Ameren looks to boost Missouri's wind installations by 700 MW, cut coal-fired rate base

Ameren Energy told analysts Tuesday during an earnings call that it is "transitioning to a cleaner generation profile" and has agreements in place to add 700 MW of wind generation while it brings coal-fired generation down to 8% of its rate base by 2024.

The state of Missouri has a total of 959 MW of wind generation currently installed, according to the American Wind Energy Association. Ameren's projects would push the state's total to more than 1,650 MW.

Ameren, the St. Louis-based utility holding company, said it has $1.2 billion of build-transfer agreements for the 700 MW of wind "to comply with Missouri's RES." It said that all but about 100 MW of the wind projects are expected to be completed by the end of this year. "A portion, or about $100 million, of the projects may go in-service in the first quarter of 2021," the company said.

It said that there are "contractual protections to pay a reduced amount for potential loss of PTCs for any portion completed in 2021."

Company chairman, president, and CEO Warner Baxter, also said, "On May 7, US Department of Treasury indicated plans to modify PTC rules." He said, "Expect [a] one-year extension of in-service criteria."

The was an acknowledgment of a letter sent by Treasury in response to a letter from the chairman of the US Senate Committee on Finance, Senator Chuck Grassley, Republican-Iowa, urging an extension of safe harbor requirements for PTCs and investment tax credits for wind and solar projects.

The Treasury Department responded to Grassley in a letter dated May 7, saying, "Treasury appreciates your concern, and plans to modify the relevant rules in the near future."

Ameren told analysts Tuesday that, as of December 31, 2019, they had four coal-fired facilities with a combined capacity of 5,395 MW with a rate base total of $2.1 billion. It reiterated its intention to retire in 2022 the 873-MW Meramec Energy Center located in St. Louis County that has a rate base of $100 million.

According to the company, the other three facilities — the 2,372-MW Labadie, the 972-MW Sioux, and the 1,178-MW Rush Island — have rate bases of $900 million, $600 million and $500 million, respectively.

According to 2019 data, Ameren Missouri's coal-fired energy centers represented 12% of the parent company's rate base and 26% of its own rate base.

AMEREN'S MISSOURI UTILITY

Ameren's largest utility, Ameren Missouri, had a Q1 loss of $10 million, compared with Q1 2019 earnings of $39 million, the company told analysts.

"The year-over-year comparison reflected lower retail sales, primarily driven by milder-than-normal winter temperatures compared to colder-than-normal [weather] in the year-ago period, as well as the absence in 2020 of energy efficiency performance incentives compared to the year-ago period," it said in its earnings report.

Ameren Missouri, which has no electric revenue decoupling, has 97% of its margins from selling power. Electric margins are 50% residential, 40% commercial and 10% industrial.

Analysts were told that Ameren Missouri's weather-normalized power sales in Q1 dipped 0.2%, comprising a 2.5% increase in residential sales, offset by a 1.5% fall in commercial sales and a 2% decline in industrial sales.

The state's stay-at-home orders went into effect March 23. In April, Ameren Missouri saw its total power sales decline 7%, with the biggest drop, 15%, in commercial sales, and a 10% decline in power sales to industrial customers. This was offset somewhat by a 6% increase in residential sales.

Stay-at-home orders now run through May 30. The company estimated Tuesday that Ameren Missouri will likely see a 2.5% decline in total power sales for all of 2020 from 2019.