Morningstar | Missouri Regulation Improving Ameren's Growth Prospect in the State
Regulation for Ameren's Illinois utility has improved significantly. Developing strong relationships with regulators is key for the company to earn competitive industry returns. The automatic annual rate-adjustment mechanism is a big improvement from rate-setting that was subject to the whims of Illinois regulators. Under the new regulation, Ameren has dialed up investment in state system modernization, which would have been difficult under the previous regulatory environment. The Missouri regulatory environment has improved after politicians took a significant step in the right direction. Management's patient, yet persistent efforts to improve Missouri's regulation bore fruit with the passage of Senate Bill 564. Ameren is expected to invest up to an additional $1 billion from 2019 to 2023 as a result of the legislation. The legislation is a long overdue measure to improve Ameren's earned returns in the state. It also supports much needed capital investment in the state's electricity grid. Ameren is moving forward with the company's planned wind generation goals by 2020, with a proposal to acquire a 157 MW wind generation facility in northwest Missouri in addition to the 400 MW wind generation facility in the northeastern part of the state that was recently unanimously approved by the Missouri Public Service Commission. Ameren aims to build 700 MW by 2020. Senate Bill 564 also gives us greater confidence that Ameren will receive regulatory approval for all of its proposed wind generation, representing a potential $1 billion investment.Transmission investments are a bright spot for Ameren and the largest catalyst for our projected earnings growth. Ameren Illinois plans to invest $2.3 billion through 2022 while Ameren Transmission Company plans $300 million of investments through 2022, primarily for the Illinois Rivers project. Ameren is also well positioned to compete for FERC Order 1000 competitive transmission projects, particularly within MISO and SPP, which offer incremental growth.Ameren is a public utility holding company. Through its subsidiary, Union Electric Company, the company operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Through its subsidiary, Ameren Illinois Company, the company operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois. Through its Ameren Transmission Company of Illinois subsidiary, the company operates a Federal Energy Regulatory Commission rate-regulated electric transmission business. The company also has other subsidiaries that conduct other activities, such as providing shared services.
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