Ameren Corp. said Feb. 19 that it plans to spend $8.4 billion over the next five years to modernize its infrastructure and transition to a cleaner energy portfolio with the addition of 3,100 MW of renewable generation by 2030 and 5,400 MW by 2040. These additions are part of its effort to meet a goal of net-zero carbon emissions by 2050.
CEO Warner Baxter told analysts during a fourth-quarter 2020 earnings call Feb. 19 that the Ameren Missouri Smart Energy Plan, filed Feb. 18 with Missouri regulators, "will drive improved reliability, enable cleaner generation and create significant jobs."
The company also expects greater transmission investment to support renewable generation. It also reiterated that it wants all of its coal-fired generation retired by 2042.
By 2025, Ameren's rate base is expected to be 82% electric and natural gas transmission and distribution, 6% renewable generation and 4% nuclear generation, the company said. Its primary utility subsidiaries are Ameren Missouri, known legally as Union Electric Co., and Ameren Illinois Co.
Ameren said $1.7 billion was invested in 2020 to improve reliability. The company has installed "smart switches" to reroute power until a line is fixed and hardened circuits to better withstand severe weather events, and it has built new or upgraded substations.
Baxter also noted that the company wants to extend the operating license for its 1,236-MW Callaway nuclear facility as part of its net-zero commitment. The plant is licensed to operate to 2044. A "nonnuclear operating issue in the generator" that emerged in December 2020 during a return from a refueling outage has forced the plant out of service, Baxter said. The company has decided to replace certain components within the generator, an effort that will keep the single-unit plant in Callaway County, Mo., out of service until late June or early July. The work is expected to cost about $65 million but should not have a significant impact on financial results, Baxter said.
No outages from cold weather
Despite temperatures that never made it above 10 degrees F in Ameren's headquarters city of St. Louis on Feb. 14 and 15, Ameren did not experience any electric service interruptions, company officials said. Baxter said the cold weather has been a "significant challenge" and "understandably" has driven up load, but to date has not resulted in any electric service disruptions. The conditions have resulted in some natural gas supply and power transmission disruptions that, combined, have resulted in higher natural gas and power prices.
2020 sales drop
The company reported Ameren Missouri's weather-normalized power sales were down 2% in 2020 due to COVID-19. Residential power sales in 2020 were up 3% year over year, while industrial sales were down 2% and commercial sales were down 7%. In the fourth quarter of 2020, Ameren Missouri's total sales were down 1.5%, with residential sales climbing 1% year over year, and industrial sales up 4%. Commercial sales were down 6%.
At Ameren Illinois, overall sales for the year were down 4.5%, with residential sales up 2%, commercial sales down 7% and industrial sales down 8%.
Ameren reported net income of $116 million, or 46 cents per diluted share, for the fourth quarter of 2020, compared with $95 million, or 38 cents per diluted share, a year earlier.
The S&P Capital IQ consensus GAAP EPS estimate for the fourth quarter of 2020 was 42 cents.
"The year-over-year increase in fourth quarter 2020 earnings was due to increased infrastructure investments across all of our business segments, new Ameren Missouri electric service rates effective April 1, 2020, and lower operations and maintenance expenses, primarily at Ameren Missouri," the company said.
"These favorable factors were partially offset by increased interest expense due to higher long-term debt outstanding at Ameren Missouri and Ameren Parent, as well as a lower allowed return on equity at Ameren Illinois Electric Distribution," Baxter said.