Ameren Q1 2022 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2022

There are 8 speakers on the call.

Operator

Greetings, and welcome to Amarin Corporation's First Quarter 2022 Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andrew Kirk, Director of Investor Relations for Amarin Corporation.

Operator

Thank you, Mr. Kirk. You may now begin.

Speaker 1

Thank you and good morning. On the call with me today are Marty Lyons, our President Chief Executive Officer and Michael Main, our Executive Vice President and Chief Financial Officer as well as other members of the Yammer management team joining us remotely. Marty and Michael will discuss our earnings results and guidance as well as provide a business update. Then we will open the call for questions. Before we begin, let me cover a few administrative details.

Speaker 1

This call contains time sensitive data that is accurate only as of the date Today's live broadcast and redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on the emmeritinvestors.com homepage that will be referenced by our speakers. As noted on Page 2 of the presentation, comments made during this conference call may contain statements that Commonly referred to as forward looking statements. Such statements include those about future expectations, beliefs, plans, projections, results to differ materially from those anticipated. For additional information concerning these factors, please read the forward looking statements section In our news release we issued yesterday and the forward looking statements and risk factors sections in our filings with the SEC.

Speaker 1

Lastly, all per share earnings amounts discussed during today's presentation, including earnings guidance, are presented on a diluted basis unless otherwise noted. Now here's Marty, who will start on Page 4.

Speaker 2

Thanks, Andrew. Good morning, everyone, and thank you for joining us. We've had a solid start to the year and our team continues to effectively execute our strategic plan across all of our business segments, allowing us to deliver consistently strong results for our customers and shareholders. Yesterday, we announced Q1 2022 earnings of $0.97 per share compared to earnings of $0.91 per share in the Q1 of 2021. The year over year increase of $0.06 per share reflected increased infrastructure investments across all of our business segments It will drive significant long term benefits for our customers.

Speaker 2

The key drivers of our Q1 results are outlined on this slide. I'm pleased to report that we remain on track to deliver within our 2022 earnings guidance range of $3.95 per share to $4.15 per share. Michael will discuss our Q1 earnings, 2022 earnings guidance and other related items in more detail later. Moving to Slide 5, you will find our strategic plan reiterated. We continue to invest in and operate our utilities In a manner consistent with existing regulatory frameworks, enhance regulatory frameworks and advocate for responsible energy and economic policies, And create and capitalize on opportunities for investment for the benefit of our customers, shareholders and the environment.

Speaker 2

Turning now to Page 6, which highlights our commitment to the first pillar of our strategy, investing in and operating our utilities In a manner consistent with existing regulatory frameworks. Our strong long term earnings growth guidance is primarily driven by our infrastructure investment and rate based growth plans, which are supported by constructive regulatory frameworks. Our plan includes strategically allocating capital to all 4 of our business segments. You can see on the right side of this page, we have invested significant capital in each of our business segments during the 1st 3 months of this year. In order to maintain safe and more reliable operations, all while facilitating and driving a clean energy transition.

Speaker 2

Regarding regulatory matters, in late February, new Ameren Missouri electric and natural gas service rates went into effect, Reflecting significant investment in grid modernization, reliability, resiliency, security and renewable energy generation. In addition, in April, Ameren Illinois filed its required annual electric distribution rate update, Reflecting similar infrastructure investments and service improvements in that jurisdiction and requesting an $83,000,000 increase. Ongoing investment across all four business segments is building a safer, stronger, smarter and cleaner energy grid for our customers now and in the future. At the same time, we are maintaining discipline with regard to costs, Leveraging our investments and focusing on continuous improvement to optimize our performance and drive greater value for our customers. Moving to Page 7, in the 2nd pillar of our strategy, enhancing regulatory frameworks and advocating for responsible energy and economic policies.

Speaker 2

Over the last several years, we have worked hard to enhance the regulatory frameworks in both Missouri and Illinois In order to consistently deliver strong value for our customers, communities and shareholders, while practicing responsible environmental stewardship, We continue to work towards enhancing regulatory frameworks and advocating for responsible energy and economic policies. Workshops related to the implementation of the Illinois Energy Transition Legislation enacted last year Our ongoing and performance metrics related to the multi year rate plan are expected to be approved by the ICC by late September. We believe this legislation will support important energy grid investments and will deliver value to customers, Such as the utility owned solar and optional battery storage pilot projects in 2 communities, Peoria and East St. Louis. We are excited to announce that we began construction of an approximate $10,000,000 2.5 Megawatt Solar Energy Facility in East St.

Speaker 2

Louis In early March, this energy center will strengthen the energy grid while building a cleaner energy future for this Illinois community. Before moving on, I'd like to briefly discuss recent energy and capacity purchases made by the Illinois Power Agency On behalf of our Ameren Illinois customers, for the upcoming June 2022 through May 2023 planning year. As you know, global events have been impacting the cost of energy commodities and power prices in the Midwest have been elevated. Further, a combination of factors, including higher energy usage, a reduction of dispatchable generation and the construct of MISO's capacity market Are all being cited as causes of a spike in regional capacity prices. Unfortunately, as a result of these factors, Some of our Illinois customers will be seeing a meaningful increase to the energy supply component of their bills beginning in June.

Speaker 2

It is important to note that energy and capacity costs are passed on to our Ameren Illinois customers through a rider with no markup. While factors leading to these increases and potential prospective mitigation will undoubtedly be discussed among stakeholders, Our approach remains the same. We will continue to focus on supporting our customers and communities by connecting them with bill assistance where needed And continuing to invest strategically to support a responsible clean energy transition in Illinois. Moving now to Page 8 and Missouri legislative matters. As part of Ameren Missouri's Smart Energy Plan, a multiyear effort to strengthen the grid, Our customers are benefiting from stronger poles, more resilient power lines, smart equipment, including modern substations And upgraded circuits to better withstand severe weather events and restore power more quickly.

Speaker 2

I am pleased to report that yesterday afternoon, Senate Bill 745 passed by strong majority support in the General Assembly. This bill enhances the Smart Energy Plan legislation enacted in 2018. More specifically, the bill extends the sunset date on the current Smart Energy Plan legislation Through December 31, 2028 with an extension through December 31, 2033 if the utility requests and the PSC approves. The bill also modifies the rate cap beginning in 2024 from the current 2.85% compound annual all in on growth in customer rates to a 2.5% average annual cap on rate impacts of PISA deferrals. In addition, the bill expands and extends economic development incentives and provides for a property tax tracker.

Speaker 2

The bill will now be sent to the governor for signature. We believe extending Missouri's smart energy plan We'll continue to benefit our customers and communities as we transform the energy grid of today to build a brighter energy future for generations to come, all while creating significant economic development and jobs in the state. Turning to Page 9, we will now provide an on developments related to our plan to accelerate the retirement of the Rush Island Energy Center. As discussed on our year end earnings call in late February, Ameren Missouri filed an Attachment Y with MISO, notifying it of our intention to close the energy center. As a result of that filing, MISO is now studying the grid reliability implications of Rush Island's planned closure In order to determine any investments and interim operating parameters required prior to closure in order to mitigate system reliability risks, I would note, MISO's preliminary study completed in January 2022 recommended transmission upgrades And indicated additional voltage support will be needed on the transmission system to ensure reliability.

Speaker 2

While MISO is under no deadline to issue a final report, We expect a draft report will be issued this month. The district court, which is awaiting MISO's analysis, is also under no deadline to issue a final order regarding the Ameren Missouri expects to file an update to its 2020 integrated resource plan With the Missouri PSC in June, which will reflect the expected accelerated retirement date of the Rush Island Energy Center. Such filing will also include discussion of the expected use of securitization in order to recover the remaining investment in Rush Island. We continue to work with all parties involved to move forward with the accelerated retirement in the most responsible fashion. On Page 10, We turn our focus to the 3rd pillar of our strategy, creating and capitalizing on opportunities for investment for the benefit of our customers, shareholders and the environment.

Speaker 2

This page provides an update on the MISO long range transmission planning process. As we have discussed with you in the past, MISO completed a study outlining the potential roadmap of transmission investments through 2,000 Taking into consideration the rapidly evolving generation mix that includes significant additions of renewable generation based on announced utility integrated resource plans, State mandates and goals for clean energy or carbon emission reductions as well as electrification of the transportation sector among other things. Under MISO's Future 1 scenario, which is the scenario that resulted in an approximate 60% carbon emission reduction below 2 would be necessary in the MISO footprint. Underage Future 3 scenario, which resulted in an approximate 80 reduction in carbon emissions below 2,005 levels by 2,030 9, MISO estimates approximately $100,000,000,000 Transmission investment in the MISO footprint would be needed. As part of Tranche 1, MISO working with key stakeholders, including transmission owners, As identified projects located in MISO North estimated to total more than $10,000,000,000 The projects Crossing through our Missouri and Illinois service territories provides significant investment opportunities.

Speaker 2

We believe we are well positioned to execute on these projects Given the location of the projects and our expertise constructing large regional transmission projects, MISO approval of Tranche 1 is expected Work on 3 additional tranches has begun and MISO has indicated that an initial set of tranche 2 projects Also located in MISO North is scheduled to be approved in the Q1 of 2023. Projects included in tranche 3 are Are expected to improve transfer capability between MISO North and MISO South with approval scheduled in the Q4 of 2025. Moving now to Page 11. We are focused on delivering sustainable energy future for our customers, communities and our country. This slide summarizes our strong sustainability value proposition and focus on environmental, social, governance and sustainable growth goals.

Speaker 2

Our preferred plan included in Ameren Missouri's 2020 IRP supports our goal of net zero By 2,030 and 2,040 respectively, which is consistent with the objectives of the Paris Agreement and limiting global Temperature rise to 1.5 degrees Celsius. As previously noted, the IRP will be updated in June to reflect, among other things, MISO's long range transmission planning, legislative and regulatory developments and the early retirement of Rush Island. We continue to work diligently to optimize our sustainability value proposition, including our clean energy transition. In just last month, we announced completion of our newest clean energy resource, a 6 Megawatt Solar Facility. The Montgomery County Solar Center is part of our Missouri Community Solar Program, which began in 2018, Offering customers the opportunity to invest in solar energy generation in their community through a shared system.

Speaker 2

The energy center is now up and running, supporting more than 2,000 customers who want to take part in clean energy generation without having to pay high upfront cost to install solar equipment on their own roofs or property. The program is fully subscribed and we are evaluating expansion opportunities at additional sites. We also have a strong long term commitment to our customers and communities to be socially responsible and economically impactful. I'm excited to say that this week, DiversityInc. Announced once again that they have named Amarin number 1 on their top utilities list For diversity and inclusion, a list we have proudly been part of since 2009.

Speaker 2

DiversityInc. Also recognized Amarin as a top company for veterans, Black Executives, as well as a top company for ESG among all industries. This slide highlights a few of the many things we are doing for our customers and communities, including being an industry leader in diversity, equity and inclusion. Further, our strong corporate governance is led by a diverse Board of Directors focused on strong oversight that's aligned with ESG matters. We recently named our 1st Chief Sustainability and Diversity Officer to further optimize our ESG impact by aligning these interconnected areas.

Speaker 2

Finally, this slide summarizes our very strong sustainable growth proposition, which remains among the best in the industry. As mentioned on our call in February, we have a robust pipeline of future investments that will continue to modernize the grid and enable the transition to a cleaner energy future. This pipeline includes over $45,000,000,000 of investment opportunities over the next decade that will deliver significant value to all of our stakeholders By making our energy grid stronger, smarter and cleaner. Of course, our investment opportunities will not only create a stronger and cleaner energy grid to meet our customers' needs and exceed their expectations, but they will also create stronger economies and thousands of jobs for the communities we serve. I encourage you to take some time to read more about our strong sustainability value proposition.

Speaker 2

You can find all of our ESG related reports atamarininvestors.com. Turning to Page 12. To sum up our value proposition, we remain firmly convinced That the execution of our strategy in 2022 and beyond will deliver superior value to our customers, shareholders and the environment. In February, we issued our 5 year growth plan, which included our expectation of a 6% to 8% compound annual earnings growth rate from 2022 through 2026. This earnings growth is primarily driven by strong rate based growth supported by strategic allocation of infrastructure investment To each of our operating segments based on their constructive regulatory frameworks, I will note renewable generation and regionally beneficial transmission projects Represent additional investment opportunities.

Speaker 2

We expect to announce further agreements for the acquisition of renewables over the course of this year And to file certificates of convenience and necessity or CCNs with the Missouri PSC after the updates to the 2020 IRP have been filed in June. We expect to deliver strong long term earnings and dividend growth, Which results in an attractive total return that compares favorably with our regulated utility peers. I'm confident in our ability to our investment plans and strategies across all four of our business segments as we have an experienced and dedicated team to get it done. Again, thank you all for joining us today. And I will now turn the call over to Michael.

Speaker 2

Thanks, Marty, and good morning, everyone. Turning now to Page 14 of our presentation. Yesterday, we reported Q1 2022 earnings of $0.97 per share compared to $0.91 per share For the year ago quarter, earnings in Ameren Missouri, our largest segment increased $0.01 per share due to several factors. Earnings increased by approximately $0.03 per share from higher electric retail sales driven by colder than normal winter temperatures In the Q1 of 2022 compared to near normal winter temperatures in the year ago period, we've included on this page The year over year weather normalized sales variances for the quarter that showed the total sales to be up 1.5% compared to the Q1 of 2021. The earnings comparison also reflected investments in infrastructure and wind generation eligible for PISA and RESRAM, which benefited earnings in January February $3 until rates were reset.

Speaker 2

These favorable factors were partially offset by higher operations and maintenance expenses, Which decreased earnings $0.05 per share. This was driven in part by the unfavorable market returns in 2022 that occurred during the Q1 on the cash surrender value of our company owned life insurance. Moving to other segments, Ameren Transmission earnings increased $0.03 year over year, which reflected the absence of the March 2021 FERC order addressing material and supplies inventories And increased infrastructure investments. Earnings for Ameren Illinois Natural Gas were up $0.01 reflecting increased infrastructure investments And higher delivery service rates were effective in late January 2021, partially offset by higher operations and maintenance expenses. Ameren Illinois Electric Distribution earnings also increased $0.01 year over year, which reflected increased infrastructure investments And a higher allowed ROE under performance based rate making of approximately 8.5% compared to approximately 8.2% for the year ago quarter.

Speaker 2

And finally, Ameren Parent and other results were comparable to the Q1 of 2021. Before moving on, I'll touch on the sales trends for Ameren Illinois distribution in the quarter. Weather normalized kilowatt hour sales to Illinois residential customers decreased about 1.5% And weather normalized kilowatt hour sales to Illinois commercial and industrial customers increased about 0.5% and 1.5% respectively. Recall that changes in electric sales in Illinois, no matter the cause, do not affect our earnings since we have full revenue decoupling. Turning to Page 15, I would now like to briefly touch on key drivers impacting our 2022 earnings guidance.

Speaker 2

We're off A strong start in 2022 and as Marty stated, we continue to expect 2022 diluted earnings to be in the range of $3.95 to $4.15 Per share. Select earning considerations for the balance of the year are listed on this page and are supplemental to the key drivers and assumptions discussed in our earnings call in February. I encourage you to take these into consideration as you develop your expectations for our Q2 earnings results. Turning now to Page 16 for details surrounding the Ameren Illinois electric distribution rate increase request. In April, Ameren Illinois submitted a request $83,000,000 revenue increase to the ICC in its annual performance based rate update.

Speaker 2

Our Illinois customers are continuing to realize the benefits of our significant investments in Energy Infrastructure. Since performance based rate making began in 2012, reliability has improved over 20% And over 1400 jobs have been created. J. D. Power ranked Ameren Illinois number 1 in residential customer satisfaction in the Midwest among large electric utility providers for 2021.

Speaker 2

Major investments included in this request are the installation of outage avoidance and detection Technology, integration of storm, hardening equipment and implementation of new technology to optimize interaction with customers. We expect the ICC's decision by December 2022 with rates effective in January 2023. On Page 17, we provide a financing update. We continue to feel very good about our financial position. On April 1, Erie, Missouri issued $525,000,000 3.9% green first mortgage bonds due 2,052.

Speaker 2

We intend to use these proceeds of the offering to fund capital expenditures and refinance short term debt. Subsequently, we plan to allocate an amount equal to the proceeds to sustainable projects meeting certain eligibility criteria, including investments transmission and distribution infrastructure designed to make the system more resilient and improve customer reliability investments in energy efficiency. Additionally, in order for us to maintain our credit rating and a strong balance sheet while we fund our robust infrastructure plan, Consistent with the guidance in February, this year we expect to issue approximately $300,000,000 of common equity under our at the market equity program. We're well positioned to fulfill our 2022 equity needs through forward sales agreements entered in as of April 1st and expect to issue 3,400,000 common shares by the end of this year upon settlement. Together with the issuance under our 401 and DRIP Our $750,000,000 ATM Equity Program is expected to support our equity needs through 2023.

Speaker 2

On Page 18, we summarize our green bond issuance over the last few years. Our sustainability financing framework, one of the first of its kind for a utility in the nation, Support Ameren's sustainability goals and the current target of net zero carbon emissions by 2,050 as well as other social initiatives. The financing proceeds from the issuance of the framework will be allocated to eligible environmental and social projects, including renewable generation, climate change adaptation, We're off to a solid start and expect to deliver strong earnings growth in 2022 as we continue to successfully execute our strategy. As we look to the longer term, we continue to expect strong earnings per share growth driven by robust rate base growth and disciplined cost management. Further, we believe this growth will compare favorably with the growth of our regulated utility peers and Ameren shares continue to offer investors an attractive dividend.

Speaker 2

In total, we have an attractive total shareholder return story that compares very favorably to our peers. That concludes our prepared remarks. We now invite your questions.

Operator

Thank you. We'll now be conducting a question and answer And a confirmation tone will indicate your line is in the question It may be necessary to pick up your handset before pressing the star keys.

Speaker 3

Thank you.

Speaker 4

Thank you. And our first question today will be coming

Operator

from the line of Jeremy Tonet with JPMorgan.

Speaker 3

Hi, good morning.

Speaker 2

Good morning, Jeremy.

Speaker 3

Thanks for having me. Just want to start off with MISO Long Range Transmission Planning here at Tranche 1. Just wondering if there's any way that you could quantify what the opportunity That might be specific to Amarin here, trying to get a sense for how big

Speaker 4

that could be in your mind?

Speaker 2

Yes, Jeremy, I appreciate the question. Look, as we said in the prepared remarks, we certainly believe we're well positioned For projects that MISO has outlined that cross through our Missouri and Illinois footprints. But as we sit here today, we don't want to get ahead of the MISO in terms of their overall approval of their projects or the designation of which ones are brownfield or greenfield projects. So We do expect that when they approve these projects in July, we expect that they will designate which ones are brownfield and they'll indicate which transmission owner has been assigned those projects. So And I would just say, stay tuned.

Speaker 2

As I said in the February call, we expect to have more to discuss on our Q2 earnings call.

Speaker 3

Got it. We'll eagerly await that. And just want to see that there's some new development in Missouri as well as it relates to Piza. And just wondering If that comes through, what your thoughts would be there as far as piece

Speaker 4

of flexibility in

Speaker 3

how that impacts Ameren's planning?

Speaker 2

Yes. Thanks, Jeremy. Yes, we were actually very pleased that yesterday the legislature did pass Senate Bill 745, which is great. That's a bill that really extends the longevity of the smart energy plan that we have in Missouri. And We're very appreciative of the strong support of the legislature with regard to that legislation.

Speaker 2

And I think it's a recognition that the investments that we've been making In Missouri, I've really been producing good benefits for our customers in terms of safety and reliability of the service That we provide and the fact that we're really scratching the surface in terms of the investments that we need to replace aging infrastructure and modernize our Equipment throughout our Missouri footprint, I think it's also a recognition of the economic development benefits associated with that legislation. We're having a positive impact as we invest on our economies through the creation of jobs. We concentrate on using Missouri vendors Substantially for the things that we procure and the things that we invest in. And there's some great economic development incentive rates associated with this legislation that help Missouri businesses grow as well as attract Missouri businesses to the state. We're really excited about the legislature passing Senate Bill 745.

Speaker 2

It now heads to the governor's desk for signature. And we're excited to be able to extend the benefits of the Smart Energy Plan prospectively.

Speaker 3

Got it. That's helpful. And just one last one, if I could. On a similar note, Recent eminent domain legislation in Missouri, could you comment on the implications for Grain Belt, MISO or anything else as far as investments That could be related to Ameren and the stake going forward there?

Speaker 2

Yes. I think I don't think with respect to that legislation that there are any Immediate impacts, other than making sure that as we move forward in time to the extent that There are greenfield transmission projects that owners of agricultural properties are compensated fairly for their property. I think that's the primary impact going forward.

Speaker 3

Got it. I'll leave it there. Thank you.

Operator

Thank you. Our next question is from the line of Julien Dumoulin Smith with Bank of America. Please proceed with your questions.

Speaker 5

Hey, good morning. This is Darius on for Julian. Thanks for the time. Maybe just on the proposed multiyear rate plans for Illinois Electric. Can you talk a little bit about I know it's Somewhat early in the process still, but can you maybe discuss a little bit about what type of performance metrics are being considered as you go through that workshop process?

Speaker 2

Yes, you bet. Good morning. This is Michael Main. I would say that things are moving along just fine there. I think a lot of Constructive conversations, workshops, etcetera.

Speaker 2

There's a number of different paths that are occurring. There's one associated with the performance metrics. I'll give you a few details there. There's one around a multiyear grid plan, etcetera. And so I think they're all moving along As we sort of anticipated last year and so nothing that we see that's concerning.

Speaker 2

With Back to the performance metrics themselves, it really is kind of the standard stuff that you would think about from like a reliability standpoint. So, system average days of disruption, you're looking at customer metrics In terms of customer response time on calls, etcetera, so kind of the standard stuff. Right now, we are Advocating for about 24 basis points. So there's about 8 different metrics and ascribing 3 basis points to each one of those metrics. Everything still should be on track to conclude here by September of this year.

Speaker 2

And then at that point in time, we'd make the decision. And Yes. As we've said before, we see ourselves opting into that. And then the multiyear rate plan would need to be filed in January of 'twenty three. That help?

Speaker 5

That does help. That's very helpful. Appreciate it. And maybe just one other one on the equity financing. Can you just want to confirm that The forward agreement that you guys executed for your funding in 2022, that takes off requirements for the full year other than the DRIP.

Speaker 5

And then also the amount under the forward agreement, that's part of the $750,000,000 included under the ATM program. Is that accurate?

Speaker 2

Yes. You got both of those correct. So that $300,000,000 that we've sold for, that does take care of the requirements here that we outlined in February 2022 and then that is part of that $750,000,000 that $750,000,000 should get us through the end of 2023.

Speaker 5

Okay, great. Thank you for clarifying that. I'll leave it here. You bet. Our

Operator

Our next question is coming from the line of Shar Pourreza with Guggenheim Partners. Please proceed with your question.

Speaker 2

Hey, good morning, guys. Good morning, Shar.

Speaker 6

If you could, I'd like to maybe touch on Illinois. The bill and kind of the reliability backdrop seems A little bit noisy amid sort of the year over year jump in PRA costs, planned retirements under CJA And just the general concerns that obviously is coming from some of the C and I customers. I guess, how do you sort of see this kind of resolving In the next couple of years, especially as you're looking to go through multiyear rate plans in the interim?

Speaker 2

Yes, sure. There's certainly a lot there. I think, First of all, the backdrop to your question is that recently we've been seeing higher power prices here in the Midwest. And then recently as a result of the MISO capacity auction, we also saw capacity prices clear At high prices, really at cost of new entry. And those higher costs of power prices as well The capacity prices then will be borne by our Illinois customers, because we know it's a retail choice state.

Speaker 2

Typically, what we've seen is that various retail electric suppliers have supplied about 60% to 65% of our customers and then Around 30% to 35% have procured their power through us. But when they do, of course, It's really the Illinois Power Agency that does the procurement of the power and the capacity. And as they've reported, those prices were Elevated and therefore some of our customers are going to see meaningful increases in their bill starting here in June. I think first of all, concern for our customers, we're trying to make sure that we provide education about the impacts of these higher prices so that People know what to expect and they can take actions accordingly. And we're also And offering bill assistance where needed as well as, of course, reinforcing the opportunities under our energy efficiency programs, which are robust in the state.

Speaker 2

And then some customers obviously will be still taking power through local In the muni aggregation programs, things of that nature that may actually not see bill increases immediately. But we are Certainly concerned about those customers. I think then more broadly, I think you say how does this resolve itself. I think that First of all, as we go into the summer, there are concerns about just reliability. Yes, I would say when you see prices clear at cone, it's a sign that the resources to supply the load with cushion Are tight.

Speaker 2

So we expect that MISO will be tight this summer. We expect that the MISO itself that is ultimately Responsible for ensuring grid reliability is certainly going to be doing everything they can working with stakeholders as we head into warm weather situations to ensure that Every possible resource is available to supply customers. And certainly, we'll be doing all we can as a company, Especially when we look at our Missouri Energy Resources to make sure that they're available and ready to go in the hot weather months. And Again, I think that's some of the efforts in the short term. In the long term, we'll see how this plays out.

Speaker 2

I mean, with Capacity prices clearing the cone. It's a clear signal to the market that more is needed in terms of dispatchable energy resources To meet our load and we'll have to see how all of that plays out and we'll be working with stakeholders as appropriate Throughout all of that to help mitigate that situation in the long term. As it relates to our multiyear Rate plan, as Michael said, we're sort of marching towards a filing here in January related to that multiyear rate plan That then the Illinois Commerce Commission would rule on towards the end of 'twenty two with implementation or excuse me, end of 'twenty three with implementation in 2024. As I said on the prepared remarks, we still have significant aging infrastructure in Illinois. That we're making or producing improved reliability for our customers, ensuring we provide safe, reliable service.

Speaker 2

And I think even what we're seeing in terms of the tight market situation in Illinois is an appropriate backdrop for continued investment in infrastructure, both transmission as well as distribution infrastructure. So we still see the need for the investments that we're making in Illinois and Don't see any impact right now on the multiyear rate plan filing itself and moving forward with that From the backdrop that we discussed.

Speaker 6

Got it. That's perfect. And then lastly for me, obviously, you have the You need to earn on some of your generation length in MISO and flow that back to Missouri customers. Are you seeing that today and any sort of quantification of the potential benefit to customers there?

Speaker 2

No real quantification of the benefits. You're right. We in Missouri right now have length in terms of our generation profile. And to the extent that power prices are elevated, provides an opportunity for us to enhance margins and all of those 95% of them flow back to our customers in the form of reduced rates. So no quantification of that right now, But you're right in terms of your thoughts on how that works.

Speaker 2

Okay, terrific. Thanks guys. I'll stop there. Appreciate it. Thank you.

Operator

Next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.

Speaker 7

Hey, good morning.

Speaker 2

Good morning, Paul.

Speaker 7

So congratulations on getting the piece of stuff over The coal line. And just to follow-up on Sean's question on Illinois, you say that it doesn't have an impact On what your the company's outlook on the needs for your plans. But I'm wondering, does the concerns at least I've been seeing by the Illinois legislators and I assume perhaps others in Illinois, Does it lead to perhaps a better a more receptive attitude perhaps To or more of a buy in to what you've been proposing on the part of policymakers perhaps in Illinois? Or do you think it's pretty much the same We're just sort of seeing, I don't know, sort of legislative drama, if you follow what I'm saying.

Speaker 2

Yes. Paul, it's hard to say at this point. I would say it's premature to conclude one way or another. I think what we're seeing right now is folks really Digesting the news in terms of the higher power and capacity prices and what that means in terms of Its implications for policy going forward, we will see. I think it's premature.

Speaker 7

Okay. And then with respect to just the Greenbelt legislation, it sounds like this is probably Going to enable Greenbelt to get built. And I'm wondering if Greenbelt, A transmission project like that or others might impact your plans For infrastructure development, if you have a big line coming into crossing your area, what have

Speaker 2

Well, with respect to Greenbelt, obviously, that's a project that's been underway for quite some time and Has been progressing and we had certainly anticipated that. One of the things that we've talked about in the past is last year, I should say in the fall of 2020 when we filed our integrated resource plan, one of the things we did is assess The potential to utilize some of that capacity and wind in Kansas to meet some of our Renewable goals and as part of our integrated resource plan. So I think the biggest thing for us, Paul, as we think about that associated with that resource or those resources in potentially fulfilling the needs of our integrated resource plan. That's something that we will continue to assess as we move forward.

Speaker 7

Okay, great. Thanks so much and have a good weekend.

Operator

Thanks. Our next question comes from the line of Anthony Krowdell with Mizuho. Please proceed with your questions.

Speaker 3

Hey, good morning, Marty. Good morning, Mike.

Speaker 5

Good morning.

Speaker 3

Hey, liking the blues. I didn't think they tie it up here. So I'm rooting for them until they meet the Rangers. But just hopefully two quick questions. I guess, one, if

Speaker 4

I think about Missouri and Illinois are both rider of first refusal states. And if the transmission lines are greenfield, does that mean they are competitively bid? Maybe just wondering what's the distinction you're making between brownfield and greenfield?

Speaker 2

I think you've generally got it. Missouri and Illinois though are not right of first refusal states, which is why that distinction between brownfield and greenfield is important. So if it's a brownfield, which generally you should think of as new transmissions on existing right of way, That we would then expect to be assigned to us as a transmission owner. And then the question will be, are there Segments of projects that are greenfield, which might be subject to competitive bidding. And that's what we'll wait to see as it comes out of the MISO's July approval of these projects.

Speaker 2

Great.

Speaker 4

And then just another follow-up here, moving to Illinois and

Speaker 2

I guess maybe 30 year treasury and

Speaker 4

I think right now it's about 90 basis points above expectation I think for the year where you guys had thought it was going to be. I calculate that as kind of like a $0.07 tailwind. I guess, are there any headwinds I think about that maybe could potentially offset that benefit When I'm thinking about the year or is maybe my number is wrong on from where the expectation was of the 30 year versus where it's at now?

Speaker 2

Yes. And look, you got the estimate right. I mean, we in February, we estimated $225,000,000 Now you got to remember, It's an average over the course of the year. So I think it averaged about 225 over the Q1. So just keep that in mind.

Speaker 1

But Look, it's in

Speaker 2

a good spot. I think what we indicated in our guidance for the remainder of the year, we're assuming it averages about 2.7. So if you average that with the Q1, that would be around 2.9% or so. So you're right, it's certainly elevated relative to that, Think about it. In terms of things that could offset it, I mean, obviously, along with that comes some increased financing costs Yes, that we've been incurring a little bit on some of the short term debt other things.

Speaker 2

But look, it's a good tailwind to have at this point. There's still a lot of the year left. Got a lot of execution to do. We're going to stay focused on it and we don't want to get ahead of ourselves.

Speaker 4

Great. Thanks for taking my questions and congrats on a good quarter.

Speaker 2

Thank you.

Operator

Thank you. At this time, we have reached the end of our question and answer session. And I'll turn the floor back to Mr. Lyons for closing comments.

Speaker 2

Yes. Hey, thank you all for joining us today. We're really pleased we had a strong start to 2022 and We certainly, as Michael said, remain focused on continuing to deliver throughout the year for our customers, our communities and our shareholders. I'd like to invite all of you to attend our Annual Shareholder Meeting, which is being held on May 12, and we look forward to seeing many of you at the AGA Financial Forum in the next couple of weeks. So With that, thank you all and have a great day.

Operator

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

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Earnings Conference Call
Ameren Q1 2022
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