Ameren sees benefits in MISO grid expansion, Illinois climate law

Ameren Corp. sees opportunities in the planned expansion of the transmission grid in Midcontinent Independent System Operator, and the company is eyeing options under a new Illinois energy law that aids investments in solar, batteries and vehicle electrification, CEO Warner Baxter said Nov. 4.

MISO estimates that it needs $30 billion worth of regional transmission projects to prepare for its most conservative forecasts of the clean energy transition, and Ameren is well positioned to build some of those transmission projects, Baxter said on Ameren's third-quarter earnings call.

This first batch of projects, slated for MISO approval in early 2022, will likely be low-risk, no-regrets projects that will help integrate an influx of renewables, Baxter said. "We are excited about the opportunity because we think it is significant and important," he said.

Grid expansion

MISO in April outlined the potential transmission projects needed under MISO's Future 1, a forecast that accounts for 100% of utility integrated resource plans and 85% of state and utility goals that are not legislated. Future 1 also assumed a 40% reduction in carbon emissions, but after modeling the other factors, Future 1 resulted in a 63% reduction in carbon emissions.

In future rounds of transmission planning, MISO will consider Futures 2 and 3, which would model carbon reductions of up to 80% and potentially necessitate $60 billion in additional transmission projects.

Ameren also highlighted the recent climate legislation passed in Illinois, which allows for investment in two solar and/or battery storage pilot projects and programs that encourage transportation electrification. Under the law, electric utilities may opt-in to a four-year rate plan effective beginning in 2024.

Multiyear rates

While the details are still being hammered out at the state level, Ameren anticipates it might take advantage of the four-year rate plan, Baxter said. The framework could improve Ameren's ability to make significant investments in Illinois and earn a fair rate of return, Michael Moehn, Ameren CFO, said on the earnings call.

Meanwhile, Ameren is trying to appeal a court decision that would require it to install scrubbers at its Rush Island coal-fired power plant in Missouri. If the appeal fails, Ameren will debate whether to install the pollution controls or retire the plant before its planned closure in 2039, said Marty Lyons, president of Ameren Missouri. Any change to Ameren's integrated resource plan would be filed with the Missouri Public Service Commission, Lyons said.

Ameren will go through some leadership changes at the beginning of the year, Baxter said. Effective Jan. 1, 2022, Baxter will become Executive Chairman of Ameren and Lyon will become Ameren CEO and a member of the board of directors.

Ameren on Nov. 4 reported third quarter earnings of $1.65/share, up $0.18/share from the third quarter of 2020. At the same time, Ameren raised its 2021 earnings guidance range to $3.75-$3.95/share, up from $3.65-$3.85/share.