Ameren Corporation (NYSE: AEE) is an electric and natural gas utility in Illinois and Missouri. Like most utilities, Ameren is heavily regulated and may only raise its rates for certain groups of customers with the permission of state regulatory agencies. Although Ameren ultimately benefits from supplying energy to both regulated and unregulated customers, its ability and incentives to adapt rapidly to the regulated market are often restricted within that market.^[1] Although AEE is permitted to adjust prices according to the price of fuel, raising prices often encourages customers to contact their regulating agency to have them reduced. Ameren's experience with rate regulation has more often than not been negative. Following the deregulation of the Illinois electricity market, regulators responding to public outcry over the prospect of sharply higher rates imposed a decade long rate freeze from 1997-2007. Following the expiration of the rate freeze, consumers in Illinois pushed for a 3 year extension. Although the extension was not passed, Ameren was required to reduce its new rates by $150MM. ^[2]

The company's dependence on coal power makes complying with continually evolving environmental standards - the most significant of which are mercury and greenhouse gas emissions standards - very costly. AEE estimates that these costs will range between $4B and $5B by 2017.^[3] Although AEE generates power using a combination of nuclear, coal, oil, natural gas, and hydroelectric power generation systems, coal represents the largest source of power by percentage of total energy generated at 84%.^[4]

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