Ameren Corporation (AEE) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Earnings Performance

  Ameren reported second quarter 2024 earnings of $0.97 per share, up from $0.90 per share in the second quarter of 2023, driven by infrastructure investments, encouraging weather normalized retail sales, and disciplined cost control.

• Strategic Infrastructure Investments

  Investments made in the first half of the year are designed to maintain the safety and reliability of the energy grid, modernize the grid, and harden it against severe weather events.

• Regulatory Advancements

  Significant regulatory progress includes approval of the Cass County solar project and advancements in Ameren Missouri's smart energy plan, which includes a mix of distribution, transmission, and generation projects.

• Customer Growth Opportunities

  Ameren has seen a significant increase in data center inquiries and formal engineering reviews, representing thousands of megawatts of additional demand, with a construction agreement executed for a 250 megawatt data center.

• MISO Transmission Projects

  Ameren won all three Tranche 1 competitive projects in its service territory and is preparing for the $23 billion to $27 billion Tranche 2.1 project portfolio, promising meaningful investment opportunities.

Pessimistic Highlights

• Regulatory and Policy Challenges

  While not explicitly mentioned, ongoing regulatory and policy challenges could impact future operations and investment opportunities, particularly in relation to environmental regulations and the need for constructive energy policies.

Company Outlook

• Positive Earnings Guidance

  Ameren remains confident in its 2024 earnings guidance range of $4.52 to $4.72 per share, supported by strong compound annual rate base growth of 8.2% and strategic infrastructure investment.

• Future Investment Opportunities

  Ameren anticipates a robust pipeline of investment opportunities over the next decade, exceeding $55 billion, driven by sales growth potential, regulatory progress, and transmission investment opportunities.

Q & A Highlights

• Q: Can you provide insights on the Rush Island mediation and its potential impact? (Shar Pourreza, Guggenheim Partners)

  A: The judge ordered mediation, which could lead to constructive settlement negotiations. If unsuccessful, hearings are expected in September, aiming for a resolution this year. (Marty Lyons)

• Q: How should we think about the competitive allocation within MISO Tranche 2.0, 2.1, and the timing of spend associated with these projects? (Shar Pourreza, Guggenheim Partners)

  A: Tranche 2.1 projects are a mix of brownfield and greenfield, with Ameren expecting to compete for greenfield projects. Construction for Tranche 1 projects extends from 2026 to 2030, with Tranche 2.1 spend likely outside the current 5-year plan. (Marty Lyons)

• Q: Regarding the data center construction and IRP update, what is the tipping point for accelerating procurements? (Nick Campanella, Barclays)

  A: Ameren is assessing potential load growth and planned generation portfolio, expecting to update the IRP by February 2025. The ultimate impact of incremental load will depend on various factors, including customer ramp-up time and tariff structures. (Marty Lyons)

• Q: How does the Chevron doctrine's recent changes impact Ameren's future plans? (Jeremy Tonet, JPMorgan)

  A: The Chevron doctrine's implications for federal agencies and court proceedings are acknowledged, but specific impacts on Ameren's plans are not detailed. (Marty Lyons)

• Q: Can you discuss expectations around resource mix in the upcoming IRP update, considering EPA regulations? (Carly Davenport, Goldman Sachs)

  A: The IRP update will consider load growth, resource mix, and potential impacts of EPA's proposed greenhouse gas rules, with considerations for carbon capture and co-firing with gas at certain facilities. (Marty Lyons)