Ameren CorporationAEE

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

Ameren has faced its share of hardships recently, including many of its own creation. Regulator-set rates can leave a company with little room to adjust in difficult straits. Such was Ameren's experience in 2007 and 2008. Although the outlook has improved Read more

Bulls Say

Residential rates in Ameren's Missouri service territories are well below the national average, leaving the company some breathing room for rate increases in upcoming rate cases.

Roughly 70% of Ameren's regulated generation is from low-cost coal-fired and nuclear plants.

Regulation is improving in Illinois, where Ameren just received a $162 million rate increase, along with partial decoupling for its natural gas operations.

Ameren has secured a fuel-cost pass-through in Missouri, which should help reduce regulatory lag and improve cash flow. Read more

Bears Say

Ameren has significant operations in Illinois and Missouri, two of the more hostile regulatory environments in the nation. Its colorful past hasn't won it any points, either.

Environmental regulations could lead to large investments at nonregulated plants that may not be recovered in power prices.

Although cost cuts were necessary to deal with Ameren's balance sheet woes, reduced investment could seriously hinder growth for the foreseeable future.

The company has large quantities of debt maturing in 2009 that will be expensive to refinance.

The breach at the Taum Sauk upper reservoir could raise legal costs. The U.S. Army Corps of Engineers has filed a suit, and there is an ongoing Environmental Protection Agency investigation. Read more

Strategy

Although its recent rate cases were successful from a total revenue standpoint, Ameren still needs to pursue a more flexible rate structure in Illinois. Management is continuing its effort to stabilize Read more

Management

Thomas Voss has taken the reins as Ameren's president and CEO. Voss, who had previously succeeded former CEO Gary Rainwater as COO, has been with the company for more than 30 years and was trained as an engineer. He brings a wealth of utility experience Read more

Profile

Ameren is a public utility holding company that provides regulated generation, transmission, and distribution of electricity and natural gas in Missouri and regulated transmission Read more

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