Ameren Corp (AEE) — Q3 2017 Earnings Call Transcript

Greetings, and welcome to the Ameren Corporation’s Third Quarter 2017 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Doug Fischer, Senior Director of Investor Relations. Thank you, Mr. Fischer, you may begin. Thank you, and good morning. On the call with me today are Warner Baxter, our Chairman, President and Chief Executive Officer, and Marty Lyons, our Executive Vice President and Chief Financial Officer, as well as other members of the Ameren management team. Warner and Marty will discuss our quarterly results and earnings guidance as well as provide a business update. Then we will open the call for questions. Before we begin, let me cover a few administrative details. This call contains time-sensitive data that is accurate only as of the date of today’s live broadcast, and redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on the amereninvestors.com website homepage that will be referenced by our speakers. As noted on Page 2 of the presentation, comments made during this conference call may contain statements that are commonly referred to as forward-looking statements. Such statements include those about future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. We caution you that various factors could cause actual results to differ materially from those anticipated. For additional information concerning these factors, please read the forward-looking statements section in the news release we issued today and the forward-looking statements and risk factors sections in our filings with the SEC. Lastly, all per share earnings amounts discussed during today's presentation, including earnings guidance, are presented on a diluted basis, unless otherwise noted. Now here is Warner, who will start on Page 4 of the presentation.

Thanks Doug. Good morning everyone and thank you for joining us. Before I begin my business update, I first want to express my deep appreciation to our co-workers and contractors who volunteered to leave their families to work tirelessly in very challenging conditions to restore power for those who experienced outages due to hurricanes impacting Texas and Florida. I'm particularly thankful that all of our co-workers returned home safely. The restoration efforts for hurricanes Harvey and Irma were just another example of the incredible teamwork and commitment our customers so often displayed by our industry. Further, Ameren and our industry stand to support Puerto Rico and its hurricane restoration efforts. Our thoughts and prayers remain with those families who lost loved ones, their homes, or were otherwise impacted by these devastating storms. Moving to our financial results, earlier today we announced third quarter 2017 core earnings of $1.24 per share compared to $1.52 per share earned in the third quarter of 2016. This year-over-year decline of $0.28 per share was largely driven by a $0.24 per share change in the timing of interim period revenue recognition at Ameren Electric Distribution, a matter which we highlighted earlier this year. This $0.24 timing-related decline in third quarter earnings will have no effect on full-year earnings, due to an increase in revenue recognition in the first, second and fourth quarters of this year compared to last year. Marty will discuss this and other factors driving the quarterly results in more detail in a moment. I'm also pleased to report that we remain on track to deliver strong core earnings results in 2017. This morning we announced that we narrowed our 2017 core earnings guidance to a range of $2.73 to $2.87 per share. Moving to Page 5, here we reiterate our strategic plan which we have been executing very well over the last several years. We remain focused on operating our businesses safely while strategically allocating capital and continue to exercise disciplined cost management. We expect this strategic capital allocation, along with disciplined cost management, that supports our goal of earnings close to our allowed returns in all of our jurisdictions to result in solid long-term earnings growth. I'm happy to report that in 2017 we have been successfully executing these key strategic actions across all of our businesses. As you can see on the right side of this page, during the first nine months of this year, we invested nearly $1 billion or two-thirds of total capital expenditures in our transmission and distribution businesses, where investments are supported by regulatory frameworks that provide fair, predictable, and timely cost recovery. Since our second quarter call, we achieved a couple of key milestones on the 100-mile Mark Twain transmission line in northeastern Missouri. To begin, ATXI’s proposed alternative route for this project, which is nearly 100% co-located on existing rights-of-way, has received all five required county easements for road crossings. This was an important accomplishment and required extensive collaboration with many key stakeholders. As a result of achieving this important milestone, in mid-September, ATXI acquired a certificate of convenience and necessity for the Mark Twain alternative route from Missouri Public Service Commission, and we expect to receive a commission order in the first half of next year. There has been no change for the estimated $250 million project cost, and the planned service date remains late 2019. Turning now to Page 6, we also continue to invest in Ameren Illinois electric and natural gas distribution infrastructure projects. Through the end of September, Ameren Illinois had installed 560,000 smart electric meters and 290,000 gas meter modules that provide customers with enhanced energy usage data and access to programs to help them save on their energy bills. We are working to deploy these meters to all of our 1.2 million electric and 800,000 gas customers in Illinois by the end of 2019. Additional investments include natural gas distribution projects that upgrade our gas infrastructure and electric distribution projects that add smart grid technology and upgrade substations, all to improve the safety and reliability of our system. Moving to Ameren Missouri, as you know earlier this year, we achieved a constructive settlement in our electric rates review which favorably impacted our third quarter results. From an operational perspective, the Callaway Energy Center began its scheduled refueling and maintenance outage in early October after completing a breaker-to-breaker run of 514 consecutive days, the second longest run in Callaway’s history. The outage is progressing safely, on schedule and on budget. Shifting now to our legislative efforts in Missouri, we remain very focused on enhancing Missouri’s regulatory framework to better support investment in its energy infrastructure. The growing body of investments from across the country clearly shows that these modernized energy policies deliver significant long-term benefits to customers. Those benefits include more reliable and smarter energy rates, a more secure rate to address potential cyber attacks, and greater tools for customers to manage their energy usage. During the 2017 legislative session, we presented a thoughtful and robust energy infrastructure plan that included an incremental $1 billion in investment over five years and up to $4 billion over ten years. Of course, these investments would also create thousands of quality jobs in the state of Missouri. The proposed legislation also included other strong economic development provisions and consumer protections to keep our already low electric rates affordable and competitive in the future. These factors have resulted in strong bipartisan support in the legislature to modernize Missouri's regulatory framework. As a result, we are leveraging the meaningful progress we have made over the last several legislative sessions and continue to work collaboratively with key stakeholders to chart a constructive path forward for our customers in the state of Missouri. And as we noted earlier this year, we expect to support a legislative initiative in 2018 to modernize Missouri’s regulatory framework for electric utilities. Legislation can be filed as early as December 1st with the 2018 session officially beginning January 3rd next year. Turning to Page 7, Missouri’s integrated resource plan. In late September, Ameren Missouri filed a new IRP with the Missouri PSC, which it does every three years. This document details our assessment of the electric energy needs of our customers for the next 20 years and puts forward our preferred resource plan for meeting those needs. The 2017 IRP is consistent with our objective to transition our generation fleet to a cleaner, more diverse portfolio in a responsible fashion. Further, the IRP outlines a significant step change in our renewable energy portfolio due to the advancement of technologies and improved economics. Importantly, the IRP is consistent with the requirements of Missouri’s Renewable Energy Standard, which requires Ameren Missouri to source at least 15% of retail customer sales from renewable energy resources by 2021 subject to a 1% average annual limit on customer rate impacts. Our preferred plan costs for an addition of at least 700 megawatts of wind generation by 2020 and 100 megawatts of solar generation by 2027. After careful assessment, we believe it is in our customers' long-term best interest for Ameren Missouri to own these new wind resources, which represents a potential investment of approximately $1 billion. We have been working on this important undertaking for many months; we still have more work in front of us to successfully execute our preferred plan. We are still completing due diligence on certain matters and are in negotiations with several developers that will ultimately determine the source, location, and cost for these projects. We also recognize that the comprehensive tax reform proposal released yesterday included revisions to the current production tax credit rules for wind generation. We expect that the proposed changes to the PTC rules will be the subject of much discussion by policymakers and key stakeholders over the next several weeks. While it remains uncertain whether these potential modifications to the PTC rules will become law, as well as tax reform in general, we will, of course, assess the potential implications of these changes on our plan, if any. Ownership will also require Ameren Missouri to secure certificates of need from the Missouri PSC for each location, as well as regional transmission organization interconnection agreements. We are excited about the customer and environmental benefits, as well as the potential significant investments and growth opportunities outlined in our preferred plan. As you know, we are very strategic when it comes to managing and financing that capital plan in order to deliver long-term benefits for our customers and shareholders. As a result, we will carefully assess our prospective infrastructure investment plans in the context of this potential $1 billion wind investment. Our infrastructure investment plan does not include any expenditures for renewable energy. We will also carefully consider the best long-term financing plan for this potential investment. Of course, we remain committed to maintaining strong equity ratios and credit metrics at our utilities and on a consolidated basis. We will also assess the best approach to recover the cost of and return on these potential investments within Missouri's regulatory framework. One tool is a cost recovery mechanism that is already included in Missouri's Renewable Energy Standard. It’s a rider mechanism that is specifically designed to address the revenue requirement impacts resulting from complying with the Renewable Energy Standard. The use of this rider mechanism would require approval by the Missouri PSC. It’s premature to go into more detail on all of these matters at this time; however, we plan to provide further updates to you during our year-end conference call in February 2018. Before I move off this subject, I would also note that Ameren Missouri has established CO2 emission reduction goals from its generation fleet of 35% by 2030, 50% by 2040, and 80% by 2050. In summary, our integrated resource plan is a forward-thinking plan that is a win, win, win for customers, the environment, and our shareholders. Rest assured we are very focused on executing this important opportunity for all of our stakeholders. Turning now to Page 8, and the current five-year plan. In February, we outlined our investment plan that included $10.8 billion of regulated infrastructure investment, as well as 6% compound annual rate base growth from 2016 through 2021, reflecting greater levels of capital allocated to those jurisdictions with more constructive regulatory frameworks. To be clear, this plan does not include potential $1 billion investment in wind generation outlined in Missouri's IRP that I just discussed. It also does not include potential additional investments of $1 billion over five years and up to $4 billion over ten years that could be enabled by constructive Missouri legislation. As we look at the future, the successful execution of our robust five-year plan is not only focused on delivering strong results through 2021; it is also designed to position Ameren for success over the next decade and beyond. With this long-term view in mind, we are already making significant investments in our Illinois electric and gas utilities that will position us for success, including those in smart meters, digital technologies, and other infrastructure due to supportive regulatory frameworks. And as we have mentioned, we have identified similar significant Missouri grid monetization investments that we would undertake with improvement in the Missouri regulatory framework. Bottom line, we are taking steps today, across the board, to position Ameren for success in the next decade and beyond, and we believe we have a strong high-quality and sustainable pipeline investment opportunities that would benefit customers and communities we serve, as well as shareholders. Turning now to Page 9 to conclude my remarks. In February we affirmed our expectations for earnings per share growth of 5% to 8% compounded annually from 2016 to 2020 based on the adjusted 2016 guidance midpoint we outlined early last year. This was driven by robust 6% compounded annual rate base growth from 2016 to 2021. We consider both our rate base and earnings growth outlooks to be attractive compared to our regulated utility peers. Ameren also continues to offer investors a solid dividend; last month Ameren's Board of Directors expressed its confidence in our long-term growth plan by increasing the dividend by 4%. Of course, future dividend decisions will be driven by earnings growth, cash flows, and other business conditions. To summarize, we believe our strong rate base and earnings growth profile, combined with our solid dividend, firmly providing a yield of approximately 3%, results in an attractive total return opportunity for shareholders compared to our regulated utility peers. We remain focused on executing our strategy, and I'm firmly convinced that by doing so, we will deliver superior value to our shareholders, customers, and the communities we serve. Again, thank you all for joining us today, and I will now turn the call over to Marty.

Thanks, Warner and good morning everyone. Turning now to Page 11 of our presentation. Today we reported third quarter 2017 GAAP earnings of $1.18 per share compared to GAAP earnings of $1.52 per share for the year-ago quarter. Excluding the third quarter 2017 non-core non-cash charge of $0.06 per share at the parent company for the reevaluation of deferred taxes, Ameren reported third-quarter core earnings of $1.24 per share. This charge was the result of an increase in the Illinois corporate income tax rate to 9.5% from 7.75% effective July 1st of this year. Beyond this charge, we do not expect tax increases to have a material prospective impact on consolidated earnings. Finally, as you can see on this page, there was no difference between GAAP and core results from last year's third quarter. Turning on Page 12, we highlighted by segment the key factors that drove the overall $0.28 per share decrease in core earnings. Starting with Ameren Illinois Electric Distribution, third-quarter year-over-year earnings decreased $0.26 per share, driven by a $0.24 per share change in the timing of interim period revenue recognition resulting from the Future Energy Jobs Act. This act modified the existing formulaic rate making by decoupling our distribution revenues from sales volumes. While this change is impacting quarterly comparisons, it will not affect full-year earnings. The effects of decoupling also eliminated weather impacts in 2017. As a result, comparable earnings were down $0.02 per share, as 2016 results benefited from warmer than normal summer temperatures. Finally, Ameren Illinois Electric Distribution's third quarter 2017 earnings benefited from increased infrastructure investments as well as a higher allowed return on equity under formulaic rate making of 8.7% compared to 8.3% for the year-ago quarter. Next, Ameren Missouri's third quarter year-over-year earnings decreased $0.02 per share reflecting lower electric retail sales primarily driven by milder summer temperatures, the absence of the 2016 performance incentive award for the 2013 to 2015 energy efficiency plan and higher depreciation expenses. These and other factors were mostly offset by new electric service rates effective April 1st, which increased earnings $0.15 per share. The new rates were driven in part by increased infrastructure investments and removal of the negative effect of lower sales to the New Madrid smelter. Turning to Ameren Transmission. Third quarter year-over-year earnings were comparable; the positive impact of increased transmission infrastructure investments at ATXI and Ameren Illinois, which both operate under constructive FERC formulaic rate making, were offset by a lower average allowed return on equity of 10.8% in 2017 compared to an average of approximately 12.3% in the year-ago quarter. In 2016, our Transmission segment benefited from a temporarily higher FERC-allowed ROE as a result of the expiration in May of 2016 of the 15-month refund period for the second MISO ROE complaint case. This temporary benefit ended in September 2016 when the FERC adjusted MISO’s base ROE to its current level. Before moving on, let me briefly cover electric sales trends for Ameren Missouri and Ameren Illinois distribution for the first nine months of 2017 compared to the first nine months of 2016. Weather-normalized kilowatt-hour sales to Missouri residential and commercial customers on a combined basis were flat, excluding the effects of our Missouri energy efficiency program under MEEIA. We exclude MEEIA effects because the plan provides rate recovery to ensure that earnings are not affected by reduced electric sales resulting from our energy efficiency efforts. These sales results reflect underlying 2017 growth offset by the absence of the 2016 leap-day sales benefit. Kilowatt-hour sales to Missouri industrial customers were also flat, excluding sales to the New Madrid smelter, which shutdown operations during the first quarter of 2016. Weather-normalized kilowatt-hour sales to Illinois residential and commercial customers on a combined basis decreased 1%, primarily driven by energy efficiency, while kilowatt-hour sales to Illinois industrial customers decreased 4%, primarily due to lower sales to a large, low-margin processor of agricultural products. Recall that changes in electric sales in Illinois, no matter the cost, do not impact our earnings since the Future Energy Jobs Act provided full revenue decoupling beginning this year. Moving to Page 13 of our presentation, I would now like to discuss our 2017 earnings guidance. Today, we narrowed our GAAP guidance range to $2.67 to $2.81 per share, which includes the third quarter non-cash tax related charge of $0.06 per share, which I discussed earlier. Excluding this charge, we expect to deliver 2017 core earnings within a range of $2.73 to $2.87 per share, reflecting continued solid execution of our strategy, including continued disciplined cost management. This guidance assumes normal temperatures for the last three months of this year. Moving to the balance of the year, we list on this page select considerations that will affect the comparability of fourth quarter 2017 core earnings to last year's fourth quarter results. Some of the larger impacts included change in the timing of interim period revenue recognition at Ameren Illinois’ Electric Distribution business, a fourth-quarter Callaway refueling and maintenance outage, and the 2017 Missouri electric rate review settlement. Before moving on I would like to mention that we expect Ameren Illinois to issue long-term debt before the end of the year to repay $250 million of maturing 6.125% senior secured notes and refinance some short-term debt. Moving now to Page 14 for a discussion of select regulatory matters pending at the Illinois Commerce Commission and the Federal Energy Regulatory Commission. Ameren Illinois is supporting a $17 million decrease in the annual electric distribution revenue requirement in its required annual electric distribution rate update filing, consistent with the ICC’s staff testimony. An ICC decision is expected in December of this year, with new rates effective early next year. Turning to the FERC, the second complaint case that seeks to reduce the base allowed ROE from MISO transmission owners, including Ameren Illinois and ATXI, remains pending. These FERC regulated businesses are currently earning a 10.82% ROE, which includes a 50 basis point adder for MISO membership, and they will continue to do so pending the outcome of this case. While quorum has been reestablished at the FERC, it remains uncertain when the commission will rule. In addition, in September, the MISO transmission owners, including Ameren Illinois and ATXI, filed a motion to dismiss the second complaint case, maintaining that the current base ROE of 10.32% ordered by the FERC in the first complaint case has not been shown to be unjust and unreasonable. Further, the MISO transmission owners believe the second complaint should be dismissed because the approach used by the complainants to argue that the ROE was unjust and unreasonable was rejected by the U.S. Court of Appeals for the DC circuit in the New England case. The FERC is under no deadline to issue an order on the motion to dismiss. Facing a significant backlog of other cases, we expect that the FERC commissioners will take time to consider the court ruling in the New England case as well as the MISO transmission owner's recent motion, as both may influence the FERC's order in the pending second MISO ROE complaint case. Turning now to Page 15 of our presentation and potential federal income tax reform. Ameren supports thoughtful, comprehensive tax reform because we believe that lower corporate tax rates would drive economic growth and job creation, benefitting our customers, the communities we serve, and other key stakeholders. We will continue to advocate for tax reform that would benefit stakeholders and that appropriately supports our industry's efforts to invest in our nation's critical energy infrastructure in an affordable manner. Earlier this year, on our February earnings conference call, we shared with you our perspectives on potential financial considerations and impacts associated with tax reform elements under consideration at that time. As you know, yesterday Republican leaders in the U.S. House of Representatives released a new comprehensive income tax reform proposal. Ameren, along with our industry colleagues, is still in the process of reviewing this proposal. While the debate on tax reform took another step forward yesterday, the timing and elements of tax reform, if ultimately successful, remain uncertain. We will remain actively engaged with our industry colleagues on this important policy matter in the weeks ahead. That said, regardless of whatever federal income tax law changes may be made, it is important to remember that our operations are fully rate regulated, we have limited parent company debt, and we have a robust pipeline of high-quality investment opportunities that can deliver strong long-term benefits for customers and shareholders. Turning to Page 16, we plan to provide 2018 earnings guidance when we release fourth-quarter results in February of next year; however, using our 2017 guidance as a reference point, we have listed on this page select items to consider as you think about our earnings outlook for next year. Beginning with the first item listed, earnings from our fully regulated electric transmission activities are expected to benefit from additional investments in Ameren Illinois and ATXI projects made under forward-looking formulaic ratemaking. Ameren transmission earnings would, of course, be affected by any change to the current allowed ROE of 10.82%. For Ameren Illinois electric distribution service, earnings are expected to benefit in 2018 compared to 2017 from additional infrastructure investments made under Illinois formulaic ratemaking. The allowed ROE will be the average 2018 30-year treasury yield plus 5.8%. In addition, Illinois gas distribution earnings are expected to benefit from qualified investments that are included in rates on a timely basis under the state’s gas infrastructure rider. For Missouri, 2018 earnings comparison is expected to be favorably affected in the first quarter of next year by increased Missouri electric service rates that took effect April 1, 2017. In addition, we expect the absence of expenses associated with our fourth quarter 2017 Callaway nuclear refueling and maintenance outage to benefit 2018 earnings by approximately $0.08 per share compared to 2017. The next scheduled Callaway refueling and maintenance outage is in the spring of 2019. Further, a return to normal weather in 2018 would increase Ameren Missouri earnings by approximately $0.06 per share compared to 2017 results to date, assuming normal weather in the last quarter of this year, and we expect lower interest expense driven by the refinancing of debt in 2017 and 2018 to favorably impact 2018 results. Finally, we expect Missouri 2018 results to also reflect regulatory lag associated with increased depreciation and transmission and property tax expenses. Turning to Page 17, I will summarize. We expect to deliver 2017 core earnings within a range of $2.73 to $2.87 per share as we continue to successfully execute our strategy. As Warner stated, as we look ahead, we continue to expect strong earnings-per-share growth driven by strong rate base growth and disciplined financial management. Ameren shares continue to offer investors an attractive yield based on our recently increased dividend. In total, we believe we offer investors an attractive total return story compared to our regulated utility peers. That concludes our prepared remarks. We now invite your questions.

Good morning guys. Sorry to have missed this, but you went over the sales growth for Missouri and Illinois, I think was 1% weather-adjusted and leap year adjusted for Illinois year-to-date, is that correct?

Let me go over that again, Paul. Just overall. We talked about for our Missouri weather-normalized kilowatt-hour sales for residential and commercial were about flat, excluding the impacts of our energy efficiency programs. We have seen a little bit of growth there offset by as you know we had the leap-day benefit last year, it was overall flat there. Also in the industrial class in Missouri it was pretty flat as well. Over in the Illinois area, the weather-normalized kilowatt-hour sales for residential and commercial was actually down about 1%. As you know we increased the energy efficiency efforts this year, and I think that’s been reflected in those lower sales, and then Illinois industrial was down about 4%. As we noted on the call, it’s certainly important to remember that in our Illinois service territory, we are fully decoupled today based on the passage of the law last December, where we increased our energy efficiency effort and we also had decoupling associated with that. So those sale declines are not affecting the bottom line result.

Okay. And just back to Missouri, the flat numbers were inclusive of your energy efficiency efforts and leap-day and weather, correct?

That’s correct, Paul. All those stats I gave you are for the nine-months year-to-date. In terms of Missouri, which you asked about specifically, we are actually seeing some positive this quarter in terms of growth in both residential and commercial customer accounts, so that’s nice, about 0.5% residential and almost 1% in commercial. So we’re seeing a little bit of growth there, and we look at the economy, of course, as you see now this morning, I think nationally the unemployment number came out at 4.1%. We have been staying a little actually south to that, a little better than that in Missouri, unemployment at 4%, and who knows, maybe even a little bit less given the announcement today that nationally had moved down. And the Illinois, unfortunately, has been a little higher, closer to 5%. So, but overall, I would say the unemployment has followed national trends, and I would say overall the economies in both states are fairly stable.

Okay, great. And then Warner, you made some comments about the legislation being introduced, I guess it’s early as December perhaps. I’m sorry again if I missed this. But I guess what timeframe are you guys thinking of your legislation being impacted? And then also, as I recall, there was a PSC proceeding in Missouri just sort of looking at things like what you guys are talking about on legislation. Has that concluded? And I apologize, but was there anything significant out of that?

No worries. We will always have interest in Missouri. I will comment on the timing of legislation and I notice that Michael mentioned the ongoing proceedings in Missouri regarding some forward-looking regulatory matters. In general, we have not established a specific timeline for when the legislation will be introduced. We are focused on working with key legislators to pre-file legislation before the session starts. Pre-filing can begin as early as December, with the legislature opening on January 3rd. While we don’t have an exact date, we have been diligently collaborating with our key stakeholders and partners over the summer to position ourselves effectively for moving forward. We expect to either file or support a legislative initiative in 2018. Mike, would you like to discuss some of the other proceedings happening in Missouri?

Sure, absolutely, Warner. I think, but we are going to continue to build off of the good work that we made - progress that we made at the end of the sessions last year, and specifically with perspective on the initiatives in Missouri, I think you are referring to. There was an interim Senate Committee as well as the PSC put some workshops on to really look at these regulatory reform issues, and those both have concluded. I would say in general they were pretty positive and supportive of what we are trying to do in varying degrees, but overall supported the idea of modernizing the degree of the benefit for customers and the need for some regulatory reform in the state of Missouri to make that happen.

But can the PSC do anything on its own now? I mean, I thought they were maybe looking at perhaps changing some of their own processes just administratively for the speakers, as opposed to requiring legislation to do something. Is there anything possible on that end that might happen?

I think the PSC does have the ability to make some—certainly administrative changes to the overall regulatory process to try to help facilitate that. I think that they were also advocating for some legislative changes as well to give themselves more tools, which gives us really more certainty at the end of the day to make these kind of needed investments.

Mike we made comments on the PSC; they are doing some workshops on some forward-thinking regulatory policies around electric vehicles and those types of things. Perhaps Paul has heard a little bit about that. Just maybe you can talk about some of those things which are taking place which that is what the PSC has initiated on their own.

Right, and that's really around these emerging technology workshops that they kicked off. And Warner is right, I mean that's really looking at the benefits of electrification and modernizing the grid, which, again, I think all of this points back towards some needed changes within the regulatory structure to promote some of these kinds of investments. And again, I think that they point to some things from the legislative standpoint that could occur as well; you are right, I mean I think they have some tools available to do some of these things also.

Okay, great. Well, that will be the last question. Thanks a lot.

Thank you, Paul.

Assuming that tax reform doesn’t pass, with your wind projects, are you set up to have 100% PTC? Do you have access to Safe Harbor turbines?

Yes, Paul, this is Marty Lyons. As it relates to that, we have been in the process of negotiation with developers, and those negotiations are ongoing and part of that is determining that in fact the developers have done what's necessary to make sure that we are eligible for the PTC, and that’s a key part of diligence efforts as part of this going on in tandem with the negotiations.

And then you talked about a potential billion dollars; if this were to come to fruition, would that be additive to your current plan or would it kind of displace some other capital?

Well, the current plan is at which we make pretty clear in the slides. The current plan did not incorporate any investment in renewable, so there was no spending in the current plan for these renewables. So in that sense, the billion dollars would be additive to that. Now as Warner talked about in his prepared remarks. What we would do is step back, evaluate our overall five-year infrastructure investment plan in the context of that incremental wind investment, and we would expect to present probably in February of next year what our four or five-year capital plan looks like.

You mentioned potentially financing $250 million; what term do you think you will put on that and refinance it?

I don't know; it’s an Ameren NOI offering. Typically, we are looking out at 10 or 30 years of offerings.

And then your '18 drivers you mentioned potential other refinancing; do you have a sense of how big and timing on that?

I think as we look out to 2018, we did mention a couple of refinancing opportunities. There are a couple of maturities in Missouri that we were specifically speaking of; I think they total something like $350 million over the course of the next year. So we would be looking at opportunities to refinance those maturities; I think there are two separate maturities that add up to about that number.

Do you have a ballpark coupon in this?

I do not at this time.

And then just on legislation, obviously you have gotten, I would say, to one guideline before. How are you making progress with the parties that could total buster?

So Paul, this is Warner. I will comment briefly. As I said before, there has been a lot of work down here when I call the off-season with the host of stakeholders, and so the conversations continue to be constructive. We try to make sure those that had opposition that we reach out to them to get their input. And so it's ongoing, and we are very focused to leverage, as Michael said a moment ago, the really strong bipartisan support that we have in both the House and the Senate as well as among the stakeholders across the state that moves something forward that’s in the best interest of our customers, and certainly the communities we serve, and certainly our shareholders. So there is still more work to be done and the team is hard at it, as well as working with our partners across the state.

Sounds like you are making some progress. Thank you.

Thank you.

Hi, good morning. How are you guys doing? Just to understand the Missouri kind of clean energy initiatives, though to this is made to meet that. I was just curious if for whatever reason this House bill were to end up being law, if the PTC was changed as written in that bill, how does that work? I mean, obviously I understand the economics of it, but you still have to meet that standard, is that correct?

We do. You are referring to the Renewable Energy Standard in Missouri. I think something to be mindful of within that standard, I mean, there is a 1% cap on customer rates well that we also have to balance in all of this, making sure that we comply, and so I mean, obviously that’s something that we will be mindful of as we work through this and be mindful of these proposed changes in the tax law.

Okay. So how do you kind of—again, whether the law really becomes law or not, a lot of people say it’s doubtful, but if it were, how do you work around this? Have you thought about it? I mean, it’s only been a day?

Andy, this is Warner. Look, I think the legislation or the proposal, to be clear, is 24 hours old. And so we assess this and as I said in my prepared remarks, I sense that this particular provision will get a lot of attention over the next several weeks from key stakeholders from across the country, but we are still assessing it ourselves. The only thing, as I said during our talking points, is that we understand the real benefits to customers, the environment, and shareholders as a result of this plan, so we are very focused on it. We are going to work very hard to get our arms around this potential proposal as well as looking at the existing law within the state of Missouri and also being mindful that it is our desire to transition our generation portfolio to a clean and more diverse portfolio in a responsible fashion. All those things come together, and we expect to be able to give a more comprehensive update on all these things certainly in February, when we have our year-end conference call, and give you a more forward-looking outlook for the next five years.

Okay. And I guess we talked about more of the next week too when we see it, but the second thing is just to understand on the drivers for 2018. If I kind of do the math correctly, and then you kind of maybe net out the property taxes and depreciation that don’t flow through Illinois on the formula rates, is there about $0.30 to $0.30 plus of upside? Everything else equals that right?

It’s Marty. Obviously, we are not giving specific 2018 guidance. I think…

I know. I think on the drivers that you gave.

Yes. If you look to Slide 16, I think that you will see that we gave a number of important drivers to think about as you think about 2018, and probably we aren’t going to go much beyond that, but I think we have given you some really good specificity to hook into. Obviously, we have got this increased investment in Ameren Transmission. The rate base is clearly expected to go up next year from $2.5 billion to $2.9 billion next year. Andy, as you know, there’s a little uncertainty around what the ROE will be next year. Right now we are earning 10.8, and that we will see the FERC rules on the second complaint case and how they rule. We have got higher rate base expected next year in Ameren Illinois electric, which is subject to formulaic rate making. The third-year treasuries did rise over the course of this year. We will see what happens over the next year, and gas distribution business, while we don’t have a rate case next year, we do get to formulaically adjust rates based on our rider there since, formulaically, we get to adjust rates based on our rider there for infrastructure investments. About 50% of our CapEx qualifies for those adjustments, so that's a boost. And then we do get a little carryover the next year from the rate increase that went into effect in Missouri this year in April, so we will pick up the first quarter benefit next year, which we quantified on Slide 16 as no Callaway refueling outage next year; that's of course $0.08. We’ve had some negative weather this year; we’ve had about a $0.06 headwind from weather this year. If we raise that next year and go to normal, that's another $0.06 pick-up. And then, as you mentioned, there are always some headwinds that would be associated with some depreciation, and we would expect transmission and property tax headwinds as well. So we have provided, I think, a pretty comprehensive list of major earnings drivers for 2018.

And then just to follow up on that, so when you give 2018 on the fourth quarter call, I guess these pluses, right, and whatever minuses, but the incremental earnings that will be based on your weather or normalized earnings in 2017, so whatever that is, if it's X it will be X plus this. Is that kind of the way to look at it?

Yes, I think that's a fair way to look at it. I think typically when we think about our growth, we don’t always strip out weather to base the growth on, but yes, I think I'm not sure exactly how you are thinking about it, but yes, you look at weather normalized 2017, and then you see things to build and consider again whether there were any sort of one-time impacts in 2017 that you wanted to take into consideration besides weather.

Okay. I will see you at Slash Mountain on Saturday night; okay.

Terrific, Andy, I appreciate you calling in. Enjoy yourself.

What is the actual approval process for the Missouri wind project you guys have proposed? Do you have to get the IRP approved and then there is another stage? Just how do you do that?

Michael why don’t you take that question please.

Absolutely. So yes, there is no formal approval process for the IRP itself. I mean there is a review that occurs and people are reviewing it as well. In terms of the specific wind projects, we do have to file what's called the Certificate of Convenience and Necessity here in Missouri, a CCN. We foresee filing it probably in the first half of 2018. That process is really then you have folks come through and intervene, etc., and so that's ultimately the approval process that occurs, so that you feel good about going forward with the project.

Okay, and Warner, in your comments I think you mentioned something about rider recovery; is that how you are looking to move from the CCN to the actual build phase?

So also as part of that CCN filing, we will make an application to use this rider mechanism that's also outlined in the law, and so that would be as part of that certificate process that I discussed.

I'm sorry, it’s important to understand that this rider mechanism doesn’t require a formal rate case; it’s a rider mechanism outside the general rate case, just how the provisions of that work.

Exactly, so you guys are going to have clarity on recovery before you actually commit the capital, is what I'm asking.

Correct.

Okay, and the other thing in just terms of modeling for the FERC jurisdictions into next year, until you have an order, should we assume that you are going to continue to book at our 10.82%?

That’s correct; we will continue to book at 10.82 until we get an order that tells us to do otherwise.

Okay, and then you guys highlighted additional CapEx that’s tied to potential legislation; in terms of the financing going forward, should we use like an FFO to debt target or consolidated equity target, or just color on how we should assume the finance side if it comes about?

Yes, I think it’s not probably a clear bright line that I tell you, Kevin. I mean, I think what we will do with whether we have additional CapEx due to the integrated resource plan or we’re having additional CapEx due to other legislative efforts or other factors, we will step back and will take a look at the overall infrastructure investment plan. We will step back and we will take a look at the overall cash flows associated with the business and then assess the best way forward to finance that. As Warner said in his prepared remarks, thinking about all credit metrics, credit ratings at the parent company at the holding companies, the consolidated equity ratio, cash flow metrics, and how best to position, I would say these incremental investments for regulatory recovery and make those additive to shareholder value. So we will take all those factors into consideration and then think about the best path forward for financing those. Clearly, as I think you mentioned in your question, given the $10.8 billion current infrastructure investment plan that we have laid out earlier this year, given the strength of our balance sheet and credit metrics, we didn't expect to need any equity as it related to financing that plan.

Exactly; so when you update capital on the fourth quarter call, this is a component of whatever you guys ultimately decide to do.

Yes, I think as we roll forward with updated prospective CapEx plans, you should expect that we will offer you comments as well as how we would plan to finance that overall infrastructure investment plan and related cash flows.

That’s very helpful. Thank you very much.

Thanks, Kevin.

Hi, this is Ashar; how are you guys doing? Pretty good, pretty good, pretty good. I just wanted to clarify one thing, Marty; so what ROE did we book on the transmission side for 2017? Is it also 10.82?

Yes, so in 2017 we have been recording the 10.82; last year we actually had a temporarily higher ROE. So I think if there was any confusion, I would say that year-over-year earnings in the third quarter on the transmission segment were relatively flat. We got the benefit of the increased infrastructure investment, but we had a comparatively lower ROE because we went from an average of 12.3 ROE in the third quarter of last year to the 10.8 that we have got this year.

Okay. So then as we monetize the growth from 2017 and 2018, based on the facts we have right now, there will be no change in ROE right as you book for 2018 versus 2017, correct?

The answer earlier in a question, Ashar, we will continue to book 10.8 until such time as the FERC would tell us to do otherwise. So, as you know, there is the second complaint case that’s outstanding, the ALJ in that particular case ruled that we should perhaps move down from 10.8 overall ROE, which includes the 50 basis points at, down to 10.2 with the 50 basis points at. As we said on the call, we have made filings to suggest that the second complaint case should be dismissed for the reasons we discussed on the call, and it’s uncertain when the FERC, even though they have got a quorum now, will rule on the second complaint case. So until that time that they do rule and until such time as they would tell us to change the ROE, we will continue to book to 10.8. I would mention that for about a 15-month period after the second complaint case was filed, we did accrue our reserve of about $40 million for the potential that the ROE would be lower to 10.2 and that we would need to refund that money. So we have got that reserve set aside to the extent that the FERC could rule consistent with the ALJ, but as I mentioned again, it is uncertain what the FERC will do actually at this point in time.

Okay. Fair enough. And then, Marty, I just, if I heard you correctly, I apologize I was listening to a couple of other things simultaneously, you said that there was $15 million of interest savings from the financings from this year, 2017, which would flow through to next year; did I hear that correct?

Well, we did a partial savings this year as it relates to that, and then we will get the full benefit next year. So year-over-year, you wouldn’t get the full uptick from the $15 million, but just highlighting that earlier this year we did refinance some debt at Ameren Missouri that produced annual interest savings of $15 million, and then also mentioned that as we look into next year, there are a couple of other opportunities as we sit here today to incrementally do some refinancing.

Incrementally. And could I assume new issuance costs around 3.5 or something like that, or something in that ballpark between three and 3.5 based on current market conditions?

That might be fair. Again, I declined to comment specifically; we will issue - we will, between now and then, consider what the best tenures are for an Ameren Missouri offering, given our debt ladder and other considerations, and obviously, price is based on the market conditions at that time.

Okay. Thank you so much.

Thank you, Ashar.

Thank you.

Thank you. As we discussed today, we believe the Ameren shares offer investors attractive total return potential based on our strong expected earnings growth outlook and solid dividend. I would like to remind you that a replay of this call will be available for one year on our website. If you have questions, please call the contacts listed on our earnings release. Thank you for your interest in Ameren, and have a great day.