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Text: Warner and Michael will discuss our earnings results and guidance as well as provide a business update.
Before we begin, let me cover a few administrative details.
Such statements include those about future expectations, beliefs, plans, projections, strategies, targets, estimates, objectives, events, conditions and financial performance.
To begin, I am pleased to report that our team continues to effectively execute our strategic plan across all of our businesses, which includes making significant investments in our energy infrastructure to enhance the reliability and resiliency with the energy grid as well as transition to a cleaner energy future in a responsible fashion.
These investments, coupled with our continued focus on disciplined cost management and delivering significant value to our customers, communities and shareholders.
Well now do our third quarter earnings results.
Yesterday, we announced third quarter 2021 earnings of $1.65 per share.
Our earnings were up $0.18 per share from the same time period in 2020.
This slide highlights the key drivers of our strong performance.
Michael will discuss the key drivers of our third quarter earnings results a bit later.
Due to the continued strong execution of our strategy, I am also pleased to report that we raised our 2021 earnings guidance.
Our 2021 earnings guidance range is now $3.75 per share to $3.95 per share compared to our original guidance range of $3.65 per share to $3.85 per share.
Turning now to page five, where we reiterate our strategic plan.
The first pillar of our strategy stresses investing in and operating our utilities in a manner consistent with existing regulatory frameworks.
This has driven our multiyear focus on investing in energy infrastructure for the long-term benefit of our customers.
As a result, and as you can see on the right side of this page, during the first nine months of this year, we invested significant capital in each of our business segments.
These investments are delivering value to our customers.
As I said before, our energy grid is stronger, more resilient and more secure because of the investments we are making in all four business segments.
As we head into the winter months, Id like to highlight some of the value these investments have created in our Ameren Illinois and Ameren Missouri natural gas businesses.
Our natural gas transmission and distribution investments are focused on upgrading and modernizing gas main and equipment infrastructure, all the strength in safety and reliability of our system for our customers.
Being mindful of the gas distribution issues experienced in the industry in the past, I will note that our Ameren Illinois and Ameren Missouri natural gas distribution systems are comprised almost entirely of plastic and protected coated steel pipelines.
There is no cast iron pipe in our systems, and we expect to eliminate all unprotected steel pipe by the end of this year.
These investments are just another example of how we are putting our customers at the center of our strategy.
Moving now to regulatory matters.
In late March, Ameren Missouri filed a request for a $299 million increase in annual electric service revenues and a $9 million increase in annual natural gas service revenues with the Missouri Public Service Commission.
In our Illinois Electric business, we have requested a $59 million base rate increase in our required annual electric distribution rate filing.
These proceedings are moving along on schedule.
Michael will provide more information on these proceedings a bit later.
Finally, we remain relentlessly focused on continuos improvement and disciplined cost management, including maintaining many of the cost savings that we realized in 2020 due to the actions we took to mitigate the impacts of COVID-19.
Moving to page six and the second pillar of our strategy: enhancing regulatory frameworks and advocating for responsible energy and economic policies.
Over the years, we have been successful in executing this element of our strategy by delivering value to our customers for our investments in energy infrastructure and through extensive collaboration with key stakeholders in all of our regulatory jurisdictions.
I am very pleased to report that these efforts paid off again in the third quarter when the Illinois legislature passed the Climate and Equitable Jobs Act, or CEJA, which is later signed by Governor Pritzker.
CEJA is a constructive piece of legislation that addresses the key objectives that we felt were important for our customers and the communities we serve.
It will enable us to continue to make important infrastructure investments to enhance the reliability and resiliency of the energy grid for a new forward-thinking regulatory framework.
It will also give us the ability to earn fair returns on those investments as well as enable us to invest in two solar and/or battery storage pilot projects.
CEJA allows for an electric utility to opt in to a multiyear rate plan effective for four years beginning in 2024.
We are currently working with key stockholders and will continue to over the course of 2022, to establish specific procedures, including performance metrics to implement this legislation.
Subject to finalizing key aspects of this rate-making framework, we anticipate filing a multiyear rate plan by mid-January 2023.
Michael will discuss this constructive piece of legislation in more in a moment.
Shifting now to the federal level, where important energy legislation continues to be discussed.
Needless to say, the situation around federal legislation remains fluid and ever changing.
One thing that remains constant is our strong support for clean energy transition tax incentives including wind and solar production tax credits, transmission and storage investment tax credits as well as direct pay and normalization opt-out provisions.
We also continue to strongly support significant funding for research, design and development for new clean energy technologies, electrification of the transportation sector and grid resiliency.
We support these important legislative initiatives because we strongly believe they will deliver significant long-term benefits to our customers, communities and country.
We will continue to work with key stakeholders, along with our industry colleagues to advance constructive federal energy and economic policies that will help us transition to a cleaner energy future in a responsible fashion.
Speaking of our transition to our cleaner energy future, please turn to Page seven in the discussion of future transmission investment needs.
As we have discussed with you in the past, MISO completed a study outlining the potential road map of transmission projects through 2039.
Taking into consideration the rapidly evolving generation mix that includes significant additions of renewable generation based on announced utility integrated resource plans, state mandates and goals for clean energy or carbon emission reductions, among other things.
Under MISOs Future one scenario, which is the scenario that resulted in an approximate 60% carbon emissions reduction below 2005 levels by 2039 and MISO estimates approximately $30 billion of future transmission investment would be necessary in the MISO footprint.
Under its Future three scenario, which resulted in an 80% reduction in carbon emissions below 2005 levels by 2039, MISO estimates approximately $100 million of transmission investment in the MISO footprint would be needed.
It is clear that investment in transmission is going to play a critical role in the clean energy transition, and we are well positioned to plan and execute the potential projects in the future for the benefit of our customers and country.
We continue to work with MISO and other key stakeholders and believe certain projects outlined in Future one are likely going to be included in this years MISO transmission planning process, which is expected to be completed in early 2022.
Moving now to page eight and an update on litigation regarding Ameren Missouris past compliance with the New Source Review provisions of the Clean Air Act.
As you may recall, this litigation dates back to 2011 and the Department of Justice on behalf of the EPA filed a complaint against Ameren Missouri, alleging that in performing certain projects at the Rush Island Energy Center, we have violated the New Source Review provisions of the Clean Air Act.
In 2017, the District Court issued a liability ruling and in September 2019, ordered the installation of pollution control equipment at the Rush Island Energy Center as well as at the Labadie Energy Center.
In September of this year, U.S. Court of Appeals preferring the District Courts 2019 order requires us to install a scrubber at our Rush Island Energy Center but denied the order to install additional pollution control equipment at Labadie.
Last month, we filed a request for rehearing with U.S. Court of Appeals.
While we wait for a final decision from the courts, we continue to assess several alternatives to effectively address the court of appeals decision, including legal, operational and regulatory measures.
In reviewing these options, we are also carefully assessing the impact on customer costs as well as generation or transmission investments needed to maintain system reliability.
And we are certainly mindful of the policies that are being considered at the federal level to help address climate change.
Should our decision result in a material change to our integrated resource plan, we will file an updated plan with the Missouri PSC.
Turning to page nine.
We remain focused on delivering a sustainable energy future for our customers, communities and our country.
This page summarizes our strong sustainability value proposition for environmental, social and governance matters and is consistent with our vision, leading the way to a sustainable energy future.
Beginning with environmental stewardship, last September, Ameren announced its transformation plan to achieve net-zero carbon emissions by 2050 across all of our operations in Missouri and Illinois.
This plan includes interim carbon emission reduction targets of 50% and 85% below 2005 levels in 2030 and 2040, respectively, and is consistent with the objectives of the Paris Agreement and limiting global temperature rise to 1.5 degrees Celsius.
We also have a strong long-term commitment to our customers and communities to be socially responsible and economically impactful.
This slide highlights the many things we are doing for our customers and communities including being an industry leader in diversity, equity and inclusion.
Further, our strong corporate governance is led by a diverse Board of Directors focused on strong oversight thats aligned with ESG matters and our executive compensation practices include performance metrics that are tied to sustainable long-term performance, diversity equity inclusion and progress toward a cleaner sustained energy future.
Finally, this slide highlights our very strong sustainable growth proposition, which is among the best in the industry.
Turning to page 10, you will go down further on this key element.
Our strong sustainable growth proposition is driven by a robust pipeline of investment opportunities over $40 billion over the next decade that will deliver significant value to all of our stakeholders and making our energy grid stronger, smarter and cleaner.
Importantly, these investment opportunities exclude any new reasonably beneficial transmission projects, including the potential road map of MISO transmission projects I discussed earlier, all of which would increase the reliability and resiliency of the energy grid as well as help to enable our countrys transition to a cleaner energy future.
In addition, we expect to see greater focus on infrastructure investments to support the electrification of the transportation sector in the future.
Our outlook through 2030 does not include significant infrastructure investments for electrification at this time.
Maintaining constructive energy policies that support robust investment in energy infrastructure and a transition to a cleaner energy future in a safe, reliable and affordable fashion will be critical to meeting our countrys future energy needs and delivering on our customers expectations.
Moving to page 11.
Another key element of our sustainable growth proposition is the five-year earnings-per-share growth guidance we issued in February, which included a 6% to 8% compound annual earnings-per-share growth rate from 2021 to 2025.
This earnings growth is primarily driven by strong rate base growth and compares very favorably with our regulated utility peers.
Importantly, our five-year earnings and rate base growth projections do not include 1,200 megawatts of incremental renewable investment opportunities outlined in Ameren Missouris Integrated Resource Plan.
Our team continues to assess several renewable generation proposals from developers.
We expect to file with the Missouri PSC for approval of a portion of these planned renewable investments this year.
I am confident in our ability to execute our investment plans and strategies across all four of our business segments.
That fact, coupled with our sustained past execution of our strategy on many fronts, has positioned us well for future success.
Further, our shares continue to offer investors a strong dividend, which we expect to grow in line with our long-term earnings-per-share growth guidance.
Simply put, we believe our strong earnings and dividend growth outlook results in a very attractive total return opportunity for shareholders.
Finally, turning to page 12.
I will wrap up with a few comments about the organizational changes we announced a few weeks ago.
Over the past eight years, I have had the great privilege to serve as Chairman, President and Chief Executive Officer of Ameren.
During this time, Ive been very fortunate to lead the team that has done an excellent job in executing our strategy and delivering strong value to our customers, communities and shareholders.
Last month, I was humbled and honored that the Board of Directors elected me to serve as Executive Chairman effective January 1, 2022.
At the same time, and consistent with our robust succession planning process, I was very pleased that the Board of Directors also elected Marty Lyons to serve as President and Chief Executive Officer as well as to join the Board of Directors on January 1.
Marty is an outstanding leader and is exceptionally qualified to lead our company as CEO during this transformation time in our industry.
Of course, many of you know Marty very well as he spent a decade as the companys Chief Financial Officer.
And during the past 20 years, Marty has demonstrated strong operational, financial, regulatory and strategic acumen.
I must say that Im very excited about our new forward-thinking leadership structure.
Working closely with Marty and our strong leadership team, I will remain actively engaged in overseeing important strategic matters impacting the company, including our transition to a cleaner energy future and will also remain focused on key energy and economic policy matters, especially in my leadership roles at the Edison Electric Institute and the Electric Power Research Institute as well as engaging with key stakeholders.
Marty will take on significant duties as a CEO, which includes leading all aspects of Ameren strategy development and execution as well as the day-to-day operational, financial, regulatory, legal and workforce matters impacting the company.
I, along with our Board of Directors, are very confident that Marty is clearly ready to lead Ameren as its new CEO.
Im truly grateful for and humbled by the opportunity to lead Ameren during these exciting times for our company and for our industry.
Im also honored to follow on your footsteps Warner.
Youve led our team to execute on a strategy that has delivered significant value to our customers and shareholders.
Working with his outstanding leadership team and my dedicated coworkers at Ameren, we will remain focused on successfully executing this strategy in the future.
I look forward to engaging with all of you joining us on the call today and in the weeks and months ahead.
I look forward to continuing to work closely with you in your new role.
Together, we remain firmly convinced that the continued execution of our strategy in the future will deliver superior value to our customers, communities, shareholders and the environment.
Yesterday, we reported third quarter 2021 earnings of $1.65 per share compared to $1.47 per share for the year ago quarter.
Turning to Ameren Missouri, our largest segment increased $0.27 per share, driven primarily by a change in seasonal electric rate design, resulting from the March 2020 rate order, which provided for lower winter rates in May and higher summer rates in September rather than the blended rates used in both months in 2020.
Higher electric retail sales also increased earnings by approximately $0.10 per share largely due to continued economic recovery in this years third quarter compared to the unfavorable impacts of COVID-19 in the year ago period as well as higher electric retail sales driven by warmer-than-normal summer temperatures in the period compared to near-normal summer temperatures in the year-ago period.
Weve included on this page, the year-over-year weather-normalized sales variances for the quarter.
That said, weve seen a net benefit in margins due to residential and commercial sales coming in higher than expected and industrial sales slightly lower than expected.
Increased investments in infrastructure and wind generation eligible for plant and service accounting and the renewable energy standard rate adjustment mechanism, or RESRAM, positively impacted earnings by $0.07 per share.
The timing of tax expense, which is not expected to materially impact full year results increased earnings by $0.03 per share.
Higher operations and maintenance expense decreased earnings by $0.04 per share in 2021 compared to the third quarter of 2020, which was affected by COVID-19 and remained flat year-to-date driven by disciplined cost management.
Finally, the amortization of deferred income taxes related to the fall 2020 Callaway Energy Center scheduled refueling and maintenance outage also decreased earnings $0.02 per share.
Moving to other segments.
Ameren Transmission earnings increased $0.03 per share year-over-year, reflecting increased infrastructure investment.
Ameren Illinois Electric Distribution earnings per share were comparable, which reflected increased infrastructure and energy efficiency investments and a higher allowed ROE under performance-based ratemaking, partially offset by dilution.
Earnings for Ameren Illinois Natural Gas decreased $0.04 per share.
Increased delivery service rates that became effective in late January 2021 were more than offset by a change in rate design during the quarter, which is not expected to impact full year results.
Ameren parent and other results decreased $0.08 per share compared to the third quarter of 2020, primarily due to the timing of income tax expense, which is not expected to materially impact full year results.
Finally, 2021 earnings per share reflected higher weighted average shares outstanding.
Before moving on, Ill touch on year-to-date sales trends for Ameren Illinois Electric Distribution.
Weather-normalized kilowatt hour sales to Illinois residential customers decreased 0.5%.
And weather-normalized kilowatt hour sales to Illinois commercial and industrial customers increased 2.5% and 1.5%, respectively.
Recall that changes in electric sales in Illinois, no matter the cause, do not affect our earnings since we have full revenue decoupling.
Turning to page 15.
Now wed like to briefly touch on key drivers impacting our 2021 earnings guidance.
We have remained very focused on maintaining disciplined cost management and well continue that focus.
As Warner noted, due to the solid execution of our strategy, we now expect 2021 diluted earnings to be in the range of $3.75 per share to $3.95 per share, an increase from our original guidance range of $3.65 per share to $3.85 per share.
Select earnings considerations for the balance of the year are listed on this page and are supplemental to the key drivers and assumptions discussed on our earnings call in February.
Moving to page 16 for an update on regulatory matters.
On March 31, we filed for a $299 million electric revenue increase with the Missouri Public Service Commission.
The request includes a 9.9% return on equity, a 51.9% equity ratio and a September 30, 2021 estimated rate base of $10 billion.
In October, Missouri Public Service Commission staff and other intervenors filed a rebuttal testimony.
Missouri PSC staff recommended a $188 million revenue increase including a return on equity range of 9.25% to 9.75% and an equity ratio of 50% based on Ameren Missouris capital structure at June 30, 2021, which will be updated to use the capital structure as of September 30, 2021.
The October staff recommendation was lower primarily due to lower recommended depreciation expense, which would not be expected to impact earnings.
Turning to Page 17.
In addition to the electric filing on March 31, we filed for a $9 million natural gas revenue increase within the Missouri PSC.
The request includes a 9.8% return on equity, a 51.9% equity ratio and a September 30, 2021 estimated rate base of $310 million.
Missouri PSC staff recommended a $4 million revenue increase, including a return on equity range of 9.25% to 9.75% and an equity ratio of 50.32% based on Ameren Missouris capital structure at June 30, 2021, which will be updated to use of the cash flow structure as of September 30, 2021.
Other parties, including the Missouri Office of Public Counsel have also made recommended adjustments to our Missouri electric and gas rate request.
Evidentiary hearings are scheduled to begin in late November, and the Missouri PSC decisions from both rate reviews are expected by early February with new rates expected to be effective by late February.
Moving to page 18, Ameren Illinois regulatory matters.
In April, we made our required annual electric distribution rate update filing.
Under Illinois performance-based rate making these annual rate updates systematically adjust cash flows over time for changes in cost of service and true up any prior period over or under recovery of such costs.
In August, the ICC staff recommended a $58 million base rate increase compared to our request of $59 million base rate increase.
An ICC decision is expected in December with new rates expected to be effective in January 2022.
Turning now to Page 19.
As Warner mentioned, in September, constructive energy legislation was enacted in the State of Illinois.
This allows Ameren Illinois the option to file a four year rate plan in January 2023 for rates effective beginning in 2024.
The return on equity, which will be determined by the Illinois Commerce Commission, may impacted by plus or minus 20 to 60 basis points based on the utilitys ability to meet certain performance metrics related to items such as reliability, customer service and supplier diversity.
The plan also allows for the use of year-end rate base and an equity ratio up to 50% with an higher equity ratio subject to approval by the ICC.
In addition, it calls revenue decoupling and an annual reconciliation of cost and revenues for each annual period approved in the multiyear rate plan.
Theres a cap on the true-up, which may not exceed 105% of the revenue requirement and excludes variation from certain forecasted costs.
The exclusions include cross associated with major storms, changing in timing of expenditure and investment that moved the expenditure investment into or out of the applicable calendar year and changes in income taxes, among other things.
The true-up cap also excludes cost recovered through riders such as purchase power, transmission and bad debts.
Rate impact to customers may also be mitigated through the ability to phase in rates.
The legislation also allows for two utility-owned solar and/or battery storage pilot projects to be located near Peoria and East St. Louis at a cost not to exceed $20 million each.
It also provides for programs that encourage transportation electrification in the state.
We believe this framework will improve our ability to make significant investments in the State of Illinois and earn a fair return on equity.
Looking ahead, we have the ability to opt-in to the multiyear rate plan or use the future test year traditional rate-making framework, both of which include a return on equity determined by the ICC and revenue decoupling.
Should we choose to opt into the new multiyear rate plan, our four-year plan must be filed by January 20, 2023.
We anticipate continuing to use the performance-based ratemaking until we proceed with a multiyear rate plan filing or choose to move ahead with using the traditional framework.
Moving to page 20 for a financing update.
We continue to feel very good about our financial position.
Were able to successfully actually on several debt issuances earlier this year, which we have outlined on this page.
In order for us to maintain our credit earnings and a strong balance sheet while we fund our robust infrastructure plan and consistent with prior guidance as of August 15, we have completed the issuance of approximately $150 million of common equity through our at-the-market or ATM program that was established in May.
Further, approximately $30 million of equity outlined for 2022 have been sold year-to-date under the programs forward sales agreement.
Together with the issuance under our 401(k) and DRPlus program, our $750 million ATM equity program is expected to support equity needs through 2023.
Moving now to page 21.
Id like to briefly touch on the recent increase in natural gas prices around the country and the potential impact it may have on customer bills this coming winter.
Beginning with our natural gas business, heading into the winter season, Ameren is approximately 75% hedged, and Ameren Missouri is approximately 85% hedged based on normal seasonal sales.
Approximately 60% of Illinois winter supply of natural gas was bought this summer at lower prices and is being stored in the companys 12 underground storage fields.
Both companies are 100% volumetrically hedged based on maximum seasonal sales.
Regarding the electric business in Missouri, we are currently long generation and any margin made through off-systems sales flow back to customers as a benefit on their bills through the Fuel Adjustment Clause.
Given our low cost of generation, rising natural gas and power prices have the potential to benefit our electric customers in Missouri.
Turning to page 22.
We plan to provide 2022 earnings guidance when we release fourth quarter results in February next year.
Using our 2021 guidance as a reference point, we have listed on this page select items to consider as you think about earnings outlook for next year.
Beginning with Missouri, we expect the new electric service rates to be effective in 2022 as a result of our pending rate review.
These rates are expected to reflect recovery of and return on new infrastructure and wind generation investments, which are expected to increase earnings when compared to 2021.
Prior to new electric service rates taking effect in late February, we expect increased investments in infrastructure and wind generation eligible for plant and service accounting and a RESRAM that positively impact earnings.
Next, I would note, we expect to recognize earnings related to energy efficiency performance incentives from both 2021 and 2022 plan years in 2022.
As a result, we expect energy efficiency performance incentives to be approximately $0.04 per share higher than 2021.
Further, our return to normal weather in 2022 would decrease Ameren Missouri earnings by approximately $0.04 compared to 2021 results to date, assuming normal weather in the last quarter of the year.
For Ameren Illinois Electric Distribution, earnings are expected to benefit in 2022 compared to 2021 from additional infrastructure investments made under Illinois formula ratemaking.
The allowed ROE under the formula will be the average 2022 30-year treasury yield plus 5.8%.
For Ameren Illinois Natural Gas, earnings are expected to benefit from new delivery service rates effective late January 2021 as well as an increase in infrastructure investments qualifying for rider treatment that were in the current allowed ROE of 9.67%.
And Lastly, turning to page 23, were well positioned to continue executing our plan.
We continue to expect to deliver strong earnings growth in 2021 as we successfully execute our strategy.
And as we look to the longer term, we expect strong earnings-per-share growth driven by robust rate base growth and disciplined cost management.
Further, we believe this growth will compare favorably with the growth of our regulated utility peers.
And Ameren shares continue to offer investors an attractive dividend.
In summary, we have a total shareholder return story that compares very favorably to our peers.

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q3 earnings per share $1.65.2021 diluted earnings per share guidance range raised to $3.75 to $3.95 from $3.65 to $3.85.

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