Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the Quarterly Period Ended September 30, 2009

OR

 

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from              to             .

 

Commission

File Number

  

Exact name of registrant as specified in its charter;

State of Incorporation;

Address and Telephone Number

  

IRS Employer

Identification No.

1-14756

   Ameren Corporation   

43-1723446

  

(Missouri Corporation)

  
  

1901 Chouteau Avenue

  
  

St. Louis, Missouri 63103

  
  

(314) 621-3222

  

1-2967

   Union Electric Company   

43-0559760

  

(Missouri Corporation)

  
  

1901 Chouteau Avenue

  
  

St. Louis, Missouri 63103

  
  

(314) 621-3222

  

1-3672

   Central Illinois Public Service Company   

37-0211380

  

(Illinois Corporation)

  
  

607 East Adams Street

  
  

Springfield, Illinois 62739

  
  

(888) 789-2477

  

333-56594

   Ameren Energy Generating Company   

37-1395586

  

(Illinois Corporation)

  
  

1901 Chouteau Avenue

  
  

St. Louis, Missouri 63103

  
  

(314) 621-3222

  

2-95569

   CILCORP Inc.   

37-1169387

  

(Illinois Corporation)

  
  

300 Liberty Street

  
  

Peoria, Illinois 61602

  
  

(309) 677-5271

  

1-2732

   Central Illinois Light Company   

37-0211050

  

(Illinois Corporation)

  
  

300 Liberty Street

  
  

Peoria, Illinois 61602

  
  

(309) 677-5271

  

1-3004

   Illinois Power Company   

37-0344645

  

(Illinois Corporation)

  
  

370 South Main Street

  
  

Decatur, Illinois 62523

  
  

(217) 424-6600

  


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Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

 

Ameren Corporation

   Yes    x    No    ¨   

Union Electric Company

   Yes    x    No    ¨   

Central Illinois Public Service Company

   Yes    x    No    ¨   

Ameren Energy Generating Company

   Yes    x    No    ¨   

Central Illinois Light Company

   Yes    x    No    ¨   

Illinois Power Company

   Yes    x    No    ¨   

CILCORP Inc. has voluntarily filed all reports that it would have been required to file if it had been subject to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Ameren Corporation

   Yes    x    No    ¨   

Union Electric Company

   Yes    ¨    No    ¨   

Central Illinois Public Service Company

   Yes    ¨    No    ¨   

Ameren Energy Generating Company

   Yes    ¨    No    ¨   

CILCORP Inc.

   Yes    ¨    No    ¨   

Central Illinois Light Company

   Yes    ¨    No    ¨   

Illinois Power Company

   Yes    ¨    No    ¨   

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

 

     Large
Accelerated Filer
   Accelerated
Filer
   Non-Accelerated
Filer
   Smaller Reporting
Company

Ameren Corporation

   x    ¨    ¨    ¨

Union Electric Company

   ¨    ¨    x    ¨

Central Illinois Public Service Company

   ¨    ¨    x    ¨

Ameren Energy Generating Company

   ¨    ¨    x    ¨

CILCORP Inc.

   ¨    ¨    x    ¨

Central Illinois Light Company

   ¨    ¨    x    ¨

Illinois Power Company

   ¨    ¨    x    ¨

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

 

Ameren Corporation

   Yes    ¨    No    x   

Union Electric Company

   Yes    ¨    No    x   

Central Illinois Public Service Company

   Yes    ¨    No    x   

Ameren Energy Generating Company

   Yes    ¨    No    x   

CILCORP Inc.

   Yes    ¨    No    x   

Central Illinois Light Company

   Yes    ¨    No    x   

Illinois Power Company

   Yes    ¨    No    x   


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The number of shares outstanding of each registrant’s classes of common stock as of October 30, 2009, was as follows:

 

Ameren Corporation

 

Common stock, $0.01 par value per share - 236,921,011

Union Electric Company

 

Common stock, $5 par value per share, held by Ameren

Corporation (parent company of the registrant) - 102,123,834

Central Illinois Public Service Company

 

Common stock, no par value, held by Ameren

Corporation (parent company of the registrant) - 25,452,373

Ameren Energy Generating Company

 

Common stock, no par value, held by Ameren Energy

Resources Company, LLC (parent company of the

registrant and subsidiary of Ameren

Corporation) - 2,000

CILCORP Inc.

 

Common stock, no par value, held by Ameren

Corporation (parent company of the registrant) - 1,000

Central Illinois Light Company

 

Common stock, no par value, held by CILCORP Inc.

(parent company of the registrant and subsidiary of

Ameren Corporation) - 13,563,871

Illinois Power Company

 

Common stock, no par value, held by Ameren

Corporation (parent company of the registrant) - 23,000,000

OMISSION OF CERTAIN INFORMATION

Ameren Energy Generating Company and CILCORP Inc. meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format allowed under that General Instruction.

 

 

This combined Form 10-Q is separately filed by Ameren Corporation, Union Electric Company, Central Illinois Public Service Company, Ameren Energy Generating Company, CILCORP Inc., Central Illinois Light Company and Illinois Power Company. Each registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page

GLOSSARY OF TERMS AND ABBREVIATIONS

   5

Forward-looking Statements

   7

PART I

   Financial Information   

Item 1.

  

Financial Statements (Unaudited)

  
   Ameren Corporation   
  

Consolidated Statement of Income

   9
  

Consolidated Balance Sheet

   10
  

Consolidated Statement of Cash Flows

   11
   Union Electric Company   
  

Statement of Income

   12
  

Balance Sheet

   13
  

Statement of Cash Flows

   14
   Central Illinois Public Service Company   
  

Statement of Income

   15
  

Balance Sheet

   16
  

Statement of Cash Flows

   17
   Ameren Energy Generating Company   
  

Consolidated Statement of Income

   18
  

Consolidated Balance Sheet

   19
  

Consolidated Statement of Cash Flows

   20
   CILCORP Inc.   
  

Consolidated Statement of Income

   21
  

Consolidated Balance Sheet

   22
  

Consolidated Statement of Cash Flows

   23
   Central Illinois Light Company   
  

Consolidated Statement of Income

   24
  

Consolidated Balance Sheet

   25
  

Consolidated Statement of Cash Flows

   26
   Illinois Power Company   
  

Statement of Income

   27
  

Balance Sheet

   28
  

Statement of Cash Flows

   29
  

Combined Notes to Financial Statements

   30

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   88

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

   130

Item 4 and

  

Item 4T.

  

Controls and Procedures

   136

PART II

   Other Information   

Item 1.

  

Legal Proceedings

   136

Item 1A.

  

Risk Factors

   136

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

   137

Item 6.

  

Exhibits

   138

Signatures

   140

This Form 10-Q contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements should be read with the cautionary statements and important factors included on page 7 of this Form 10-Q under the heading “Forward-looking Statements.” Forward-looking statements are all statements other than statements of historical fact, including those statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” and similar expressions.

 

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GLOSSARY OF TERMS AND ABBREVIATIONS

We use the words “our,” “we” or “us” with respect to certain information that relates to all Ameren Companies, as defined below. When appropriate, subsidiaries of Ameren are named specifically as their various business activities are discussed.

AERG - AmerenEnergy Resources Generating Company, a CILCO subsidiary that operates a merchant electric generation business in Illinois.

AFS - Ameren Energy Fuels and Services Company, a Resources Company subsidiary that procures fuel and natural gas and manages the related risks for the Ameren Companies.

AITC - Ameren Illinois Transmission Company, an Ameren Corporation subsidiary that is engaged in the construction and operation of transmission assets in Illinois and is regulated by FERC and the ICC.

Ameren - Ameren Corporation and its subsidiaries on a consolidated basis. In references to financing activities, acquisition activities, or liquidity arrangements, Ameren is defined as Ameren Corporation, the parent.

Ameren Companies - The individual registrants within the Ameren consolidated group.

Ameren Illinois Utilities - CIPS, IP and the rate-regulated electric and gas utility operations of CILCO.

Ameren Services - Ameren Services Company, an Ameren Corporation subsidiary that provides support services to Ameren and its subsidiaries.

ARO - Asset retirement obligations.

Baseload - The minimum amount of electric power delivered or required over a given period of time at a steady rate.

Btu - British thermal unit, a standard unit for measuring the quantity of heat energy required to raise the temperature of one pound of water by one degree Fahrenheit.

Capacity factor - A percentage measure that indicates how much of an electric power generating unit’s capacity was used during a specific period.

CILCO - Central Illinois Light Company, a CILCORP subsidiary that operates a rate-regulated electric transmission and distribution business, a merchant electric generation business through AERG, and a rate-regulated natural gas transmission and distribution business, all in Illinois, as AmerenCILCO. CILCO owns all of the common stock of AERG.

CILCORP - CILCORP Inc., an Ameren Corporation subsidiary that operates as a holding company for CILCO and its merchant generation subsidiary.

CIPS - Central Illinois Public Service Company, an Ameren Corporation subsidiary that operates a rate-regulated electric and natural gas transmission and distribution business in Illinois as AmerenCIPS.

CO2 - Carbon dioxide.

COLA - Combined nuclear plant construction and operating license application.

Cooling degree-days - The summation of positive differences between the mean daily temperature and a 65-degree Fahrenheit base. This statistic is useful for estimating electricity demand by residential and commercial customers for summer cooling.

CT - Combustion turbine electric generation equipment used primarily for peaking capacity.

Development Company - Ameren Energy Development Company, which was an Ameren Energy Resources Company subsidiary and parent of Genco, Marketing Company, AFS, and Medina Valley. It was eliminated in an internal reorganization in February 2008.

DOE - Department of Energy, a U.S. government agency.

DRPlus - Ameren Corporation’s dividend reinvestment and direct stock purchase plan.

EEI - Electric Energy, Inc., an 80%-owned Ameren Corporation subsidiary that operates merchant electric generation facilities and FERC-regulated transmission facilities in Illinois. Prior to February 29, 2008, EEI was 40% owned by UE and 40% owned by Development Company. On February 29, 2008, UE’s 40% ownership interest and Development Company’s 40% ownership interest were transferred to Resources Company. The remaining 20% is owned by Kentucky Utilities Company, a nonaffiliated entity.

EPA - Environmental Protection Agency, a U.S. government agency.

Equivalent availability factor - A measure that indicates the percentage of time an electric power generating unit was available for service during a period.

Exchange Act - Securities Exchange Act of 1934, as amended.

FAC - A fuel and purchased power cost recovery mechanism that allows UE to recover through customer rates 95% of changes in fuel (coal, coal transportation, natural gas for generation and nuclear) and purchased power costs, net of off-system revenues, including MISO costs and revenues, above or below the amount set in base rates.

FASB - Financial Accounting Standards Board, a rulemaking organization that establishes financial accounting and reporting standards in the United States.

FERC - The Federal Energy Regulatory Commission, a U.S. government agency.

Fitch - Fitch Ratings, a credit rating agency.

Form 10-K - The combined Annual Report on Form 10-K for the year ended December 31, 2008, filed by the Ameren Companies with the SEC.

FTRs - Financial transmission rights, financial instruments that entitle the holder to pay or receive compensation for certain congestion-related transmission charges between two designated points.

GAAP - Generally accepted accounting principles in the United States of America.

Genco - Ameren Energy Generating Company, a Resources Company subsidiary that operates a merchant electric generation business in Illinois and Missouri.

Gigawatthour - One thousand megawatthours.

Heating degree-days - The summation of negative differences between the mean daily temperature and a 65- degree Fahrenheit base. This statistic is useful as an indicator of demand for electricity and natural gas for winter space heating for residential and commercial customers.

 

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ICC - Illinois Commerce Commission, a state agency that regulates Illinois utility businesses, including the rate-regulated operations of CIPS, CILCO and IP.

Illinois Customer Choice Law - Illinois Electric Service Customer Choice and Rate Relief Law of 1997, which provided for electric utility restructuring and was designed to introduce competition into the retail supply of electric energy in Illinois.

Illinois electric settlement agreement - A comprehensive settlement of issues in Illinois arising out of the end of ten years of frozen electric rates, effective January 2, 2007. The Illinois electric settlement agreement, which became effective on August 28, 2007, was designed to avoid new rate rollback and freeze legislation and legislation that would impose a tax on electric generation in Illinois. The settlement addressed the issue of power procurement, and it included a comprehensive rate relief and customer assistance program.

Illinois EPA - Illinois Environmental Protection Agency, a state government agency.

Illinois Regulated - A financial reporting segment consisting of the regulated electric and natural gas transmission and distribution businesses of CIPS, CILCO, IP and AITC.

IP - Illinois Power Company, an Ameren Corporation subsidiary. IP operates a rate-regulated electric and natural gas transmission and distribution business in Illinois as AmerenIP.

IP LLC - Illinois Power Securitization Limited Liability Company, which was a special-purpose Delaware limited-liability company. It was dissolved in February 2009 because the remaining TFNs, with respect to which this entity was created, were redeemed by IP in September 2008.

IP SPT - Illinois Power Special Purpose Trust, which was created as a subsidiary of IP LLC to issue TFNs as allowed under the Illinois Customer Choice Law. It was dissolved in February 2009 because the remaining TFNs were redeemed by IP in September 2008.

IPA - Illinois Power Agency, a state government agency that has broad authority to assist in the procurement of electric power for residential and nonresidential customers beginning in June 2009.

Kilowatthour - A measure of electricity consumption equivalent to the use of 1,000 watts of power over a period of one hour.

MACT - Maximum Achievable Control Technology.

Marketing Company - Ameren Energy Marketing Company, a Resources Company subsidiary that markets power for Genco, AERG and EEI.

Medina Valley - AmerenEnergy Medina Valley Cogen L.L.C., a Resources Company subsidiary, which owns a 40-megawatt gas-fired electric generation plant.

Megawatthour - One thousand kilowatthours.

Merchant Generation - A financial reporting segment consisting of the operations or activities of Genco, the CILCORP parent company, AERG, EEI, Medina Valley, and Marketing Company.

MGP - Manufactured gas plant.

MISO - Midwest Independent Transmission System Operator, Inc.

MISO Day Two Energy Market - A market that uses market-based pricing, incorporating transmission congestion and line losses, to compensate market participants for power.

Missouri Regulated - A financial reporting segment consisting of UE’s rate-regulated businesses.

Mmbtu - One million Btus.

Money pool - Borrowing agreements among Ameren and its subsidiaries to coordinate and provide for certain short-term cash and working capital requirements. Separate money pools maintained for rate-regulated and non-rate-regulated business are referred to as the utility money pool and the non-state-regulated subsidiary money pool, respectively.

Moody’s - Moody’s Investors Service Inc., a credit rating agency.

MoPSC - Missouri Public Service Commission, a state agency that regulates Missouri utility businesses, including the rate-regulated operations of UE.

MPS - Multi-Pollutant Standard, an agreement reached in 2006 among Genco, CILCO (AERG), EEI and the Illinois EPA, which was codified in Illinois environmental regulations.

 

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MTM - Mark-to-market.

MW - Megawatt.

Native load - Wholesale customers and end-use retail customers, whom we are obligated to serve by statute, franchise, contract, or other regulatory requirement.

NOx - Nitrogen oxide.

Noranda - Noranda Aluminum, Inc.

NPNS - Normal purchases and normal sales.

NRC - Nuclear Regulatory Commission, a U.S. government agency.

OCI - Other comprehensive income (loss) as defined by GAAP.

Off-system revenues - Revenues from other than native load sales.

OTC - Over-the-counter.

PGA - Purchased Gas Adjustment tariffs, which allow the passing through of the actual cost of natural gas to utility customers.

PJM - PJM Interconnection LLC.

PUHCA 2005 - The Public Utility Holding Company Act of 2005, enacted as part of the Energy Policy Act of 2005, effective February 8, 2006.

Regulatory lag - Adjustments to retail electric and natural gas rates are based on historic cost levels. Rate increase requests can take up to 11 months to be acted upon by the MoPSC and the ICC. As a result, revenue changes authorized by regulators will lag behind changing costs.

Resources Company - Ameren Energy Resources Company, LLC, an Ameren Corporation subsidiary that consists of non-rate-regulated operations, including Genco, Marketing Company, EEI, AFS, and Medina Valley. It is the successor to Ameren Energy Resources Company, which was eliminated in an internal reorganization in February 2008.

RFP - Request for proposal.

RTO - Regional Transmission Organization

S&P - Standard & Poor’s Ratings Services, a credit rating agency that is a division of The McGraw-Hill Companies, Inc.

SEC - Securities and Exchange Commission, a U.S. government agency.

SO2 - Sulfur dioxide.

TFN - Transitional Funding Trust Notes issued by IP SPT as allowed under the Illinois Customer Choice Law. IP designated a portion of cash received from customer billings to pay the TFNs. The designated funds received by IP were remitted to IP SPT. The designated funds were restricted for the sole purpose of making payments of principal and interest on, and paying other fees and expenses related to, the TFNs. After the implementation of authoritative guidance on the consolidation of variable interest entities, IP did not consolidate IP SPT. Therefore, the obligation to IP SPT appeared on IP’s balance sheet as of December 31, 2007. In September 2008, IP redeemed the remaining TFNs.

UE - Union Electric Company, an Ameren Corporation subsidiary that operates a rate-regulated electric generation, transmission and distribution business, and a rate-regulated natural gas transmission and distribution business in Missouri as AmerenUE.

VIE - Variable-interest entity.

 

 

FORWARD-LOOKING STATEMENTS

Statements in this report not based on historical facts are considered “forward-looking” and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors and elsewhere in this report and in our other filings with the SEC, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:

 

 

regulatory or legislative actions, including changes in regulatory policies and ratemaking determinations, such as the outcome of pending UE, CIPS, CILCO and IP rate proceedings, and future rate proceedings or future legislative actions that seek to limit or reverse rate increases;

 

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uncertainty as to the continued effectiveness of the Illinois power procurement process;

 

 

changes in laws and other governmental actions, including monetary and fiscal policies;

 

 

changes in laws or regulations that adversely affect the ability of electric distribution companies and other purchasers of wholesale electricity to pay their suppliers, including UE and Marketing Company;

 

 

enactment of legislation taxing electric generators, in Illinois or elsewhere;

 

 

the effects of increased competition in the future due to, among other things, deregulation of certain aspects of our business at both the state and federal levels, and the implementation of deregulation, such as occurred when the electric rate freeze and power supply contracts expired in Illinois at the end of 2006;

 

 

increasing capital expenditure and operating expense requirements and our ability to recover these costs in a timely fashion in light of regulatory lag;

 

 

the effects of participation in the MISO;

 

 

the cost and availability of fuel such as coal, natural gas, and enriched uranium used to produce electricity; the cost and availability of purchased power and natural gas for distribution; and the level and volatility of future market prices for such commodities, including the ability to recover the costs for such commodities;

 

 

the effectiveness of our risk management strategies and the use of financial and derivative instruments;

 

 

prices for power in the Midwest, including forward prices;

 

 

business and economic conditions, including their impact on interest rates, bad debt expense, and demand for our products;

 

 

disruptions of the capital markets or other events that make the Ameren Companies’ access to necessary capital, including short-term credit and liquidity, impossible, more difficult or more costly;

 

 

our assessment of our liquidity;

 

 

the impact of the adoption of new accounting guidance and the application of appropriate technical accounting rules and guidance;

 

 

actions of credit rating agencies and the effects of such actions;

 

 

the impact of weather conditions and other natural phenomena on us and our customers;

 

 

the impact of system outages caused by severe weather conditions or other events;

 

 

generation plant construction, installation and performance, including costs associated with UE’s Taum Sauk pumped-storage hydroelectric plant incident and the plant’s future operation;

 

 

impairments of long-lived assets or goodwill;

 

 

the recovery of costs associated with UE’s Taum Sauk pumped-storage hydroelectric plant incident and investment in a COLA for a second unit at its Callaway nuclear plant;

 

 

operation of UE’s nuclear power facility, including planned and unplanned outages, and decommissioning costs;

 

 

the effects of strategic initiatives, including acquisitions and divestitures;

 

 

the impact of current environmental regulations on utilities and power generating companies and the expectation that more stringent requirements, including those related to greenhouse gases, will be enacted over time, which could limit the operation of our generating units, increase our costs or otherwise have a negative financial effect;

 

 

labor disputes, workforce reductions, future wage and employee benefits costs, including changes in discount rates and returns on benefit plan assets;

 

 

the inability of our counterparties and affiliates to meet their obligations with respect to contracts, credit facilities and financial instruments;

 

 

the cost and availability of transmission capacity for the energy generated by the Ameren Companies’ facilities or required to satisfy energy sales made by the Ameren Companies;

 

 

legal and administrative proceedings; and

 

 

acts of sabotage, war, terrorism, or intentionally disruptive acts.

Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.

 

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PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

AMEREN CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(Unaudited) (In millions, except per share amounts)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
         2009            2008            2009            2008    

Operating Revenues:

           

Electric

   $ 1,679     $ 1,928     $ 4,589     $ 4,944 

Gas

     136       132       826       987 
                           

Total operating revenues

     1,815       2,060       5,415       5,931 
                           

Operating Expenses:

           

Fuel

     306       461       867       963 

Coal contract settlement

                    (60)

Purchased power

     256       371       708       964 

Gas purchased for resale

     57       73       523       697 

Other operations and maintenance

     422       456       1,294       1,361 

Depreciation and amortization

     185       173       541       513 

Taxes other than income taxes

     104       98       311       300 
                           

Total operating expenses

     1,330       1,632       4,244       4,738 
                           

Operating Income

     485       428       1,171       1,193 

Other Income and Expenses:

           

Miscellaneous income

     16       23       49       61 

Miscellaneous expense

     (3)      (10)      (14)      (23)
                           

Total other income

     13       13       35       38 
                           

Interest Charges

     134       113       376       331 
                           

Income Before Income Taxes

     364       328       830       900 

Income Taxes

     135       113       288       319 
                           

Net Income

     229       215       542       581 

Less: Net Income Attributable to Noncontrolling Interests

          11            33 
                           

Net Income Attributable to Ameren Corporation

   $ 227     $ 204     $ 533     $ 548 
                           

Earnings per Common Share – Basic and Diluted

   $ 1.04     $ 0.97     $ 2.48     $ 2.61 
                           

Dividends per Common Share

   $ 0.385     $ 0.635     $ 1.155     $ 1.905 

Average Common Shares Outstanding

     218.2       210.3       214.9       209.5 

The accompanying notes are an integral part of these consolidated financial statements.

 

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AMEREN CORPORATION

CONSOLIDATED BALANCE SHEET

(Unaudited) (In millions, except per share amounts)

 

     September 30,
        2009        
   December 31,
        2008        

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $ 563     $ 92 

Accounts receivable – trade (less allowance for doubtful accounts of $29 and $28, respectively)

     416       502 

Unbilled revenue

     250       427 

Miscellaneous accounts and notes receivable

     182       292 

Materials and supplies

     857       842 

Mark-to-market derivative assets

     239       207 

Other current assets

     273       232 
             

Total current assets

     2,780       2,594 
             

Property and Plant, Net

     17,272       16,567 

Investments and Other Assets:

     

Nuclear decommissioning trust fund

     280       239 

Goodwill

     831       831 

Intangible assets

     138       167 

Regulatory assets

     1,641       1,653 

Other assets

     652       606 
             

Total investments and other assets

     3,542       3,496 
             

TOTAL ASSETS

   $ 23,594     $ 22,657 
             

LIABILITIES AND EQUITY

     

Current Liabilities:

     

Current maturities of long-term debt

   $ 128     $ 380 

Short-term debt

     435       1,174 

Accounts and wages payable

     443       813 

Taxes accrued

     135       54 

Interest accrued

     183       107 

Customer deposits

     107       126 

Mark-to-market derivative liabilities

     197       155 

Other current liabilities

     298       254 
             

Total current liabilities

     1,926       3,063 
             

Long-term Debt, Net

     7,321       6,554 

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     2,431       2,131 

Accumulated deferred investment tax credits

     93       100 

Regulatory liabilities

     1,322       1,291 

Asset retirement obligations

     423       406 

Pension and other postretirement benefits

     1,477       1,495 

Other deferred credits and liabilities

     555       438 
             

Total deferred credits and other liabilities

     6,301       5,861 
             

Commitments and Contingencies (Notes 2, 8, 9 and 10)

     

Ameren Corporation Stockholders’ Equity:

     

Common stock, $0.01 par value, 400.0 shares authorized – shares outstanding of 236.8 and 212.3, respectively

         

Other paid-in capital, principally premium on common stock

     5,392       4,780 

Retained earnings

     2,467       2,181 

Accumulated other comprehensive loss

     (21)     
             

Total Ameren Corporation stockholders’ equity

     7,840       6,963 
             

Noncontrolling Interests

     206       216 
             

Total equity

     8,046       7,179 
             

TOTAL LIABILITIES AND EQUITY

   $ 23,594     $ 22,657 
             

The accompanying notes are an integral part of these consolidated financial statements.

 

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AMEREN CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Nine Months Ended
September 30,
         2009            2008    

Cash Flows From Operating Activities:

     

Net income

   $ 542     $ 581 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Gain on sales of emission allowances

          (2)

Net mark-to-market gain on derivatives

     (26)      (42)

Depreciation and amortization

     557       528 

Amortization of nuclear fuel

     40       31 

Amortization of debt issuance costs and premium/discounts

     16       14 

Deferred income taxes and investment tax credits, net

     301       130 

Other

          (2)

Changes in assets and liabilities:

     

Receivables

     239       144 

Materials and supplies

     (11)      (216)

Accounts and wages payable

     (241)      (74)

Taxes accrued

     81       44 

Assets, other

     (96)      46 

Liabilities, other

     134       142 

Pension and other postretirement benefits

     30       23 

Counterparty collateral, net

     66      

Taum Sauk costs, net of insurance recoveries

     110       (94)
             

Net cash provided by operating activities

     1,746       1,253 
             

Cash Flows From Investing Activities:

     

Capital expenditures

     (1,295)      (1,316)

Nuclear fuel expenditures

     (47)      (161)

Purchases of securities – nuclear decommissioning trust fund

     (315)      (386)

Sales of securities – nuclear decommissioning trust fund

     315       360 

Purchases of emission allowances

     (4)      (2)

Sales of emission allowances

         

Other

         
             

Net cash used in investing activities

     (1,345)      (1,501)
             

Cash Flows From Financing Activities:

     

Dividends on common stock

     (247)      (399)

Capital issuance costs

     (64)      (9)

Dividends paid to noncontrolling interest holders

     (19)      (31)

Short-term debt, net

     (739)      (65)

Redemptions, repurchases, and maturities:

     

Long-term debt

     (250)      (823)

Preferred stock

          (16)

Issuances:

     

Common stock

     617       107 

Long-term debt

     772       1,335 
             

Net cash provided by financing activities

     70       99 
             

Net change in cash and cash equivalents

     471       (149)

Cash and cash equivalents at beginning of year

     92       355 
             

Cash and cash equivalents at end of period

   $ 563     $ 206 
             

The accompanying notes are an integral part of these consolidated financial statements.

 

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UNION ELECTRIC COMPANY

STATEMENT OF INCOME

(Unaudited) (In millions)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
         2009            2008            2009            2008    

Operating Revenues:

           

Electric – excluding off-system

   $ 738     $ 739     $ 1,818     $ 1,812 

Electric – off-system

     78       114       302       418 

Gas

     19       21       120       139 

Other

                   
                           

Total operating revenues

     836       875       2,243       2,370 
                           

Operating Expenses:

           

Fuel

     153       238       451       489 

Purchased power

     27       45       88       135 

Gas purchased for resale

          11       68       84 

Other operations and maintenance

     229       234       665       689 

Depreciation and amortization

     90       83       266       246 

Taxes other than income taxes

     72       69       200       189 
                           

Total operating expenses

     579       680       1,738       1,832 
                           

Operating Income

     257       195       505       538 

Other Income and Expenses:

           

Miscellaneous income

     15       17       43       46 

Miscellaneous expense

     (2)      (2)      (6)      (6)
                           

Total other income

     13       15       37       40 
                           

Interest Charges

     61       51       171       142 
                           

Income Before Income Taxes and Equity in Income of Unconsolidated Investment

     209       159       371       436 

Income Taxes

     67       60       123       160 
                           

Income Before Equity in Income of Unconsolidated Investment

     142       99       248       276 

Equity in Income of Unconsolidated Investment, Net of Taxes

                    11 
                           

Net Income

     142       99       248       287 

Preferred Stock Dividends

                   
                           

Net Income Available to Common Stockholder

   $ 141     $ 98     $ 244     $ 283 
                           

The accompanying notes as they relate to UE are an integral part of these financial statements.

 

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UNION ELECTRIC COMPANY

BALANCE SHEET

(Unaudited) (In millions, except per share amounts)

 

     September 30,
        2009        
   December 31,
        2008        

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $ 229     $

Accounts receivable – trade (less allowance for doubtful accounts of $6 and $8, respectively)

     201       142 

Unbilled revenue

     103       111 

Miscellaneous accounts and notes receivable

     159       261 

Accounts receivable – affiliates

     140       32 

Materials and supplies

     367       339 

Mark-to-market derivative assets

     28       50 

Other current assets

     81       58 
             

Total current assets

     1,308       993 
             

Property and Plant, Net

     9,372       8,995 

Investments and Other Assets:

     

Nuclear decommissioning trust fund

     280       239 

Intangible assets

     38       48 

Regulatory assets

     874       897 

Other assets

     385       352 
             

Total investments and other assets

     1,577       1,536 
             

TOTAL ASSETS

   $ 12,257     $ 11,524 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY      

Current Liabilities:

     

Current maturities of long-term debt

   $    $

Short-term debt

          251 

Intercompany note payable – Ameren

          92 

Accounts and wages payable

     178       360 

Accounts payable – affiliates

     102       151 

Taxes accrued

     124       20 

Interest accrued

     75       56 

Other current liabilities

     124       121 
             

Total current liabilities

     607       1,055 
             

Long-term Debt, Net

     4,022       3,673 

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     1,611       1,372 

Accumulated deferred investment tax credits

     76       80 

Regulatory liabilities

     934       922 

Asset retirement obligations

     330       317 

Pension and other postretirement benefits

     519       494 

Other deferred credits and liabilities

     111       49 
             

Total deferred credits and other liabilities

     3,581       3,234 
             

Commitments and Contingencies (Notes 2, 8, 9 and 10)

     

Stockholders’ Equity:

     

Common stock, $5 par value, 150.0 shares authorized – 102.1 shares outstanding

     511       511 

Other paid-in capital, principally premium on common stock

     1,555       1,119 

Preferred stock not subject to mandatory redemption

     113       113 

Retained earnings

     1,868       1,794 

Accumulated other comprehensive income

          25 
             

Total stockholders’ equity

     4,047       3,562 
             

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 12,257     $ 11,524 
             

The accompanying notes as they relate to UE are an integral part of these financial statements.

 

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UNION ELECTRIC COMPANY

STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Nine Months Ended
September 30,
         2009            2008    

Cash Flows From Operating Activities:

     

Net income

   $ 248     $ 287 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Gain on sales of emission allowances

          (1)

Net mark-to-market gain on derivatives

     (29)      (10)

Depreciation and amortization

     266       246 

Amortization of nuclear fuel

     40       31 

Amortization of debt issuance costs and premium/discounts

         

Deferred income taxes and investment tax credits, net

     219       57 

Other

     (15)      (19)

Changes in assets and liabilities:

     

Receivables

     (184)      79 

Materials and supplies

     (25)      (45)

Accounts and wages payable

     (159)      (200)

Taxes accrued

     104       57 

Assets, other

     (1)      97 

Liabilities, other

     86       55 

Pension and other postretirement benefits

     13       10 

Taum Sauk costs, net of insurance recoveries

     110       (94)
             

Net cash provided by operating activities

     680       555 
             

Cash Flows From Investing Activities:

     

Capital expenditures

     (657)      (614)

Nuclear fuel expenditures

     (47)      (161)

Proceeds from intercompany note receivable

         

Purchases of securities – nuclear decommissioning trust fund

     (315)      (386)

Sales of securities – nuclear decommissioning trust fund

     315       360 

Sales of emission allowances

         

Other

     (1)     
             

Net cash used in investing activities

     (705)      (794)
             

Cash Flows From Financing Activities:

     

Dividends on common stock

     (170)      (193)

Dividends on preferred stock

     (4)      (4)

Capital issuance costs

     (14)      (5)

Short-term debt, net

     (251)      (82)

Intercompany note payable – Ameren, net

     (92)      17 

Redemptions, repurchases, and maturities of long-term debt

          (378)

Issuances of long-term debt

     349       699 

Capital contribution from parent

     436      
             

Net cash provided by financing activities

     254       54 
             

Net change in cash and cash equivalents

     229       (185)

Cash and cash equivalents at beginning of year

          185 
             

Cash and cash equivalents at end of period

   $ 229     $
             

The accompanying notes as they relate to UE are an integral part of these financial statements.

 

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CENTRAL ILLINOIS PUBLIC SERVICE COMPANY

STATEMENT OF INCOME

(Unaudited) (In millions)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
         2009            2008            2009            2008    

Operating Revenues:

           

Electric

   $ 180     $ 190     $ 508     $ 539 

Gas

     27       25       158       173 

Other

                   
                           

Total operating revenues

     208       217       669       714 
                           

Operating Expenses:

           

Purchased power

     97       117       297       348 

Gas purchased for resale

     11       13       100       117 

Other operations and maintenance

     40       49       138       147 

Depreciation and amortization

     17       16       51       50 

Taxes other than income taxes

               26       27 
                           

Total operating expenses

     173       203       612       689 
                           

Operating Income

     35       14       57       25 

Other Income and Expenses:

           

Miscellaneous income

                   

Miscellaneous expense

               (1)      (2)
                           

Total other income

                   
                           

Interest Charges

               22       23 
                           

Income Before Income Taxes

     28            40      

Income Taxes

     10            14      
                           

Net Income

     18            26      

Preferred Stock Dividends

                   
                           

Net Income Available to Common Stockholder

   $ 17     $    $ 24     $
                           

The accompanying notes as they relate to CIPS are an integral part of these financial statements.

 

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CENTRAL ILLINOIS PUBLIC SERVICE COMPANY

BALANCE SHEET

(Unaudited) (In millions)

 

     September 30,
        2009        
   December 31,
        2008        

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $    $

Accounts receivable – trade (less allowance for doubtful accounts of $5 and $6, respectively)

     48       79 

Unbilled revenue

     45       74 

Miscellaneous accounts and notes receivable

         

Accounts receivable – affiliates

         

Current portion of intercompany note receivable – Genco

     45       42 

Current portion of intercompany tax receivable – Genco

         

Materials and supplies

     60       70 

Counterparty collateral

          21 

Current portion of regulatory assets

     51       31 

Deferred taxes

     17      

Other current assets

         
             

Total current assets

     299       339 
             

Property and Plant, Net

     1,249       1,212 

Other Assets:

     

Intercompany note receivable – Genco

          45 

Intercompany tax receivable – Genco

     87       93 

Regulatory assets

     286       195 

Other assets

     25       33 
             

Total investments and other assets

     398       366 
             

TOTAL ASSETS

   $ 1,946     $ 1,917 
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current Liabilities:

     

Short-term debt

   $    $ 62 

Borrowings from money pool

          44 

Accounts and wages payable

     35       48 

Accounts payable – affiliates

     42       49 

Taxes accrued

     12      

Customer deposits

     20       16 

Mark-to-market derivative liabilities

     14       17 

Mark-to-market derivative liabilities – affiliates

     38       14 

Other current liabilities

     43       51 
             

Total current liabilities

     204       308 
             

Long-term Debt, Net

     421       421 

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     268       259 

Accumulated deferred investment tax credits

         

Regulatory liabilities

     239       234 

Pension and other postretirement benefits

     77       79 

Other deferred credits and liabilities

     175       78 
             

Total deferred credits and other liabilities

     767       659 
             

Commitments and Contingencies (Notes 2, 8, and 9)

     

Stockholders’ Equity:

     

Common stock, no par value, 45.0 shares authorized – 25.5 shares outstanding

         

Other paid-in capital

     204       191 

Preferred stock not subject to mandatory redemption

     50       50 

Retained earnings

     300       288 
             

Total stockholders’ equity

     554       529 
             

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 1,946     $ 1,917 
             

The accompanying notes as they relate to CIPS are an integral part of these financial statements.

 

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CENTRAL ILLINOIS PUBLIC SERVICE COMPANY

STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Nine Months Ended
September 30,
         2009            2008    

Cash Flows From Operating Activities:

     

Net income

   $ 26     $

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization

     51       50 

Amortization of debt issuance costs and premium/discounts

         

Deferred income taxes and investment tax credits, net

     (8)      (2)

Changes in assets and liabilities:

     

Receivables

     66       32 

Materials and supplies

     10       (25)

Accounts and wages payable

     (14)      (6)

Taxes accrued

         

Assets, other

     26       19 

Liabilities, other

     (5)     

Pension and other postretirement benefits

         
             

Net cash provided by operating activities

     160       80 
             

Cash Flows From Investing Activities:

     

Capital expenditures

     (83)      (65)

Proceeds from intercompany note receivable – Genco

     42       39 
             

Net cash used in investing activities

     (41)      (26)
             

Cash Flows From Financing Activities:

     

Dividends on common stock

     (12)     

Dividends on preferred stock

     (2)      (2)

Capital issuance costs

     (3)     

Short-term debt, net

     (62)      (29)

Changes in money pool borrowings, net

     (44)     

Redemptions, repurchases, and maturities of long-term debt

          (35)

Capital contribution from parent

     13      
             

Net cash used in financing activities

     (110)      (66)
             

Net change in cash and cash equivalents

          (12)

Cash and cash equivalents at beginning of year

          26 
             

Cash and cash equivalents at end of period

   $    $ 14 
             

The accompanying notes as they relate to CIPS are an integral part of these financial statements.

 

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AMEREN ENERGY GENERATING COMPANY

CONSOLIDATED STATEMENT OF INCOME

(Unaudited) (In millions)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
         2009            2008            2009            2008    

Operating Revenues

   $ 212     $ 238     $ 655     $ 667 

Operating Expenses:

           

Fuel

     79       131       224       268 

Coal contract settlement

                    (60)

Other operations and maintenance

     46       40       127       133 

Depreciation and amortization

     19       16       52       48 

Taxes other than income taxes

               15       16 
                           

Total operating expenses

     149       192       418       405 
                           

Operating Income

     63       46       237       262 

Other Income and Expenses:

           

Miscellaneous income

                   

Miscellaneous expense

          (1)           (1)
                           

Total other expenses

          (1)          
                           

Interest Charges

     14       14       43       40 
                           

Income Before Income Taxes

     49       31       194       222 

Income Taxes

     22       11       74       82 
                           

Net Income

   $ 27     $ 20     $ 120     $ 140 
                           

The accompanying notes as they relate to Genco are an integral part of these consolidated financial statements.

 

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AMEREN ENERGY GENERATING COMPANY

CONSOLIDATED BALANCE SHEET

(Unaudited) (In millions, except shares)

 

     September 30,
        2009        
   December 31,
        2008        

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $    $

Accounts receivable – affiliates

     82       88 

Miscellaneous accounts and notes receivable

          15 

Materials and supplies

     126       122 

Income tax receivable

     22      

Other current assets

         
             

Total current assets

     237       237 
             

Property and Plant, Net

     2,093       1,950 

Intangible Assets

     37       49 

Other Assets

     13      
             

TOTAL ASSETS

   $ 2,380     $ 2,244 
             

LIABILITIES AND STOCKHOLDER’S EQUITY

     

Current Liabilities:

     

Short-term debt

   $ 100     $

Current portion of intercompany note payable – CIPS

     45       42 

Borrowings from money pool

     37       80 

Accounts and wages payable

     51       82 

Accounts payable – affiliates

     52       58 

Current portion of intercompany tax payable – CIPS

         

Taxes accrued

     14       16 

Interest accrued

     26       12 

Deferred taxes

     20       15 

Other current liabilities

     17       16 
             

Total current liabilities

     371       330 
             

Long-term Debt, Net

     774       774 

Intercompany Note Payable – CIPS

          45 

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     182       136 

Accumulated deferred investment tax credits

         

Intercompany tax payable – CIPS

     87       93 

Asset retirement obligations

     52       49 

Pension and other postretirement benefits

     69       67 

Other deferred credits and liabilities

     24       49 
             

Total deferred credits and other liabilities

     419       400 
             

Commitments and Contingencies (Notes 2, 8 and 9)

     

Stockholder’s Equity:

     

Common stock, no par value, 10,000 shares authorized – 2,000 shares outstanding

         

Other paid-in capital

     503       503 

Retained earnings

     361       241 

Accumulated other comprehensive loss

     (48)      (49)
             

Total stockholder’s equity

     816       695 
             

TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY

   $ 2,380     $ 2,244 
             

The accompanying notes as they relate to Genco are an integral part of these consolidated financial statements.

 

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AMEREN ENERGY GENERATING COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Nine Months Ended
September 30,
         2009            2008    

Cash Flows From Operating Activities:

     

Net income

   $ 120     $ 140 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Gain on sales of emission allowances

          (1)

Net mark-to-market (gain) loss on derivatives

     (8)     

Depreciation and amortization

     65       68 

Amortization of debt issuance costs and discounts

         

Deferred income taxes and investment tax credits, net

     49       14 

Other

         

Changes in assets and liabilities:

     

Receivables

     18       15 

Materials and supplies

     (4)      (29)

Accounts and wages payable

     (9)      (18)

Taxes accrued

     (2)      (2)

Assets, other

     (14)     

Liabilities, other

     (15)      11 

Pension and other postretirement benefits

         
             

Net cash provided by operating activities

     208       209 
             

Cash Flows From Investing Activities:

     

Capital expenditures

     (216)      (216)

Changes in money pool advances

          (13)

Purchases of emission allowances

     (2)      (2)

Sales of emission allowances

         
             

Net cash used in investing activities

     (218)      (230)
             

Cash Flows From Financing Activities:

     

Dividends on common stock

          (84)

Capital issuance costs

     (4)      (2)

Short-term debt, net

     100      (100)

Changes in money pool borrowings, net

     (43)      (54)

Intercompany note payable – CIPS

     (42)      (39)

Issuances of long-term debt

          300 
             

Net cash provided by financing activities

     11       21 
             

Net change in cash and cash equivalents

         

Cash and cash equivalents at beginning of year

         
             

Cash and cash equivalents at end of period

   $    $
             

The accompanying notes as they relate to Genco are an integral part of these consolidated financial statements.

 

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CILCORP INC.

CONSOLIDATED STATEMENT OF INCOME

(Unaudited) (In millions)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
         2009            2008            2009            2008    

Operating Revenues:

           

Electric

   $ 200     $ 227     $ 548     $ 584 

Gas

     31       37       188       257 

Support services – affiliates

     19            53      

Other

                   
                           

Total operating revenues

     251       264       794       842 
                           

Operating Expenses:

           

Fuel

     37       40       85       93 

Purchased power

     44       84       131       225 

Gas purchased for resale

     14       25       129       190 

Other operations and maintenance

     63       49       190       145 

Goodwill impairment loss

               462      

Depreciation and amortization

     19       22       55       65 

Taxes other than income taxes

               20       18 
                           

Total operating expenses

     183       224       1,072       736 
                           

Operating Income (Loss)

     68       40       (278)      106 

Other Income and Expenses:

           

Miscellaneous income

                   

Miscellaneous expense

     (2)      (2)      (4)      (4)
                           

Total other expenses

     (1)      (1)      (3)      (2)

Interest Charges

     24       13       55       41 
                           

Income (Loss) Before Income Taxes

     43       26       (336)      63 

Income Taxes

     14            43       20 
                           

Net Income (Loss)

     29       18       (379)      43 

Less: Net Income Attributable to Noncontrolling Interests

                   
                           

Net Income (Loss) Attributable to CILCORP Inc.

   $ 28     $ 18     $ (380)    $ 42 
                           

The accompanying notes as they relate to CILCORP are an integral part of these financial statements.

 

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CILCORP INC.

CONSOLIDATED BALANCE SHEET

(Unaudited) (In millions, except shares)

 

     September 30,
        2009        
   December 31,
        2008        
ASSETS      

Current Assets:

     

Cash and cash equivalents

   $ 111     $

Accounts receivable – trade (less allowance for doubtful accounts of $9 and $3, respectively)

     30       60 

Unbilled revenue

     17       65 

Accounts and notes receivable – affiliates

     61       59 

Advances to money pool

         

Materials and supplies

     126       131 

Income tax receivable

     29      

Current portion of accumulated deferred income taxes, net

     10       24 

Current portion of regulatory assets

     33       24 

Other current assets

     10       20 
             

Total current assets

     428       385 
             

Property and Plant, Net

     1,750       1,710 

Investments and Other Assets:

     

Goodwill

     80       542 

Intangible assets

     32       35 

Regulatory assets

     193       171 

Other assets

     26       22 
             

Total investments and other assets

     331       770 
             

TOTAL ASSETS

   $ 2,509     $ 2,865 
             

LIABILITIES AND EQUITY

     

Current Liabilities:

     

Current maturities of long-term debt

   $ 124     $ 126 

Short-term debt

          286 

Borrowings from money pool

          98 

Intercompany note payable – Ameren

     552       152 

Accounts and wages payable

     50       117 

Accounts payable – affiliates

     60       84 

Taxes accrued

         

Mark-to-market derivative liabilities

     12       21 

Mark-to-market derivative liabilities – affiliates

     21      

Other current liabilities

     81       69 
             

Total current liabilities

     904       964 
             

Long-term Debt, Net

     534       536 

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     232       212 

Accumulated deferred investment tax credits

         

Regulatory liabilities

     62       59 

Pension and other postretirement benefits

     229       216 

Asset retirement obligations

     30       28 

Other deferred credits and liabilities

     90       76 
             

Total deferred credits and other liabilities

     647       596 
             

Commitments and Contingencies (Notes 2, 8 and 9)

     

CILCORP Inc. Stockholder’s Equity:

     

Common stock, no par value, 10,000 shares authorized – 1,000 shares outstanding

         

Other paid-in capital

     663       627 

Retained earnings (deficit)

     (280)      100 

Accumulated other comprehensive income

     22       23 
             

Total CILCORP Inc. stockholder’s equity

     405       750 
             

Noncontrolling Interest

     19       19 
             

Total equity

     424       769 
             

TOTAL LIABILITIES AND EQUITY

   $ 2,509     $ 2,865 
             

The accompanying notes as they relate to CILCORP are an integral part of these consolidated financial statements.

 

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CILCORP INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Nine Months Ended
September 30,
         2009            2008    

Cash Flows From Operating Activities:

     

Net income (loss)

   $ (379)    $ 43 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

     

Net mark-to-market (gain) loss on derivatives

     (3)     

Depreciation and amortization

     56       66 

Amortization of debt issuance costs and premium/discounts

         

Deferred income taxes and investment tax credits, net

     30       30

Goodwill impairment loss

     462      

Changes in assets and liabilities:

     

Receivables

     70       (3)

Materials and supplies

          (46)

Accounts and wages payable

     (48)      16 

Taxes accrued

         

Assets, other

     (8)      (5)

Liabilities, other

         

Pension and postretirement benefits

     11       (4)
             

Net cash provided by operating activities

     201       108 
             

Cash Flows From Investing Activities:

     

Capital expenditures

     (128)      (223)

Money pool advances, net

          (1)

Purchases of emission allowances

     (1)     

Other

         
             

Net cash used in investing activities

     (127)      (222)
             

Cash Flows From Financing Activities:

     

Capital issuance costs

     (14)      -

Dividends paid to noncontrolling interest holders

     (1)      (1)

Short-term debt, net

     (286)      (88)

Intercompany note payable – Ameren, net

     400       61 

Changes in money pool borrowings, net

     (98)      171 

Redemptions, repurchases, and maturities of:

     

Long-term debt

          (19)

Preferred stock

          (16)

Capital contribution from parent

     36      
             

Net cash provided by financing activities

     37       108 
             

Net change in cash and cash equivalents

     111       (6)

Cash and cash equivalents at beginning of year

         
             

Cash and cash equivalents at end of period

   $ 111     $
             

The accompanying notes as they relate to CILCORP are an integral part of these consolidated financial statements.

 

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CENTRAL ILLINOIS LIGHT COMPANY

CONSOLIDATED STATEMENT OF INCOME

(Unaudited) (In millions)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
         2009            2008            2009            2008    

Operating Revenues:

           

Electric

   $ 200     $ 227     $ 548     $ 584 

Gas

     31       37       188       257 

Support services – affiliates

     19            53      

Other

                   
                           

Total operating revenues

     251       264       794       842 
                           

Operating Expenses:

           

Fuel

     35       39       81       89 

Purchased power

     44       84       131       225 

Gas purchased for resale

     14       25       129       190 

Other operations and maintenance

     64       48       193       145 

Depreciation and amortization

     19       21       53       62 

Taxes other than income taxes

               20       18 
                           

Total operating expenses

     182       221       607       729 
                           

Operating Income

     69       43       187       113 

Other Income and Expenses:

           

Miscellaneous income

                   

Miscellaneous expense

     (1)      (2)      (4)      (3)
                           

Total other expenses

          (1)      (3)      (1)
                           

Interest Charges

     13            28       16 
                           

Income Before Income Taxes

     56       37       156       96 

Income Taxes

     19       13       55       34 
                           

Net Income

     37       24       101       62 

Preferred Stock Dividends

                   
                           

Net Income Available to Common Stockholder

   $ 36     $ 24     $ 100     $ 61 
                           

The accompanying notes as they relate to CILCO are an integral part of these consolidated financial statements.

 

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CENTRAL ILLINOIS LIGHT COMPANY

CONSOLIDATED BALANCE SHEET

(Unaudited) (In millions)

 

     September 30,
        2009        
   December 31,
        2008        

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $ 111     $

Accounts receivable – trade (less allowance for doubtful accounts of $9 and $3, respectively)

     30       60 

Unbilled revenue

     17       65 

Accounts receivable – affiliates

     57       51 

Materials and supplies

     125       131 

Current portion of regulatory assets

     33       24 

Other current assets

     39       35 
             

Total current assets

     412       366 
             

Property and Plant, Net

     1,777       1,734 

Investments and Other Assets:

     

Intangible assets

         

Regulatory assets

     193       171 

Other assets

     20       22 
             

Total investments and other assets

     214       194 
             

TOTAL ASSETS

   $ 2,403     $ 2,294 
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current Liabilities:

     

Short-term debt

   $    $ 236 

Borrowings from money pool

          98 

Intercompany note payable – Ameren

     334      

Accounts and wages payable

     50       117 

Accounts payable – affiliates

     57       83 

Taxes accrued

         

Mark-to-market derivative liabilities

     12       21 

Mark-to-market derivative liabilities – affiliates

     21      

Other current liabilities

     64       60 
             

Total current liabilities

     542       630 
             

Long-term Debt, Net

     279       279 

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     198       171 

Accumulated deferred investment tax credits

         

Regulatory liabilities

     210       206 

Pension and other postretirement benefits

     229       216 

Asset retirement obligations

     30       28 

Other deferred credits and liabilities

     90       75 
             

Total deferred credits and other liabilities

     761       701 
             

Commitments and Contingencies (Notes 2, 8 and 9)

     

Stockholders’ Equity:

     

Common stock, no par value, 20.0 shares authorized – 13.6 shares outstanding

         

Other paid-in capital

     465       429 

Preferred stock not subject to mandatory redemption

     19       19 

Retained earnings

     340       240 

Accumulated other comprehensive loss

     (3)      (4)
             

Total stockholders’ equity

     821       684 
             

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 2,403     $ 2,294 
             

The accompanying notes as they relate to CILCO are an integral part of these consolidated financial statements.

 

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CENTRAL ILLINOIS LIGHT COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Nine Months Ended
September 30,
         2009            2008    

Cash Flows From Operating Activities:

     

Net income

   $ 101     $ 62 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Net mark-to-market (gain) loss on derivatives

     (3)     

Depreciation and amortization

     54       62 

Amortization of debt issuance costs and premium/discounts

         

Deferred income taxes and investment tax credits, net

     26       30 

Changes in assets and liabilities:

     

Receivables

     66       (3)

Materials and supplies

          (46)

Accounts and wages payable

     (50)      15 

Taxes accrued

     (4)     

Assets, other

          (9)

Liabilities, other

     (4)      (2)

Pension and postretirement benefits

     14      
             

Net cash provided by operating activities

     211       120 
             

Cash Flows From Investing Activities:

     

Capital expenditures

     (128)      (223)

Purchases of emission allowances

     (1)     

Other

         
             

Net cash used in investing activities

     (128)      (221)
             

Cash Flows From Financing Activities:

     

Dividends on preferred stock

     (1)      (1)

Capital issuance costs

     (7)     

Short-term debt, net

     (236)      (40)

Intercompany note payable – Ameren, net

     334      

Changes in money pool borrowings, net

     (98)      171 

Redemptions, repurchases, and maturities of:

     

Long-term debt

          (19)

Preferred stock

          (16)

Capital contribution from parent

     36      
             

Net cash provided by financing activities

     28       95 
             

Net change in cash and cash equivalents

     111       (6)

Cash and cash equivalents at beginning of year

         
             

Cash and cash equivalents at end of period

   $ 111     $
             

The accompanying notes as they relate to CILCO are an integral part of these consolidated financial statements.

 

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ILLINOIS POWER COMPANY

STATEMENT OF INCOME

(Unaudited) (In millions)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
         2009            2008            2009            2008    

Operating Revenues:

           

Electric

   $ 266     $ 303     $ 765     $ 799 

Gas

     61       49       351       414 

Other

               10      
                           

Total operating revenues

     329       353       1,126       1,216 
                           

Operating Expenses:

           

Purchased power

     126       185       401       499 

Gas purchased for resale

     23       22       214       298 

Other operations and maintenance

     56       79       200       233 

Depreciation and amortization

     24       21       73       61 

Amortization of regulatory assets

               13       13 

Taxes other than income taxes

     12       12       46       48 
                           

Total operating expenses

     246       324       947       1,152 
                           

Operating Income

     83       29       179       64 

Other Income and Expenses:

           

Miscellaneous income

                   

Miscellaneous expense

     (1)      (2)      (2)      (5)
                           

Total other income

                   
                           

Interest Charges

     24       22       76       72 
                           

Income (Loss) Before Income Taxes

     59            104       (4)

Income Taxes (Benefit)

     24            42       (2)
                           

Net Income (Loss)

     35            62       (2)

Preferred Stock Dividends

                   
                           

Net Income (Loss) Available to Common Stockholder

   $ 34     $    $ 60     $ (4)
                           

The accompanying notes as they related to IP are an integral part of these financial statements.

 

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ILLINOIS POWER COMPANY

BALANCE SHEET

(Unaudited) (In millions)

 

     September 30,
        2009        
   December 31,
        2008        
ASSETS      

Current Assets:

     

Cash and cash equivalents

   $ 178     $ 50 

Accounts receivable – trade (less allowance for doubtful accounts of $8 and $12, respectively)

     93       152 

Unbilled revenue

     38       133 

Accounts receivable – affiliates

     64       23 

Advances to money pool

          44 

Materials and supplies

     136       144 

Counterparty collateral

     11       35 

Current portion of regulatory assets

     84       57 

Other current assets

     28       21 
             

Total current assets

     632       659 
             

Property and Plant, Net

     2,379       2,329 

Investments and Other Assets:

     

Goodwill

     214       214 

Regulatory assets

     601       517 

Other assets

     49       47 
             

Total investments and other assets

     864       778 
             

TOTAL ASSETS

   $ 3,875     $ 3,766 
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current Liabilities:

     

Current maturities of long-term debt

   $    $ 250 

Accounts and wages payable

     67       94 

Accounts payable – affiliates

     119       105 

Taxes accrued

         

Interest accrued

     35       21 

Customer deposits

     46       50 

Mark-to-market derivative liabilities

     26       36 

Mark-to-market derivative liabilities – affiliates

     58       20 

Other current liabilities

     50       64 
             

Total current liabilities

     405       648 
             

Long-term Debt, Net

     1,146       1,150 

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     211       176 

Regulatory liabilities

     87       76 

Pension and other postretirement benefits

     297       314 

Other deferred credits and liabilities

     300       151 
             

Total deferred credits and other liabilities

     895       717 
             

Commitments and Contingencies (Notes 2, 8 and 9)

     

Stockholders’ Equity:

     

Common stock, no par value, 100.0 shares authorized – 23.0 shares outstanding

         

Other paid-in-capital

     1,313       1,194 

Preferred stock not subject to mandatory redemption

     46       46 

Retained earnings

     67      

Accumulated other comprehensive income

         
             

Total stockholders’ equity

     1,429       1,251 
             

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 3,875     $ 3,766 
             

The accompanying notes as they related to IP are an integral part of these financial statements.

 

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ILLINOIS POWER COMPANY

STATEMENT OF CASH FLOWS

(Unaudited) (In millions)

 

     Nine Months Ended
September 30,
         2009            2008    

Cash Flows From Operating Activities:

     

Net income (loss)

   $ 62     $ (2)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

     

Depreciation and amortization

     82       67 

Amortization of debt issuance costs and premium/discounts

         

Deferred income taxes

     35       23 

Other

     (1)     

Changes in assets and liabilities:

     

Receivables

     116       52 

Materials and supplies

          (68)

Accounts and wages payable

          13 

Taxes accrued

     (4)     

Assets, other

     20       (12)

Liabilities, other

     23       31 

Pension and other postretirement benefits

         
             

Net cash provided by operating activities

     351       120 
             

Cash Flows From Investing Activities:

     

Capital expenditures

     (127)      (128)

Changes in money pool advances, net

     44       (9)

Other

          (2)
             

Net cash used in investing activities

     (83)      (139)
             

Cash Flows From Financing Activities:

     

Dividends on common stock

          (45)

Dividends on preferred stock

     (2)      (2)

Capital issuance costs

     (7)      (2)

Short-term debt, net

          129 

Redemptions, repurchases and maturities of long-term debt

     (250)      (337)

Issuance of long-term debt

          336 

Capital contribution from parent

     119      

IP SPT maturities

          (54)
             

Net cash provided by (used in) financing activities

     (140)      25 
             

Net change in cash and cash equivalents

     128      

Cash and cash equivalents at beginning of year

     50      
             

Cash and cash equivalents at end of period

   $ 178     $ 12 
             

The accompanying notes as they relate to IP are an integral part of these financial statements.

 

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AMEREN CORPORATION (Consolidated)

UNION ELECTRIC COMPANY

CENTRAL ILLINOIS PUBLIC SERVICE COMPANY

AMEREN ENERGY GENERATING COMPANY (Consolidated)

CILCORP INC. (Consolidated)

CENTRAL ILLINOIS LIGHT COMPANY (Consolidated)

ILLINOIS POWER COMPANY

COMBINED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

September 30, 2009

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 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 and CILCORP holding companies 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.

 

 

UE, or Union Electric Company, also known as AmerenUE, operates a rate-regulated electric generation, transmission and distribution business, and a rate-regulated natural gas transmission and distribution business in Missouri.

 

 

CIPS, or Central Illinois Public Service Company, also known as AmerenCIPS, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois.

 

 

Genco, or Ameren Energy Generating Company, operates a merchant electric generation business in Illinois and Missouri.

 

 

CILCO, or Central Illinois Light Company, also known as AmerenCILCO, is a subsidiary of CILCORP (a holding company). It operates a rate-regulated electric transmission and distribution business, a merchant electric generation business (through its subsidiary, AERG) and a rate-regulated natural gas transmission and distribution business, all in Illinois.

 

 

IP, or Illinois Power Company, also known as AmerenIP, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois.

Ameren has various other subsidiaries responsible for the short- and long-term marketing of power, procurement of fuel, management of commodity risks, and provision of other shared services. Ameren has an 80% ownership interest in EEI, which until February 29, 2008, was held 40% by UE and 40% by Development Company. Ameren consolidates EEI for financial reporting purposes. UE reported EEI under the equity method until February 29, 2008. Effective February 29, 2008, UE’s and Development Company’s ownership interests in EEI were transferred to Resources Company through an internal reorganization. UE’s interest in EEI was transferred at book value indirectly through a dividend to Ameren.

The financial statements of Ameren, Genco, CILCORP and CILCO are prepared on a consolidated basis. UE, CIPS and IP have no subsidiaries, and therefore their 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 management to make certain estimates and assumptions. Such estimates and assumptions affect

 

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reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The results of operations of an interim period may not give a true indication of results that may be expected for a full year. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K.

Management has performed an evaluation of subsequent events through November 6, 2009, which was the date Ameren’s financial statements were issued and the date UE’s, CIPS’, Genco’s, CILCORP’s, CILCO’s and IP’s financial statements were available to be issued.

Earnings Per Share

There were no material differences between Ameren’s basic and diluted earnings per share amounts for the three and nine months ended September 30, 2009 and 2008. The number of stock options, restricted stock shares, and performance share units outstanding had an immaterial impact on earnings per share.

Long-term Incentive Plan of 1998 and 2006 Omnibus Incentive Compensation Plan

A summary of nonvested shares as of September 30, 2009, under the Long-term Incentive Plan of 1998, as amended, and the 2006 Omnibus Incentive Compensation Plan (2006 Plan) is presented below:

 

      Performance Share Units     Restricted Shares  
      Share Units     Weighted-average
Fair Value Per Unit
    Shares     Weighted-average
Fair Value Per Share
 

Nonvested at January 1, 2009

   675,977      $ 43.28      213,683      $ 47.46   

Granted

   741,738 (a)      15.52      -        -   

Dividends

   -        -      6,116        24.52   

Forfeitures

   (14,163     30.14      (3,645     48.30   

Vested

   (143,610 )(b)      19.17      (82,277     45.15   

Nonvested at September 30, 2009

   1,259,942      $ 29.83      133,877      $ 48.92   

 

(a) Includes performance share units (share units) granted to certain executive and nonexecutive officers and other eligible employees in March 2009 under the 2006 Plan.
(b) Share units 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.

The fair value of each share unit awarded in March 2009 under the 2006 Plan was determined to be $15.52 based on Ameren’s closing common share price of $22.20 per share at March 2, 2009, and lattice simulations 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, 2009. The significant assumptions used to calculate fair value also included a three-year risk-free rate of 1.24%, volatility of 21.3% to 33.1% for the peer group, and Ameren’s attainment of earnings per share of at least $2.54 during each year of the performance period.

Ameren recorded compensation expense of $4 million and $7 million for the three months ended September 30, 2009 and 2008, respectively, and a related tax benefit of $2 million and $3 million for the three months ended September 30, 2009 and 2008, respectively. Ameren recorded compensation expense of $12 million and $21 million for the nine months ended September 30, 2009 and 2008, respectively, and a related tax benefit of $5 million and $8 million for the nine months ended September 30, 2009 and 2008, respectively. As of September 30, 2009, total compensation expense of $11 million related to nonvested awards not yet recognized was expected to be recognized over a weighted-average period of 19 months.

 

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Accounting Changes and Other Matters

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued authoritative guidance that established accounting and reporting standards for minority interests, which were recharacterized as noncontrolling interests. This guidance requires noncontrolling interests to be classified as a component of equity separate from the parent’s equity; purchases or sales of equity interests that do not result in a change in control to be accounted for as equity transactions; net income attributable to the noncontrolling interest to be included in consolidated net income in the statement of income; and upon a loss of control, the interest sold, as well as any interest retained, to be recorded at fair value, with any gain or loss recognized in earnings. We adopted the provisions of this guidance as of the beginning of 2009, which applies prospectively, except for the presentation and disclosure requirements, for which it applies retroactively. This guidance impacts Ameren and CILCORP. See Noncontrolling Interest below for additional information.

Disclosures about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued amended authoritative guidance that requires entities to provide greater transparency in interim and annual financial statements about how and why the entity uses derivative instruments, how the instruments and related hedged items are accounted for, and how the instruments and related hedged items affect the financial position, results of operations, and cash flows of the entity. This guidance requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. Effective for us in the first quarter of 2009, the adoption of this guidance did not have a material impact on our results of operations, financial position, or liquidity because it provided enhanced amended disclosure requirements only. See Note 6 - Derivative Financial Instruments for additional information.

Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly

In April 2009, the FASB issued additional authoritative guidance regarding the factors that should be considered in estimating fair value when there has been a significant decrease in market activity for an asset or liability. The guidance, which applies to all fair value measurements, does not change the objective of a fair value measurement. The adoption of this guidance, effective for us as of June 30, 2009, did not have a material impact on our results of operations, financial position, or liquidity.

Interim Disclosures about Fair Value of Financial Instruments

In April 2009, the FASB issued amended authoritative guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The adoption of this guidance, effective for us as of June 30, 2009, did not have a material impact on our results of operations, financial position, or liquidity, because it provided enhanced disclosure requirements only. See Note 7 - Fair Value Measurements for our interim reporting disclosures.

Recognition and Presentation of Other-Than-Temporary Impairments

In April 2009, the FASB issued authoritative guidance that established a new method of recognizing and reporting other-than-temporary impairments of debt securities and contains additional annual and interim disclosure requirements related to debt and equity securities.

 

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Under the new guidance, an impairment of debt securities is other-than-temporary if (1) the entity intends to sell the security, (2) it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, or (3) the entity does not expect to recover the security’s entire amortized cost basis. The adoption of this guidance, effective for us as of June 30, 2009, did not have a material impact on our results of operations, financial position, or liquidity.

Subsequent Events

In May 2009, the FASB issued authoritative guidance that established general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The adoption of this guidance, effective for us as of June 30, 2009, did not have a material impact on our results of operations, financial position, or liquidity.

Variable Interest Entities

In June 2009, the FASB issued amended authoritative guidance that significantly changes the consolidation rules for VIEs. The guidance requires an enterprise to qualitatively assess the determination of the primary beneficiary of a VIE based on whether the entity (1) has the power to direct matters that most significantly impact the activities of the VIE, and (2) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Further, the guidance requires an ongoing reconsideration of the primary beneficiary. It also amends the events that trigger a reassessment of whether an entity is a VIE. We are in the process of determining the impact the adoption of this guidance, effective for us as of January 1, 2010, will have on our results of operations, financial position, and liquidity, if any.

The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles

In June 2009, the FASB issued the FASB Accounting Standards Codification (the “Codification”), which is the primary source of authoritative GAAP to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification modifies the hierarchy of GAAP to include only two levels: authoritative and nonauthoritative. The Codification supersedes all non-SEC accounting and reporting standards. All other nongrandfathered, non-SEC accounting literature not included in the Codification are nonauthoritative. The adoption of the Codification, effective for us as of July 1, 2009, did not impact our results of operations, financial position, or liquidity.

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. Ameren’s and IP’s goodwill relates to the acquisition of IP in 2004. Ameren’s and CILCORP’s goodwill relates to the acquisition of CILCORP in 2003. Ameren’s goodwill also includes an additional 20% ownership interest in EEI acquired in 2004 as well as the acquisition of Medina Valley in 2003. During the first quarter of 2009, CILCORP recognized a non-cash goodwill impairment loss of $462 million. Ameren and IP did not recognize a goodwill impairment during the first nine months of 2009. See Note 14 - Goodwill Impairment for further information about CILCORP’s goodwill impairment.

Intangible Assets. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired. Ameren’s, UE’s, Genco’s, CILCORP’s and CILCO’s intangible assets consisted of emission allowances at September 30, 2009. See also Note 9 - Commitments and Contingencies for additional information on emission allowances.

 

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The following table presents the SO2 and NOx emission allowances held and the related aggregate SO2 and NOx emission allowance book values that were carried as intangible assets at September 30, 2009. Emission allowances consist of various individual emission allowance certificates and do not expire. Emission allowances are charged to fuel expense as they are used in operations.

 

SO2 and NOx in tons    SO2(a)    NOx(b)    Book Value(c)  

Ameren(d)

   3,085,000    31,213    $ 138 (e) 

UE

   1,647,000    15,840      38   

Genco

   753,000    11,870      37   

CILCORP

   357,000    758      32 (f) 

CILCO (AERG)

   357,000    758      1   

EEI

   328,000    2,745      7   

 

(a) Vintages are from 2009 to 2019. Each company possesses additional allowances for use in periods beyond 2019.
(b) Vintage is 2009.
(c)

The book value represents SO2 and NOx emission allowances for use in periods through 2038. The book value at December 31, 2008, for Ameren, UE, Genco, CILCORP, CILCO (AERG), and EEI was $167 million, $48 million, $49 million, $35 million, $1 million, and $9 million, respectively.

(d) Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations.
(e) Includes $24 million of fair-market value adjustments recorded in connection with Ameren’s 2004 acquisition of an additional 20% ownership interest in EEI.
(f) Includes fair market value adjustments recorded in connection with Ameren’s acquisition of CILCORP.

The following table presents amortization expense based on usage of emission allowances, net of gains from emission allowance sales, for Ameren, UE, Genco, CILCORP and CILCO (AERG) during the three and nine months ended September 30, 2009 and 2008.

 

      Three Months     Nine Months  
      2009     2008     2009     2008  

Ameren(a)(b)

   $ 10      $ 9      $ 23      $ 25   

UE

     -        -        (c     (1

Genco

     5        7        13        20   

CILCORP(b)

     2        2        4        5   

CILCO (AERG)

     (c     (c     1        (c

 

(a) Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations.
(b) Includes allowances consumed that were recorded through purchase accounting.
(c) Less than $1 million.

Employee Separation and Other Charges

In the third quarter of 2009, Ameren initiated a voluntary separation program that provided eligible management employees the opportunity to voluntarily terminate and receive benefits consistent with Ameren’s standard management severance program. This program was offered to eligible management employees at Ameren’s subsidiaries, including UE, CIPS, Genco, CILCORP, CILCO and IP. Additionally, in November 2009, Ameren initiated an involuntary separation program to reduce additional management positions under terms and benefits consistent with Ameren’s standard management severance program. Ameren recorded a pretax charge to earnings of $17.5 million during the quarter ended September 30, 2009, (UE - $9 million, CIPS - $1 million, Genco - $3 million, CILCORP - $3 million, CILCO - $3 million, and IP - $1 million) for the severance costs related to both the voluntary and involuntary separation programs as well as for Merchant Generation staff reductions announced in the third quarter of 2009. This charge was recorded in other operations and maintenance expense in the applicable statements of income. It is anticipated that substantially all of this amount will be paid prior to December 31, 2009. The number of positions eliminated as a result of these separation programs, including the Merchant Generation staff reductions, will total approximately 300. In addition to these programs, Genco recorded a $4 million pretax charge to earnings in the third quarter of 2009 for the retirement of two generating units at its Meredosia power plant and for related obsolete inventory.

 

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Excise Taxes

Excise taxes imposed on us are reflected on Missouri electric, Missouri gas, and Illinois gas customer bills. They are recorded gross in Operating Revenues and Operating Expenses - Taxes Other than Income Taxes on the statement of income. Excise taxes reflected on 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 and Operating Expenses - Taxes Other than Income Taxes for the three and nine months ended September 30, 2009 and 2008:

 

      Three Months     Nine Months  
      2009     2008     2009     2008  

Ameren

   $ 44      $ 43      $ 128      $ 130   

UE

     36        36        89        88   

CIPS

     2        2        10        11   

CILCORP

     2        1        8        8   

CILCO

     2        1        8        8   

IP

     4        4        21        23   

Uncertain Tax Positions

The amount of unrecognized tax benefits as of September 30, 2009, was $136 million, $86 million, less than $1 million, $24 million, $17 million, $17 million, and less than $1 million for Ameren, UE, CIPS, Genco, CILCORP, CILCO and IP, respectively. The amount of unrecognized tax benefits (detriments) as of September 30, 2009, that would impact the effective tax rate, if recognized, was $6 million, $2 million, less than $1 million, $(1) million, less than $1 million, less than $1 million, and less than $1 million for Ameren, UE, CIPS, Genco, CILCORP, CILCO and IP, respectively.

Ameren remains subject to U.S. federal income tax examination by the Internal Revenue Service for 2005 and subsequent years. 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 have material state income tax issues under examination, administrative appeals, or litigation.

It is reasonably possible that events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits to increase or decrease. However, the Ameren Companies do not believe such increases or decreases would be material to their financial condition or results of operations.

Asset Retirement Obligations

AROs at Ameren, UE, CIPS, Genco, CILCORP, CILCO and IP increased compared to December 31, 2008, to reflect the accretion of obligations to their fair values.

Noncontrolling Interest

At Ameren, noncontrolling interest comprises the 20% of EEI’s net assets not owned by Ameren and the preferred stock not subject to mandatory redemption of the Ameren subsidiaries. These noncontrolling interests are classified as a component of equity separate from Ameren’s equity in its consolidated balance sheet. At CILCORP, noncontrolling interest comprises the preferred stock not subject to mandatory redemption of its subsidiary, CILCO. This noncontrolling interest is classified as a component of equity separate from CILCORP’s equity in CILCORP’s consolidated balance sheet.

 

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A reconciliation of the equity changes attributable to the noncontrolling interest at Ameren and CILCORP for the three and nine months ended September 30, 2009 and 2008 is shown below:

 

      Three Months     Nine Months  
      2009     2008     2009     2008  

Ameren:

        

Noncontrolling interest, beginning of period

   $ 207      $ 219      $ 216      $ 217   

Net income attributable to noncontrolling interest

     2        11        9        33   

Dividends paid to noncontrolling interest holders

     (3     (11     (19     (31

Noncontrolling interest, end of period

   $ 206      $ 219      $ 206      $ 219   

CILCORP:

        

Noncontrolling interest, beginning of period

   $ 19      $ 19      $ 19      $ 19   

Net income attributable to noncontrolling interest

     1        -        1        1   

Dividends paid to noncontrolling interest holders

     (1     -        (1     (1

Noncontrolling interest, end of period

   $ 19      $ 19      $ 19      $ 19   

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 January 2009, the MoPSC issued an order approving an increase for UE in annual revenues of approximately $162 million for electric service and the implementation of a FAC and a vegetation management and infrastructure inspection cost tracking mechanism, among other things. In February 2009, Noranda, UE’s largest electric customer, and the Missouri Office of Public Counsel appealed certain aspects of the MoPSC decision to the Circuit Court of Pemiscot County, Missouri, the Circuit Court of Stoddard County, Missouri, and the Circuit Court of Cole County, Missouri. In September 2009, the Circuit Court of Pemiscot County granted Noranda’s request to stay the electric rate increase granted by the January 2009 MoPSC order as it applies specifically to Noranda’s electric service account until the court renders its decision on the appeal. The merits of the appeal will be briefed by the parties over the next several months, with a decision likely to be issued by the court in the first half of 2010. During the stay, Noranda will pay into the court registry the contested portion of its monthly billings, approximately $0.5 million per month based on current usage levels. If UE wins the appeal, it will receive those monthly payments plus interest.

Pending Electric Rate Case

UE filed a request with the MoPSC in July 2009 to increase its annual revenues for electric service by $402 million. Included in this increase request was approximately $227 million of anticipated increases in normalized net fuel costs in excess of the net fuel costs included in base rates previously authorized by the MoPSC in its January 2009 electric rate order, which, absent initiation of this general rate proceeding, would have been eligible for recovery through UE’s existing FAC. The balance of the increase request is based primarily on investments made to continue system-wide reliability improvements for customers, increases in costs essential to generating and delivering electricity, and higher financing costs. The electric rate increase request is based on an 11.5% return on equity, a capital structure composed of 47.4% equity, a rate base for UE of $6.0 billion, and a test year ended March 31, 2009, with certain pro-forma adjustments through the anticipated true-up date of January 31, 2010. Following Ameren’s September 2009 common stock issuance, UE received a capital contribution from Ameren of $436 million in September 2009. UE expects to true-up its capital structure in the electric rate case to reflect this capital contribution, among other things. See Note 4 - Long-term Debt and Equity Financings for further information on the Ameren common stock issuance.

UE’s filing included a request for interim rate relief, which would place into effect approximately $37 million of the requested increase prior to completion of the full rate case. The amount of this interim increase request reflected the increased revenue requirement associated with rate base additions made by UE between October 2008 and May 2009. The MoPSC has scheduled a hearing in December 2009 to consider UE’s request for interim rate relief.

 

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As part of its filing, UE also requested the MoPSC to approve the implementation of an environmental cost recovery mechanism and a storm restoration cost tracker. The environmental cost recovery mechanism, if approved, would allow UE to twice each year adjust electric rates outside of general rate proceedings to reflect changes in its prudently incurred costs to comply with federal, state or local environmental laws, regulations or rules greater than or less than the amount set in base rates. Rate adjustments pursuant to this cost recovery mechanism would not be permitted to exceed an annual amount equal to 2.5% of UE’s gross jurisdictional electric revenues and would be subject to prudency reviews of the MoPSC. UE’s request is consistent with the environmental cost recovery rules approved by the MoPSC in April 2009. The storm restoration cost tracker would permit UE a more timely recovery of storm restoration operations and maintenance expenditures.

In addition, UE requested that the MoPSC approve the continued use of the FAC and the vegetation management and infrastructure inspection cost tracking mechanism that the MoPSC previously authorized in its January 2009 electric rate order, and the continued use of the regulatory tracking mechanism for pension and postretirement benefit costs that the MoPSC previously authorized in its May 2007 electric rate order.

UE’s filing with the MoPSC also seeks approval to revise the tariff under which it serves Noranda to prospectively address the significant lost revenues UE can incur due to any future operational issues at Noranda’s smelter plant in southeastern Missouri, such as the revenue losses resulting from the January 2009 storm-related power outage. The tariff change that UE is proposing would permit it to collect from Noranda the revenue authorized by the MoPSC in this rate case regardless of the level at which the Noranda plant is operating prospectively. If the plant is operating at levels less than the levels assumed in rates, Noranda would receive a credit reflecting any revenues received by UE from energy sales resulting from the decrease in actual energy sales to Noranda. The result would be that UE is able to recover its costs without impacting other customers regardless of Noranda’s actual energy use.

The MoPSC proceeding relating to the proposed electric service rate changes (except for the request for interim rate relief as discussed above) will take place over a period of up to 11 months, and a decision by the MoPSC in such proceeding is required by the end of June 2010. Hearings are scheduled for March 2010. UE cannot predict the level of any electric service rate change the MoPSC may approve, when any rate change (interim or final) may go into effect, whether the cost recovery mechanisms and trackers requested will be approved or continued, or whether any rate change that may eventually be approved will be sufficient to enable UE to recover its costs and earn a reasonable return on its investments when the rate change goes into effect.

Missouri Energy Efficiency Investment Act

In July 2009, the Missouri governor signed a law that went into effect in August 2009, which, among other things, allows electric utilities to recover costs related to MoPSC-approved energy efficiency programs. Recovery is only permitted if the program is approved by the MoPSC, results in energy savings, and is beneficial to all customers in the class for which the program is proposed. The new law would potentially, among other items, allow UE to earn a return on its energy efficiency programs, which the current model of cost recovery does not permit.

 

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Illinois

Pending Electric and Natural Gas Delivery Service Rate Cases

In June 2009, CIPS, CILCO and IP filed requests with the ICC to increase their annual revenues for electric delivery service. The currently pending requests, as amended, seek to increase annual revenues from electric delivery service by $136 million in the aggregate (CIPS - $41 million, CILCO - $22 million, and IP - $73 million). The electric rate increase requests are based on an 11.3% to 11.7% return on equity, a capital structure composed of 44% to 49% equity, an aggregate rate base for the Ameren Illinois Utilities of $2.4 billion, and a test year ended December 31, 2008, with certain known and measurable adjustments through May 2010. In addition, the Ameren Illinois Utilities have requested a rider mechanism that would permit all distribution-related costs incurred to implement reliability recommendations submitted by the Liberty Consulting Group, which are discussed below, to be reflected in electric rates outside of general rate proceedings. The Ameren Illinois Utilities estimate that they will incur distribution-related implementation costs of $15 million (CIPS - $5 million, CILCO - $3 million, and IP - $7 million) in 2010.

CIPS, CILCO and IP also filed requests with the ICC in June 2009 to increase their annual revenues for natural gas delivery service. The currently pending requests, as amended, seek to increase annual revenues for natural gas delivery service by $26 million in the aggregate (CIPS - $7 million, CILCO - $6 million, and IP - $13 million). The natural gas rate increase requests are based on a 10.8% to 11.2% return on equity, a capital structure composed of 44% to 49% equity, an aggregate rate base for the Ameren Illinois Utilities of $1.0 billion, and a test year ended December 31, 2008, with certain known and measurable adjustments through May 2010.

In September 2009, the ICC staff filed direct testimony in response to the Ameren Illinois Utilities electric and natural gas delivery service rate increase filings. The ICC staff recommended in their testimony a net increase in revenues for electric delivery service for the Ameren Illinois Utilities of $49 million in the aggregate (CIPS - $16 million increase, CILCO - $6 million increase, and IP - $27 million increase) and a net decrease in revenues for natural gas delivery service of $4 million in the aggregate (CIPS - $1 million increase, CILCO - $3 million decrease, and IP - $2 million decrease). The ICC staff position is based on a 10.2% to 10.4% return on equity for electric delivery service and a 9.4% to 9.8% return on equity for natural gas delivery service. Other parties also made recommendations through direct testimony filed in the electric and natural gas delivery service rate cases.

The ICC proceedings relating to the proposed electric and natural gas delivery service rate changes will take place over a period of up to 11 months, and decisions by the ICC in such proceedings are required by May 2010. Hearings are scheduled for December 2009. The Ameren Illinois Utilities cannot predict the level of any delivery service rate changes the ICC may approve, when any rate changes may go into effect, or whether any rate changes that may eventually be approved will be sufficient to enable the Ameren Illinois Utilities to recover their costs and earn a reasonable return on their investments when the rate changes go into effect.

Illinois Electric Settlement Agreement

The Ameren Illinois Utilities, Genco, and CILCO (AERG) recognize in their financial statements the costs of their respective rate relief contributions and program funding under the Illinois electric settlement agreement in a manner corresponding with the timing of the funding. As a result, Ameren, CIPS, CILCO (Illinois Regulated), IP, Genco, and CILCO (AERG) incurred charges to earnings, primarily recorded as a reduction to electric operating revenues, during the quarter ended September 30, 2009, of $6 million, $1 million, $1 million, $1 million, $3 million, and $1 million, respectively (quarter ended September 30, 2008 - $10 million, $2 million, less than $1 million, $2 million, $4 million, and $2 million, respectively) and during the nine months ended September 30, 2009, of $18 million, $3 million, $1 million, $4 million, $7 million, and $3 million, respectively (nine months ended September 30, 2008 - $32 million, $5 million, $2 million, $6 million, $13 million, and $6 million, respectively).

 

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Power Procurement Plan

In January 2009, the ICC approved the electric power procurement plan filed by the IPA for both the Ameren Illinois Utilities and Commonwealth Edison Company. The plan outlined the wholesale products that the IPA procured on behalf of the Ameren Illinois Utilities for the period June 1, 2009, through May 31, 2014. The IPA procured capacity, energy swaps, and renewable energy credits through a RFP process on behalf of the Ameren Illinois Utilities in the second quarter of 2009. See Note 8 - Related Party Transactions and Note 9 - Commitments and Contingencies for further information about the results of the RFPs.

In August 2009, the IPA submitted its plan for procurement of electric power for the Ameren Illinois Utilities and Commonwealth Edison Company for the period June 1, 2010, through May 31, 2015. The plan must be approved or modified by the ICC by December 29, 2009. The IPA is proposing to hold two procurement events in 2010: one in the spring for energy, capacity and renewable energy credits and a second in the fall for demand response resources. The exact dates of each procurement event have not been determined. Once the proposed 2010 procurement events are complete, the Ameren Illinois Utilities will have sufficient capacity and energy hedges in place for 100% of their expected supply obligation for the period June 2010 through May 2011, 70% of their expected supply obligation for the period June 2011 through May 2012, and 44% of their expected supply obligations for the period June 2012 through May 2013. Renewable energy credits will be procured for 2010 only.

ICC Reliability Audit

In August 2007, the ICC retained Liberty Consulting Group to investigate, analyze, and report to the ICC on the Ameren Illinois Utilities’ transmission and distribution systems and reliability following the July 2006 wind storms and a November 2006 ice storm. In October 2008, Liberty Consulting Group presented the ICC with a final report containing recommendations for the Ameren Illinois Utilities to improve their systems and their response to emergencies. The ICC directed the Ameren Illinois Utilities to present to the ICC a plan to implement Liberty Consulting Group’s recommendations. The plan was submitted to the ICC in November 2008. Liberty Consulting Group will monitor the Ameren Illinois Utilities’ efforts to implement the recommendations and any initiatives that the Ameren Illinois Utilities undertake. The Ameren Illinois Utilities expect to incur an estimated $20 million ($15 million for distribution and $5 million for transmission) of capital costs and an estimated $66 million ($50 million for distribution and $16 million for transmission) of cumulative operations and maintenance expenses for the 2009 through 2013 timeframe in order to implement the recommendations. In testimony filed with the ICC in October 2009 as part of the pending electric delivery service rate cases, the Ameren Illinois Utilities requested recovery of all distribution-related costs through the implementation of a rider mechanism that would permit the Ameren Illinois Utilities to reflect these costs in electric rates outside of general rate proceedings. Transmission-related costs will be recoverable through FERC’s ratemaking proceedings.

Illinois 2009 Energy Legislation

In July 2009, a new law became effective in Illinois that, among other things, establishes new energy efficiency targets for Illinois natural gas utilities, develops a percentage of income payment plan for low-income utility customers, and allows electric and gas utilities to recover through a rate adjustment the difference between their actual bad debt expense and the bad debt expense included in their rates. The legislation provides utilities the ability to adjust their rates annually through a rate adjustment mechanism that applies to 2008 and subsequent years. During 2008, the Ameren Illinois Utilities incurred approximately $25 million more of bad debt expense (CIPS - $5 million, CILCO - $4 million, and IP - $16 million) than they recovered through rates. In August 2009, the Ameren Illinois Utilities filed with the ICC electric and natural gas rate adjustment clause tariffs to recover bad debt expense not recovered in 2008 and to make corresponding rate adjustments beginning in 2010. The ICC has until February 2010 to approve, or approve as modified, the filed tariffs.

 

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Upon ICC approval of the rate adjustment clause tariffs filed in August 2009, the Ameren Illinois Utilities will be required to make a one-time $10 million donation (CIPS - $3 million, CILCO - $2 million, and IP - $5 million) for customer assistance programs. The amount of the required one-time donation and the impact of the recovery of 2008 bad debt expenses were reflected in earnings during the third quarter of 2009.

Federal

Nuclear Combined Construction and Operating License Application

In July 2008, UE filed an application with the NRC for a combined construction and operating license for a potential new 1,600-megawatt nuclear unit at UE’s existing Callaway County, Missouri, nuclear plant site. UE had also signed contracts for COLA-related services and certain long lead-time nuclear-unit related equipment (heavy forgings).

In early 2009, the Missouri Clean and Renewable Energy Construction Act was separately introduced in both the Missouri Senate and House of Representatives. These bills were designed to allow the MoPSC to authorize, among other things, utilities to recover the costs of financing and tax payments associated with a new generating plant while that plant was being constructed. Recovery of actual construction costs still could not have begun until a plant was put into service. UE believes legislation allowing timely recovery of financing costs during construction must be enacted in order for it to build a new nuclear unit to meet its baseload generation capacity needs. However, passage of this or other legislation was not a commitment or guarantee that UE would build a new nuclear unit.

In April 2009, senior management of UE announced that they had asked the legislative sponsors of the Missouri Clean and Renewable Energy Construction Act to withdraw the bills from consideration by the Missouri General Assembly. UE believed pursuing the legislation being considered in the Missouri Senate in its then proposed form would not give it the financial and regulatory certainty needed to complete the project. As a result, UE announced that it was suspending its efforts to build a new nuclear unit at its existing Missouri nuclear plant site. In June 2009, UE requested the NRC suspend review of the COLA and all activities related to the COLA. UE will consider all available and feasible generation options to meet future customer requirements as part of an integrated resource plan that UE is due to file with the MoPSC in 2011.

As of September 30, 2009, UE had capitalized approximately $68 million as construction work in progress related to the COLA. The incurred costs will remain capitalized while management assesses all options to maximize the value of its investment in this project. If all efforts are permanently abandoned with respect to the future construction of a new nuclear unit, it is possible that a charge to earnings could be recognized in a future period.

Prior to June 30, 2009, UE made contractual payments to the heavy forgings manufacturer of $14 million and had remaining contractual commitments of $81 million. In July 2009, an agreement was reached with the heavy forgings manufacturer to terminate the heavy forgings procurement agreement, and $5 million of previously-made payments were retained by the manufacturer as a penalty for terminating the contract, which was charged to earnings in June 2009. See Note 9 - Commitments and Contingencies for further information about the contract termination.

 

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FERC Order - MISO Charges

In May 2007, UE, CIPS, CILCO and IP filed with the U.S. Court of Appeals for the District of Columbia Circuit an appeal of FERC’s March 2007 order involving the reallocation of certain MISO operational costs among MISO participants retroactive to 2005. In August 2007, the court granted FERC’s motion to hold the appeal in abeyance until the end of the continuing proceedings at FERC regarding these costs. Other MISO participants also filed appeals. On August 10, 2007, UE, CIPS, CILCO, and IP filed a complaint with FERC regarding the MISO tariff’s allocation methodology for these same MISO operational charges. In November 2007, FERC issued two orders relative to these allocation matters. One of these orders addressed requests for rehearing of prior orders in the proceedings, and one concerned MISO’s compliance with FERC’s orders to date in the proceedings. In December 2007, UE, CIPS, CILCO and IP requested FERC’s clarification or rehearing of its November 2007 order regarding MISO’s compliance with FERC’s orders. UE, CIPS, CILCO, and IP maintained that MISO was required to reallocate certain of MISO’s operational costs among MISO market participants, which would result in refunds to UE, CIPS, CILCO, and IP retroactive to April 2006. On November 7, 2008, FERC issued an order granting the request for clarification and directed MISO to reallocate certain MISO operational costs among MISO participants and provide refunds for the period April 2006 to August 2007 (“November 7, 2008 Clarification Order”). On November 10, 2008, FERC granted further relief requested in the complaints filed by UE, CIPS, CILCO, IP and others regarding further reallocation for these same MISO operational charges and directed MISO to calculate refunds for the period from August 10, 2007, forward (“November 10, 2008 Complaint Order”).

Several parties to these proceedings protested MISO’s proposed implementation of these refunds, requested rehearing of FERC’s orders and, in some cases, have appealed FERC’s orders to the courts. In March 2009, MISO began resettling its markets to provide refunds as FERC directed effective on August 10, 2007. On May 6, 2009, FERC issued an order that upheld most of the conclusions of the November 10, 2008 Complaint Order but changed the effective date for refunds such that certain operational costs will be allocated among MISO market participants beginning November 10, 2008, instead of August 10, 2007. In June 2009, UE, CIPS, CILCO and IP filed for rehearing of the May 2009 order regarding the change to the refund effective date. This rehearing request is pending.

With respect to the November 7, 2008 Clarification Order, in June 2009 FERC issued an order dismissing rehearing requests of such clarification 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 25, 2006, through November 4, 2007. UE, CIPS, CILCO and IP filed a request for rehearing in July 2009. This rehearing request is pending.

With respect to the two rehearing requests discussed above, UE, CIPS, CILCO and IP do not believe that the ultimate resolution of either request will have a material effect on their results of operations, financial position, or liquidity.

MISO and PJM Dispute Resolution

During 2009, MISO and PJM discovered an error in the calculation quantifying certain transactions between the RTOs. The error originated in April 2005, corresponding with the initiation of the MISO Day Two Energy Market and was corrected prospectively in June 2009. Since discovering the error, MISO and PJM have worked jointly to estimate the financial impact to the respective markets. MISO and PJM are in agreement on the methodology used to recalculate the market flows occurring from June 2007 to June 2009 for the resettlement due from PJM to MISO estimated at $65 million. MISO and PJM are not in agreement on the methodology used to recalculate the market flows occurring from April 2005 to May 2007, nor are they in agreement over the resettlement amount. To

 

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resolve this issue, MISO and PJM have agreed to participate in FERC’s dispute resolution and settlement process to determine a resettlement amount for the entire period from April 2005 to June 2009. In October 2009, an administrative law judge was appointed as mediator, and a settlement conference was held at FERC. A final settlement between MISO and PJM, if and when reached, will be subject to FERC approval. Ameren, and its subsidiaries, may receive a to-be-determined portion of the resettlement amount due from PJM to MISO. Until a settlement has been reached and approved by FERC, we cannot predict the ultimate impact of these proceedings on Ameren’s, UE’s, CIPS’, Genco’s, CILCORP’s, CILCO’s and IP’s results of operations, financial position, or liquidity.

NOTE 3 - SHORT-TERM BORROWINGS AND LIQUIDITY

The liquidity needs of the Ameren Companies are typically supported through the use of available cash and drawings under committed bank credit facilities.

Amended and New Credit Facilities

On June 30, 2009, Ameren and certain of its subsidiaries entered into multiyear credit facility agreements with 24 international, national and regional lenders with no single lender providing more than $146 million of credit. These facilities, as described below, cumulatively provide $2.1 billion of credit through July 14, 2010, thereafter reducing to $1.8795 billion through June 30, 2011, and thereafter reducing to $1.0795 billion through July 14, 2011.

2009 Multiyear Credit Agreements

On June 30, 2009, Ameren, UE, and Genco entered into an agreement (the “2009 Multiyear Credit Agreement”) to amend and restate the $1.15 billion five-year revolving credit agreement that was originally entered into as of July 14, 2005, then amended and restated as of July 14, 2006, and due to expire in July 2010 (the “Prior $1.15 Billion Credit Facility”). Ameren, UE, and Genco also entered into a $150 million Supplemental Credit Agreement to the 2009 Multiyear Credit Agreement (the “Supplemental Agreement”), which provides Ameren, UE, and Genco with an additional facility of $150 million with terms and conditions substantially identical to the 2009 Multiyear Credit Agreement. Collectively, these agreements are the “2009 Multiyear Credit Agreements.”

The obligations of each borrower under the 2009 Multiyear Credit Agreements are several and not joint, and except under limited circumstances relating to expenses and indemnities, the obligations of UE or Genco are not guaranteed by Ameren or any other subsidiary of Ameren. The combined maximum amount available to all of the borrowers, collectively, under the 2009 Multiyear Credit Agreements is $1.3 billion, and the combined maximum amount available to each borrower, individually, under the 2009 Multiyear Credit Agreements is limited as follows: Ameren - $1.15 billion, UE - $500 million and Genco - $150 million (such amounts being each borrower’s “Borrowing Sublimit”). CIPS, CILCO, and IP have no borrowing authority or liability under the 2009 Multiyear Credit Agreements.

On July 14, 2010, the Supplemental Agreement will terminate, all commitments and all outstanding amounts under the Supplemental Agreement will be consolidated with those under the 2009 Multiyear Credit Agreement, and the combined maximum amount available to all borrowers will be $1.0795 billion with the UE and Genco Borrowing Sublimits remaining the same noted above and Ameren’s changing to $1.0795 billion. Ameren has the option to seek additional commitments from existing or new lenders to increase the total facility size to $1.3 billion after July 14, 2010. The 2009 Multiyear Credit Agreement will terminate with respect to Ameren on July 14, 2011, representing a one-year extension from the Prior $1.15 Billion Credit Facility. The Borrowing Sublimits

 

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of UE and Genco will continue to be subject to extension on a 364-day basis (but in no event later than July 14, 2011) with the current maturity date of their Borrower Sublimits under the 2009 Multiyear Credit Agreements being June 29, 2010.

The obligations of all borrowers under the 2009 Multiyear Credit Agreements are unsecured. The interest rates applicable to loans under the 2009 Multiyear Credit Agreements will be either ABR (alternate base rate) 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 reference to such borrower’s long-term unsecured credit ratings as in effect from time to time. A competitive bid rate is also available if requested by a borrower. Letters of credit in an aggregate undrawn face amount not to exceed $287.5 million are available for issuance for account of the borrowers under (but within the $1.3 billion overall combined facility limitation) the 2009 Multiyear Credit Agreements.

Under the 2009 Multiyear Credit Agreements, the principal amount of each revolving loan will be due and payable no later than the final maturity of the agreements, in the case of Ameren, and the last day of the then applicable 364-day period in the case of UE and Genco. Ameren, UE and Genco will use the proceeds of any borrowings under the 2009 Multiyear Credit Agreements for general corporate purposes, including for working capital, and to fund loans under the Ameren money pool arrangements.

2009 Illinois Credit Agreement

Also on June 30, 2009, Ameren, CIPS, CILCO, and IP entered into an $800 million multiyear, senior secured credit agreement (the “2009 Illinois Credit Agreement”). The 2009 Illinois Credit Agreement replaces the Ameren Illinois Utilities’ existing $500 million credit facility dated as of July 14, 2006 (the “2006 $500 Million Credit Facility (Terminated)”), and their existing $500 million credit facility dated as of February 9, 2007 (the “2007 $500 Million Credit Facility (Terminated)”), each as previously amended (collectively, the “Terminated Illinois Credit Facilities”), which were terminated contemporaneously with the effectiveness of the 2009 Illinois Credit Agreement.

Ameren was not a borrower under the Terminated Illinois Credit Facilities, but is a borrower under the 2009 Illinois Credit Agreement. CILCORP and AERG were borrowers under the Terminated Illinois Credit Facilities, but are not parties to or borrowers under the 2009 Illinois Credit Agreement. All obligations of CILCORP and AERG under the Terminated Illinois Credit Facilities have been repaid and all liens securing such obligations have been released. CILCORP and AERG expect to meet their external liquidity needs through borrowings under the Ameren non-state-regulated subsidiary money pool arrangements or other liquidity arrangements.

The obligations of each borrower under the 2009 Illinois Credit Agreement are several and not joint, and are not guaranteed by Ameren or any other subsidiary of Ameren. The maximum amount available to each borrower under the facility is limited as follows: Ameren - $300 million, CIPS - $135 million, CILCO - $150 million and IP - $350 million (such amounts being such borrower’s “Borrowing Sublimit”).

The 2009 Illinois Credit Agreement will terminate with respect to all borrowers on June 30, 2011. Each borrowing under the 2009 Illinois Credit Agreement must be repaid no later than 364 days after such borrowing, in each case subject to the right of the applicable borrower on such date to make a new borrowing or convert or continue such borrowing as a new borrowing subject to satisfaction of the applicable conditions to borrowing. The obligations of the Ameren Illinois Utilities under the 2009 Illinois Credit Agreement are secured by the issuance of mortgage bonds, for collateral support, by each such utility under its respective mortgage indenture in an amount equal to its respective Borrowing Sublimit. Ameren’s obligations are unsecured.

Loans are available on a revolving basis under the 2009 Illinois Credit Agreement 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 applicable under the 2009 Illinois Credit Agreement are ABR plus the margin applicable to the particular borrower and/or the Eurodollar rate plus the

 

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margin applicable to the particular borrower. The applicable margins will be determined by reference to, in the case of Ameren, Ameren’s long-term unsecured credit ratings as in effect from time to time, and in the case of the Ameren Illinois Utilities, such utility’s long-term secured credit ratings as in effect from time to time. Letters of credit in an aggregate undrawn face amount not to exceed $200 million are also available for issuance for the account of the borrowers (but within the $800 million overall facility limitation) under the 2009 Illinois Credit Agreement.

Borrowings were made under the 2009 Illinois Credit Agreement to repay amounts owed under the Terminated Illinois Credit Facilities, and the borrowers will use the proceeds of other borrowings for working capital and other general corporate purposes.

The following table summarizes the borrowing activity and relevant interest rates as of September 30, 2009, under the 2009 Multiyear Credit Agreements, the 2009 Illinois Credit Agreement and the Terminated Illinois Credit Facilities (excluding letters of credit issued):

 

<
2009 Multiyear Credit Agreement ($1.15 billion)(a)                 Ameren
   (Parent)   
   

UE

   

    Genco    

   

      Total      

 

September 30, 2009:

             

Average daily borrowings outstanding during 2009

        $ 252      $ 355      $ 49      $ 656   

Outstanding short-term debt at period end

          279        -        88        367   

Weighted-average interest rate during 2009

          1.75     1.72     2.57