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, 2010

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
  

(Formerly known as Central Illinois Public Service Company)

(Illinois Corporation)

  
   300 Liberty Street   
   Peoria, Illinois 61602   
   (309) 677-5271   
333-56594    Ameren Energy Generating Company    37-1395586
   (Illinois Corporation)   
   1901 Chouteau Avenue   
   St. Louis, Missouri 63103   
   (314) 621-3222   
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   


Table of Contents

 

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    ¨   

Ameren Illinois Company

   Yes    x    No    ¨   

Ameren Energy Generating Company

   Yes    x    No    ¨   

Central Illinois Light Company*

   Yes    x    No    ¨   

Illinois Power Company*

   Yes    x    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 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    ¨   

Ameren Illinois Company

   Yes    ¨    No    ¨   

Ameren Energy Generating Company

   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   ¨

Ameren Illinois Company

  ¨   ¨   x   ¨

Ameren Energy Generating Company

  ¨   ¨   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   

Ameren Illinois Company

   Yes    ¨    No    x   

Ameren Energy Generating Company

   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 29, 2010, was as follows:

 

Ameren Corporation

  

Common stock, $0.01 par value per share - 239,829,423

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

(Formerly known as 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

Central Illinois Light Company*

  

Illinois Power Company*

  

This combined Form 10-Q is separately filed by Ameren Corporation, Union Electric Company, Ameren Illinois Company, Ameren Energy Generating Company, 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.

 

* On October 1, 2010, Central Illinois Public Service Company, Central Illinois Light Company and Illinois Power Company completed the previously-announced merger whereby Central Illinois Light Company and Illinois Power Company merged with and into Central Illinois Public Service Company, with Central Illinois Public Service Company as the surviving entity, pursuant to the terms of the agreement and plan of merger, dated as of April 13, 2010, among Central Illinois Public Service Company, Central Illinois Light Company and Illinois Power Company. Upon consummation of the merger, Central Illinois Public Service Company’s name was changed to Ameren Illinois Company and the separate legal existence of Central Illinois Light Company and Illinois Power Company terminated. Prior to the merger, each of Central Illinois Public Service Company, Central Illinois Light Company and Illinois Power Company was a separate registrant subsidiary of Ameren Corporation. Throughout this document we continue to reference Central Illinois Public Service Company, Central Illinois Light Company and Illinois Power Company when discussing historical results through September 30, 2010. When discussing current or future operations or results, we reference the newly merged entity, Ameren Illinois Company.

 

 

 

OMISSION OF CERTAIN INFORMATION

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

 

 

 


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   
 

Central Illinois Light Company

  
 

Consolidated Statement of Income

     21   
 

Consolidated Balance Sheet

     22   
 

Consolidated Statement of Cash Flows

     23   
 

Illinois Power Company

  
 

Statement of Income

     24   
 

Balance Sheet

     25   
 

Statement of Cash Flows

     26   
 

Combined Notes to Financial Statements

     27   

Item 2.

 

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

     76   

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

     108   

Item 4 and

    

Item 4T.

 

Controls and Procedures

     112   

PART II

 

Other Information

  

Item 1.

 

Legal Proceedings

     113   

Item 1A.

 

Risk Factors

     113   

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

     113   

Item 6.

 

Exhibits

     115   

Signatures

     117   

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 words and 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.

2007 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 settlement, which became effective on August 28, 2007, was designed to avoid new rate rollback and freeze legislation as well as any 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.

2009 Illinois Credit Agreement - Ameren’s, CIPS’, CILCO’s and IP’s $800 million senior secured credit agreement, which terminated on September 10, 2010.

2009 Multiyear Credit Agreement - Ameren’s, UE’s and Genco’s $1.15 billion credit agreement, which terminated on September 10, 2010. Collectively, this agreement and the 2009 Supplemental Credit Agreement are referred to herein as the “2009 Multiyear Credit Agreements.”

2009 Supplemental Credit Agreement - Ameren’s, UE’s and Genco’s $150 million supplemental credit agreement to the 2009 Multiyear Credit Agreement. This agreement expired in July 2010.

2010 Credit Agreements - The 2010 Genco Credit Agreement, the 2010 Illinois Credit Agreement, and the 2010 Missouri Credit Agreement, collectively.

2010 Genco Credit Agreement - On September 10, 2010, Ameren and Genco entered into a $500 million multiyear senior unsecured revolving credit facility. This agreement is due to expire on September 10, 2013.

2010 Illinois Credit Agreement - On September 10, 2010, Ameren, CIPS, CILCO and IP entered into an $800 million multiyear senior unsecured credit agreement. This agreement is due to expire on September 10, 2013, with respect to Ameren. This agreement is due to expire on September 9, 2011, subject to extensions, with respect to AIC.

2010 Missouri Credit Agreement - On September 10, 2010, Ameren and UE entered into an $800 million multiyear senior unsecured revolving credit facility. This agreement is due to expire on September 10, 2013, with respect to Ameren. This agreement is due to expire on September 9, 2011, subject to extensions, with respect to UE.

AERG - AmerenEnergy Resources Generating Company, a CILCO subsidiary until October 1, 2010, that operates a merchant electric generation business in Illinois. On October 1, 2010, AERG stock was distributed to Ameren and subsequently contributed by Ameren to Resources Company, which resulted in AERG becoming a subsidiary of Resources Company.

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.

AIC - Ameren Illinois Company, an Ameren Corporation subsidiary that operates a rate-regulated electric and natural gas transmission and distribution businesses in Illinois. On October 1, 2010, CILCO and IP merged with and into CIPS with the surviving corporation renamed Ameren Illinois Company, doing business as Ameren Illinois.

AIC Merger - On October 1, 2010, CILCO and IP merged with and into CIPS, with the surviving corporation renamed Ameren Illinois Company.

AITC - Ameren Illinois Transmission Company, an Ameren Corporation subsidiary that is engaged in the construction and operation of electric transmission assets in Illinois and is regulated by 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 - A financial reporting segment consisting of the rate-regulated electric and natural gas transmission and distribution businesses of CIPS, CILCO and IP until October 1, 2010, and AIC on and after October 1, 2010.

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

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

ARO - Asset retirement obligations.

ATX - Ameren Transmission Company, a direct subsidiary of Ameren Corporation dedicated to electric transmission infrastructure investment.

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.

CAIR - Clean Air Interstate Rule.

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

CATR - Clean Air Transport Rule.

CILCO - Central Illinois Light Company, an Ameren Corporation subsidiary until October 1, 2010, that operated 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. Prior to October 1, 2010, CILCO owned all of the common stock of AERG and included AERG within its consolidated financial statements. On October 1, 2010, CILCO and IP merged with and into CIPS with the surviving corporation renamed Ameren Illinois Company.

 

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AERG stock was distributed to Ameren and subsequently contributed by Ameren to Resources Company, which resulted in AERG becoming a subsidiary of Resources Company.

CILCORP - CILCORP Inc., a former Ameren Corporation subsidiary that operated as a holding company for CILCO and its merchant generation subsidiary. On March 4, 2010, CILCORP merged with and into Ameren.

CIPS - Central Illinois Public Service Company, an Ameren Corporation subsidiary that operates a rate-regulated electric and natural gas transmission and distribution business, all in Illinois. On October 1, 2010, CILCO and IP merged with and into CIPS with the surviving corporation renamed Ameren Illinois Company.

CO2 - Carbon dioxide.

COLA - Combined nuclear plant construction and operating license application.

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

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 Resources Company subsidiary that operates merchant electric generation facilities and FERC-regulated transmission facilities in Illinois. Effective January 1, 2010, in an internal reorganization, Resources Company contributed its 80% ownership interest in EEI to its subsidiary, Genco. 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, greater or less than the amount set in base rates, without a traditional rate proceeding.

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, 2009, filed by the Ameren Companies with the SEC.

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.

ICC - Illinois Commerce Commission, a state agency that regulates Illinois utility businesses, including AITC and the rate-regulated operations of AIC, and prior to October 1, 2010, CIPS, CILCO and IP.

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

IP - Illinois Power Company, an Ameren Corporation subsidiary until October 1, 2010, that operated a rate-regulated electric and natural gas transmission and distribution business, all in Illinois. On October 1, 2010, CILCO and IP merged with and into CIPS with the surviving corporation renamed Ameren Illinois Company.

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

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, EEI and Medina Valley.

Medina Valley - AmerenEnergy Medina Valley Cogen LLC, 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 primarily of the operations or activities of Genco, AERG, EEI, Medina Valley, Resources Company and Marketing Company.

MGP - Manufactured gas plant.

MISO - Midwest Independent Transmission System Operator, Inc., an RTO.

MISO Energy and Operating Reserves Market - A market that uses market-based pricing, incorporating transmission congestion and line losses, to compensate market participants for power and ancillary services.

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, as amended, reached in 2006 among Genco, 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.

NSR - New Source Review provisions of the Clean Air Act.

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

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

OTC - Over-the-counter.

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 and revenue levels. Rate increase requests can take up to 11 months to be acted upon by the MoPSC and the ICC. As a result, revenue increases authorized by regulators will lag behind changing costs and revenue.

Resources Company - Ameren Energy Resources Company, LLC, an Ameren Corporation subsidiary that consists of non-rate-regulated operations, including Genco, Marketing Company, AFS and Medina Valley. On October 1, 2010, AERG stock was distributed to Ameren and subsequently contributed by Ameren to Resources Company, which resulted in AERG becoming a subsidiary of Resources Company.

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.

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, all in Missouri doing business as Ameren Missouri.

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 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:

 

 

regulatory or legislative actions, including changes in regulatory policies and ratemaking determinations, such as the outcome of UE’s pending electric and natural gas rate proceedings and the rehearings or appeals related to UE’s 2009 and 2010 electric rate orders, and future rate proceedings or legislative actions that seek to limit or reverse rate increases;

 

 

the effects of, or changes to, 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;

 

 

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;

 

 

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 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;

 

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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;

 

 

generation, transmission, and distribution asset construction, installation and performance;

 

 

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

 

 

impairments of long-lived assets, intangible assets, or goodwill;

 

 

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

 

 

the effects of strategic initiatives, including mergers, 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, other emissions and energy efficiency, will be enacted over time, which could limit or terminate the operation of certain of our generating facilities, increase our costs, result in an impairment of our assets, reduce our customers’ demand for electricity or natural gas, or otherwise have a negative financial effect;

 

 

labor disputes, work force 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 (LOSS)

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

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2010      2009      2010      2009  

Operating Revenues:

           

Electric

   $ 2,122        $ 1,679        $ 5,095        $ 4,589    

Gas

     132          136          779          826    
                                   

Total operating revenues

     2,254          1,815          5,874          5,415    
                                   

Operating Expenses:

           

Fuel

     394          306          973          867    

Purchased power

     376          256          915          708    

Gas purchased for resale

     51          57          467          523    

Other operations and maintenance

     444          422          1,306          1,294    

Goodwill and other impairment losses

     589                  589            

Depreciation and amortization

     194          185          571          541    

Taxes other than income taxes

     117          104          335          311    
                                   

Total operating expenses

     2,165          1,330          5,156          4,244    
                                   

Operating Income

     89          485          718          1,171    

Other Income and Expenses:

           

Miscellaneous income

     24          16          70          49    

Miscellaneous expense

     10                  19          14    
                                   

Total other income

     14          13          51          35    
                                   

Interest Charges

     130          134          377          376    
                                   

Income (Loss) Before Income Taxes

     (27)         364          392          830    

Income Taxes

     137          135          295          288    
                                   

Net Income (Loss)

     (164)         229          97          542    

Less: Net Income Attributable to Noncontrolling Interests

                     10            
                                   

Net Income (Loss) Attributable to Ameren Corporation

   $ (167)       $ 227        $ 87        $ 533    
                                   

Earnings (Loss) per Common Share – Basic and Diluted

   $ (0.70)       $ 1.04        $ 0.37        $ 2.48    
                                   

Dividends per Common Share

   $ 0.385        $ 0.385        $ 1.155        $ 1.155    

Average Common Shares Outstanding

     239.3          218.2          238.4          214.9    

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,
2010
    December 31,
2009
 

ASSETS

   

Current Assets:

   

Cash and cash equivalents

  $ 608       $ 622    

Accounts receivable – trade (less allowance for doubtful accounts of $22 and $24, respectively)

    496         424    

Unbilled revenue

    313         367    

Miscellaneous accounts and notes receivable

    395         318    

Materials and supplies

    746         782    

Mark-to-market derivative assets

    153         121    

Current regulatory assets

    313         110    

Other current assets

    96         98    
               

Total current assets

    3,120         2,842    
               

Property and Plant, Net

    17,655         17,610    

Investments and Other Assets:

   

Nuclear decommissioning trust fund

    315         293    

Goodwill

    411         831    

Intangible assets

           129    

Regulatory assets

    1,422         1,430    

Other assets

    699         655    
               

Total investments and other assets

    2,856         3,338    
               

TOTAL ASSETS

  $ 23,631       $ 23,790    
               

LIABILITIES AND EQUITY

   

Current Liabilities:

   

Current maturities of long-term debt

  $ 354       $ 204    

Short-term debt

    125         20    

Accounts and wages payable

    414         694    

Taxes accrued

    153         54    

Interest accrued

    174         110    

Customer deposits

    99         101    

Mark-to-market derivative liabilities

    188         109    

Current accumulated deferred income taxes, net

    107         38    

Other current liabilities

    300         381    
               

Total current liabilities

    1,914         1,711    
               

Credit Facility Borrowings

    400         830    

Long-term Debt, Net

    6,859         7,113    

Deferred Credits and Other Liabilities:

   

Accumulated deferred income taxes, net

    2,941         2,554    

Accumulated deferred investment tax credits

    90         94    

Regulatory liabilities

    1,373         1,345    

Asset retirement obligations

    448         429    

Pension and other postretirement benefits

    1,076         1,165    

Other deferred credits and liabilities

    621         489    
               

Total deferred credits and other liabilities

    6,549         6,076    
               

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

   

Ameren Corporation Stockholders' Equity:

   

Common stock, $.01 par value, 400.0 shares authorized – shares outstanding of 239.7 and 237.4, respectively

             

Other paid-in capital, principally premium on common stock

    5,496         5,412    

Retained earnings

    2,266         2,455    

Accumulated other comprehensive loss

    (10)        (13)   
               

Total Ameren Corporation stockholders’ equity

    7,754         7,856    
               

Noncontrolling Interests

    155         204    
               

Total equity

    7,909         8,060    
               

TOTAL LIABILITIES AND EQUITY

  $ 23,631       $ 23,790    
               

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,
 
     2010      2009  

Cash Flows From Operating Activities:

     

Net income

   $ 97        $ 542    

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

     

Goodwill and other impairment losses

     589          -     

Net mark-to-market gain on derivatives

     (27)         (26)   

Depreciation and amortization

     588          557    

Amortization of nuclear fuel

     36          40    

Amortization of debt issuance costs and premium/discounts

     19          16    

Deferred income taxes and investment tax credits, net

     409          301    

Other

     (23)           

Changes in assets and liabilities:

     

Receivables

     (152)         174    

Materials and supplies

     39          (11)   

Accounts and wages payable

     (170)         (241)   

Taxes accrued

     99          81    

Assets, other

     (111)         (50)   

Liabilities, other

     90          124    

Pension and other postretirement benefits

     (12)         30    

Counterparty collateral, net

     (24)         44    

Taum Sauk insurance recoveries, net of costs

     57          110    
                 

Net cash provided by operating activities

      1,504          1,696    
                 

Cash Flows From Investing Activities:

     

Capital expenditures

     (746)         (1,295)   

Nuclear fuel expenditures

     (35)         (47)   

Purchases of securities – nuclear decommissioning trust fund

     (207)         (315)   

Sales of securities – nuclear decommissioning trust fund

     195          315    

Purchases of emission allowances

             (4)   

Proceeds from sales of property interests

     18          -     

Other

     (1)           
                 

Net cash used in investing activities

     (776)         (1,345)   
                 

Cash Flows From Financing Activities:

     

Dividends on common stock

     (276)         (247)   

Capital issuance costs

     (15)         (64)   

Dividends paid to noncontrolling interest holders

     (7)         (19)   

Short-term and credit facility borrowings, net

     (325)         (739)   

Redemptions, repurchases, and maturities:

     

Long-term debt

     (106)         (250)   

Preferred stock

     (52)         -     

Issuances:

     

Common stock

     60          617    

Long-term debt

     -           772    

Generator advances for construction received (refunded), net

     (21)         50    
                 

Net cash provided by (used in) financing activities

     (742)         120    
                 

Net change in cash and cash equivalents

     (14)         471    

Cash and cash equivalents at beginning of year

     622          92    
                 

Cash and cash equivalents at end of period

   $ 608        $ 563    
                 

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,
 
     2010      2009      2010      2009  

Operating Revenues:

           

Electric

   $ 1,040        $    816        $ 2,384        $ 2,120    

Gas

     20          19          118          120    

Other

                               
                                   

Total operating revenues

     1,060          836          2,503          2,243    
                                   

Operating Expenses:

           

Fuel

     205          153          441          451    

Purchased power

     48          27          134          88    

Gas purchased for resale

                     64          68    

Other operations and maintenance

     233          229          691          665    

Depreciation and amortization

     99          90          283          266    

Taxes other than income taxes

     82          72          218          200    
                                   

Total operating expenses

     675          579          1,831          1,738    
                                   

Operating Income

     385          257          672          505    

Other Income and Expenses:

           

Miscellaneous income

     23          15          64          43    

Miscellaneous expense

                     11            
                                   

Total other income

     15          13          53          37    
                                   

Interest Charges

     56          61          158          171    
                                   

Income Before Income Taxes

     344          209          567          371    

Income Taxes

     120          67          200          123    
                                   

Net Income

     224          142          367          248    

Preferred Stock Dividends

                               
                                   

Net Income Available to Common Stockholder

   $ 223        $ 141        $ 363        $ 244    
                                   

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,
2010
     December 31,
2009
 
ASSETS      

Current Assets:

     

Cash and cash equivalents

   $ 291        $ 267    

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

     263          154    

Accounts receivable – affiliates

     18          22    

Unbilled revenue

     143          127    

Miscellaneous accounts and notes receivable

     177          199    

Materials and supplies

     338          346    

Current regulatory assets

     196          63    

Other current assets

     65          50    
                 

Total current assets

     1,491          1,228    
                 

Property and Plant, Net

     9,606          9,585    

Investments and Other Assets:

     

Nuclear decommissioning trust fund

     315          293    

Intangible assets

             35    

Regulatory assets

     793          765    

Other assets

     398          395    
                 

Total investments and other assets

     1,508          1,488    
                 

TOTAL ASSETS

   $ 12,605        $ 12,301    
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY      

Current Liabilities:

     

Current maturities of long-term debt

   $       $   

Accounts and wages payable

     161          336    

Accounts payable – affiliates

     136          132    

Taxes accrued

     139          21    

Interest accrued

     73          63    

Current accumulated deferred income taxes, net

     51          12    

Other current liabilities

     121          115    
                 

Total current liabilities

     685          683    
                 

Long-term Debt, Net

     3,954          4,018    

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     1,918          1,660    

Accumulated deferred investment tax credits

     77          79    

Regulatory liabilities

     828          947    

Asset retirement obligations

     342          331    

Pension and other postretirement benefits

     379          400    

Other deferred credits and liabilities

     211          126    
                 

Total deferred credits and other liabilities

     3,755          3,543    
                 

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          1,555    

Preferred stock not subject to mandatory redemption

     80          113    

Retained earnings

     2,065          1,878    
                 

Total stockholders’ equity

     4,211          4,057    
                 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 12,605        $ 12,301    
                 

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,
 
     2010     2009  

Cash Flows From Operating Activities:

    

Net income

   $ 367       $ 248    

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

    

Net mark-to-market gain on derivatives

            (29)   

Depreciation and amortization

     283         266    

Amortization of nuclear fuel

     36         40    

Amortization of debt issuance costs and premium/discounts

              

Deferred income taxes and investment tax credits, net

     266         219    

Allowance for equity funds used during construction

     (38)        (20)   

Other

              

Changes in assets and liabilities:

    

Receivables

     (158)        (159)   

Materials and supplies

     10         (25)   

Accounts and wages payable

     (96)        (159)   

Taxes accrued

     118         104    

Assets, other

     (148)        (21)   

Liabilities, other

     77         77    

Pension and other postretirement benefits

     (5)        13    

Taum Sauk insurance recoveries, net of costs

     57         110    
                

Net cash provided by operating activities

     780         676    
                

Cash Flows From Investing Activities:

    

Capital expenditures

     (434)        (657)   

Nuclear fuel expenditures

     (35)        (47)   

Purchases of securities – nuclear decommissioning trust fund

     (207)        (315)   

Sales of securities – nuclear decommissioning trust fund

     195         315    
                

Net cash used in investing activities

     (481)        (704)   
                

Cash Flows From Financing Activities:

    

Dividends on common stock

     (176)        (170)   

Dividends on preferred stock

     (4)        (4)   

Capital issuance costs

     (4)        (14)   

Short-term debt, net

            (251)   

Intercompany note payable – Ameren, net

            (92)   

Redemptions, repurchases, and maturities:

    

Long-term debt

     (66       

Preferred stock

     (33       

Issuances of long-term debt

            349    

Capital contribution from parent

            436    

Other

              
                

Net cash provided by (used in) financing activities

     (275)        257    
                

Net change in cash and cash equivalents

     24         229    

Cash and cash equivalents at beginning of year

     267           
                

Cash and cash equivalents at end of period

   $ 291       $ 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,
 
     2010      2009      2010      2009  

Operating Revenues:

           

Electric

   $ 202        $ 180        $ 523        $ 508    

Gas

     25          27          148          158    

Other

                               
                                   

Total operating revenues

     227          208          672          669    
                                   

Operating Expenses:

           

Purchased power

     99          97          273          297    

Gas purchased for resale

             11          87          100    

Other operations and maintenance

     44          40          131          138    

Depreciation and amortization

     17          17          51          51    

Taxes other than income taxes

     11                  30          26    
                                   

Total operating expenses

     179          173          572          612    
                                   

Operating Income

     48          35          100          57    

Other Income and Expenses:

           

Miscellaneous income

                               

Miscellaneous expense

                               
                                   

Total other income

                               
                                   

Interest Charges

                     21          22    
                                   

Income Before Income Taxes

     41          28          80          40    

Income Taxes

     16          10          32          14    
                                   

Net Income

     25          18          48          26    

Preferred Stock Dividends

                               
                                   

Net Income Available to Common Stockholder

   $ 24        $ 17        $ 46        $ 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,
2010
    December 31,
2009
 

ASSETS

   

Current Assets:

   

Cash and cash equivalents

  $ 59       $ 28    

Accounts receivable – trade (less allowance for doubtful accounts of $4 and $5, respectively)

    61         53    

Accounts receivable – affiliates

           12    

Unbilled revenue

    43         52    

Miscellaneous accounts and notes receivable

    34         14    

Current portion of note receivable – Genco

           45    

Current portion of tax receivable – Genco

             

Materials and supplies

    55         47    

Current regulatory assets

    96         59    

Current accumulated deferred income taxes, net

    12         18    

Other current assets

    11           
               

Total current assets

    386         342    
               

Property and Plant, Net

    1,265         1,268    

Investments and Other Assets:

   

Tax receivable – Genco

    74         82    

Regulatory assets

    226         248    

Other assets

    32         25    
               

Total investments and other assets

    332         355    
               

TOTAL ASSETS

  $ 1,983       $ 1,965    
               

LIABILITIES AND STOCKHOLDERS’ EQUITY

   

Current Liabilities:

   

Current maturities of long-term debt

  $ 150       $   

Accounts and wages payable

    38         48    

Accounts payable – affiliates

    43         58    

Taxes accrued

             

Customer deposits

    22         21    

Mark-to-market derivative liabilities

    25         10    

Mark-to-market derivative liabilities – affiliates

    65         43    

Environmental remediation

    23         22    

Other current liabilities

    38         45    
               

Total current liabilities

    410         254    
               

Long-term Debt, Net

    232         421    

Deferred Credits and Other Liabilities:

   

Accumulated deferred income taxes, net

    309         273    

Accumulated deferred investment tax credits

             

Regulatory liabilities

    236         244    

Pension and other postretirement benefits

    53         58    

Other deferred credits and liabilities

    141         134    
               

Total deferred credits and other liabilities

    745         716    
               

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

    256         257    

Preferred stock not subject to mandatory redemption

    50         50    

Retained earnings

    290         267    
               

Total stockholders’ equity

    596         574    
               

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $ 1,983       $ 1,965    
               

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,
 
     2010      2009  

Cash Flows From Operating Activities:

     

Net income

   $ 48        $ 26    

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

     

Depreciation and amortization

     51          51    

Amortization of debt issuance costs and premium/discounts

               

Deferred income taxes and investment tax credits, net

     38          (8)   

Changes in assets and liabilities:

     

Receivables

     (5)         64    

Materials and supplies

     (8)         10    

Accounts and wages payable

     (20)         (14)   

Taxes accrued

     (1)           

Assets, other

     (7)         26    

Liabilities, other

     11          (3)   

Pension and other postretirement benefits

     -             
                 

Net cash provided by operating activities

      109          160    
                 

Cash Flows From Investing Activities:

     

Capital expenditures

     (59)         (83)   

Note receivable – Genco

     45          42    
                 

Net cash used in investing activities

     (14)         (41)   
                 

Cash Flows From Financing Activities:

     

Dividends on common stock

     (24)         (12)   

Dividends on preferred stock

     (2)         (2)   

Capital issuance costs

     (1)         (3)   

Short-term debt, net

     -           (62)   

Money pool borrowings, net

     -           (44)   

Redemptions, repurchases, and maturities of long-term debt

     (40)         -     

Capital contribution from parent

     -           13    

Other

             -     
                 

Net cash used in financing activities

     (64)         (110)   
                 

Net change in cash and cash equivalents

     31            

Cash and cash equivalents at beginning of year

     28          -     
                 

Cash and cash equivalents at end of period

   $ 59        $   
                 

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 (LOSS)

(Unaudited) (In millions)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2010      2009 (a)      2010      2009 (a)  

Operating Revenues

   $ 335        $  305        $  877        $  887    

Operating Expenses:

           

Fuel

     146          113          405          321    

Purchased power

     42          48          62          72    

Other operations and maintenance

     47          59          141          171    

Goodwill and other impairment losses

     170          -           170          -     

Depreciation and amortization

     25          22          74          60    

Taxes other than income taxes

                     17          18    
                                   

Total operating expenses

     434          248          869          642    
                                   

Operating Income (Loss)

     (99)         57                  245    

Other Income and Expenses:

           

Miscellaneous income

     -           -                   -     

Miscellaneous expense

     -           -                   -     
                                   

Total other income

     -           -           -           -     
                                   

Interest Charges

     21          15          60          44    
                                   

Income (Loss) Before Income Taxes

     (120)         42          (52)         201    

Income Taxes

     (20)         20          10          78    
                                   

Net Income (Loss)

     (100)         22          (62)         123    

Less: Net Income (Loss) Attributable to Noncontrolling Interest

             (1)                   
                                   

Net Income (Loss) Attributable to Ameren Energy Generating Company

   $ (101)       $ 23        $ (65)       $ 122    
                                   

 

 

(a)

Prior period has been adjusted to include EEI as discussed in Note 1 - Summary of Significant Accounting Policies.

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)

 

     September 30,
2010
     December 31,
2009 (a)
 

ASSETS

     

Current Assets:

     

Cash and cash equivalents

   $       $   

Accounts receivable – affiliates

     93          129    

Miscellaneous accounts and notes receivable

             26    

Advances to money pool

     205          73    

Materials and supplies

     128          170    

Mark-to-market derivative assets

     26          22    

Other current assets

               
                 

Total current assets

     468          428    
                 

Property and Plant, Net

     2,249          2,337    

Investments and Other Assets:

     

Goodwill

             65    

Intangible assets

             62    

Other assets

     24          28    
                 

TOTAL ASSETS

   $ 2,746        $ 2,920    
                 

LIABILITIES AND EQUITY

     

Current Liabilities:

     

Current maturities of long-term debt

   $ 200        $ 200    

Current portion of note payable – CIPS

             45    

Note payable – Ameren

     73          131    

Accounts and wages payable

     57          85    

Accounts payable – affiliates

     34          40    

Current portion of tax payable – CIPS

               

Taxes accrued

     27          17    

Interest accrued

     34          13    

Other current liabilities

     49          58    
                 

Total current liabilities

     483          598    
                 

Long-term Debt, Net

     823          823    

Deferred Credits and Other Liabilities:

     

Accumulated deferred income taxes, net

     241          216    

Accumulated deferred investment tax credits

               

Tax payable – CIPS

     74          82    

Asset retirement obligations

     66          60    

Pension and other postretirement benefits

     83          89    

Other deferred credits and liabilities

     17          35    
                 

Total deferred credits and other liabilities

     485          486    
                 

Commitments and Contingencies (Notes 2, 8 and 9)

     

Ameren Energy Generating Company Stockholder’s Equity:

     

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

               

Other paid-in capital

     620          620    

Retained earnings

     367          432    

Accumulated other comprehensive loss

     (44)         (48)   
                 

Total Ameren Energy Generating Company stockholder’s equity

     943          1,004    
                 

Noncontrolling Interest

     12            
                 

Total equity

     955          1,013    
                 

TOTAL LIABILITIES AND EQUITY

   $ 2,746        $ 2,920    
                 

 

(a)

Prior period has been adjusted to include EEI as discussed in Note 1 - Summary of Significant Accounting Policies.

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,
 
     2010      2009 (a)  

Cash Flows From Operating Activities:

     

Net income (loss)

   $ (62)       $ 123    

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

     

Goodwill and other impairment losses

     170          -     

Loss on sales of emission allowances

             -     

Net mark-to-market gain on derivatives

     (2)         (12)   

Depreciation and amortization

     87          79    

Amortization of debt issuance costs and discounts

               

Deferred income taxes and investment tax credits, net

             57    

Other

     (5)           

Changes in assets and liabilities:

     

Receivables

     55          24    

Materials and supplies

     43          (11)   

Accounts and wages payable

     (20)         (18)   

Taxes accrued

     10          (3)   

Assets, other

               

Liabilities, other

     (4)         (15)   

Pension and other postretirement benefits

               
                 

Net cash provided by operating activities

     293          235    
                 

Cash Flows From Investing Activities:

     

Capital expenditures

     (71)         (248)   

Proceeds from sale of property interests

     18          -     

Money pool advances, net

     (132)         -     

Purchases of emission allowances

             (3)   
                 

Net cash used in investing activities

     (185)         (251)   
                 

Cash Flows From Financing Activities:

     

Dividends on common stock

     -           (43)   

Dividends paid to noncontrolling interest holder

     -           (11)   

Capital issuance costs

     (4)         (5)   

Short-term debt, net

     -           100    

Money pool borrowings, net

     -           (43)   

Notes payable – affiliates

     (103)         18    
                 

Net cash provided by (used in) financing activities

     (107)         16    
                 

Net change in cash and cash equivalents

             -     

Cash and cash equivalents at beginning of year

               
                 

Cash and cash equivalents at end of period

   $       $   
                 

 

(a)

Prior period has been adjusted to include EEI as discussed in Note 1 - Summary of Significant Accounting Policies.

The accompanying notes as they relate to Genco 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,
 
     2010      2009      2010      2009  

Operating Revenues:

           

Electric

   $ 193        $ 200        $ 512        $ 548    

Gas

     29          31          177          188    

Support services – affiliates

     18          19          58          53    

Other

                               
                                   

Total operating revenues

     240          251          747          794    
                                   

Operating Expenses:

           

Fuel

     37          35          115          81    

Purchased power

     48          44          125          131    

Gas purchased for resale

     13          14          117          129    

Other operations and maintenance

     64          64          190          193    

Depreciation and amortization

     19          19          55          53    

Taxes other than income taxes

                     20          20    
                                   

Total operating expenses

     186          182          622          607    
                                   

Operating Income

     54          69          125          187    

Other Income and Expenses:

           

Miscellaneous income

                               

Miscellaneous expense

                               
                                   

Total other expenses

     (1)                         (3)   
                                   

Interest Charges

     10          13          33          28    
                                   

Income Before Income Taxes

     43          56          92          156    

Income Taxes

     11          19          29          55    
                                   

Net Income

     32          37          63          101    

Preferred Stock Dividends

                               
                                   

Net Income Available to Common Stockholder

   $ 31        $ 36        $ 62        $ 100    
                                   

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,
2010
    December 31,
2009
 
ASSETS    

Current Assets:

   

Cash and cash equivalents

  $ 80       $ 88    

Accounts receivable – trade (less allowance for doubtful accounts of $2 and $3, respectively)

    30         39    

Accounts receivable – affiliates

    49         68    

Unbilled revenue

    19         43    

Miscellaneous accounts and notes receivable

    28         16    

Materials and supplies

    95         107    

Current regulatory assets

    63         29    

Other current assets

    31         18    
               

Total current assets

    395         408    
               

Property and Plant, Net

    1,764         1,789    

Investments and Other Assets:

   

Intangible assets

             

Regulatory assets

    166         162    

Other assets

    38         22    
               

Total investments and other assets

    205         185    
               

TOTAL ASSETS

  $ 2,364       $ 2,382    
               
LIABILITIES AND STOCKHOLDERS’ EQUITY    

Current Liabilities:

   

Note payable – Ameren

  $ 181       $ 288    

Accounts and wages payable

    48         62    

Accounts payable – affiliates

    44         50    

Taxes accrued

    22           

Mark-to-market derivative liabilities

    30         10    

Mark-to-market derivative liabilities – affiliates

    33         19    

Current regulatory liabilities

    23         23    

Other current liabilities

    41         49    
               

Total current liabilities

    422         506    
               

Long-term Debt, Net

    279         279    

Deferred Credits and Other Liabilities:

   

Accumulated deferred income taxes, net

    250         214    

Accumulated deferred investment tax credits

             

Regulatory liabilities

    206         210    

Pension and other postretirement benefits

    187         193    

Asset retirement obligations

    36         34    

Other deferred credits and liabilities

    97         87    
               

Total deferred credits and other liabilities

    779         742    
               

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

    480         480    

Preferred stock not subject to mandatory redemption

           19    

Retained earnings

    402         354    

Accumulated other comprehensive income

             
               

Total stockholders’ equity

    884         855    
               

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $ 2,364       $ 2,382    
               

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,
 
     2010      2009  

Cash Flows From Operating Activities:

     

Net income

   $ 63        $ 101    

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

     

Net mark-to-market gain on derivatives

     -           (3)   

Depreciation and amortization

     55          54    

Amortization of debt issuance costs and premium/discounts

               

Deferred income taxes and investment tax credits, net

     24          26    

Changes in assets and liabilities:

     

Receivables

     43          43    

Materials and supplies

     12            

Accounts and wages payable

     (12)         (50)   

Taxes accrued

     17          (4)   

Assets, other

     (23)         22    

Liabilities, other

     (4)         (1)   

Pension and postretirement benefits

     (2)         14    
                 

Net cash provided by operating activities

      176          210    
                 

Cash Flows From Investing Activities:

     

Capital expenditures

     (41)         (128)   

Purchases of emission allowances

     -           (1)   

Other

               
                 

Net cash used in investing activities

     (39)         (128)   
                 

Cash Flows From Financing Activities:

     

Dividends on common stock

     (13)         -     

Dividends on preferred stock

     (1)         (1)   

Capital issuance costs

     (2)         (7)   

Short-term debt, net

     -           (236)   

Note payable – Ameren

     (107)         334    

Money pool borrowings, net

     -           (98)   

Redemptions of preferred stock

     (19)         -     

Capital contribution from parent

     -           36    

Other

     (3)           
                 

Net cash provided by (used in) financing activities

     (145)         29    
                 

Net change in cash and cash equivalents

     (8)         111    

Cash and cash equivalents at beginning of year

     88          -     
                 

Cash and cash equivalents at end of period

   $          80        $         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,
 
         2010              2009              2010              2009      

Operating Revenues:

           

Electric

   $         324        $         266        $         825        $         765    

Gas

     60          61          338          351    

Other

                             10    
                                   

Total operating revenues

     386          329          1,169          1,126    
                                   

Operating Expenses:

           

Purchased power

     140          126          384          401    

Gas purchased for resale

     21          23          197          214    

Other operations and maintenance

     74          56          220          200    

Depreciation and amortization

     25          24          75          73    

Amortization of regulatory assets

                             13    

Taxes other than income taxes

     13          12          47          46    
                                   

Total operating expenses

     274          246          931          947    
                                   

Operating Income

     112          83          238          179    

Other Income and Expenses:

           

Miscellaneous income

                               

Miscellaneous expense

                               
                                   

Total other income (expense)

                     (1)           
                                   

Interest Charges

     23          24          68          76    
                                   

Income Before Income Taxes

     89          59          169          104    

Income Taxes

     35          24          67          42    
                                   

Net Income

     54          35          102          62    

Preferred Stock Dividends

                               
                                   

Net Income Available to Common Stockholder

   $ 54        $ 34        $ 101        $ 60    
                                   

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

 

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ILLINOIS POWER COMPANY

BALANCE SHEET

(Unaudited) (In millions)

 

    September  30,
2010
    December  31,
2009
 

ASSETS

   

Current Assets:

   

Cash and cash equivalents

  $ 146       $ 190    

Accounts receivable – trade (less allowance for doubtful accounts of $8 and $9, respectively)

    114         107    

Accounts receivable – affiliates

    65         49    

Unbilled revenue

    65         94    

Miscellaneous accounts and notes receivable

    62         23    

Materials and supplies

    130         112    

Current regulatory assets

    149         86    

Other current assets

    48         26    
               

Total current assets

    779         687    
               

Property and Plant, Net

    2,486         2,450    

Investments and Other Assets:

   

Goodwill

    214         214    

Regulatory assets

    484         540    

Other assets

    81         51    
               

Total investments and other assets

    779         805    
               

TOTAL ASSETS

  $ 4,044       $ 3,942    
               

LIABILITIES AND STOCKHOLDERS’ EQUITY

   

Current Liabilities:

   

Accounts and wages payable

  $ 58       $ 98    

Accounts payable – affiliates

    109         117    

Taxes accrued

    28           

Interest accrued

    34         17    

Customer deposits

    43         46    

Mark-to-market derivative liabilities

    56         20    

Mark-to-market derivative liabilities – affiliates

    93         65    

Environmental remediation liabilities

    47         59    

Current regulatory liabilities

    16         24    

Other current liabilities

    29         53    
               

Total current liabilities

    513         505    
               

Long-term Debt, Net

    1,147         1,147    

Deferred Credits and Other Liabilities:

   

Accumulated deferred income taxes, net

    306         232    

Regulatory liabilities

    103         92    

Pension and other postretirement benefits

    210         238    

Other deferred credits and liabilities

    276         277    
               

Total deferred credits and other liabilities

    895         839    
               

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

    1,382         1,349    

Preferred stock not subject to mandatory redemption

    13         46    

Retained earnings

    91         53    

Accumulated other comprehensive income

             
               

Total stockholders’ equity

    1,489         1,451    
               

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $         4,044       $         3,942    
               

The accompanying notes as they relate 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,
 
     2010      2009  

Cash Flows From Operating Activities:

     

Net income

   $ 102        $ 62    

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

     

Depreciation and amortization

     83          82    

Amortization of debt issuance costs and premium/discounts

               

Deferred income taxes

     74          35    

Other

     (1)         (1)   

Changes in assets and liabilities:

     

Receivables

     (32)         99    

Materials and supplies

     (18)           

Accounts and wages payable

     (23)         38    

Taxes accrued

     22          (4)   

Assets, other

     (35)         28    

Liabilities, other

             (14)   

Pension and other postretirement benefits

     -             
                 

Net cash provided by operating activities

     180          343    
                 

Cash Flows From Investing Activities:

     

Capital expenditures

     (121)         (127)   

Advances to AITC for construction

     (7)         (38)   

Money pool advances, net

     -           44    
                 

Net cash used in investing activities

     (128)         (121)   
                 

Cash Flows From Financing Activities:

     

Dividends on common stock

     (63)         -     

Dividends on preferred stock

     (1)         (2)   

Capital issuance costs

     (2)         (7)   

Redemptions, repurchases, and maturities of long-term debt

     -           (250)   

Capital contribution from parent

     -           119    

Generator advances for construction received (refunded), net

     (30)         46    
                 

Net cash used in financing activities

     (96)         (94)   
                 

Net change in cash and cash equivalents

     (44)         128    

Cash and cash equivalents at beginning of year

     190          50    
                 

Cash and cash equivalents at end of period

   $         146        $         178    
                 

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)

CENTRAL ILLINOIS LIGHT COMPANY (Consolidated)

ILLINOIS POWER COMPANY

COMBINED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

September 30, 2010

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren’s primary assets are the common stock of its subsidiaries. Ameren’s subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses in Missouri and Illinois. Dividends on Ameren’s common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries.

On October 1, 2010, Ameren, CIPS, CILCO, IP, AERG and Resources Company completed the previously announced two-step corporate reorganization. The first step of the reorganization involved CILCO and IP merging with and into CIPS, with CIPS as the surviving entity, pursuant to the terms of the agreement and plan of merger, dated as of April 13, 2010. Upon consummation of the merger, CIPS’ name was changed to Ameren Illinois Company, or AIC, and the separate legal existence of CILCO and IP terminated. The second step of the reorganization involved the distribution of AERG stock from AIC to Ameren and the subsequent contribution by Ameren of the AERG stock to Resources Company. The AIC Merger was accounted for as a transaction between entities under common control. In accordance with authoritative accounting guidance, assets and liabilities transferred between entities under common control were accounted for at the historical cost basis of the common parent, Ameren. The AERG distribution was accounted for as a spin-off. AIC transferred AERG to Ameren based on AERG’s carrying value. See Note 14 - Corporate Reorganization for additional information. Throughout this document we continue to reference CIPS, CILCO and IP when discussing historical results. When discussing current or future operations or results, we reference the newly merged entity, AIC.

Ameren’s principal subsidiaries as of September 30, 2010, are listed below. Also see the Glossary of Terms and Abbreviations at the front of this report.

 

 

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

 

 

CIPS, or Central Illinois Public Service Company, operates a rate-regulated electric and natural gas transmission and distribution business, all in Illinois. Effective October 1, 2010, CIPS changed its name to Ameren Illinois Company, or AIC.

 

 

Genco, or Ameren Energy Generating Company, operates a merchant electric generation business in Illinois and Missouri. Genco has an 80% ownership interest in EEI.

 

 

CILCO, or Central Illinois Light Company, operated 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.

 

 

IP, or Illinois Power Company, operated a rate-regulated electric and natural gas transmission and distribution business, all in Illinois.

Ameren has various other subsidiaries responsible for the marketing of power, procurement of fuel, management of commodity risks, and provision of other shared services.

Ameren, through Genco, has an 80% ownership interest in EEI. Ameren and Genco consolidate EEI for financial reporting purposes. Effective January 1, 2010, as part of an internal reorganization, Resources Company transferred its 80% stock ownership interest in EEI to Genco through a capital contribution. The transfer of EEI to Genco was accounted for as a transaction between entities under common control, whereby Genco accounted for the transfer at the historical carrying value of the parent (Ameren) as if the transfer had occurred at the beginning of the earliest reporting period presented. Ameren’s historical cost basis in EEI included purchase accounting adjustments relating to Ameren’s acquisition of an additional 20% ownership interest in EEI in 2004. This transfer required Genco’s prior-period financial statements to be retrospectively combined for all periods presented. Consequently, Genco’s prior-period consolidated financial statements reflect EEI as if it had been a subsidiary of Genco.

The financial statements of Ameren, Genco and CILCO were prepared on a consolidated basis. As of September 30, 2010, UE, CIPS and IP had 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.

 

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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.

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, 2010 and 2009. The number of restricted stock shares and performance share units outstanding had an immaterial impact on earnings per share. All of Ameren’s remaining stock options expired in February 2010.

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

The following table summarizes the changes in nonvested shares for the nine months ended September 30, 2010, under the Long-term Incentive Plan of 1998 (1998 Plan), as amended, and the 2006 Omnibus Incentive Compensation Plan (2006 Plan):

 

      Performance Share Units(a)      Restricted Shares(b)  
      Share Units    

Weighted-average
Fair Value Per Unit

at Grant Date

     Shares    

Weighted-average
Fair Value Per Share

at Grant Date

 

Nonvested at January 1, 2010

     945,337      $ 22.07         135,696      $ 48.92   

Granted(c)

     688,510        32.01         -        -   

Dividends

     -        -         3,536        26.23   

Forfeitures

     (26,264     25.46         (4,369     49.71   

Vested(d)

     (100,474     31.19         (52,828     47.43   

Nonvested at September 30, 2010

     1,507,109      $ 25.94         82,035      $ 49.87   

 

(a) Granted under the 2006 Plan.
(b) Granted under the 1998 Plan.
(c) Includes performance share units (share units) granted to certain executive and nonexecutive officers and other eligible employees in January 2010.
(d) 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 January 2010 under the 2006 Plan was determined to be $32.01. That amount was based on Ameren’s closing common share price of $27.95 at December 31, 2009, and lattice simulations. Lattice simulations are used to estimate expected share payout based on Ameren’s total stockholder return for a three-year performance period relative to the designated peer group beginning January 1, 2010. The significant assumptions used to calculate fair value also included a three-year risk-free rate of 1.70%, volatility of 23% to 39% for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during each year of the performance period.

Ameren recorded compensation expense of $4 million for each of the three months ended September 30, 2010, and 2009, and a related tax benefit of $1 million and $2 million for the three months ended September 30, 2010, and 2009, respectively. Ameren recorded compensation expense of $11 million and $12 million for each of the nine-month periods ended September 30, 2010 and 2009, respectively, and a related tax benefit of $4 million and $5 million for the nine-month periods ended September 30, 2010 and 2009, respectively. As of September 30, 2010, total compensation expense of $16 million related to nonvested awards not yet recognized was expected to be recognized over a weighted-average period of 25 months.

Accounting Changes and Other Matters

The following is a summary of recently adopted authoritative accounting guidance as well as guidance issued but not yet adopted that could impact the Ameren Companies.

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 affect 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

 

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requires an ongoing reconsideration of the primary beneficiary. It also amends the events that trigger a reassessment of whether an entity is a VIE. The adoption of this guidance, effective for us as of January 1, 2010, did not have a material impact on our results of operations, financial position, or liquidity. See Variable-interest Entities below for additional information.

Disclosures about Fair Value Measurements

In January 2010, the FASB issued amended authoritative guidance regarding fair value measurements. This guidance requires disclosures regarding significant transfers into and out of Level 1 and Level 2 fair value measurements. It also requires information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. Further, the FASB clarified guidance regarding the level of disaggregation, inputs, and valuation techniques. This guidance was effective for us as of January 1, 2010, with the exception of guidance applicable to detailed Level 3 reconciliation disclosures, which will be effective for us as of January 1, 2011. The adoption of this guidance did not have a material impact on our results of operations, financial position, or liquidity because it provides enhanced disclosure requirements only. See Note 7 - Fair Value Measurements for additional information.

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 recorded goodwill related to its acquisition of IP and an additional 20% EEI ownership interest acquired in 2004, as well as its acquisition of CILCORP and Medina Valley in 2003. IP recorded goodwill related to its acquisition by Ameren in 2004. Genco recorded goodwill related to the additional 20% EEI ownership interest acquired in 2004.

We evaluate goodwill for impairment as of October 31 of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Ameren and Genco conducted an interim goodwill impairment test in the third quarter of 2010. That test resulted in the recognition of a noncash goodwill impairment charge at Ameren and Genco of $420 million and $65 million, respectively. See Note 15 - Goodwill and Other Asset Impairments for additional information.

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 and CILCO’s intangible assets consisted of emission allowances at September 30, 2010. During the third quarter of 2010, Ameren and Genco recorded a noncash pretax impairment charge relating to SO2 emission allowances of $68 million and $41 million, respectively. UE recorded a $23 million impairment of its SO2 emission allowances by reducing a previously established regulatory liability related to the SO2 emission allowances. Therefore, the UE SO2 emission allowance impairment had no impact to earnings. See Note 15 - Goodwill and Other Asset Impairments for additional information about the asset impairment charges recorded during the third quarter of 2010. See Note 9 - Commitments and Contingencies for additional information on emission allowances.

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 as of September 30, 2010. 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

     3,111,000         32,042       $ 9 (d) 

UE

     1,619,000         22,322         2   

Genco

     1,117,000         9,279         5   

AERG

     375,000         441         1   

 

(a) Vintages are from 2010 to 2020. Each company possesses additional allowances for use in periods beyond 2020.
(b) Vintages are from 2010 and the remaining unused prior years’ allowances.
(c)

The book value represents SO2 and NOx emission allowances for use in periods through 2040. The book value at December 31, 2009, for Ameren, UE, Genco and AERG was $129 million, $35 million, $62 million, and $1 million, respectively.

(d) Includes $1 million of fair-market value adjustments recorded in connection with Ameren’s 2003 acquisition of CILCORP.

The following table presents amortization expense based on usage of emission allowances, net of gains and losses from emission allowance sales, for Ameren, UE, Genco and AERG during the three and nine months ended September 30, 2010, and 2009. The table below does not include the intangible asset impairment charges referenced above.

 

      Three Months     Nine Months  
      2010     2009     2010     2009  

Ameren(a)

   $ 10      $ 10      $ 20      $ 23   

UE

     -        -        (b     (b

Genco(a)

     8        8        16        19   

AERG

     (b     (b     (b     1   

 

(a) Includes allowances consumed that were recorded through purchase accounting.
(b) Less than $1 million.

Excise Taxes

Excise taxes imposed on us are reflected on Missouri electric, Missouri natural gas, and Illinois natural gas customer bills. They are recorded gross in Operating Revenues and Operating Expenses - Taxes Other than

 

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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, 2010 and 2009:

 

      Three Months      Nine Months  
      2010      2009      2010      2009  

Ameren

   $ 54       $ 44       $   144       $ 128   

UE

     45         36         103         89   

CIPS

     3         2         11         10   

CILCO

     2         2         8         8   

IP

     5         4         23         21   

Uncertain Tax Positions

The amount of unrecognized tax benefits as of September 30, 2010, was $224 million, $154 million, $16 million, $13 million, $19 million, and $24 million for Ameren, UE, CIPS, Genco, CILCO and IP, respectively. The amount of unrecognized tax benefits as of September 30, 2010, that would impact the effective tax rate, if recognized, was $2 million, $2 million, less than $1 million, $1 million, $1 million, and less than $1 million for Ameren, UE, CIPS, Genco, CILCO and IP, respectively.

Ameren’s federal income tax returns for the years 2005 through 2008 are before the Appeals Office of the Internal Revenue Service. Ameren’s federal tax return is currently under U.S. federal income tax examination for the year 2009.

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 a year after formal notification to the states. Ameren’s 2007 and 2008 state of Illinois income tax returns are currently under examination by the Illinois Department of Revenue.

It is reasonably possible that 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 such increases or decreases would be material to their results of operations, financial position or liquidity.

Asset Retirement Obligations

AROs at Ameren, UE, CIPS, Genco, CILCO and IP at September 30, 2010, increased compared to December 31, 2009, primarily to reflect the accretion of obligations to their fair values. In addition, Genco’s AROs increased by $3 million as a result of a change in estimate for useful lives of certain plants and an additional liability incurred.

Genco Asset Sale

In June 2010, Genco completed a sale of 25% of its Columbia CT facility to the city of Columbia, Missouri. Genco received cash proceeds of $18 million from the sale. The city of Columbia also holds two options to purchase additional ownership interests in the facility under two existing power purchase agreements. Columbia can exercise one option, as amended, for an additional 25% of the facility at the end of 2011 for a purchase price of $14.9 million, at the end of 2014 for a purchase price of $9.5 million, or at the end of 2020 for a purchase price of $4 million. The other option can be exercised for another 25% of the facility at the end of 2013 for a purchase price of $15.5 million, at the end of 2017 for a purchase price of $9.5 million, or at the end of 2023 for a purchase price of $4 million. On an annual basis, the city of Columbia purchases a total of 72 megawatts of capacity and energy generated by the facility under the two existing purchase power agreements. If the city of Columbia exercises one of the purchase options described above, the purchase power agreement associated with that option would be terminated.

Variable-interest Entities

According to the applicable authoritative accounting guidance, an entity is considered a VIE if it does not have sufficient equity to finance its activities without assistance from variable-interest holders, or if its equity investors lack any of the following characteristics of a controlling financial interest: control through voting rights, the obligation to absorb expected losses, or the right to receive expected residual returns. The primary beneficiary of a VIE is the entity that (1) has the power to direct matters that most significantly affect 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. Entities are required to consolidate a VIE if they are its primary beneficiary. At September 30, 2010, and December 31, 2009, Ameren had investments in multiple affordable housing and low-income real estate development partnerships as well as an investment in a commercial real estate development partnership of $49 million and $64 million in the aggregate, respectively. Ameren has a variable interest in these investments as a limited partner. With the exception of the commercial real estate development partnership, Ameren does not own a majority interest in any partnership. Ameren receives the benefits and accepts the risks consistent with its limited partner interest in each partnership. Ameren is not the primary beneficiary of these investments because Ameren

 

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does not have the power to direct matters that most significantly impact the activities of the VIE. These investments are classified as Other Assets on Ameren’s consolidated balance sheet. The maximum exposure to loss as a result of these variable interests is limited to the investments in these partnerships.

See Note 8 - Related Party Transactions for information about AIC’s (previously IP’s) variable interest in AITC.

Noncontrolling Interest

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

A reconciliation of the equity changes attributable to the noncontrolling interests at Ameren and Genco for the three and nine months ended September 30, 2010, is shown below:

 

      Three Months     Nine Months  
            2010                   2009                     2010                     2009          

Ameren:

        

Noncontrolling interests, beginning of period

   $ 206      $ 203      $ 204      $ 212   

Net income attributable to noncontrolling interests

     3        2        10        9   

Dividends paid to noncontrolling interest holders

     (2     (3     (7     (19

Purchase of subsidiary preferred shares from noncontrolling interests(a)

     (52     -        (52     -   

Noncontrolling interests, period ended September 30

   $ 155      $ 202      $ 155      $ 202   

Genco:

        

Noncontrolling interest, beginning of period

   $ 11      $ 8      $ 9      $ 17   

Net income attributable to noncontrolling interest

     1        (1     3        1   

Dividends paid to noncontrolling interest holders

     -        -        -        (11

Noncontrolling interest, period ended September 30

   $ 12      $ 7      $ 12      $ 7   

 

(a) Represents preferred stock redemptions of $33 million and $19 million by UE and CILCO, respectively. See Note 4 - Long-term Debt and Equity Financings for additional information.

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. The rate changes necessary to implement the provisions of the MoPSC order were effective March 1, 2009. 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. The Stoddard and Pemiscot County cases were consolidated (collectively, the Circuit Court), and the Cole County case was dismissed. In September 2009, the Circuit Court 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. During the stay, Noranda paid into the Circuit Court’s registry the contested portion of its monthly billings, including its monthly FAC payments. As of September 30, 2010, the aggregate amount held by the Circuit Court was approximately $7 million.

In August 2010, the Circuit Court issued a judgment that reversed parts of the MoPSC’s decision. Also, upon issuance, the Circuit Court suspended its own judgment. Therefore, the entire amount currently held in the Circuit Court’s registry will remain in the Circuit Court’s registry pending the appeal discussed below.

On September 29, 2010, UE filed an appeal with the Missouri Court of Appeals. The Court of Appeals will conduct an independent review of the MoPSC’s order. UE believes the Circuit Court’s judgment, which reversed parts of the MoPSC decision, will be found erroneous by the Court of Appeals; however, there can be no assurances that UE’s appeal will be successful. If UE prevails on all issues of its appeal, UE will receive all of the funds held in the Circuit Court’s registry, plus interest. To the extent that

 

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UE does not win all the issues of its appeal, pretax earnings would be reduced by the amount of the previously recognized revenue that was subsequently returned to Noranda from the court registry. A decision by the Court of Appeals is not expected until at least the third quarter of 2011.

2010 Electric Rate Order

On May 28, 2010, the MoPSC issued an order approving an increase for UE in annual revenues for electric service of approximately $230 million, including $119 million to cover higher fuel costs and lower revenue from sales outside UE’s system. The revenue increase was based on a 10.1% return on equity, a capital structure composed of 51.3% common equity, and a rate base of approximately $6 billion. The rate changes became effective on June 21, 2010. The MoPSC order a