Ameren’s second quarter helped by weather, Illinois profits down
ST. LOUIS — Ameren Corp. today announced second quarter 2014 net income from continuing operations of $150 million, or 62 cents per share, compared to second quarter 2013 net income from continuing operations of $105 million, or 44 cents per share.
The year-over-year increase reflected the absence of 2013 Callaway Energy Center nuclear refueling outage expenses and a 2013 charge related to Missouri fuel adjustment clause treatment of certain prior period wholesale sales. In 2014 the Callaway refueling outage is scheduled for the fourth quarter, whereas in 2013 the refueling outage occurred in the second quarter, the company said.
The earnings comparison also benefited from warmer early summer temperatures in 2014, which drove higher Missouri native load electric sales volumes. Other factors included increased rates effective Jan. 1, 2014, for Federal Energy Regulatory Commission-regulated electric transmission and Illinois natural gas delivery services, as well as decreased interest expense.
“Continued execution of our strategy is producing solid financial and operating performance for the benefit of our customers and shareholders,” said Warner L. Baxter, chairman, president and chief executive officer of Ameren Corp. “Over the remainder of this year, we will remain focused on successfully completing several key infrastructure projects, as well as managing our costs in a disciplined fashion.”
Ameren recorded net income from continuing operations for the six months ended June 30, 2014, of $247 million, or $1.02 per share, compared to net income from continuing operations for the six months ended June 30, 2013, of $159 million, or 66 cents per share.
The earnings increase reflected much colder winter and warmer early summer temperatures in 2014, which drove higher native load electric and natural gas sales volumes, as well as the absence of 2013 Callaway refueling outage expenses and a 2013 Missouri FAC-related charge. The positive earnings comparison was also the result of increased rates, effective Jan. 1, 2014, for FERC-regulated electric transmission and Illinois natural gas delivery services. In addition, interest expense and Parent Company and Other operations and maintenance expenses decreased.
Ameren continues to expect earnings per share to be in a range of $2.30 to $2.50 for 2014 and to grow at a 7 percent to 10 percent compound annual rate through 2018 using 2013 results from continuing operations as the base. This expected five-year growth is driven primarily by infrastructure investments in FERC-regulated electric transmission and Illinois-regulated energy delivery services.
Ameren Illinois segment second quarter 2014 earnings were $28 million, compared to second quarter 2013 earnings of $31 million. The company cited lower electric delivery service earnings under formula ratemaking as timing differences more than offset positive effects from increased infrastructure investments and a higher allowed return on equity due to increased 30-year U.S. Treasury bond yields. The earnings comparison was also negatively affected by a charge related to a June 2014 FERC order. Those factors were partially offset by increased rates, effective Jan. 1, 2014, for FERC-regulated electric transmission and natural gas delivery services, as well as decreased interest expense, the company said.
The parent company and other loss from continuing operations for the second quarter of 2014 was $4 million, compared to a loss of $10 million for the second quarter of 2013. This reduced loss reflected decreased interest expense, primarily resulting from the May 2014 maturity of parent company 8.875 percent senior notes, and lower other operations and maintenance expenses, primarily due to the substantial elimination of business and administrative costs previously incurred in support of the divested merchant generation business.
The earnings comparison also benefited from increased earnings from Ameren Transmission Company of Illinois, reflecting infrastructure investments made under FERC ratemaking.
Ameren said a number of factors could cause actual results to differ materially from expectations, including
– Ameren Illinois’ appeals of the Illinois Commerce Commission’s electric and natural gas rate orders issued in December 2013;
– Ameren Illinois’ April 2014 annual electric delivery service formula update filing;
– FERC settlement procedures regarding a potential Ameren Illinois electric transmission rate refund;
– The effect of Ameren Illinois participating in a performance-based formula ratemaking process under the Illinois Energy Infrastructure Modernization Act.
– The effects of Ameren Illinois’ expected participation, beginning in 2015, in the regulatory framework provided by the state of Illinois’ Natural Gas Consumer, Safety and Reliability Act, which allows for the use of a rider to recover costs of certain natural gas infrastructure investments made between rate cases