AEE- 2013.6.30-10Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
ý
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2013
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
  
Ameren Illinois Company
  
37-0211380
 
  
(Illinois Corporation)
  
 
 
  
6 Executive Drive
  
 
 
  
Collinsville, Illinois 62234
  
 
 
  
(618) 343-8150
  
 
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
  
ý
  
No
  
¨
Union Electric Company
  
Yes
  
ý
  
No
  
¨
Ameren Illinois Company
  
Yes
  
ý
  
No
  
¨
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
Ameren Corporation
  
Yes
  
ý
  
No
  
¨
Union Electric Company
  
Yes
  
ý
  
No
  
¨
Ameren Illinois Company
  
Yes
  
ý
  
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 Exchange Act.



 
 
  
Large Accelerated
Filer
  
Accelerated
Filer
  
Non-Accelerated
Filer
  
Smaller Reporting
Company
Ameren Corporation
  
ý
  
¨
  
¨
  
¨
Union Electric Company
  
¨
  
¨
  
ý
  
¨
Ameren Illinois Company
  
¨
  
¨
  
ý
  
¨
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Ameren Corporation
  
Yes
  
¨
  
No
  
ý
Union Electric Company
  
Yes
  
¨
  
No
  
ý
Ameren Illinois Company
  
Yes
  
¨
  
No
  
ý
The number of shares outstanding of each registrant’s classes of common stock as of July 31, 2013, was as follows:
 
Ameren Corporation
 
Common stock, $0.01 par value per share - 242,634,671
Union Electric Company
 
Common stock, $5 par value per share, held by Ameren
Corporation (parent company of the registrant) - 102,123,834
Ameren Illinois Company
 
Common stock, no par value, held by Ameren
Corporation (parent company of the registrant) - 25,452,373
 
______________________________________________________________________________________________________ 
This combined Form 10-Q is separately filed by Ameren Corporation, Union Electric Company, and Ameren Illinois 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
 
 
Page
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 6.
 
 
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 pages 1 and 2 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.




GLOSSARY OF TERMS AND ABBREVIATIONS
We use the words “our,” “we” or “us” with respect to certain information that relates to Ameren, Ameren Missouri, and Ameren Illinois, collectively. When appropriate, subsidiaries of Ameren Corporation are named specifically as their various business activities are discussed. Refer to the Form 10-K for a complete listing of glossary terms and abbreviations. Only new or significantly changed terms and abbreviations are included below.
AER - Ameren Energy Resources Company, LLC, an Ameren Corporation subsidiary that consists of non-rate-regulated operations, including Genco, AERG, Marketing Company and Medina Valley through March 13, 2013. Medina Valley was distributed from AER to Ameren on March 14, 2013.
Dynegy - Dynegy Inc.
FAC - Fuel adjustment clause, a fuel and purchased power cost recovery mechanism that allows Ameren Missouri to recover, through customer rates, 95% of changes in net energy costs greater or less than the amount set in base rates without a traditional rate proceeding, subject to MoPSC prudence reviews. Net energy cost includes fuel (coal, coal transportation, natural gas for generation, and nuclear), certain fuel additives, emission allowances, purchased power costs, transmission costs and revenues, and MISO costs and revenues, net of off-system revenues.
FCC - Federal Communications Commission, a United States government agency.
Form 10-K - The combined Annual Report on Form 10-K for the year ended December 31, 2012, filed by Ameren, Ameren Missouri, and Ameren Illinois with the SEC.
IPH - Illinois Power Holdings, LLC, an indirect wholly owned subsidiary of Dynegy.
Medina Valley - AmerenEnergy Medina Valley Cogen, LLC, an AER subsidiary through March 13, 2013, which owned a 40-megawatt natural gas-fired electric energy center that was sold in February 2012. This company was distributed from AER to Ameren on March 14, 2013.
MISO - Midcontinent Independent System Operator, Inc., an RTO. Formerly known as Midwest Independent Transmission System Operator, Inc.
New AER - A limited liability company to be formed as a direct wholly owned subsidiary of AER. New AER will be acquired by IPH and will include substantially all of the assets and liabilities of AER, except for certain assets and liabilities retained by Ameren.
 
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 in the Form 10-K 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:
completion of our divestiture of New AER and the sale of the Elgin, Gibson City, and Grand Tower gas-fired energy centers;
regulatory approvals, including from FERC, the FCC, and the Illinois Pollution Control Board relating to, and the satisfaction or waiver of the conditions to, the divestiture of New AER and regulatory approvals from FERC with respect to both the transfer to Medina Valley and ultimate sale to a third-party of the Elgin, Gibson City, and Grand Tower gas-fired energy centers;
Ameren's exit from the Merchant Generation business, which could result in additional impairments of long-lived assets, disposal-related losses, contingencies, reduction of existing deferred tax assets, or could have other adverse impacts on the financial condition, results of operations and liquidity of Ameren;
regulatory, judicial, or legislative actions, including changes in regulatory policies and ratemaking determinations, such as the outcome of Ameren Illinois' natural gas delivery service rate case filed in 2013; the court appeals of Ameren Missouri's and Ameren Illinois' electric rate orders issued in 2012; Ameren Missouri’s current FAC prudence review by the MoPSC; Ameren Missouri's request with the MoPSC for an accounting authority order relating to the deferral of certain fixed costs; Ameren Illinois' request for rehearing of FERC’s July 2012 and June 2013 orders regarding the alleged inclusion of acquisition premiums in Ameren Illinois transmission rates; and future regulatory, judicial, or legislative actions that seek to change regulatory recovery mechanisms;
the effect of Ameren Illinois participating in a performance-based formula ratemaking process under the IEIMA, including the direct relationship between Ameren Illinois’ return on common equity and the 30-year United States Treasury bond yields, the related financial commitments required by the IEIMA, and the resulting uncertain impact on the financial condition, results of operations and liquidity of Ameren Illinois;
Ameren Illinois’ decision of when to participate in the regulatory framework provided by the state of Illinois’ recently enacted Natural Gas Consumer, Safety and Reliability Act, which allows for the use of a rider to recover costs of certain infrastructure investments made between rate cases;
the effects of, or changes to, the Illinois power procurement process;
the effects of increased competition in the future due to, among other things, deregulation of certain aspects of our


1



business at both the state and federal levels, and the implementation of deregulation;
changes in laws and other governmental actions, including monetary, fiscal, and tax policies, such as changes that result in our being unable to claim all or a portion of the cash tax benefits that are expected to result from the divestiture of AER;
the effects on demand for our services resulting from technological advances, including advances in energy efficiency and distributed generation sources, which generate electricity at the site of consumption;
increasing capital expenditure and operating expense requirements and our ability to recover these costs;
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;
the level and volatility of future prices for power in the Midwest, which may have a significant effect on the financial condition of Ameren's Merchant Generation segment;
business and economic conditions, including their impact on interest rates, bad debt expense, and demand for our products;
disruptions of the capital markets, deterioration in credit metrics of the Ameren Companies, 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, including liquidity concerns for Ameren's Merchant Generation business, and specifically for Genco, whose ability to borrow additional funds from external, third-party sources is restricted;
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, including the impacts of droughts, which may cause lower river levels and could limit our energy centers' ability to generate power;
the impact of system outages;
generation, transmission, and distribution asset construction, installation, performance, and cost recovery;
the effects of our increasing investment in electric transmission projects and uncertainty as to whether we will achieve our expected investment and returns in a timely fashion, if at all;
the extent to which Ameren Missouri prevails in its claims against insurers in connection with its Taum Sauk pumped-storage hydroelectric energy center incident;
the extent to which Ameren Missouri is permitted by its regulators to recover in rates the investments it made in connection with additional nuclear generation at its Callaway energy center;
 
operation of Ameren Missouri's Callaway energy center, including planned, unplanned and refueling outages, and future decommissioning costs;
the effects of strategic initiatives, including mergers, acquisitions and divestitures, including the divestiture of the Merchant Generation business, and any related tax implications;
the impact of current environmental regulations on utilities and power generating companies and new, more stringent or changing requirements, including those related to greenhouse gases, other emissions and discharges, cooling water intake structures, CCR, and energy efficiency, that are enacted over time and that could limit or terminate the operation of certain of our energy centers, increase our costs, result in an impairment of our assets, result in sales of our assets, reduce our customers' demand for electricity or natural gas, or otherwise have a negative financial effect;
the impact of complying with renewable energy portfolio requirements in Missouri;
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 agreements, and financial instruments;
the cost and availability of transmission capacity for the energy generated by Ameren's and Ameren Missouri's energy centers or required to satisfy energy sales made by Ameren or Ameren Missouri;
legal and administrative proceedings; and
acts of sabotage, war, terrorism, cybersecurity attacks 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.



2



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
 
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF INCOME (LOSS)
(Unaudited) (In millions, except per share amounts)
 
Three months ended June 30,
 
Six months ended June 30,
 
2013
 
2012
 
2013
 
2012
Operating Revenues:
 
 
 
 
 
 
 
Electric
$
1,228

 
$
1,255

 
$
2,316

 
$
2,319

Gas
175

 
147

 
562

 
495

Total operating revenues
1,403

 
1,402

 
2,878

 
2,814

Operating Expenses:
 
 
 
 
 
 
 
Fuel
213

 
175

 
426

 
356

Purchased power
121

 
161

 
272

 
370

Gas purchased for resale
72

 
49

 
302

 
264

Other operations and maintenance
447

 
395

 
846

 
764

Depreciation and amortization
178

 
168

 
353

 
335

Taxes other than income taxes
111

 
110

 
233

 
223

Total operating expenses
1,142

 
1,058

 
2,432

 
2,312

Operating Income
261

 
344

 
446

 
502

Other Income and Expenses:
 
 
 
 
 
 
 
Miscellaneous income
16

 
19

 
31

 
36

Miscellaneous expense
5

 
7

 
13

 
22

Total other income
11

 
12

 
18

 
14

Interest Charges
100

 
98

 
201

 
196

Income Before Income Taxes
172

 
258

 
263

 
320

Income Taxes
66

 
96

 
101

 
119

Income from Continuing Operations
106

 
162

 
162

 
201

Income (Loss) from Discontinued Operations, Net of Taxes (Note 2)
(10
)
 
48

 
(209
)
 
(394
)
Net Income (Loss)
96

 
210

 
(47
)
 
(193
)
Less: Net Income (Loss) Attributable to Noncontrolling Interests:
 
 
 
 
 
 
 
                  Continuing Operations
1

 
1

 
3

 
3

                  Discontinued Operations

 
(2
)
 

 
(4
)
Net Income (Loss) Attributable to Ameren Corporation:
 
 
 
 
 
 
 
      Continuing Operations
105

 
161

 
$
159

 
$
198

      Discontinued Operations
(10
)
 
50

 
(209
)
 
(390
)
Net Income (Loss) Attributable to Ameren Corporation
$
95

 
$
211

 
$
(50
)
 
$
(192
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) per Common Share – Basic and Diluted:
 
 
 
 
 
 
 
          Continuing Operations
$
0.44

 
$
0.66

 
$
0.66

 
$
0.81

          Discontinued Operations
(0.05
)
 
0.21

 
(0.87
)
 
(1.60
)
Net Income (Loss) per Common Share – Basic and Diluted
$
0.39

 
$
0.87

 
$
(0.21
)
 
$
(0.79
)
 
 
 
 
 
 
 
 
Dividends per Common Share
$
0.40

 
$
0.40

 
$
0.80

 
$
0.80

Average Common Shares Outstanding
242.6

 
242.6

 
242.6

 
242.6

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

3



AMEREN CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Unaudited) (In millions)
 
 
Three months ended June 30,
 
Six months ended June 30,
 
2013
 
2012
 
2013
 
2012
Income from Continuing Operations
$
106

 
$
162

 
$
162

 
$
201

Other Comprehensive Income, Net of Taxes
 
 
 
 
 
 
 
Pension and other postretirement benefit plan activity, net of income taxes of $8, $-, $8, and $-, respectively
10

 
1

 
10

 
1

Total other comprehensive income, net of taxes
10

 
1

 
10

 
1

Comprehensive Income from Continuing Operations
116

 
163

 
172

 
202

Less: Comprehensive Income from Continuing Operations Attributable to Noncontrolling Interests
1

 
1

 
3

 
3

Comprehensive Income from Continuing Operations Attributable to Ameren Corporation
115

 
162

 
169

 
199

 
 
 
 
 
 
 
 
Net Income (Loss) from Discontinued Operations
(10
)
 
48

 
(209
)
 
(394
)
Other Comprehensive Income (Loss) from Discontinued Operations, Net of Taxes
(4
)
 
4

 
(11
)
 
19

Comprehensive Income (Loss) from Discontinued Operations
(14
)
 
52

 
(220
)
 
(375
)
Less: Comprehensive Loss from Discontinued Operations Attributable to Noncontrolling Interest

 
(2
)
 

 
(4
)
Comprehensive Income (Loss) from Discontinued Operations Attributable to Ameren Corporation
(14
)
 
54

 
(220
)
 
(371
)
Comprehensive Income (Loss) Attributable to Ameren Corporation
$
101

 
$
216

 
$
(51
)
 
$
(172
)
The accompanying notes are an integral part of these consolidated financial statements.

4



AMEREN CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited) (In millions, except per share amounts)
 
June 30, 2013
 
December 31, 2012
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
150

 
$
184

Accounts receivable – trade (less allowance for doubtful accounts of $22 and $17, respectively)
425

 
354

Unbilled revenue
308

 
291

Miscellaneous accounts and notes receivable
75

 
71

Materials and supplies
511

 
570

Current regulatory assets
192

 
247

Current accumulated deferred income taxes, net
157

 
160

Other current assets
104

 
98

Current assets of discontinued operations
1,486

 
1,600

Total current assets
3,408

 
3,575

Property and Plant, Net
15,601

 
15,348

Investments and Other Assets:
 
 
 
Nuclear decommissioning trust fund
442

 
408

Goodwill
411

 
411

Intangible assets
18

 
14

Regulatory assets
1,742

 
1,786

Other assets
654

 
667

Total investments and other assets
3,267

 
3,286

TOTAL ASSETS
$
22,276

 
$
22,209

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Current maturities of long-term debt
$
884

 
$
355

Short-term debt
25

 

Accounts and wages payable
428

 
533

Taxes accrued
123

 
50

Interest accrued
100

 
89

Customer deposits
110

 
107

Mark-to-market derivative liabilities
75

 
92

Current regulatory liabilities
180

 
100

Other current liabilities
178

 
168

Current liabilities of discontinued operations
1,183

 
1,166

Total current liabilities
3,286

 
2,660

Long-term Debt, Net
5,274

 
5,802

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes, net
3,348

 
3,166

Accumulated deferred investment tax credits
67

 
70

Regulatory liabilities
1,666

 
1,589

Asset retirement obligations
385

 
375

Pension and other postretirement benefits
1,140

 
1,138

Other deferred credits and liabilities
585

 
642

Total deferred credits and other liabilities
7,191

 
6,980

Commitments and Contingencies (Notes 2, 3, 9, 10 and 11)


 


Ameren Corporation Stockholders’ Equity:
 
 
 
Common stock, $.01 par value, 400.0 shares authorized – shares outstanding of 242.6
2

 
2

Other paid-in capital, principally premium on common stock
5,619

 
5,616

Retained earnings
762

 
1,006

Accumulated other comprehensive loss
(9
)
 
(8
)
Total Ameren Corporation stockholders’ equity
6,374

 
6,616

Noncontrolling Interests
151

 
151

Total equity
6,525

 
6,767

TOTAL LIABILITIES AND EQUITY
$
22,276

 
$
22,209

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

5



AMEREN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
 
Six months ended June 30,
 
2013
 
2012
Cash Flows From Operating Activities:
 
 
 
Net loss
$
(47
)
 
$
(193
)
Loss from discontinued operations, net of taxes
209

 
394

Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
334

 
314

Amortization of nuclear fuel
29

 
41

Amortization of debt issuance costs and premium/discounts
12

 
8

Deferred income taxes and investment tax credits, net
70

 
110

Allowance for equity funds used during construction
(16
)
 
(17
)
Stock-based compensation costs
14

 
12

Other
18

 
(6
)
Changes in assets and liabilities:
 
 
 
Receivables
(92
)
 
(16
)
Materials and supplies
77

 
19

Accounts and wages payable
(75
)
 
(138
)
Taxes accrued
67

 
66

Assets, other
49

 
12

Liabilities, other
9

 
36

Pension and other postretirement benefits
36

 
23

Counterparty collateral, net
35

 
(1
)
Net cash provided by operating activities - continuing operations
729

 
664

Net cash provided by operating activities - discontinued operations
39

 
97

Net cash provided by operating activities
768

 
761

Cash Flows From Investing Activities:
 
 
 
Capital expenditures
(575
)
 
(485
)
Nuclear fuel expenditures
(25
)
 
(52
)
Purchases of securities – nuclear decommissioning trust fund
(97
)
 
(206
)
Sales and maturities of securities – nuclear decommissioning trust fund
89

 
195

Other
2

 
(1
)
Net cash used in investing activities - continuing operations
(606
)
 
(549
)
Net cash used in investing activities - discontinued operations
(31
)
 
(64
)
Net cash used in investing activities
(637
)
 
(613
)
Cash Flows From Financing Activities:
 
 
 
Dividends on common stock
(194
)
 
(187
)
Dividends paid to noncontrolling interest holders
(3
)
 
(3
)
Short-term debt, net
25

 
(118
)
Advances received for construction
7

 
3

Net cash used in financing activities - continuing operations
(165
)
 
(305
)
Net cash used in financing activities - discontinued operations

 

Net cash used in financing activities
(165
)
 
(305
)
Net change in cash and cash equivalents
(34
)
 
(157
)
Cash and cash equivalents at beginning of year
184

 
248

Cash and cash equivalents at end of period
$
150

 
$
91

Noncash financing activity – dividends on common stock
$

 
$
(7
)
The accompanying notes are an integral part of these consolidated financial statements.

6



 
UNION ELECTRIC COMPANY
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (In millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2013
 
2012
 
2013
 
2012
Operating Revenues:
 
 
 
 
 
 
 
Electric
$
860

 
$
822

 
$
1,592

 
$
1,458

Gas
29

 
21

 
93

 
76

Other

 
1

 

 
1

Total operating revenues
889

 
844

 
1,685

 
1,535

Operating Expenses:
 
 
 
 
 
 
 
Fuel
213

 
177

 
426

 
357

Purchased power
41

 

 
67

 
20

Gas purchased for resale
11

 
5

 
48

 
37

Other operations and maintenance
253

 
206

 
474

 
408

Depreciation and amortization
113

 
109

 
224

 
217

Taxes other than income taxes
79

 
78

 
156

 
149

Total operating expenses
710

 
575

 
1,395

 
1,188

Operating Income
179

 
269

 
290

 
347

Other Income and Expenses:
 
 
 
 
 
 
 
Miscellaneous income
14

 
18

 
28

 
33

Miscellaneous expense
3

 
4

 
8

 
7

Total other income
11

 
14

 
20

 
26

Interest Charges
56

 
56

 
116

 
112

Income Before Income Taxes
134

 
227

 
194

 
261

Income Taxes
49

 
83

 
68

 
95

Net Income
85

 
144

 
126

 
166

Other Comprehensive Income

 

 

 

Comprehensive Income
$
85

 
$
144

 
$
126

 
$
166

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
85

 
$
144

 
$
126

 
$
166

Preferred Stock Dividends
1

 
1

 
2

 
2

Net Income Available to Common Stockholder
$
84

 
$
143

 
$
124

 
$
164

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

7



UNION ELECTRIC COMPANY
BALANCE SHEET
(Unaudited) (In millions, except per share amounts)
 
June 30, 2013
 
December 31, 2012
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
19

 
$
148

Advances to money pool

 
24

Accounts receivable – trade (less allowance for doubtful accounts of $6 and $5, respectively)
229

 
161

Accounts receivable – affiliates
3

 
4

Unbilled revenue
225

 
145

Miscellaneous accounts and notes receivable
56

 
48

Materials and supplies
369

 
397

Current regulatory assets
132

 
163

Other current assets
100

 
69

Total current assets
1,133

 
1,159

Property and Plant, Net
10,264

 
10,161

Investments and Other Assets:
 
 
 
Nuclear decommissioning trust fund
442

 
408

Intangible assets
18

 
14

Regulatory assets
830

 
852

Other assets
444

 
449

Total investments and other assets
1,734

 
1,723

TOTAL ASSETS
$
13,131

 
$
13,043

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Current maturities of long-term debt
$
309

 
$
205

Accounts and wages payable
198

 
345

Accounts payable – affiliates
103

 
66

Taxes accrued
107

 
28

Interest accrued
73

 
60

Current regulatory liabilities
71

 
18

Other current liabilities
90

 
77

Total current liabilities
951

 
799

Long-term Debt, Net
3,697

 
3,801

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes, net
2,474

 
2,443

Accumulated deferred investment tax credits
62

 
64

Regulatory liabilities
979

 
917

Asset retirement obligations
355

 
346

Pension and other postretirement benefits
465

 
461

Other deferred credits and liabilities
150

 
158

Total deferred credits and other liabilities
4,485

 
4,389

Commitments and Contingencies (Notes 3, 9, 10 and 11)


 


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
1,556

 
1,556

Preferred stock not subject to mandatory redemption
80

 
80

Retained earnings
1,851

 
1,907

Total stockholders’ equity
3,998

 
4,054

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
13,131

 
$
13,043

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

8



UNION ELECTRIC COMPANY
STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
 
Six months ended June 30,
 
2013
 
2012
Cash Flows From Operating Activities:
 
 
 
Net income
$
126

 
$
166

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
208

 
201

Amortization of nuclear fuel
29

 
41

FAC prudence review charge
23

 

Amortization of debt issuance costs and premium/discounts
4

 
3

Deferred income taxes and investment tax credits, net
13

 
76

Allowance for equity funds used during construction
(14
)
 
(15
)
Changes in assets and liabilities:
 
 
 
Receivables
(155
)
 
(65
)
Materials and supplies
28

 
(43
)
Accounts and wages payable
(119
)
 
(164
)
Taxes accrued
79

 
29

Assets, other
61

 
12

Liabilities, other
37

 
42

Pension and other postretirement benefits
18

 
18

Net cash provided by operating activities
338

 
301

Cash Flows From Investing Activities:
 
 
 
Capital expenditures
(273
)
 
(299
)
Nuclear fuel expenditures
(25
)
 
(52
)
Money pool advances, net
24

 

Purchases of securities – nuclear decommissioning trust fund
(97
)
 
(206
)
Sales and maturities of securities – nuclear decommissioning trust fund
89

 
195

Other
(3
)
 
(5
)
Net cash used in investing activities
(285
)
 
(367
)
Cash Flows From Financing Activities:
 
 
 
Dividends on common stock
(180
)
 
(200
)
Dividends on preferred stock
(2
)
 
(2
)
Money pool borrowings, net

 
67

Net cash used in financing activities
(182
)
 
(135
)
Net change in cash and cash equivalents
(129
)
 
(201
)
Cash and cash equivalents at beginning of year
148

 
201

Cash and cash equivalents at end of period
$
19

 
$

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


9



 
AMEREN ILLINOIS COMPANY
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (In millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2013
 
2012
 
2013
 
2012
Operating Revenues:
 
 
 
 
 
 
 
Electric
$
368

 
$
437

 
$
728

 
$
868

Gas
146

 
127

 
470

 
420

Other
2

 

 
2

 

Total operating revenues
516

 
564

 
1,200

 
1,288

Operating Expenses:
 
 
 
 
 
 
 
Purchased power
80

 
162

 
207

 
352

Gas purchased for resale
61

 
44

 
254

 
227

Other operations and maintenance
196

 
186

 
372

 
354

Depreciation and amortization
62

 
55

 
123

 
110

Taxes other than income taxes
30

 
31

 
72

 
70

Total operating expenses
429

 
478

 
1,028

 
1,113

Operating Income
87

 
86

 
172

 
175

Other Income and Expenses:
 
 
 
 
 
 
 
Miscellaneous income
2

 
2

 
3

 
3

Miscellaneous expense
1

 
2

 
4

 
13

Total other income (expense)
1

 

 
(1
)
 
(10
)
Interest Charges
34

 
31

 
65

 
64

Income Before Income Taxes
54

 
55

 
106

 
101

Income Taxes
22

 
22

 
42

 
40

Net Income
32

 
33

 
64

 
61

Other Comprehensive Loss, Net of Taxes:
 
 
 
 
 
 
 
Pension and other postretirement benefit plan activity, net of income taxes (benefit) of $-, $(1), $(1), and $(1), respectively
(1
)
 
(1
)
 
(2
)
 
(2
)
Comprehensive Income
$
31

 
$
32

 
$
62

 
$
59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
32

 
$
33

 
$
64

 
$
61

Preferred Stock Dividends
1

 
1

 
2

 
2

Net Income Available to Common Stockholder
$
31

 
$
32

 
$
62

 
$
59

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


10



AMEREN ILLINOIS COMPANY
BALANCE SHEET
(Unaudited) (In millions)
 
June 30, 2013
 
December 31, 2012
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
98

 
$

Accounts receivable – trade (less allowance for doubtful accounts of $16 and $12, respectively)
185

 
182

Accounts receivable – affiliates
13

 
10

Unbilled revenue
83

 
146

Miscellaneous accounts receivable
18

 
22

Materials and supplies
141

 
173

Current regulatory assets
61

 
84

Current accumulated deferred income taxes, net
82

 
85

Other current assets
29

 
47

Total current assets
710

 
749

Property and Plant, Net
5,216

 
5,052

Investments and Other Assets:
 
 
 
Tax receivable – Genco
38

 
39

Goodwill
411

 
411

Regulatory assets
908

 
934

Other assets
83

 
97

Total investments and other assets
1,440

 
1,481

TOTAL ASSETS
$
7,366

 
$
7,282

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Current maturities of long-term debt
$
150

 
$
150

Borrowings from money pool

 
24

Accounts and wages payable
184

 
146

Accounts payable – affiliates
91

 
86

Taxes accrued
13

 
18

Customer deposits
85

 
85

Mark-to-market derivative liabilities
55

 
77

Current environmental remediation
56

 
37

Current regulatory liabilities
110

 
82

Other current liabilities
79

 
92

Total current liabilities
823

 
797

Long-term Debt, Net
1,577

 
1,577

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes, net
1,082

 
1,025

Accumulated deferred investment tax credits
5

 
5

Regulatory liabilities
687

 
672

Pension and other postretirement benefits
416

 
406

Environmental remediation
196

 
216

Other deferred credits and liabilities
149

 
183

Total deferred credits and other liabilities
2,535

 
2,507

Commitments and Contingencies (Notes 3, 9 and 10)


 


Stockholders’ Equity:
 
 
 
Common stock, no par value, 45.0 shares authorized – 25.5 shares outstanding

 

Other paid-in capital
1,965

 
1,965

Preferred stock not subject to mandatory redemption
62

 
62

Retained earnings
392

 
360

Accumulated other comprehensive income
12

 
14

Total stockholders’ equity
2,431

 
2,401

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
7,366

 
$
7,282


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

11



AMEREN ILLINOIS COMPANY
STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
 
Six months ended June 30,
 
2013
 
2012
Cash Flows From Operating Activities:
 
 
 
Net income
$
64

 
$
61

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
121

 
105

Amortization of debt issuance costs and premium/discounts
7

 
4

Deferred income taxes and investment tax credits, net
61

 
63

Other
(4
)
 
(5
)
Changes in assets and liabilities:
 
 
 
Receivables
62

 
62

Materials and supplies
50

 
59

Accounts and wages payable
46

 
13

Taxes accrued
(6
)
 
(1
)
Assets, other
(4
)
 
(3
)
Liabilities, other
(18
)
 
3

Pension and other postretirement benefits
15

 
(5
)
Counterparty collateral, net
32

 
4

Net cash provided by operating activities
426

 
360

Cash Flows From Investing Activities:
 
 
 
Capital expenditures
(283
)
 
(184
)
Money pool advances, net

 
(67
)
Other
4

 
4

Net cash used in investing activities
(279
)
 
(247
)
Cash Flows From Financing Activities:
 
 
 
Dividends on common stock
(30
)
 
(75
)
Dividends on preferred stock
(2
)
 
(2
)
Money pool borrowings, net
(24
)
 

Advances received for construction
7

 
3

Net cash used in financing activities
(49
)
 
(74
)
Net change in cash and cash equivalents
98

 
39

Cash and cash equivalents at beginning of year

 
21

Cash and cash equivalents at end of period
$
98

 
$
60

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


12



AMEREN CORPORATION (Consolidated)
UNION ELECTRIC COMPANY
AMEREN ILLINOIS COMPANY
COMBINED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 2013
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 its equity interests in its subsidiaries. Ameren’s subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses. Dividends on Ameren’s common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries. Ameren’s principal subsidiaries are listed below. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.
Union Electric Company, or Ameren Missouri, operates a rate-regulated electric generation, transmission and distribution business, and a rate-regulated natural gas transmission and distribution business in Missouri.
Ameren Illinois Company, or Ameren Illinois, operates a rate-regulated electric and natural gas transmission and distribution business in Illinois.
AER consists of non-rate-regulated operations, including Genco, AERG, and Marketing Company, and, through Genco, an 80% ownership interest in EEI, which Ameren consolidates for financial reporting purposes.
Ameren has various other subsidiaries responsible for activities such as the provision of shared services.
On March 14, 2013, Ameren entered into a transaction agreement to divest New AER to IPH. Immediately prior to Ameren’s entry into the transaction agreement with IPH, on March 14, 2013, Genco exercised its option under the amended put option agreement with Medina Valley and received an initial payment of $100 million for the pending sale of its Elgin, Gibson City, and Grand Tower gas-fired energy centers to Medina Valley, which is subject to FERC approval. Ameren has commenced a sale process for these three gas-fired energy centers and expects a third-party sale to be completed during 2013. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information regarding these divestitures. As a result of the transaction agreement with IPH and Ameren’s plan to sell its Elgin, Gibson City, and Grand Tower gas-fired energy centers, Ameren determined that New AER and the Elgin, Gibson City,
 
and Grand Tower gas-fired energy centers qualified for discontinued operations presentation. Therefore, Ameren has segregated New AER’s and the Elgin, Gibson City, and Grand Tower gas-fired energy centers’ operating results, assets, and liabilities and presented them separately as discontinued operations for all periods presented in this report. Unless otherwise noted, these notes to Ameren’s financial statements have been revised to exclude discontinued operations for all periods presented. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information regarding that presentation.
The financial statements of Ameren are prepared on a consolidated basis. Ameren Missouri and Ameren Illinois have no subsidiaries, and therefore their financial statements are 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 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.
During preparation of the 2012 annual statements of cash flows, it was identified that Ameren’s and Ameren Missouri’s 2012 interim statements of cash flows incorrectly classified certain activity from the nuclear decommissioning trust fund. Although not material, operating cash flows were overstated by $14 million, $26 million, and $49 million for the year-to-date periods ended March, 31, 2012, June 30, 2012, and September 30, 2012, respectively. The overstated operating cash flows resulted in the investing cash flows being understated by the same amounts. The cash flows for the six months ended June 30, 2012, for Ameren and Ameren Missouri have been revised in this report to correct for this error. The cash flows for the nine months ended September 30, 2012, will be revised to correct for this error in the Ameren and Ameren Missouri reports for the quarter ending September 30, 2013.
Earnings Per Share
There were no material differences between Ameren’s basic and diluted earnings per share amounts for the three and six months ended June 30, 2013, and 2012. The number of dilutive restricted stock shares and performance share units had an immaterial impact on earnings per share.


13



Stock-based Compensation
A summary of nonvested performance share units at June 30, 2013, and changes during the six months ended June 30, 2013, under the 2006 Omnibus Incentive Compensation Plan (2006 Plan) are presented below:
 
Performance Share Units
 
Share Units
Weighted-average Fair Value Per Unit at Grant Date
Nonvested as of January 1, 2013
1,192,487

$
33.56

Granted(a)
834,919

31.19

Forfeitures
(7,757
)
32.66

Vested(b)
(129,226
)
31.27

Nonvested as of June 30, 2013
1,890,423

$
32.68

(a)
Includes performance share units (share units) granted to certain executive and nonexecutive officers and other eligible employees in 2013 under the 2006 Plan.
(b)
Share units vested due to the 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 2013 under the 2006 Plan was determined to be $31.19. That amount was based on Ameren’s closing common share price of $30.72 at December 31, 2012, and lattice simulations. Lattice simulations are used to estimate expected share payout based on Ameren’s total stockholder return for a three-year performance period relative to the designated peer group beginning January 1, 2013. The simulations can produce a greater fair value for the share unit than the applicable closing common share price because they include the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also included a three-year risk-free rate of 0.36%, volatility of 12% to 21% for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period.
Intangible Assets
Ameren and Ameren Missouri classify emission allowances and renewable energy credits as intangible assets. Ameren Illinois consumes renewable energy credits as they are purchased through the IPA procurement process and expenses them immediately. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired.
At June 30, 2013, Ameren’s and Ameren Missouri’s intangible assets consisted of renewable energy credits obtained through wind and solar power purchase agreements. The book value of Ameren’s and Ameren Missouri’s renewable energy credits was $18 million and $18 million, respectively, at June 30, 2013. The book value of Ameren’s and Ameren Missouri’s renewable energy credits was $14 million and $14 million, respectively, at December 31, 2012.
Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. In accordance with the MoPSC's 2012 electric rate order, the majority of Ameren Missouri's amortization of intangible assets is deferred as a regulatory asset pending future recovery from customers through rates. The following table presents amortization expense based on usage of renewable energy credits and emission allowances,
 
net of gains from sales, for Ameren, Ameren Missouri, and Ameren Illinois, during the three and six months ended June 30, 2013, and 2012.
 
 
Three Months
 
Six Months
 
 
2013
 
2012
 
2013
 
2012
Ameren Missouri
$

$
(a)
$
(a)

$
(a)
Ameren Illinois
 
3

 
(a)
 
7

 
(a)
Ameren
$
3

$
(a)
$
7

$
(a)
(a)
Less than $1 million.
Excise Taxes
Excise taxes levied on us are reflected on Ameren Missouri electric customer bills and on Ameren Missouri and Ameren Illinois natural gas customer bills. They are recorded gross in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” on the statement of income or the statement of income and comprehensive income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in “Taxes accrued” on the balance sheet. The following table presents excise taxes recorded in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” for the three and six months ended June 30, 2013, and 2012:
 
Three Months
 
Six Months
 
2013
 
2012
 
2013
 
2012
Ameren Missouri
$
38

 
$
38

 
$
71

 
$
65

Ameren Illinois
11

 
10

 
33

 
28

Ameren
$
49

 
$
48

 
$
104

 
$
93

Uncertain Tax Positions
The amount of unrecognized tax benefits as of June 30, 2013, was $193 million, $127 million, and $4 million, for Ameren, Ameren Missouri, and Ameren Illinois, respectively. The amount of unrecognized tax benefits (detriments) as of June 30, 2013,


14



that would impact the effective tax rate, if recognized, was $49 million, less than $1 million, and $(1) million for Ameren, Ameren Missouri, and Ameren Illinois, respectively. The amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, for Ameren increased by $48 million as of June 30, 2013, all of which occurred during the first quarter of 2013. This increase is primarily due to uncertainty related to the historical computation of Ameren’s tax basis in its stock investment in AER.
Ameren’s federal income tax returns for the years 2007 through 2011 are before the Appeals Office of the Internal Revenue Service. Ameren’s federal income tax return for the year 2012 is currently under examination.
It is reasonably possible that a settlement will be reached with the Appeals Office of the Internal Revenue Service in the next 12 months for the years 2007 through 2010. This settlement, which is primarily related to uncertain tax positions for capitalization versus currently deductible repair expense and research tax deductions, is expected to result in a decrease in uncertain tax benefits of $126 million, $110 million, and $5 million for Ameren, Ameren Missouri and Ameren Illinois, respectively. In addition, it is reasonably possible that other events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits for the Ameren Companies to increase or decrease. However, the Ameren Companies do not believe any such increases or decreases, including the decrease from the reasonably possible IRS Appeals Office settlement discussed above, would be material to their results of operations, financial position, or liquidity.
State income tax returns are generally subject to examination for a period of three years after filing of the return.
 
The Ameren Companies do not currently have material state income tax issues under examination, administrative appeals, or litigation. 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.
Ameren Missouri has an uncertain tax position tracker. Under Missouri’s regulatory framework, uncertain income tax positions do not reduce Ameren Missouri’s electric rate base. When an uncertain income tax position liability is resolved, the MoPSC requires, through the uncertain tax position tracker, the creation of a regulatory asset or regulatory liability to reflect the time value (using the weighted-average cost of capital included in each of the electric rate orders in effect before the tax position was resolved) of the difference between the uncertain income tax position liability that was excluded from rate base and the final tax liability. The resulting regulatory asset or liability will be amortized over three years beginning on the effective date of new rates established in the next electric rate case.
Asset Retirement Obligations
AROs at Ameren, Ameren Missouri, and Ameren Illinois increased compared to December 31, 2012, to reflect the accretion of obligations to their fair values.
Based on the transaction agreement to divest New AER to IPH, Ameren will retain the AROs associated with the Meredosia and Hutsonville energy centers. Therefore, these AROs are classified as continuing operations. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information.

Noncontrolling Interest
Ameren's noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests were classified as a component of equity separate from Ameren's equity on its consolidated balance sheet. A reconciliation of the equity changes attributable to the noncontrolling interests at Ameren for the three and six months ended June 30, 2013, and 2012, is shown below:
  
Three Months
 
Six Months
  
2013
 
2012
 
2013
 
2012
Ameren:
 
 
 
 
 
 
 
Noncontrolling interests, beginning of period (a)
$
151

 
$
147

 
$
151

 
$
149

Net income from continuing operations attributable to noncontrolling interests
1

 
1

 
3

 
3

Net income (loss) from discontinued operations attributable to noncontrolling interests

 
(2
)
 

 
(4
)
Dividends paid to noncontrolling interest holders
(1
)
 
(1
)
 
(3
)
 
(3
)
Noncontrolling interests, end of period (a)
$
151

 
$
145

 
$
151

 
$
145

(a)
Includes the 20% EEI ownership interest not owned by Ameren. The assets and liabilities of EEI were consolidated in Ameren’s balance sheet at a 100% ownership level and were included in “Current assets of discontinued operations” and “Current liabilities of discontinued operations.” The 20% ownership interest not owned by Ameren was included in “Noncontrolling interests” on Ameren’s June 30, 2013, and December 31, 2012 balance sheets. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information.
Accounting and Reporting Developments
The following is a summary of recently adopted authoritative accounting guidance that could impact the Ameren Companies.
 
Presentation of Comprehensive Income
In June 2011, FASB amended its guidance on the presentation of comprehensive income in financial statements.


15



The amended guidance changed the presentation of comprehensive income in the financial statements. It requires entities to report components of comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. This guidance was effective for the Ameren Companies beginning in the first quarter of 2012 with retroactive application required. The implementation of the amended guidance did not affect the Ameren Companies’ results of operations, financial position, or liquidity.
In February 2013, FASB amended this guidance to require an entity to provide information about the amounts reclassified out of accumulated OCI by component. In addition, an entity is required to present significant amounts reclassified out of accumulated OCI by the respective line items of net income either on the face of the statement where net income is presented or in the footnotes. This guidance was effective for the Ameren Companies beginning in the first quarter of 2013. The implementation of this amended guidance did not affect the Ameren Companies’ results of operations, financial position, or liquidity. The only amounts reclassified out of accumulated OCI for the Ameren Companies related to pension and other postretirement plan activity. These amounts were immaterial during the first and second quarters of 2013, and therefore no additional disclosures were required.
Disclosures about Offsetting Assets and Liabilities
In December 2011, FASB issued additional authoritative accounting guidance to improve information disclosed about financial and derivative instruments. The guidance requires an entity to disclose information about offsetting and related arrangements to enable users of the financial statements to understand the effect of those arrangements on its financial position. In January 2013, FASB amended this guidance to limit the scope to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The Ameren Companies adopted this guidance for the first quarter of 2013. The implementation of this additional guidance did not affect the Ameren Companies’ results of operations, financial positions, or liquidity, as this guidance only requires additional disclosures. See Note 7 - Derivative Financial Instruments for the required additional disclosures.
Presentation of an Unrecognized Tax Benefit
In July 2013, FASB issued additional authoritative accounting guidance to provide explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The objective of this guidance is to eliminate diversity in practice related to the presentation of certain unrecognized tax benefits. It requires entities to present an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is available under the tax law. The amended guidance will not affect
 
the Ameren Companies' results of operations, financial position, or liquidity, as this guidance is presentation-related only. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2014.
NOTE 2 - DIVESTITURE TRANSACTIONS AND DISCONTINUED OPERATIONS
Transaction Agreement with IPH
On March 14, 2013, Ameren entered into a transaction agreement to divest New AER to IPH. Under the terms of the transaction agreement, AER will effect a reorganization that will, among other things, transfer substantially all of the assets and liabilities of AER, other than (i) any outstanding debt obligations of AER to Ameren or its other subsidiaries, except for certain intercompany balances discussed below, (ii) all of the issued and outstanding equity interests in Medina Valley, which were distributed to Ameren in March 2013, (iii) the assets and liabilities associated with Genco’s Meredosia, Hutsonville, Elgin, Gibson City, and Grand Tower energy centers, (iv) the obligations relating to Ameren's single-employer pension and postretirement benefit plans, and (v) the deferred tax positions associated with Ameren's ownership of these retained assets and liabilities, to New AER. IPH will acquire all of the equity interests in New AER.
Ameren will retain the pension and postretirement benefit obligations associated with current and former employees of AER that are included in the Ameren Retirement Plan, the Ameren Supplemental Retirement Plan, the Ameren Retiree Medical Plan, and the Ameren Group Life Insurance Plan. This noncurrent obligation is reflected on Ameren’s consolidated balance sheet as “Pension and other postretirement benefits.” IPH will assume the pension and other postretirement benefit obligations associated with EEI’s current and former employees that are included in the Revised Retirement Plan for Employees of Electric Energy, Inc., the Group Insurance Plan for Management Employees of Electric Energy, Inc., and the Group Insurance Plan for Bargaining Unit Employees of Electric Energy, Inc. The obligations to be assumed by IPH are estimated at $37 million at June 30, 2013. IPH will also acquire the estimated $15 million asset at June 30, 2013, relating to the overfunded status of one of EEI’s postretirement plans.
Ameren will retain Genco’s Meredosia and Hutsonville energy centers, which are no longer in operation and had an immaterial property and plant asset balance as of June 30, 2013. Ameren will also retain AROs associated with these energy centers, estimated at $27 million as of June 30, 2013. All other AROs associated with AER are expected to be assumed by either IPH or the third-party buyer of the Grand Tower energy center. Upon the transaction agreement closing, with the exception of certain agreements, such as supply obligations to Ameren Illinois, a note from New AER to Ameren relating to cash collateral that will remain outstanding at closing, and Genco money pool advances, all intercompany agreements and debt between AER and its subsidiaries, on the one hand, and Ameren and its non-AER affiliates, on the other hand, will be either retained or cancelled by Ameren, without any cost or obligation to


16



IPH or New AER and its subsidiaries. Immediately prior to the transaction agreement closing, the cash collateral provided to New AER by Ameren through money pool borrowings will be converted to a note payable to Ameren, which will be payable, with interest, 24 months after closing or sooner as cash collateral requirements are reduced. Cash collateral postings by AER and its subsidiaries with external parties, including postings related to exchange-traded contracts, at June 30, 2013, were $29 million.
Genco's $825 million in aggregate principal amount of senior notes will remain outstanding following the closing of the transaction agreement and will continue to be solely obligations of Genco. Pursuant to the transaction agreement, in addition to the cash paid to Genco for the Elgin, Gibson City, and Grand Tower energy center sale, Ameren will cause $85 million of cash to be retained at New AER.
As a condition to the transaction agreement, Genco exercised the amended put option agreement for the sale of the Elgin, Gibson City, and Grand Tower gas-fired energy centers to Medina Valley. Ameren has commenced a sale process for these three energy centers and expects a third-party sale will be completed during 2013.
Completion of the New AER sale to IPH is subject to the receipt of approvals from FERC and approval of certain license transfers by the FCC. On April 16, 2013, AER and Dynegy filed with FERC an application for approval of the divestiture of New AER and Genco’s sale of the Elgin, Gibson City, and Grand Tower natural gas-fired energy centers to Medina Valley. On July 26, 2013, FERC issued an order seeking additional information. In early August 2013, AER and Dynegy responded to FERC’s request for additional information. Several wholesale customers filed a protest with FERC regarding the application. Separately, as a condition to IPH’s obligation to complete the New AER transaction, the Illinois Pollution Control Board must approve the transfer to IPH of, or otherwise approve a variance in favor of IPH on the same terms as, AER’s variance of the Illinois MPS. In May 2013, AER and IPH filed a transfer request with the Illinois Pollution Control Board, which was subsequently denied by the board on procedural grounds. On July 22, 2013, IPH, AER, and Medina Valley, as current and future owners of the coal-fired energy centers, filed a request for a variance with the Illinois Pollution Control Board seeking the same relief as the existing AER variance. The Illinois Pollution Control Board has until late November 2013 to issue a decision. See Note 10 - Commitments and Contingencies for additional information. Ameren’s and IPH’s obligation to complete the transaction is also subject to other customary closing conditions, including the material accuracy of each company’s representations and warranties and the compliance, in all material respects, with each company’s covenants. The transaction agreement contains customary representations and warranties of Ameren and IPH, including representations and warranties of Ameren with respect to the business being sold. The transaction agreement also contains customary covenants of Ameren and IPH, including the covenant of Ameren that AER will be operated in the ordinary course prior to the closing.
 
Ameren expects the closing of the New AER divestiture to IPH will occur in the fourth quarter of 2013. If the closing does not occur on or before March 14, 2014, subject to a one-month extension to obtain FERC approval, either party may elect to terminate the transaction agreement if the inability to close the transaction by such date is not the result of the failure of the terminating company to fulfill any of its obligations under the transaction agreement.
Amended Put Option Agreement, Asset Purchase Agreement and Guaranty
See Note 9 - Related Party Transactions for additional information regarding the original put option agreement between Genco and AERG that was entered into on March 28, 2012.
Prior to entry into the transaction agreement with IPH as discussed above, (i) the original put option agreement between Genco and AERG was novated and amended such that the rights and obligations of AERG under the agreement were assigned to and assumed by Medina Valley and (ii) Genco exercised its option under the amended put option agreement to sell the Elgin, Gibson City, and Grand Tower gas-fired energy centers to Medina Valley. As a result, on March 14, 2013, Genco received an initial payment of $100 million in accordance with the terms of the amended put option agreement. Genco advanced the initial payment amount it received into the non-state-regulated subsidiary money pool. In connection with the amended put option agreement, Ameren's guaranty, dated March 28, 2012, was modified to replace all references to AERG with references to Medina Valley.
Pursuant to the amended put option agreement, Genco and Medina Valley entered into an asset purchase agreement, dated March 14, 2013. Genco and Medina Valley have engaged three appraisers to conduct a fair market valuation of the Elgin, Gibson City, and Grand Tower gas-fired energy centers, which valuations will be averaged and subject to adjustment at the closing of the asset purchase agreement to reflect the assets and liabilities associated with the Elgin, Gibson City, and Grand Tower gas-fired energy centers. At the closing, Genco will receive an additional amount equal to the greater of (i) $33 million, or (ii) the appraised value of the Elgin, Gibson City, and Grand Tower gas-fired energy centers less the initial payment of $100 million, for a total purchase price of at least $133 million, and Genco will sell and transfer to Medina Valley all of its rights in the Elgin, Gibson City, and Grand Tower gas-fired energy centers as a condition to the transaction agreement. If these gas-fired energy centers are subsequently sold by Medina Valley within two years of the asset purchase agreement closing, Medina Valley will pay Genco any proceeds from such sale, net of taxes and other expenses, in excess of the amounts previously paid to Genco. Ameren has commenced a sale process for these three energy centers and expects a third-party sale will be completed during 2013. Should FERC approval not be obtained and the transfer of the Elgin, Gibson City, and Grand Tower energy centers to Medina Valley cannot be completed, Genco will be required to return to Medina Valley the initial payment received in March 2013.


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The asset purchase agreement contains customary representations, warranties and covenants of Genco and Medina Valley. The consummation of the transactions contemplated by the asset purchase agreement is subject to certain conditions, including the receipt of FERC approval and other customary conditions.
Discontinued Operations Presentation
As of March 14, 2013, Ameren determined that New AER and the Elgin, Gibson City, and Grand Tower gas-fired energy
 
centers qualified for discontinued operations presentation and, therefore, were classified separately in Ameren’s consolidated financial statements as discontinued operations for all periods presented in this report. Ameren concluded that New AER and collectively the Elgin, Gibson City, and Grand Tower gas-fired energy centers are two separate disposal groups. Both disposal groups have been aggregated in the disclosures below. Each disposal group was measured at fair value on a nonrecurring basis with inputs that are classified as Level 3 within the fair value hierarchy.

The following table presents the components of discontinued operations in Ameren's consolidated statement of income (loss) for the three and six months ended June 30, 2013, and 2012:
 
Three Months
 
Six months
 
 
2013
 
2012
 
2013
 
2012
 
Operating revenues
$
303

 
$
258

 
$
567

 
$
504

 
Operating expenses
(310
)

(238
)
 
(725
)
(a) 
(1,064
)
(b) 
Operating income (loss)
(7
)
 
20

 
(158
)
 
(560
)
 
Other income (loss)
1

 

 
(1
)
 

 
Interest charges
(11
)
 
(14
)
 
(22
)
 
(29
)
 
Income (loss) before income taxes
(17
)
 
6

 
(181
)
 
(589
)
 
Income tax (expense) benefit
7

 
42

 
(28
)
 
195

 
Income (loss) from discontinued operations, net of taxes
$
(10
)
 
$
48

 
$
(209
)
 
$
(394
)
 
(a)
Includes a noncash pretax impairment charge of $168 million for the six months ended June 30, 2013, to reduce the carrying value of the New AER disposal group to its estimated fair value less cost to sell.
(b)
Includes a noncash pretax asset impairment charge of $628 million to reduce the carrying value of AERG’s Duck Creek energy center to its estimated fair value under held and used accounting guidance.
As the New AER disposal group continued to meet the discontinued operations criteria at June 30, 2013, Ameren evaluated whether any impairment existed by comparing the disposal group’s carrying value to the estimated fair value of the disposal group, less cost to sell. The fair value was based on the terms of Ameren’s agreement to divest New AER to IPH. Ameren will receive no cash proceeds from IPH for the divestiture of New AER. Ameren recorded a pretax charge to earnings of $155 million for the three months ended March 31, 2013, to reduce the carrying value of the New AER disposal group to its estimated fair value less cost to sell. The pretax charge to earnings increased by $13 million during the three months ended June 30, 2013, as the disposal group’s carrying value increased, primarily as a result of derivative market value gains. Ameren recorded a cumulative pretax charge to earnings of $168 million for the six months ended June 30, 2013, to reduce the carrying value of the New AER disposal group to its estimated fair value less cost to sell. The impairment loss was recorded in “Operating expenses” within the components of the discontinued operations statement of income (loss) with a corresponding reduction in “Property and Plant, net” within the components of the discontinued operations balance sheet. Ameren estimated the impairment loss of the disposal group based on the estimated fair value pursuant to the terms of the transaction agreement with IPH, using information currently available, and assuming an expected fourth quarter 2013 closing. Actual operating results, derivative market values, capital expenditures and other items will impact the ultimate loss recognized to reduce the carrying value of the New AER disposal
 
group to its actual fair value less cost to sell, which will be recorded in discontinued operations after all of the information becomes available. In addition, any curtailment gain related to Ameren's pension and postretirement plans will be recorded when the related employees terminate employment with Ameren. The ultimate impairment loss may differ materially from the estimated loss recorded as of June 30, 2013.
Ameren adjusted accumulated deferred income taxes on its balance sheet to reflect the excess of tax basis over financial reporting basis of its stock investment in AER, during the three months ended March 31, 2013, when it became apparent that the temporary difference would reverse. This change in basis resulted in a discontinued operations deferred tax expense of $98 million, which was partially offset by the expected tax benefits of $63 million related to the pretax loss from discontinued operations including the impairment charge, during the three months ended March 31, 2013. During the second quarter of 2013, Ameren recorded tax benefits of $6 million related to the incremental pretax loss from discontinued operations recorded during the second quarter of 2013. In addition, Ameren recorded a $1 million reduction in discontinued operations deferred tax expense during the second quarter of 2013 to reflect the excess of tax basis over financial reporting basis of Ameren’s stock investment in AER. Ameren recorded a cumulative discontinued operations deferred tax expense of $97 million, which was partially offset by the expected tax benefits of $69 million related to the pretax loss from discontinued operations including the


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impairment charge, during the six months ended June 30, 2013. The final tax basis of the AER disposal group and the related tax benefit resulting from the transaction agreement with IPH are dependent upon taxable losses utilized by the disposal group through the closing and the resolution of tax matters under audit, including the adoption of recently issued guidance from the IRS related to tangible property repairs and other matters. As a result, tax expense and benefits realized in discontinued operations may differ materially from those recorded as of June 30, 2013.
As the Elgin, Gibson City, and Grand Tower energy center disposal group continued to meet the discontinued operations criteria at June 30, 2013, Ameren evaluated whether any impairment existed by comparing the disposal group’s carrying value to the estimated fair value of the disposal group, less cost to sell. The fair value was based on the appraised value of these three gas-fired energy centers. In December 2012, Ameren recorded a noncash long-lived asset impairment charge to reduce the carrying value of AER’s energy centers, including the Elgin, Gibson City, and Grand Tower energy centers, to their estimated fair values under the accounting guidance for held and used assets. An immaterial impairment was recorded by Ameren for the three gas-fired energy centers during the three months
 
ended March 31, 2013, with no adjustment necessary during the three months ended June 30, 2013, as the December 2012 held and used asset impairment charge reduced these energy centers’ disposal group carrying value to their estimated fair value of $133 million. Ameren does not expect to have significant continuing involvement or material cash flows with the Elgin, Gibson City, and Grand Tower energy centers after their sale.
Effective with its conclusion that the New AER disposal group and the Elgin, Gibson City, and Grand Tower energy centers’ disposal group each met the criteria for held for sale presentation, Ameren suspended recording depreciation on these assets in March 2013.
Interest on Genco’s senior notes, which will continue to be solely obligations of Genco following the closing of the transaction agreement with IPH, are included in the “Interest charges” component within the discontinued operations line item in the statement of income (loss). Ameren did not allocate corporate interest to the disposal groups. Additionally, general corporate overhead expenses originally allocated to the disposal groups were classified as expenses of continuing operations.


The following table presents the carrying amounts of the components of assets and liabilities segregated on Ameren's consolidated balance sheets as discontinued operations at June 30, 2013, and December 31, 2012:
 
June 30, 2013
 
December 31, 2012
Current assets of discontinued operations
 
 
 
Cash and cash equivalents
$
25

 
$
25

Accounts receivable and unbilled revenue
102

 
102

Materials and supplies
119

 
134

Mark-to-market derivative assets
111

 
102

Property and plant, net
615

 
748

Accumulated deferred income taxes, net
380

 
373

Other assets
134

 
116

Total current assets of discontinued operations
$
1,486

 
$
1,600

Current liabilities of discontinued operations
 
 
 
Accounts payable and other current obligations
$
142

 
$
133

Mark-to-market derivative liabilities
70

 
63

Long-term debt, net
824

 
824

Asset retirement obligations
87

 
78

Pension and other postretirement benefits
37

 
40

Other liabilities
23

 
28

Total current liabilities of discontinued operations
$
1,183

 
$
1,166

Accumulated other comprehensive income(a)
$
8

 
$
19

Noncontrolling interest(b)
$
8

 
$
8

(a)
Accumulated other comprehensive income related to discontinued operations remains in “Accumulated other comprehensive loss” on Ameren’s June 30, 2013, and December 31, 2012, balance sheets. This balance relates to New AER assets and liabilities that will be realized or removed from Ameren’s balance sheet either before or at the closing of the New AER divestiture.
(b)
The 20% ownership interest of EEI not owned by Ameren remains in “Noncontrolling interests” on Ameren’s June 30, 2013, and December 31, 2012, balance sheets. This noncontrolling interest will be removed from Ameren’s balance sheet at the closing of the New AER divestiture.
Ameren will have continuing transactions with New AER after the divestiture is complete. Ameren Illinois has power supply agreements with Marketing Company, which are a result of the power procurement process in Illinois administered by the IPA as required by the Illinois Public Utilities Act. Ameren Illinois will
 
continue to purchase power and purchase trade receivables as required by Illinois law, and Ameren will reflect these items as continuing operations after the divestiture occurs. Ameren Illinois and ATXI currently sell, and will continue to sell, transmission services to Marketing Company after the divestiture of New AER


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is completed. Also, upon the divestiture of New AER, the transaction agreement requires Ameren (parent) to maintain its financial obligations with respect to all credit support provided to New AER for all transactions entered into prior to the closing of such divestiture for up to 24 months after the closing. IPH shall indemnify Ameren for any payments Ameren makes pursuant to these credit support obligations if the counterparty does not return the posted collateral to Ameren. IPH’s indemnification obligation will be secured by certain AERG and Genco assets. In addition, Dynegy has provided a limited guarantee of $25 million to Ameren (parent) pursuant to which Dynegy will, among other things, guarantee IPH’s indemnification obligations for a period of up to 24 months after the closing (subject to certain exceptions). Immediately prior to the transaction agreement closing, the cash collateral provided to New AER by Ameren through money pool borrowings will be converted to a note payable to Ameren which will be payable, with interest, 24 months after closing or sooner as cash collateral requirements are reduced. Also, within 120 days after closing, a working capital adjustment will be finalized, which may result in a cash payment from Ameren to New AER. Ameren has determined that the continuing cash flows generated by these arrangements are not significant and, accordingly, are not deemed direct cash flows of the divested business. Additionally, these arrangements do not provide Ameren the ability to significantly influence the operating results of New AER after the divestiture is complete. See Note 9 - Related Party Transactions for additional information regarding existing transactions between Ameren and New AER.
For a period of up to 12 months following the closing, Ameren will provide certain transitional services to IPH. Such services will be provided at no charge for 90 days, subject to a $5 million limit; thereafter, services will be provided at cost, except for certain services that may be applied to the $5 million limit to the extent such limit has not been reached by the end of the 90 day period. The transitional services may be provided for six months after the closing and can be extended by IPH on a month-to-month basis for up to an additional six months.
See Note 10 - Commitments and Contingencies for information regarding amendments to the plant transfer agreements between both Genco and Ameren Illinois and AERG and Ameren Illinois as well as other AER related contingencies.
Genco Indenture Provisions
Genco’s indenture includes provisions that require Genco to maintain certain interest coverage and debt-to-capital ratios in order for Genco to pay dividends, to make principal or interest payments on subordinated borrowings, to make loans to or investments in affiliates, or to incur additional external, third-party indebtedness. The following table summarizes these ratios for the 12 months ended and as of June 30, 2013:
  
Required
Ratio
Actual
Ratio
Interest coverage ratio- restricted payment (a)
≥1.75
1.60

Interest coverage ratio- additional indebtedness (b)
≥2.50
1.60

Debt-to-capital ratio- additional indebtedness (b)
≤60%
50
%
 
(a)
As of the date of the restricted payment, as defined, the minimum ratio must have been achieved for the most recently ended four fiscal quarters and projected by management to be achieved for each of the subsequent four six-month periods. Investments in the non-state-regulated subsidiary money pool and repayments of non-state-regulated subsidiary money pool borrowings are not subject to this incurrence test.
(b)
Ratios must be computed on a pro forma basis considering the additional indebtedness to be incurred and the related interest expense. Non-state-regulated subsidiary money pool borrowings are defined as permitted indebtedness and are not subject to these incurrence tests. Other borrowings from third-party external sources are included in the definition of indebtedness and are subject to these incurrence tests.
Genco’s debt incurrence-related ratio restrictions under its indenture may be disregarded if both Moody’s and S&P reaffirm the ratings of Genco in place at the time of the debt incurrence after considering the additional indebtedness.
As shown in the table above, under the provisions of Genco’s indenture, Genco may not borrow additional funds from external, third-party sources if its interest coverage ratio is less than 2.5 or its debt-to-capital ratio is greater than 60%. Beginning in the first quarter of 2013, Genco’s interest coverage ratio fell to a value less than the specified minimum level required for external borrowings, and Genco expects the ratio to remain less than this minimum level through at least 2015. As a result, Genco’s ability to borrow additional funds from external third-party sources is restricted. Genco’s indenture does not restrict intercompany borrowings from Ameren’s non-state-regulated subsidiary money pool. However, borrowings from the money pool are subject to Ameren’s control. If a Genco intercompany financing need were to arise, borrowings from the non-state-regulated subsidiary money pool by Genco would be dependent on consideration by Ameren of the facts and circumstances existing at that time. As stated above, the transaction agreement requires Ameren to operate New AER, including Genco, in the ordinary course prior to the closing.
NOTE 3 - RATE AND REGULATORY MATTERS
Below is a summary of updates to significant regulatory proceedings and related lawsuits. See also Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K. 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
FAC Prudence Reviews
Missouri law requires the MoPSC to perform prudence reviews of Ameren Missouri's FAC at least every 18 months. In April 2011, the MoPSC issued an order with respect to its review of Ameren Missouri's FAC for the period from March 1, 2009, to September 30, 2009. In this order, the MoPSC ruled that Ameren Missouri should have included in the FAC calculation all revenues and costs associated with certain long-term partial requirements sales that were made by Ameren Missouri because of the loss of Noranda's load caused by a severe ice storm in January 2009. As a result of the order, Ameren Missouri recorded a pretax


20



charge to earnings of $18 million, including $1 million for interest, in 2011 for its obligation to refund to Ameren Missouri's electric customers the earnings associated with these sales previously recognized by Ameren Missouri during the period from March 1, 2009, to September 30, 2009. Ameren Missouri completed its refund to customers in 2012 as directed by the April 2011 MoPSC order.
In May 2012, upon appeal by Ameren Missouri, the Cole County Circuit Court reversed the MoPSC's April 2011 order. In June 2012, the MoPSC and a group of large industrial customers filed an appeal of the Cole County Circuit Court's ruling to the Missouri Court of Appeals, Western District. In May 2013, the Missouri Court of Appeals upheld the MoPSC’s April 2011 order and reversed the Cole County Circuit Court’s May 2012 decision. Ameren Missouri determined that it would not appeal the Missouri Court of Appeals’ decision.
Ameren Missouri’s FAC calculation for the period from October 1, 2009, to May 31, 2011, excluded all revenues and costs associated with certain long-term partial requirements sales that were made by Ameren Missouri because of the loss of Noranda’s load caused by a severe ice storm in January 2009, similar to the FAC calculation for the period from March 1, 2009, to September 30, 2009. As a result of the Missouri Court of Appeal’s May 2013 decision on the MoPSC’s April 2011 order, Ameren Missouri recorded a pretax charge to earnings of $23 million, including $1 million for interest, in the second quarter of 2013 for its estimated obligation to refund to Ameren Missouri’s electric customers the earnings associated with these sales previously recognized by Ameren Missouri for the period from October 1, 2009, to May 31, 2011. Ameren Missouri recorded the charge to “Operating Revenues - Electric” and the related interest to “Interest Charges” with a corresponding offset to “Current regulatory liabilities.” No similar revenues were excluded from FAC calculations after May 2011. On July 31, 2013, the MoPSC issued an order calculating the refund of these earnings to be $26 million, including $1 million of interest. Ameren Missouri is evaluating its options regarding seeking rehearing or appeal of the MoPSC’s order as it relates to the additional $3 million of refunds, as Ameren Missouri believes it has already refunded $3 million to customers through the FAC.
Separately, in July 2011, Ameren Missouri filed a request with the MoPSC for an accounting authority order that would allow Ameren Missouri to defer, as a regulatory asset, fixed costs totaling $36 million that were not recovered from Noranda as a result of the loss of load caused by the severe 2009 ice storm for potential recovery in a future electric rate case. This case remains pending and we cannot predict its outcome.
The MoPSC’s FAC prudence review for the period from June 1, 2011, to September 30, 2012, was initiated on March 1, 2013. The MoPSC is expected to issue an order for this prudence review in 2013.
2012 Electric Rate Order
In December 2012, the MoPSC issued an order approving an increase for Ameren Missouri in annual revenues for electric
 
service of $260 million. In January 2013, Ameren Missouri appealed the order with respect to the amount of property taxes included in the order to the Missouri Court of Appeals, Western District. In July 2013, Ameren Missouri withdrew its appeal related to the 2012 electric rate order. In February 2013, the MoOPC, MIEC and other parties filed separate appeals to the Missouri Court of Appeals, Western District, relating to the 2012 electric rate order’s treatment of transmission costs in the FAC. The appeals filed by MoOPC, MIEC and other parties were consolidated and are still pending. A decision is expected by the Missouri Court of Appeals, Western District, in 2013. Ameren Missouri cannot predict the ultimate outcome of this appeal, which could adversely impact its results of operations.
Illinois
IEIMA
Under the provisions of the IEIMA, Ameren Illinois’ electric delivery service rates effective in 2013 are subject to an annual revenue requirement reconciliation to its actual 2013 costs. The 2013 revenue requirement reconciliation will be filed with the ICC in 2014. The approved annual revenue requirement reconciliation adjustment will be reflected in customer rates beginning in January 2015. Throughout the year, Ameren Illinois records a regulatory asset or a regulatory liability and a corresponding increase or decrease to operating revenues for any differences between the revenue requirement in effect for that year and its best estimate of the probable increase or decrease in the revenue requirement expected to ultimately be approved by the ICC based on that year's actual costs incurred. As of June 30, 2013, Ameren Illinois recorded a $33 million regulatory asset to reflect the year-to-date portion of its expected 2013 revenue requirement reconciliation adjustment. As of June 30, 2013 and December 31, 2012, Ameren Illinois recorded a regulatory liability of $57 million and $55 million, respectively, to reflect its expected 2012 revenue requirement reconciliation adjustment, with interest,