Ameren (NYSE:AEE) continues to move forward on transmission, with Ameren Illinois looking to invest about $900m through 2016, according to Ameren Chairman, President and CEO Thomas Voss.
“Ameren Illinois is moving forward with its plans to invest approximately $900m across some 300 projects over the five years ending in 2016, which are focused on reliability and local load growth needs,” Voss said during Ameren’s 2Q12 earnings call Aug. 2.
Three-quarters of the planned $900m investment is in projects that do not require regulatory approval because they are improving or rebuilding existing lines, he said, adding that the remaining investments, which are for five greenfield projects, do require regulatory approval, and two of these projects have already been granted such certificates.
He also provided an update on Ameren Transmission Company (ATX), noting that ATX is moving forward with its plans to invest about $750m in greenfield regional projects within Illinois and Missouri over the five years ending in 2016.
The bulk of ATX’s investment over this period will be in the $800m-plus Illinois Rivers project, which is a Midwest ISO (MISO)-approved regional multi-value project (MVP) to build a transmission line across Illinois.
“We are currently holding public meetings on route design for this project,” Voss added. “Later this year, we plan to file for a certificate of public convenience and necessity, and an ICC [(Illinois Commerce Commission)] decision will be issued by July of 2013. Once we receive the certificate, we will begin to acquire right of way. Preliminary construction may start as early as 2013, with a full range of construction activities in 2014.”
Meanwhile, he added, the company recently filed with FERC requesting the same constructive rate treatment that the company has received for the Illinois Rivers Project for ATX’s two other MISO-approved regional MVPs.
Voss also discussed recent regulatory developments, noting that in June, FERC issued an order regarding MISO’s electric capacity construct filing. He said FERC approved MISO’s request to change the capacity construct from a monthly capacity construct to an annual construct beginning with the 2013-2014 planning year.
“We are disappointed with the FERC’s order and continue to maintain that a multi-year or forward capacity construct is necessary to provide the transparent price signals needed to ensure electric reliability over the long term,” he said. “However, in an encouraging aspect of the order, the FERC directed staff to solicit comments in a separate proceeding on the issue of capacity portability between MISO and PJM [Interconnection]. This includes an examination of administrative rules that may act as barriers to capacity transfers across the MISO-PJM scene, and potential solutions. We continue to support the removal of unnecessary barriers to capacity portability across the scene, as a means of improving market efficiency.”
Among other things, he noted that Ameren Illinois submitted its original smart grid advanced metering infrastructure deployment plan to the ICC in March. The ICC denied the plan in May, ruling that the plan did not provide enough support to prove that it was cost-beneficial for electric customers.
The ICC is set to rule on the company’s modified plan in November, he added, noting that the company is “optimistic about a positive outcome.” Assuming ICC approval, infrastructure construction would begin in 3Q13, with the first meters to be installed in 2Q14.
On whether Ameren had any new peaks in the quarter, ATX President and CEO Maureen Borkowski, said: “[On a] transmission system basis, we did set a new all-time peak on [July 25], of … I think … 18,588 MW, and based on the two individual companies, Ameren Illinois, did set a new all-time peak on that same day. Ameren Missouri has not yet exceeded its all-time peak, which was in 2007.”
On the numbers
The company reported 2Q12 net income in accordance with GAPP of $211m, or 87 cents per share, compared to 2Q11 GAAP net income of $138m, or 57 cents per share.
Excluding certain items, such as a noncash asset impairment charge related to the Duck Creek Energy Center, which decreased the merchant generation business segment’s net income by $377m in the first six months of 2012, Ameren recorded 2Q12 core (non-GAAP) net income of $177m, or 73 cents per share, compared to 2Q12 core (non-GAAP) net income of $143m, or 59 cents per share.
The increase in 2Q12 core (non-GAAP) earnings, compared to 2Q11 core (non-GAAP) earnings, reflected increased earnings from regulated utility operations partially offset by decreased earnings from merchant generation operations, Ameren added.
Regulated utility earnings were positively affected by a favorable FERC order related to a disputed Ameren Missouri power purchase agreement that expired in 2009, the absence in 2012 of a 2011 Ameren Missouri charge to earnings related to the fuel adjustment clause, and 2011 Missouri electric and 2012 Illinois gas rate adjustments. Ameren also said that other factors having a favorable effect on the regulated utility earnings comparison included reduced storm-related costs and increased electric sales to native load customers resulting from warmer temperatures. Merchant generation earnings were negatively affected by lower market prices for electricity, the company said.
“The positive earnings impact of warm second quarter weather partially offset the negative impact of mild first quarter weather,” Voss said in the Aug. 2 statement. “Given our second quarter results, we are raising our guidance for 2012 core earnings to a range of $2.25 to $2.55 per share from our prior range of $2.20 to $2.50 per share.”
He also said that during the current extended period of warm weather, which began with record temperatures in May, Ameren’s utility systems have performed well, demonstrating the value of the significant reliability investments that have made in recent years.