30, 2011 |
2,268 | 550 | 285 | 1.18 | ||||||||||||
|
September 30, 2010 |
2,267 | 89 | (167 | ) | (0.70 | ) | ||||||||||
|
December 31, 2011 |
1,578 | 148 | 25 | 0.10 | ||||||||||||
|
December 31, 2010 |
1,706 | 198 | 52 | 0.21 | ||||||||||||
| (a) | The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods. This is due to the effects of rounding and changes in the number of weighted-average shares outstanding each period. |
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