10-Q 1 aee-2016q1.htm 10-Q SEC Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
ý
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2016
OR
 
¨
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from             to
 
Commission
File Number
  
Exact name of registrant as specified in its charter;
State of Incorporation;
Address and Telephone Number
  
IRS Employer
Identification No.
1-14756
  
Ameren Corporation
  
43-1723446
 
  
(Missouri Corporation)
  
 
 
  
1901 Chouteau Avenue
  
 
 
  
St. Louis, Missouri 63103
  
 
 
  
(314) 621-3222
  
 
 
 
 
1-2967
  
Union Electric Company
  
43-0559760
 
  
(Missouri Corporation)
  
 
 
  
1901 Chouteau Avenue
  
 
 
  
St. Louis, Missouri 63103
  
 
 
  
(314) 621-3222
  
 
 
 
 
1-3672
  
Ameren Illinois Company
  
37-0211380
 
  
(Illinois Corporation)
  
 
 
  
6 Executive Drive
  
 
 
  
Collinsville, Illinois 62234
  
 
 
  
(618) 343-8150
  
 
Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
 
Ameren Corporation
  
Yes
  
ý
  
No
  
¨
Union Electric Company
  
Yes
  
ý
  
No
  
¨
Ameren Illinois Company
  
Yes
  
ý
  
No
  
¨
Indicate by check mark whether each registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
Ameren Corporation
  
Yes
  
ý
  
No
  
¨
Union Electric Company
  
Yes
  
ý
  
No
  
¨
Ameren Illinois Company
  
Yes
  
ý
  
No
  
¨
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



 
 
  
Large Accelerated
Filer
  
Accelerated
Filer
  
Non-Accelerated
Filer
  
Smaller Reporting
Company
Ameren Corporation
  
ý
  
¨
  
¨
  
¨
Union Electric Company
  
¨
  
¨
  
ý
  
¨
Ameren Illinois Company
  
¨
  
¨
  
ý
  
¨
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Ameren Corporation
  
Yes
  
¨
  
No
  
ý
Union Electric Company
  
Yes
  
¨
  
No
  
ý
Ameren Illinois Company
  
Yes
  
¨
  
No
  
ý
The number of shares outstanding of each registrant’s classes of common stock as of April 29, 2016, was as follows:
 
Ameren Corporation
 
Common stock, $0.01 par value per share - 242,634,798
Union Electric Company
 
Common stock, $5 par value per share, held by Ameren
Corporation - 102,123,834
Ameren Illinois Company
 
Common stock, no par value, held by Ameren
Corporation - 25,452,373
 
______________________________________________________________________________________________________ 
This combined Form 10-Q is separately filed by Ameren Corporation, Union Electric Company, and Ameren Illinois Company. Each registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information.



TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
Union Electric Company (d/b/a Ameren Missouri)
 
 
 
 
Ameren Illinois Company (d/b/a Ameren Illinois)
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 6.
 
 
This report contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements should be read with the cautionary statements and important factors under the heading “Forward-looking Statements.” Forward-looking statements are all statements other than statements of historical fact, including those statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” and similar expressions.




GLOSSARY OF TERMS AND ABBREVIATIONS
We use the words “our,” “we” or “us” with respect to certain information that relates to Ameren, Ameren Missouri, and Ameren Illinois, collectively. When appropriate, subsidiaries of Ameren Corporation are named specifically as their various business activities are discussed. Refer to the Form 10-K for a complete listing of glossary terms and abbreviations. Only new or significantly changed terms and abbreviations are included below.

Form 10-K - The combined Annual Report on Form 10-K for the year ended December 31, 2015, filed by the Ameren Companies with the SEC.
MEEIA 2013 - Ameren Missouri’s portfolio of customer energy efficiency programs, net shared benefits and performance incentive for 2013 through 2015, as approved by the MoPSC in August 2012.
MEEIA 2016 - Ameren Missouri’s portfolio of customer energy efficiency programs, throughput disincentive and performance incentive for March 2016 through February 2019, as approved by the MoPSC in February 2016.

 
FORWARD-LOOKING STATEMENTS
Statements in this report not based on historical facts are considered “forward-looking” and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in the Form 10-K, and elsewhere in this report and in our other filings with the SEC, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:
regulatory, judicial, or legislative actions, including changes in regulatory policies and ratemaking determinations, that may result from the complaint cases filed with the FERC seeking a reduction in the allowed base return on common equity under the MISO tariff, Ameren Missouri's appeal of how an input used to calculate its performance incentive under MEEIA 2013 is determined, Ameren Illinois’ April 2016 annual electric delivery service formula rate update filing, and future regulatory, judicial, or legislative actions that change regulatory recovery mechanisms;
the effect of Ameren Illinois participating in a performance-based formula ratemaking process under the IEIMA, including the direct relationship between Ameren Illinois'
 
return on common equity and 30-year United States Treasury bond yields, the related financial commitments required by the IEIMA, and the resulting uncertain impact on Ameren Illinois' results of operations, financial position, and liquidity;
our ability to align our overall spending, both operating and capital, with regulatory frameworks established by our regulators in an attempt to earn our allowed return on equity;
the effects of changes in laws and other governmental actions, including monetary, fiscal, tax, and energy policies;
the effects of changes in federal, state, or local tax laws, regulations, interpretations, or rates and any challenges to the tax positions taken by the Ameren Companies;
the effects on demand for our services resulting from technological advances, including advances in customer energy efficiency and distributed generation sources, which generate electricity at the site of consumption and are becoming more cost-competitive;
the effectiveness of Ameren Missouri's customer energy efficiency programs and the related amount of any revenues and performance incentive earned under MEEIA 2013, MEEIA 2016, and any future approved MEEIA plan;
the timing of increasing capital expenditure and operating expense requirements and our ability to recover these costs in a timely manner;
the cost and availability of fuel such as coal, natural gas, and enriched uranium used to produce electricity; the cost and availability of purchased power and natural gas for distribution; and the level and volatility of future market prices for such commodities, including our ability to recover the costs for such commodities and our customers' tolerance for the related rate increases;
disruptions in the delivery of fuel, failure of our fuel suppliers to provide adequate quantities or quality of fuel, or lack of adequate inventories of fuel, including ultra-low-sulfur coal used for Ameren Missouri’s compliance with environmental regulations;
the effectiveness of our risk management strategies and our use of financial and derivative instruments;
the ability to obtain sufficient insurance, including insurance relating to Ameren Missouri’s Callaway energy center and insurance for cyber attacks or, in the absence of insurance, the ability to recover uninsured losses from customers;
business and economic conditions, including their impact on key customers, interest rates, collection of our receivable balances, and demand for our products;
Noranda's bankruptcy filing, the idling of operations at its aluminum smelter located in southeast Missouri, and the resulting impacts to Ameren Missouri's ability to recover its revenue requirement until rates are adjusted by the MoPSC in a future electric rate case to reflect Noranda’s actual sales volumes;
disruptions of the capital markets, deterioration in credit metrics of the Ameren Companies, or other events that may have an adverse effect on the cost or availability of capital, including short-term credit and liquidity;
the impact of the adoption of new accounting guidance and the application of appropriate accounting rules and guidance;


1



actions of credit rating agencies and the effects of such actions;
the impact of weather conditions and other natural phenomena on us and our customers, including the impact of system outages;
the construction, installation, performance, and cost recovery of generation, transmission, and distribution assets;
the effects of breakdowns or failures of equipment in the operation of natural gas distribution and transmission systems and storage facilities, such as leaks, explosions and mechanical problems, and compliance with natural gas safety regulations;
the effects of our increasing investment in electric transmission projects, our ability to obtain all of the necessary approvals to complete the projects, and the uncertainty as to whether we will achieve our expected returns in a timely manner;
operation of Ameren Missouri's Callaway energy center, including planned and unplanned outages, and decommissioning costs;
the effects of strategic initiatives, including mergers, acquisitions, and divestitures, and any related tax implications;
the impact of current environmental regulations and new, more stringent, or changing requirements, including those related to CO2, other emissions and discharges, cooling water intake structures, CCR, and energy efficiency, that are enacted over time and that could limit or terminate the operation of certain of our energy centers, increase our costs or investment requirements, result in an impairment of our assets, cause us to sell our assets, reduce our customers' demand for electricity or natural gas, or otherwise have a negative financial effect;
the impact of complying with renewable energy portfolio requirements in Missouri;
labor disputes, work force reductions, future wage and employee benefits costs, including changes in discount rates, mortality tables, and returns on benefit plan assets;
the inability of our counterparties to meet their obligations with respect to contracts, credit agreements, and financial instruments;
the cost and availability of transmission capacity for the energy generated by Ameren Missouri's energy centers or required to satisfy Ameren Missouri's energy sales;
legal and administrative proceedings;
the impact of cyber attacks, which could result in the loss of operational control of energy centers and electric and natural gas transmission and distribution systems and/or the loss of data, such as utility customer data and account information; and
acts of sabotage, war, terrorism, or other intentionally disruptive acts.

New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any
 
forward-looking statement. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.



2



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
 
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) (In millions, except per share amounts)
 
Three Months Ended March 31,
 
2016
 
2015
Operating Revenues:
 
 
 
Electric
$
1,102

 
$
1,143

Gas
332

 
413

Total operating revenues
1,434

 
1,556

Operating Expenses:
 
 
 
Fuel
203

 
206

Purchased power
138

 
139

Gas purchased for resale
152

 
236

Other operations and maintenance
400

 
401

Depreciation and amortization
207

 
193

Taxes other than income taxes
114

 
125

Total operating expenses
1,214

 
1,300

Operating Income
220

 
256

Other Income and Expense:
 
 
 
Miscellaneous income
20

 
19

Miscellaneous expense
7

 
11

Total other income
13

 
8

Interest Charges
95

 
88

Income Before Income Taxes
138

 
176

Income Taxes
31

 
66

Income from Continuing Operations
107

 
110

Income from Discontinued Operations, Net of Taxes

 

Net Income
107

 
110

Less: Net Income from Continuing Operations Attributable to Noncontrolling Interests
2

 
2

Net Income Attributable to Ameren Common Shareholders:
 
 
 
Continuing Operations
105

 
108

Discontinued Operations

 

Net Income Attributable to Ameren Common Shareholders
$
105

 
$
108

 
 
 
 
Earnings per Common Share – Basic and Diluted:
 
 
 
Continuing Operations
$
0.43

 
$
0.45

Discontinued Operations

 

Earnings per Common Share – Basic and Diluted
$
0.43

 
$
0.45

 
 
 
 
Dividends per Common Share
$
0.425

 
$
0.41

Average Common Shares Outstanding – Basic
242.6

 
242.6

The accompanying notes are an integral part of these consolidated financial statements.

3



AMEREN CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (In millions)
 
 
Three Months Ended March 31,
 
2016
 
2015
Income from Continuing Operations
$
107

 
$
110

Other Comprehensive Income from Continuing Operations, Net of Taxes

 

Pension and other postretirement benefit plan activity, net of income taxes of $1 and $-, respectively
(2
)
 

Comprehensive Income from Continuing Operations
105

 
110

Less: Comprehensive Income from Continuing Operations Attributable to Noncontrolling Interests
2

 
2

Comprehensive Income Attributable to Ameren Common Shareholders
$
103

 
$
108

The accompanying notes are an integral part of these consolidated financial statements.

4



AMEREN CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited) (In millions, except per share amounts)
 
March 31, 2016
 
December 31, 2015
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
13

 
$
292

Accounts receivable – trade (less allowance for doubtful accounts of $21 and $19, respectively)
428

 
388

Unbilled revenue
186

 
239

Miscellaneous accounts and notes receivable
56

 
98

Materials and supplies
483

 
538

Current regulatory assets
215

 
260

Other current assets
63

 
88

Assets of discontinued operations
14

 
14

Total current assets
1,458

 
1,917

Property and Plant, Net
19,000

 
18,799

Investments and Other Assets:
 
 
 
Nuclear decommissioning trust fund
567

 
556

Goodwill
411

 
411

Regulatory assets
1,376

 
1,382

Other assets
573

 
575

Total investments and other assets
2,927

 
2,924

TOTAL ASSETS
$
23,385

 
$
23,640

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Current maturities of long-term debt
$
135

 
$
395

Short-term debt
581

 
301

Accounts and wages payable
429

 
777

Taxes accrued
77

 
43

Interest accrued
99

 
89

Customer deposits
98

 
100

Current regulatory liabilities
87

 
80

Other current liabilities
305

 
279

Liabilities of discontinued operations
28

 
29

Total current liabilities
1,839

 
2,093

Long-term Debt, Net
6,881

 
6,880

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes, net
3,928

 
3,885

Accumulated deferred investment tax credits
59

 
60

Regulatory liabilities
1,931

 
1,905

Asset retirement obligations
625

 
618

Pension and other postretirement benefits
581

 
580

Other deferred credits and liabilities
530

 
531

Total deferred credits and other liabilities
7,654

 
7,579

Commitments and Contingencies (Notes 2, 9, and 10)


 


Ameren Corporation Shareholders’ Equity:
 
 
 
Common stock, $.01 par value, 400.0 shares authorized – shares outstanding of 242.6
2

 
2

Other paid-in capital, principally premium on common stock
5,539

 
5,616

Retained earnings
1,333

 
1,331

Accumulated other comprehensive loss
(5
)
 
(3
)
Total Ameren Corporation shareholders’ equity
6,869

 
6,946

Noncontrolling Interests
142

 
142

Total equity
7,011

 
7,088

TOTAL LIABILITIES AND EQUITY
$
23,385

 
$
23,640

The accompanying notes are an integral part of these consolidated financial statements.

5



AMEREN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
 
Three Months Ended March 31,
 
2016
 
2015
Cash Flows From Operating Activities:
 
 
 
Net income
$
107

 
$
110

(Income) from discontinued operations, net of taxes

 

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
210

 
195

Amortization of nuclear fuel
24

 
23

Amortization of debt issuance costs and premium/discounts
6

 
5

Deferred income taxes and investment tax credits, net
42

 
59

Allowance for equity funds used during construction
(8
)
 
(5
)
Share-based compensation costs
6

 
8

Other
(3
)
 
(11
)
Changes in assets and liabilities:
 
 
 
Receivables
55

 
(48
)
Materials and supplies
55

 
75

Accounts and wages payable
(246
)
 
(215
)
Taxes accrued
30

 
35

Regulatory assets and liabilities
81

 
62

Assets, other
4

 
14

Liabilities, other
(25
)
 
(21
)
Pension and other postretirement benefits
9

 
27

Counterparty collateral, net
3

 
(2
)
Net cash provided by operating activities – continuing operations
350

 
311

Net cash provided by (used in) operating activities – discontinued operations
(1
)
 
1

Net cash provided by operating activities
349

 
312

Cash Flows From Investing Activities:
 
 
 
Capital expenditures
(496
)
 
(417
)
Nuclear fuel expenditures
(21
)
 
(17
)
Purchases of securities – nuclear decommissioning trust fund
(130
)
 
(84
)
Sales and maturities of securities – nuclear decommissioning trust fund
125

 
79

Proceeds from note receivable – Marketing Company

 
5

Contributions to note receivable – Marketing Company

 
(5
)
Other
(2
)
 

Net cash used in investing activities – continuing operations
(524
)
 
(439
)
Net cash provided by investing activities – discontinued operations
14

 

Net cash used in investing activities
(510
)
 
(439
)
Cash Flows From Financing Activities:
 
 
 
Dividends on common stock
(103
)
 
(99
)
Dividends paid to noncontrolling interest holders
(2
)
 
(2
)
Short-term debt, net
280

 
241

Maturity of long-term debt
(260
)
 

Employee payroll taxes related to share-based payments
(32
)
 
(12
)
Other
(1
)
 

Net cash provided by (used in) financing activities – continuing operations
(118
)
 
128

Net change in cash and cash equivalents
(279
)
 
1

Cash and cash equivalents at beginning of year
292

 
5

Cash and cash equivalents at end of period
$
13

 
$
6

The accompanying notes are an integral part of these consolidated financial statements.

6



 
UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (In millions)
 
Three Months Ended March 31,
 
2016
 
2015
Operating Revenues:
 
 
 
Electric
$
694

 
$
742

Gas
47

 
58

Total operating revenues
741

 
800

Operating Expenses:
 
 
 
Fuel
203

 
206

Purchased power
42

 
39

Gas purchased for resale
21

 
31

Other operations and maintenance
212

 
211

Depreciation and amortization
127

 
118

Taxes other than income taxes
73

 
80

Total operating expenses
678

 
685

Operating Income
63

 
115

Other Income and Expense:
 
 
 
Miscellaneous income
15

 
11

Miscellaneous expense
2

 
3

Total other income
13

 
8

Interest Charges
52

 
55

Income Before Income Taxes
24

 
68

Income Taxes
9

 
26

Net Income
15

 
42

Other Comprehensive Income

 

Comprehensive Income
$
15

 
$
42

 
 
 
 
 
 
 
 
Net Income
$
15

 
$
42

Preferred Stock Dividends
1

 
1

Net Income Available to Common Shareholder
$
14

 
$
41

The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.

7



UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
BALANCE SHEET
(Unaudited) (In millions, except per share amounts)
 
March 31, 2016
 
December 31, 2015
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$

 
$
199

Advances to money pool

 
36

Accounts receivable – trade (less allowance for doubtful accounts of $6 and $7, respectively)
150

 
174

Accounts receivable – affiliates
16

 
54

Unbilled revenue
105

 
128

Miscellaneous accounts and notes receivable
44

 
78

Materials and supplies
389

 
387

Current regulatory assets
55

 
89

Other current assets
29

 
41

Total current assets
788

 
1,186

Property and Plant, Net
11,181

 
11,183

Investments and Other Assets:
 
 
 
Nuclear decommissioning trust fund
567

 
556

Regulatory assets
591

 
605

Other assets
316

 
321

Total investments and other assets
1,474

 
1,482

TOTAL ASSETS
$
13,443

 
$
13,851

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Current maturities of long-term debt
$
6

 
$
266

Short-term debt
165

 

Accounts and wages payable
174

 
417

Accounts payable – affiliates
59

 
56

Taxes accrued
64

 
31

Interest accrued
50

 
59

Current regulatory liabilities
15

 
28

Other current liabilities
132

 
120

Total current liabilities
665

 
977

Long-term Debt, Net
3,845

 
3,844

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes, net
2,857

 
2,844

Accumulated deferred investment tax credits
57

 
58

Regulatory liabilities
1,181

 
1,172

Asset retirement obligations
619

 
612

Pension and other postretirement benefits
236

 
234

Other deferred credits and liabilities
27

 
28

Total deferred credits and other liabilities
4,977

 
4,948

Commitments and Contingencies (Notes 2, 8, 9, and 10)


 


Shareholders’ Equity:
 
 
 
Common stock, $5 par value, 150.0 shares authorized – 102.1 shares outstanding
511

 
511

Other paid-in capital, principally premium on common stock
1,822

 
1,822

Preferred stock
80

 
80

Retained earnings
1,543

 
1,669

Total shareholders’ equity
3,956

 
4,082

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
13,443

 
$
13,851

The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.

8



UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)
STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
 
Three Months Ended March 31,
 
2016
 
2015
Cash Flows From Operating Activities:
 
 
 
Net income
$
15

 
$
42

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
130

 
121

Amortization of nuclear fuel
24

 
23

Amortization of debt issuance costs and premium/discounts
2

 
2

Deferred income taxes and investment tax credits, net
9

 
21

Allowance for equity funds used during construction
(7
)
 
(4
)
Changes in assets and liabilities:
 
 
 
Receivables
81

 
60

Materials and supplies
(2
)
 
(14
)
Accounts and wages payable
(172
)
 
(171
)
Taxes accrued
31

 
40

Regulatory assets and liabilities
45

 
27

Assets, other
5

 
3

Liabilities, other
3

 
(5
)
Pension and other postretirement benefits
5

 
12

Net cash provided by operating activities
169

 
157

Cash Flows From Investing Activities:
 
 
 
Capital expenditures
(178
)
 
(145
)
Nuclear fuel expenditures
(21
)
 
(17
)
Purchases of securities – nuclear decommissioning trust fund
(130
)
 
(84
)
Sales and maturities of securities – nuclear decommissioning trust fund
125

 
79

Money pool advances, net
36

 

Other
(2
)
 
(2
)
Net cash used in investing activities
(170
)
 
(169
)
Cash Flows From Financing Activities:
 
 
 
Dividends on common stock
(140
)
 
(315
)
Dividends on preferred stock
(1
)
 
(1
)
Short-term debt, net
165

 
43

Money pool borrowings, net

 
61

Maturity of long-term debt
(260
)
 

Capital contribution from parent
38

 
224

Net cash (used in) provided by financing activities
(198
)
 
12

Net change in cash and cash equivalents
(199
)
 

Cash and cash equivalents at beginning of year
199

 
1

Cash and cash equivalents at end of period
$

 
$
1

The accompanying notes as they relate to Ameren Missouri are an integral part of these financial statements.


9



 
AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (In millions)
 
Three Months Ended March 31,
 
2016
 
2015
Operating Revenues:
 
 
 
Electric
$
392

 
$
390

Gas
285

 
355

Total operating revenues
677

 
745

Operating Expenses:
 
 
 
Purchased power
104

 
102

Gas purchased for resale
131

 
205

Other operations and maintenance
194

 
202

Depreciation and amortization
77

 
73

Taxes other than income taxes
38

 
43

Total operating expenses
544

 
625

Operating Income
133

 
120

Other Income and Expense:
 
 
 
Miscellaneous income
5

 
7

Miscellaneous expense
5

 
5

Total other income

 
2

Interest Charges
35

 
33

Income Before Income Taxes
98

 
89

Income Taxes
38

 
35

Net Income
60

 
54

Other Comprehensive Loss, Net of Taxes:
 
 
 
Pension and other postretirement benefit plan activity, net of income taxes (benefit) of $(1) and $(1), respectively
(1
)
 
(1
)
Comprehensive Income
$
59

 
$
53

 
 
 
 
 
 
 
 
Net Income
$
60

 
$
54

Preferred Stock Dividends
1

 
1

Net Income Available to Common Shareholder
$
59

 
$
53

The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.


10



AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)
BALANCE SHEET
(Unaudited) (In millions)
 
March 31, 2016
 
December 31, 2015
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$

 
$
71

Advances to money pool
58

 

Accounts receivable – trade (less allowance for doubtful accounts of $15 and $12, respectively)
262

 
204

Accounts receivable – affiliates
10

 
22

Unbilled revenue
81

 
111

Miscellaneous accounts receivable
12

 
19

Materials and supplies
94

 
151

Current regulatory assets
156

 
167

Other current assets
13

 
15

Total current assets
686

 
760

Property and Plant, Net
6,956

 
6,848

Investments and Other Assets:
 
 
 
Goodwill
411

 
411

Regulatory assets
777

 
771

Other assets
114

 
113

Total investments and other assets
1,302

 
1,295

TOTAL ASSETS
$
8,944

 
$
8,903

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Current maturities of long-term debt
$
129

 
$
129

Accounts and wages payable
180

 
249

Accounts payable – affiliates
55

 
66

Taxes accrued
12

 
13

Interest accrued
44

 
28

Customer deposits
67

 
69

Mark-to-market derivative liabilities
51

 
45

Current environmental remediation
38

 
28

Current regulatory liabilities
55

 
39

Other current liabilities
82

 
86

Total current liabilities
713

 
752

Long-term Debt, Net
2,343

 
2,342

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes, net
1,518

 
1,480

Accumulated deferred investment tax credits
2

 
2

Regulatory liabilities
749

 
732

Pension and other postretirement benefits
271

 
271

Environmental remediation
187

 
205

Other deferred credits and liabilities
236

 
222

Total deferred credits and other liabilities
2,963

 
2,912

Commitments and Contingencies (Notes 2, 8, and 9)


 


Shareholders’ Equity:
 
 
 
Common stock, no par value, 45.0 shares authorized – 25.5 shares outstanding

 

Other paid-in capital
2,005

 
2,005

Preferred stock
62

 
62

Retained earnings
854

 
825

Accumulated other comprehensive income
4

 
5

Total shareholders’ equity
2,925

 
2,897

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
8,944

 
$
8,903


The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.

11



AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)
STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
 
Three Months Ended March 31,
 
2016
 
2015
Cash Flows From Operating Activities:
 
 
 
Net income
$
60

 
$
54

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
77

 
72

Amortization of debt issuance costs and premium/discounts
4

 
4

Deferred income taxes and investment tax credits, net
37

 
13

Other
(3
)
 
(3
)
Changes in assets and liabilities:
 
 
 
Receivables
(22
)
 
(41
)
Materials and supplies
57

 
89

Accounts and wages payable
(33
)
 
(11
)
Taxes accrued
(3
)
 
24

Regulatory assets and liabilities
32

 
33

Assets, other
7

 
5

Liabilities, other
12

 
4

Pension and other postretirement benefits
4

 
11

Net cash provided by operating activities
229

 
254

Cash Flows From Investing Activities:
 
 
 
Capital expenditures
(211
)
 
(174
)
Money pool advances, net
(58
)
 
(33
)
Net cash used in investing activities
(269
)
 
(207
)
Cash Flows From Financing Activities:
 
 
 
Dividends on common stock
(30
)
 

Dividends on preferred stock
(1
)
 
(1
)
Short-term debt, net

 
(32
)
Money pool borrowings, net

 
(15
)
Net cash used in financing activities
(31
)
 
(48
)
Net change in cash and cash equivalents
(71
)
 
(1
)
Cash and cash equivalents at beginning of year
71

 
1

Cash and cash equivalents at end of period
$

 
$

The accompanying notes as they relate to Ameren Illinois are an integral part of these financial statements.


12



AMEREN CORPORATION (Consolidated)
UNION ELECTRIC COMPANY (d/b/a Ameren Missouri)
AMEREN ILLINOIS COMPANY (d/b/a Ameren Illinois)
COMBINED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 2016
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005. Ameren’s primary assets are its equity interests in its subsidiaries, including Ameren Missouri and Ameren Illinois. Ameren’s subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. Dividends on Ameren’s common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries. Ameren’s principal subsidiaries are listed below. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.
Union Electric Company, doing business as Ameren Missouri, operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas transmission and distribution business in Missouri.
Ameren Illinois Company, doing business as Ameren Illinois, operates rate-regulated electric and natural gas transmission and distribution businesses in Illinois.
Ameren has various other subsidiaries that conduct activities such as the provision of shared services. Ameren also has a subsidiary, ATXI, that operates a FERC rate-regulated electric transmission business. ATXI is developing MISO-approved electric transmission projects, including the Illinois Rivers, Spoon River, and Mark Twain projects. Ameren is also pursuing projects to improve electric transmission system reliability within Ameren Missouri's and Ameren Illinois' service territories as well as
 
competitive electric transmission investment opportunities outside of these territories, including investments outside of MISO.
Unless otherwise stated, these notes to Ameren’s financial statements exclude discontinued operations for all periods presented. See Note 12 - Discontinued Operations in this report and Note 16 - Divestiture Transactions and Discontinued Operations under Part II, Item 8, of the Form 10-K for additional information.
Ameren’s financial statements are prepared on a consolidated basis and therefore include the accounts of its majority-owned subsidiaries. All intercompany transactions have been eliminated. Ameren Missouri and Ameren Illinois have no subsidiaries, and therefore their financial statements are not prepared on a consolidated basis. All tabular dollar amounts are in millions, unless otherwise indicated.
Our accounting policies conform to GAAP. Our financial statements reflect all adjustments (which include normal, recurring adjustments) that are necessary, in our opinion, for a fair statement of our results. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The results of operations of an interim period may not give a true indication of results that may be expected for a full year. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K.
Asset Retirement Obligations
AROs at Ameren, Ameren Missouri, and Ameren Illinois increased at March 31, 2016, compared to December 31, 2015, to reflect the accretion of obligations to their fair value, partially offset by immaterial settlements.

Share-based Compensation
A summary of nonvested performance share units at March 31, 2016, and changes during the three months ended March 31, 2016, under the 2006 Incentive Plan and the 2014 Incentive Plan are presented below:
 
Performance Share Units
 
Share Units
Weighted-average Fair Value per Share Unit
Nonvested at January 1, 2016
1,024,870

$
46.08

Granted(a)
580,737

44.13

Forfeitures
(12,315
)
45.12

Vested(b)
(8,265
)
42.91

Nonvested at March 31, 2016
1,585,027

$
45.39

(a)
Performance share units granted to certain executive and nonexecutive officers and other eligible employees under the 2014 Incentive Plan.
(b)
Performance share units vested due to the attainment of retirement eligibility by certain employees. Actual shares issued for retirement-eligible employees will vary depending on actual performance over the three-year measurement period.
The fair value of each performance share unit awarded in 2016 under the 2014 Incentive Plan was determined to be
 
$44.13, which was based on Ameren’s closing common share price of $43.23 at December 31, 2015, and lattice simulations.


13



Lattice simulations are used to estimate expected share payout based on Ameren’s total shareholder return for a three-year performance period relative to the designated peer group beginning January 1, 2016. The simulations can produce a greater fair value for the performance share unit than the applicable closing common share price because they include the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also included a three-year risk-free rate of 1.31%, volatility of 15% to 20% for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period.
Excise Taxes
Ameren Missouri and Ameren Illinois collect certain excise taxes from customers that are levied on the sale or distribution of natural gas and electricity. Excise taxes are levied on Ameren Missouri’s electric and natural gas businesses and on Ameren Illinois’ natural gas business and are recorded gross in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” on the statement of income or the statement of income and comprehensive income. Excise taxes for electric service in Illinois are levied on the customer and are therefore not included in Ameren Illinois’ revenues and expenses. The following table presents excise taxes recorded in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” for the three months ended March 31, 2016 and 2015:
 
Three Months
 
2016
 
2015
Ameren Missouri
$
30

 
$
34

Ameren Illinois
20

 
23

Ameren
$
50

 
$
57

Earnings Per Share
There were no material differences between Ameren’s basic and diluted earnings per share amounts for the three months ended March 31, 2016 and 2015. The assumed settlement of dilutive performance share units had an immaterial impact on earnings per share. The calculation of diluted earnings per share reflected the adoption of FASB guidance related to employee share-based payment accounting discussed below.
Accounting and Reporting Developments
Below is a summary of recently issued authoritative accounting standards relevant to the Ameren Companies.
Revenue from Contracts with Customers
In May 2014, the FASB issued authoritative accounting guidance that changes the criteria for recognizing revenue from a contract with a customer. The underlying principle of the guidance is that an entity will recognize revenue for the transfer of promised goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or
 
services. The guidance also requires additional disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Entities can apply the guidance retrospectively to each reporting period presented or retrospectively by recording a cumulative effect adjustment to retained earnings in the period of initial adoption. The Ameren Companies are currently assessing the impacts of this guidance on their results of operations, financial position, and disclosures, including their accounting for contributions in aid of construction and similar arrangements, as well as the transition method that they will use to adopt the guidance. In August 2015, the FASB deferred the effective date of this revenue guidance to the first quarter of 2018, with an option for entities to early adopt in the first quarter of 2017. The Ameren Companies do not expect to early adopt this guidance.
Amendments to the Consolidation Analysis
In February 2015, the FASB issued authoritative accounting guidance that amends the consolidation analysis for variable interest entities and voting interest entities. The new guidance affects (1) limited partnerships, similar legal entities, and certain investment funds, (2) the evaluation of fees paid to a decision maker or service provider as a variable interest, (3) how fee arrangements impact the primary beneficiary determination, and (4) the evaluation of related party relationships on the primary beneficiary determination. The adoption of this guidance in the first quarter of 2016 did not impact the Ameren Companies’ results of operations, financial position, cash flows, or disclosures.
Leases
In February 2016, the FASB issued authoritative accounting guidance that will require an entity to recognize assets and liabilities arising from a lease. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease will depend primarily on its classification as a finance or operating lease. The guidance also requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. The guidance will be effective for the Ameren Companies in the first quarter of 2019 with an option for entities to early adopt. Upon adoption, the Ameren Companies will recognize and measure operating leases on their respective balance sheets at the beginning of the earliest period presented. The Ameren Companies are currently assessing the impacts of this guidance on their results of operations, financial position, cash flows, and disclosures.
Improvements to Employee Share-Based Payment Accounting
In March 2016, the FASB issued authoritative accounting guidance that simplifies the accounting for share-based payment transactions, including the income tax consequences, the calculation of diluted earnings per share, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Ameren determines for each performance share unit award whether the difference between


14



the deduction for tax purposes and the compensation cost recognized for financial reporting purposes results in either an excess tax benefit or an excess tax deficit. Previously, excess tax benefits were recognized in "Other paid-in capital" on Ameren’s consolidated balance sheet, and in certain cases, excess tax deficits were recognized in “Income taxes” on Ameren’s consolidated income statement. The new guidance increases income statement volatility by requiring all excess tax benefits and deficits to be recognized in “Income taxes,” and treated as discrete items in the period in which they occur. Ameren adopted this guidance in the first quarter of 2016, which resulted in recognition of a $21 million income tax benefit during the period. For the three months ended March 31, 2015, Ameren reclassified, for comparison purposes, $2 million of excess tax benefits on the statement of cash flows from financing to operating activity, and $12 million of employee payroll taxes related to share-based payments from operating to financing activity.
NOTE 2 - RATE AND REGULATORY MATTERS
Below is a summary of updates to significant regulatory proceedings and related lawsuits. See also Note 2 - Rate and Regulatory Matters under Part II, Item 8, of the Form 10-K. We are unable to predict the ultimate outcome of these matters, the timing of the final decisions of the various agencies and courts, or the impact on our results of operations, financial position, or liquidity.
Missouri
MEEIA 2013
The MEEIA 2013 performance incentive allowed Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy efficiency goals, including $19 million if 100% of the goals were achieved during the three-year period, with the potential to earn a larger performance incentive if Ameren Missouri’s energy savings exceeded those goals. In November 2015, the MoPSC issued an order that clarified how an input used in the calculation of the performance incentive would be determined. Ameren Missouri filed an appeal of the order with the Missouri Court of Appeals, Western District. If the Missouri Court of Appeals upholds the MoPSC order, the MEEIA 2013 performance incentive will be significantly less than the performance incentive calculated using Ameren Missouri’s interpretation. A decision from the Missouri Court of Appeals is expected in 2016. Separately, an order from the MoPSC determining the MEEIA 2013 performance incentive is also expected in 2016. Ameren Missouri has not recorded any revenues associated with the MEEIA 2013 performance incentive. Ameren Missouri believes it will ultimately be found to have exceeded 100% of the customer energy efficiency goals, and it therefore expects to recognize revenues relating to the MEEIA 2013 performance incentive of at least $19 million in 2016.
 
Noranda
Ameren Missouri supplies electricity to Noranda’s aluminum smelter located in southeast Missouri under a long-term power supply agreement.
In the first quarter of 2016, Noranda idled production at its aluminum smelter. In addition, Noranda filed voluntary petitions for a court-supervised restructuring process under Chapter 11 of the United States Bankruptcy Code. Noranda stated it would maintain the flexibility to restart operations at the smelter should conditions allow. Ameren Missouri has been working with Noranda, legislators, and other stakeholders on a potential legislative solution to support Noranda’s operations. For utility service through March 31, 2016, Noranda prepaid an amount to Ameren Missouri in excess of its utility service usage. Ameren Missouri expects to be paid in full for utility services provided to Noranda.
In its April 2015 electric rate order, the MoPSC approved a rate design that established $78 million in annual revenues, net of fuel and purchased power costs, as Noranda’s portion of Ameren Missouri’s revenue requirement. The portion of Ameren Missouri’s annual revenue requirement reflected in Noranda’s electric rate is based on the smelter using approximately 4.2 million megawatthours annually, which is almost 100% of its operating capacity. Ameren Missouri’s rates, including those for Noranda, are seasonal. Noranda’s summer base rate (June through September) is $45.78 per megawatthour, and its winter base rate (October through May) is $31.11 per megawatthour.
In 2016, actual sales volumes to Noranda will be significantly below the sales volumes reflected in rates. As a result, Ameren Missouri will not fully recover its revenue requirement until rates are adjusted by the MoPSC in a future electric rate case to accurately reflect Noranda’s actual sales volumes. As a result of Noranda’s idled production described above, Ameren Missouri is applying a provision in its FAC tariff that, under certain circumstances, allows Ameren Missouri to retain a portion of the revenues from any off-system sales it makes as a result of reduced tariff sales to Noranda. The current market price of electricity is less than Noranda’s electric rate, and Ameren Missouri expects market prices to remain below Noranda’s electric rate during 2016. Accordingly, this FAC-tariff provision will not enable Ameren Missouri to fully recover its revenue requirement under current market conditions.
Ameren Missouri expects to file an electric rate case in 2016 to reflect additional infrastructure investments and rising costs, including depreciation, transmission service, and property tax expenses, and expects the resulting new rates to reflect Noranda’s actual sales volumes, which would prospectively eliminate the impact of the current revenue shortfall from Noranda sales levels. The rate case would take place over a period of up to 11 months from the date of filing. Ameren Missouri may seek recovery of lost revenues in a filing with the MoPSC to recover certain costs incurred but not contemporaneously recovered by rate revenues as a result of Noranda's reduced operations. Ameren Missouri will continue to monitor Noranda’s


15



sales volumes and to evaluate regulatory and legislative options that might mitigate adverse financial impacts. The reduction in Noranda’s sales volumes have adversely affected and will continue to adversely affect Ameren’s and Ameren Missouri’s results of operations, financial condition, and liquidity until customer rates are adjusted in a future rate case.
ATXI Transmission Projects
The Mark Twain project is a MISO-approved 95-mile transmission line located in northeast Missouri. In April 2016, the MoPSC granted ATXI a certificate of convenience and necessity for the Mark Twain project. Starting construction under the certificate is subject to ATXI obtaining assents from the five counties where the line will be constructed. The Mark Twain project is expected to be completed in 2018. Extended difficulties in obtaining the assents could delay the completion date.
Illinois
IEIMA
Under the provisions of the IEIMA's performance-based formula rate-making framework, which currently extends through 2019, Ameren Illinois’ electric delivery service rates are subject to an annual revenue requirement reconciliation to its actual recoverable costs. Throughout each year, Ameren Illinois records a regulatory asset or a regulatory liability and a corresponding increase or decrease to operating revenues for any differences between the revenue requirement reflected in customer rates for that year and its estimate of the probable increase or decrease in the revenue requirement expected to ultimately be approved by the ICC based on that year's actual recoverable costs incurred. As of March 31, 2016, Ameren Illinois had recorded regulatory assets of $9 million, $65 million, and $82 million, to reflect its expected 2016 and 2015 revenue requirement reconciliation adjustments and the approved 2014 revenue requirement reconciliation adjustment, with interest, respectively.
In April 2016, Ameren Illinois filed with the ICC its annual electric delivery service formula rate update to establish the revenue requirement used for 2017 rates. Pending ICC approval, Ameren Illinois’ update filing will result in a $14 million decrease in Ameren Illinois’ electric delivery service revenue requirement, beginning in January 2017. This update reflects an increase to the annual formula rate based on 2015 actual costs and expected net plant additions for 2016, an increase to include the 2015 revenue requirement reconciliation adjustment, and a decrease for the conclusion of the 2014 revenue requirement reconciliation adjustment, which will be fully collected from customers in 2016, consistent with the ICC’s December 2015 annual update filing order. As of December 31, 2015, Ameren Illinois had recorded a regulatory asset of $103 million related to the approved 2014 revenue requirement reconciliation adjustment.
 
Federal
FERC Complaint Cases
In November 2013, a customer group filed a complaint case with the FERC seeking a reduction in the allowed base return on common equity for the FERC-regulated transmission rate base under the MISO tariff from 12.38% to 9.15%. In December 2015, an administrative law judge issued an initial decision in the November 2013 complaint case that would lower the allowed base return on common equity to 10.32% and would require customer refunds to be issued for the 15-month period ending February 2015. The allowed base return on common equity in the initial decision was based on observable market data for the six months ended June 30, 2015. The FERC is expected to issue a final order on the November 2013 complaint case in the fourth quarter of 2016.
Because the maximum FERC-allowed refund period for the November 2013 complaint case ended in February 2015, another customer complaint case was filed in February 2015. The February 2015 complaint case seeks a reduction in the allowed base return on common equity for the FERC-regulated transmission rate base under the MISO tariff to 8.67%. The initial decision from an administrative law judge in the February 2015 complaint case, which will subsequently require FERC approval, is expected to be issued in the second quarter of 2016.
On January 6, 2015, a FERC-approved incentive adder of up to 50 basis points on the allowed base return on common equity for our participation in an RTO became effective. Beginning with its January 6, 2015 effective date, the incentive adder will reduce any refund to customers relating to a reduction of the allowed base return on common equity from the complaint cases discussed above.
As of March 31, 2016, Ameren and Ameren Illinois had current regulatory liabilities of $55 million and $37 million, respectively, representing their estimates of the potential refunds from the November 12, 2013 refund effective date through March 31, 2016. Ameren and Ameren Illinois recorded liabilities to reflect the allowed base return on common equity in the initial decision for the November 2013 complaint case refund period and the observable market data for the six months ended December 31, 2015, for the February 2015 complaint case refund period. Ameren’s and Ameren Illinois’ liabilities also reflect the January 6, 2015 incentive adder discussed above. Ameren Missouri did not record a liability as of March 31, 2016, and it does not expect that a reduction in the FERC-allowed base return on common equity for MISO transmission owners would be material to its results of operations, financial position, or liquidity.


NOTE 3 - SHORT-TERM DEBT AND LIQUIDITY
The liquidity needs of the Ameren Companies are typically supported through the use of available cash, drawings under committed credit agreements, commercial paper issuances, or, in the case of Ameren Missouri and Ameren Illinois, short-term intercompany borrowings.

16



The Missouri Credit Agreement and the Illinois Credit Agreement, both of which expire on December 11, 2019, were not utilized for direct borrowings during the three months ended March 31, 2016, but were used to support commercial paper issuances and to issue letters of credit. Based on letters of credit issued under the Credit Agreements, as well as commercial paper outstanding, the aggregate amount of credit capacity available under the Credit Agreements to Ameren (parent), Ameren Missouri, and Ameren Illinois, collectively, at March 31, 2016, was $1.5 billion.
Commercial Paper
The following table presents commercial paper outstanding at Ameren (parent), Ameren Missouri, and Ameren Illinois as of March 31, 2016, and December 31, 2015:
  
March 31, 2016
 
December 31, 2015
Ameren (parent)
$
416

 
$
301

Ameren Missouri
165

 

Ameren Illinois

 

Ameren Consolidated
$
581

 
$
301

The following table summarizes the borrowing activity and relevant interest rates under Ameren’s (parent), Ameren Missouri’s, and Ameren Illinois’ commercial paper programs for the three months ended March 31, 2016 and 2015:
 
 
Ameren
(parent)
Ameren
Missouri
Ameren
Illinois
Ameren Consolidated
2016
 
 
 
 
 
 
Average daily commercial paper outstanding
 
$
349

 
$
68

$

$
417

Weighted-average interest rate
 
0.82
%
 
0.80
%
%
0.81
%
Peak commercial paper during period(a)
 
$
482

 
$
208

$

$
581

Peak interest rate
 
0.95
%
 
0.85
%
%
0.95
%
2015
 
 
 
 
 
 
Average daily commercial paper outstanding
 
$
691

 
$
151

$
10

$
852

Weighted-average interest rate
 
0.55
%
 
0.49
%
0.44
%
0.53
%
Peak commercial paper during period(a)
 
$
815

 
$
243

$
39

$
955

Peak interest rate
 
0.70
%
 
0.60
%
0.60
%
0.70
%
(a)
The timing of peak commercial paper issuances varies by company, and therefore the peak amounts presented by company might not equal the Ameren Consolidated peak commercial paper issuances for the period.
Indebtedness Provisions and Other Covenants
The information below is a summary of the Ameren Companies’ compliance with financial covenants in the Credit Agreements. See Note 4 - Short-term Debt and Liquidity under Part II, Item 8, in the Form 10-K for a detailed description of these provisions. The Credit Agreements also contain nonfinancial covenants, including restrictions on the ability to incur liens, to transact with affiliates, to dispose of assets, to make investments in or transfer assets to its affiliates, and to merge with other entities.
The Credit Agreements require Ameren, Ameren Missouri, and Ameren Illinois to each maintain consolidated indebtedness of not more than 65% of its consolidated total capitalization pursuant to a defined calculation set forth in the agreements. As of March 31, 2016, the ratios of consolidated indebtedness to consolidated total capitalization, calculated in accordance with the provisions of the Credit Agreements, were 52%, 49%, and 46%, for Ameren, Ameren Missouri, and Ameren Illinois, respectively. In addition, under the Credit Agreements, if Ameren does not have a senior long-term unsecured credit rating of at least Baa3 from Moody’s or BBB- from S&P, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of at least 2.0
 
to 1.0. As of March 31, 2016, Ameren’s senior long-term unsecured credit rating exceeded the minimum rating requirements; therefore, the interest coverage requirement was not applicable. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable Credit Agreement.
The Credit Agreements contain default provisions that apply separately to each borrower; provided, however, that a default of Ameren Missouri or Ameren Illinois under the applicable Credit Agreement will also be deemed to constitute a default of Ameren under such agreement. Defaults include a cross-default resulting from a default of such borrower under any other agreement covering outstanding indebtedness of such borrower and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $75 million in the aggregate (including under the other Credit Agreement). However, under the default provisions of the Credit Agreements, any default of Ameren under any Credit Agreement that results solely from a default of Ameren Missouri or Ameren Illinois thereunder does not result in a cross-default of Ameren under the other Credit Agreement. Further, the Credit Agreement default provisions provide that an Ameren default under any of the Credit Agreements does not constitute a default by Ameren Missouri or Ameren Illinois.


17



None of the Ameren Companies' credit agreements or financing arrangements contain credit rating triggers that would cause a default or acceleration of repayment of outstanding balances. The Ameren Companies were in compliance with the covenants in their credit agreements at March 31, 2016.
Money Pools
Ameren has money pool agreements with and among its subsidiaries to coordinate and provide for certain short-term cash and working capital requirements.
Ameren Missouri, Ameren Illinois, and ATXI may participate in the utility money pool as both lenders and borrowers. Ameren and Ameren Services may participate in the utility money pool only as lenders. Surplus internal funds are contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the Credit Agreements and the commercial paper programs. The total
 
amount available to the pool participants from the utility money pool at any given time is reduced by the amount of borrowings made by participants, but is increased to the extent that the pool participants advance surplus funds to the utility money pool or remit funds from other external sources. The availability of funds is also determined by funding requirement limits established by regulatory authorizations. Participants receiving a loan under the utility money pool must repay the principal amount of such loan, together with accrued interest. The rate of interest depends on the composition of internal and external funds in the utility money pool. The average interest rate for borrowing under the utility money pool for the three months ended March 31, 2016 and 2015, was 0.47% and 0.08%, respectively.
See Note 8 - Related Party Transactions for the amount of interest income and expense from the money pool arrangements recorded by the Ameren Companies for the three months ended March 31, 2016 and 2015.

NOTE 4 - LONG-TERM DEBT AND EQUITY FINANCINGS
Ameren Missouri
In February 2016, $260 million principal amount of Ameren Missouri's 5.40% senior secured notes matured and was repaid with cash on hand and commercial paper borrowings.
Indenture Provisions and Other Covenants
Ameren Missouri’s and Ameren Illinois’ indentures, credit facilities, and articles of incorporation include covenants and provisions related to issuances of first mortgage bonds and preferred stock. Ameren Missouri and Ameren Illinois are required to meet certain ratios to issue additional first mortgage bonds and preferred stock. A failure to achieve these ratios would not result in a default under these covenants and provisions, but would restrict the companies’ ability to issue bonds or preferred stock. The following table summarizes the required and actual interest coverage ratios for interest charges, dividend coverage ratios, and bonds and preferred stock issuable as of March 31, 2016, at an assumed annual interest rate of 5% and dividend rate of 6%.
 
 
Required Interest
Coverage Ratio(a)
 
Actual Interest
Coverage Ratio
 
Bonds Issuable(b)
 
Required Dividend
Coverage Ratio(c)
 
Actual Dividend
Coverage Ratio
 
Preferred Stock
Issuable
 
Ameren Missouri
 
≥2.0
 
3.8
$
3,809
 
≥2.5
 
95.8
$
2,128
 
Ameren Illinois
 
≥2.0
 
6.4
 
3,642
(d) 
≥1.5
 
2.6
 
203
(e) 
(a)
Coverage required on the annual interest charges on first mortgage bonds outstanding and to be issued. Coverage is not required in certain cases when additional first mortgage bonds are issued on the basis of retired bonds.
(b)
Amount of bonds issuable based either on required coverage ratios or unfunded property additions, whichever is more restrictive. The amounts shown also include bonds issuable based on retired bond capacity of $1,206 million and $204 million at Ameren Missouri and Ameren Illinois, respectively.
(c)
Coverage required on the annual dividend on preferred stock outstanding and to be issued, as required in the respective company’s articles of incorporation.
(d)
Amount of bonds issuable by Ameren Illinois based on unfunded property additions and retired bonds solely under the former IP mortgage indenture. The amount of bonds issuable by Ameren Illinois is also subject to the lien restrictions contained in the Illinois Credit Agreement.
(e)
Preferred stock issuable is restricted by the amount of preferred stock that is currently authorized by Ameren Illinois’ articles of incorporation.

18



Ameren Missouri and Ameren Illinois and certain other Ameren subsidiaries are subject to Section 305(a) of the Federal Power Act, which makes it unlawful for any officer or director of a public utility, as defined in the Federal Power Act, to participate in the making or paying of any dividend from any funds “properly included in capital account.” The FERC has consistently interpreted the provision to allow dividends to be paid as long as (1) the source of the dividends is clearly disclosed, (2) the dividends are not excessive, and (3) there is no self-dealing on the part of corporate officials. At a minimum, Ameren believes that dividends can be paid by its subsidiaries that are public utilities from retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on its stock, unless, among other things, its earnings and earned surplus are sufficient to declare and pay a dividend after provision is made for reasonable and proper reserves, or unless Ameren Illinois has specific authorization from the ICC.
Ameren Illinois’ articles of incorporation require dividend payments on its common stock to be based on ratios of common
 
stock to total capitalization and other provisions related to certain operating expenses and accumulations of earned surplus. Ameren Illinois committed to the FERC to maintain a minimum of 30% equity in its capital structure. As of March 31, 2016, Ameren Illinois had 51% equity in its capital structure.
In order for the Ameren Companies to issue securities in the future, we have to comply with all applicable requirements in effect at the time of any such issuances.
Off-Balance-Sheet Arrangements
At March 31, 2016, none of the Ameren Companies had off-balance-sheet financing arrangements, other than operating leases entered into in the ordinary course of business, letters of credit, and Ameren parent guarantee arrangements on behalf of its subsidiaries. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.

NOTE 5 - OTHER INCOME AND EXPENSES
The following table presents the components of “Other Income and Expenses” in the Ameren Companies’ statements of income for the three months ended March 31, 2016 and 2015:
 
Three Months
 
 
2016
 
2015
 
Ameren:(a)
 
 
 
 
Miscellaneous income:
 
 
 
 
Allowance for equity funds used during construction
$
8

 
$
5

 
Interest income on industrial development revenue bonds
7

 
7

 
Interest income
4

 
4

 
Other
1

 
3

 
Total miscellaneous income
$
20

 
$
19

 
Miscellaneous expense:
 
 
 
 
Donations
$
5

 
$
8

 
Other
2

 
3

 
Total miscellaneous expense
$
7

 
$
11

 
Ameren Missouri:
 
 
 
 
Miscellaneous income:
 
 
 
 
Allowance for equity funds used during construction
$
7

 
$
4

 
Interest income on industrial development revenue bonds
7

 
7

 
Other
1

  

 
Total miscellaneous income
$
15

 
$
11

 
Miscellaneous expense:
 
 
 
 
Donations
$
1

 
$
2

 
Other
1

 
1

 
Total miscellaneous expense
$
2

 
$
3

 
Ameren Illinois:
 
 
 
 
Miscellaneous income:
 
 
 
 
Allowance for equity funds used during construction
$
1

 
$
1

 
Interest income
4

 
4

 
Other

 
2

 
Total miscellaneous income
$
5

 
$
7

 
Miscellaneous expense:
 
 
 
 
Donations
$
4

 
$
3

 
Other
1

 
2

 
Total miscellaneous expense
$
5

 
$
5

 
(a)
Includes amounts for Ameren registrant and nonregistrant subsidiaries and intercompany eliminations.

19



NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS
We use derivatives to manage the risk of changes in market prices for natural gas, power, and uranium, as well as the risk of changes in rail transportation surcharges through fuel oil hedges. Such price fluctuations may cause the following:
an unrealized appreciation or depreciation of our contracted commitments to purchase or sell when purchase or sale prices under the commitments are compared with current commodity prices;
market values of natural gas and uranium inventories that differ from the cost of those commodities in inventory; and
actual cash outlays for the purchase of these commodities that differ from anticipated cash outlays.
 
The derivatives that we use to hedge these risks are governed by our risk management policies for forward contracts, futures, options, and swaps. Our net positions are continually assessed within our structured hedging programs to determine whether new or offsetting transactions are required. The goal of the hedging program is generally to mitigate financial risks while ensuring that sufficient volumes are available to meet our requirements. Contracts we enter into as part of our risk management program may be settled financially, settled by physical delivery, or net settled with the counterparty.

The following table presents open gross commodity contract volumes by commodity type for derivative assets and liabilities as of March 31, 2016, and December 31, 2015. As of March 31, 2016, these contracts ran through October 2018, March 2021, May 2032, and January 2019 for fuel oils, natural gas, power, and uranium, respectively.
  
Quantity (in millions, except as indicated)
 
2016
2015
Commodity
Ameren Missouri
Ameren Illinois
Ameren
Ameren Missouri
Ameren Illinois
Ameren
Fuel oils (in gallons)(a)
29

(b)

29

35

(b)

35

Natural gas (in mmbtu)
29

150

179

30

151

181

Power (in megawatthours)
1

9

10

1

10

11

Uranium (pounds in thousands)
428

(b)

428

494

(b)

494

(a)
Consists of ultra-low-sulfur diesel products.
(b)
Not applicable.
Authoritative accounting guidance regarding derivative instruments requires that all contracts considered to be derivative instruments be recorded on the balance sheet at their fair values, unless the NPNS exception applies. See Note 7 - Fair Value Measurements for a discussion of our methods of assessing the fair value of derivative instruments. Many of our physical contracts, such as our purchased power contracts, qualify for the NPNS exception to derivative accounting rules. The revenue or expense on NPNS contracts is recognized at the contract price upon physical delivery.
If we determine that a contract meets the definition of a derivative and is not eligible for the NPNS exception, we review the contract to determine whether the resulting gains or losses qualify for regulatory deferral. Derivative contracts that qualify for regulatory deferral are recorded at fair value, with changes in fair value recorded as regulatory assets or regulatory liabilities in the period in which the change occurs. We believe derivative losses
 
and gains deferred as regulatory assets and regulatory liabilities are probable of recovery or refund through future rates charged to customers. Regulatory assets and regulatory liabilities are amortized to operating income as related losses and gains are reflected in rates charged to customers. Therefore, gains and losses on these derivatives have no effect on operating income. As of March 31, 2016, and December 31, 2015, all contracts received regulatory deferral.
Authoritative accounting guidance permits companies to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a liability) against fair value amounts recognized for derivative instruments that are executed with the same counterparty under a master netting arrangement or similar agreement. The Ameren Companies did not elect to adopt this guidance for any eligible derivative instruments.


20



The following table presents the carrying value and balance sheet location of all derivative commodity contracts, none of which were designated as hedging instruments, as of March 31, 2016, and December 31, 2015:
 
Balance Sheet Location
 
Ameren
Missouri
 
Ameren
Illinois
 
Ameren
2016
 
 
 
 
 
 
Natural gas
Other assets
 
$

 
$
1

 
$
1

Power
Other current assets
 
6

 

 
6

 
Total assets (a)
 
$
6

 
$
1

 
$
7

Fuel oils
Other current liabilities
 
$
19

 
$

 
$
19

 
Other deferred credits and liabilities
 
6

 

 
6

Natural gas
MTM derivative liabilities
 
(b)

 
36

 
(b)

 
Other current liabilities
 
7

 

 
43

 
Other deferred credits and liabilities
 
7

 
15

 
22

Power
MTM derivative liabilities
 
(b)

 
15

 
(b)

 
Other current liabilities
 

 

 
15

 
Other deferred credits and liabilities
 

 
172

 
172

Uranium
Other current liabilities
 
2

 

 
2

 
Other deferred credits and liabilities
 
2

 

 
2

 
Total liabilities (c)
 
$
43

 
$
238

 
$
281

2015
 
 
 
 
 
 
Natural gas
Other current assets
 
$

 
$
1

 
$
1

 
Other assets
 
1

 

 
1

Power
Other current assets
 
16

 

 
16

 
Total assets (a)
 
$
17

 
$
1

 
$
18

Fuel oils
Other current liabilities
 
$
22

 
$

 
$
22

 
Other deferred credits and liabilities
 
7

 

 
7

Natural gas
MTM derivative liabilities
 
(b)

 
32

 
(b)

 
Other current liabilities
 
6

 

 
38

 
Other deferred credits and liabilities
 
8

 
18

 
26

Power
MTM derivative liabilities
 
(b)

 
13

 
(b)

 
Other current liabilities
 

 

 
13

 
Other deferred credits and liabilities
 

 
157

 
157

Uranium
Other current liabilities
 
1

 

 
1

 
Total liabilities (c)
 
$
44

 
$
220

 
$
264

(a)
Because all contracts qualifying for hedge accounting receive regulatory deferral, the cumulative amount of pretax net gains on all derivative instruments is deferred as a regulatory liability.
(b)
Balance sheet line item not applicable to registrant.
(c)
Because all contracts qualifying for hedge accounting receive regulatory deferral, the cumulative amount of pretax net losses on all derivative instruments is deferred as a regulatory asset.
Derivative instruments are subject to various credit-related losses in the event of nonperformance by counterparties to the transaction. Exchange-traded contracts are supported by the financial and credit quality of the clearing members of the respective exchanges and have nominal credit risk. In all other transactions, we are exposed to credit risk. Our credit risk management program involves establishing credit limits and collateral requirements for counterparties, using master netting arrangements or similar agreements, and reporting daily exposure to senior management.
We believe that entering into master netting arrangements or similar agreements mitigates the level of financial loss that could result from default by allowing net settlement of derivative assets and liabilities. We generally enter into the following master netting arrangements: (1) the International Swaps and Derivatives Association Agreement, a standardized financial natural gas and electric contract; (2) the Master Power Purchase and Sale Agreement, created by the Edison Electric Institute and the National Energy Marketers Association, a standardized contract for the purchase and sale of wholesale power; and (3) the North American Energy Standards Board Inc. Agreement, a standardized contract for the purchase and sale of natural gas. These master netting arrangements allow the counterparties to net settle sale and purchase transactions. Further, collateral requirements are calculated at the master netting arrangement or similar agreement level by counterparty.

21



The following table provides the recognized gross derivative balances and the net amounts of those derivatives subject to an enforceable master netting arrangement or similar agreement as of March 31, 2016, and December 31, 2015:
 
 
 
 
Gross Amounts Not Offset in the Balance Sheet
 
 
Commodity Contracts Eligible to be Offset
 
Gross Amounts Recognized in the Balance Sheet
 
Derivative Instruments
 
Cash Collateral Received/Posted(a)
 
Net
Amount
2016
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Ameren Missouri
 
$
6

 
$
2

 
$

 
$
4

Ameren Illinois
 
1

 
1

 

 

Ameren
 
$
7

 
$
3

 
$

 
$
4

Liabilities:
 
 
 
 
 
 
 
 
Ameren Missouri
 
$
43

 
$
2

 
$
8

 
$
33

Ameren Illinois
 
238

 
1

 
2

 
235

Ameren
 
$
281

 
$
3

 
$
10

 
$
268

2015
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Ameren Missouri
 
$
17

 
$
1

 
$

 
$
16

Ameren Illinois
 
1

 

 

 
1

Ameren
 
$
18

 
$
1

 
$

 
$
17

Liabilities:
 
 
 
 
 
 
 
 
Ameren Missouri
 
$
44

 
$
1

 
$
8

 
$
35

Ameren Illinois
 
220

 

 
3

 
217

Ameren
 
$
264

 
$
1

 
$
11

 
$
252

(a)
Cash collateral received reduces gross asset balances and is included in “Other current liabilities” and “Other deferred credits and liabilities” on the balance sheet. Cash collateral posted reduces gross liability balances and is included in “Other current assets” and “Other assets” on the balance sheet.
Concentrations of Credit Risk
In determining our concentrations of credit risk related to derivative instruments, we review our individual counterparties and categorize each counterparty into groupings according to the primary business in which each engages. We calculate maximum exposures based on the gross fair value of financial instruments, including NPNS and other accrual contracts. These exposures are calculated on a gross basis, which include affiliate exposure not eliminated at the consolidated Ameren level. The potential loss on counterparty exposures may be reduced or eliminated by the application of master netting arrangements or similar agreements and collateral held. As of March 31, 2016, if counterparty groups were to fail completely to perform on contracts, the Ameren Companies’ maximum exposure would have been immaterial with or without consideration of the application of master netting arrangements or similar agreements and collateral held.
Derivative Instruments with Credit Risk-Related Contingent Features
Our commodity contracts contain collateral provisions tied to the Ameren Companies’ credit ratings. If we were to experience an adverse change in our credit ratings, or if a counterparty with reasonable grounds for uncertainty regarding our ability to satisfy an obligation requested adequate assurance of performance, additional collateral postings might be required. The following table presents, as of March 31, 2016, the aggregate fair value of all derivative instruments with credit risk-related contingent features in a gross liability position, the cash collateral posted, and the aggregate amount of additional collateral that counterparties could require. The additional collateral required is the net liability position allowed under the master netting arrangements or similar agreements, assuming (1) the credit risk-related contingent features underlying these arrangements were triggered on March 31, 2016, and (2) those counterparties with rights to do so requested collateral.
 
Aggregate Fair Value of
Derivative Liabilities(a)
 
Cash
Collateral Posted
 
Potential Aggregate Amount of
Additional Collateral Required(b)
2016
 
 
 
 
 
Ameren Missouri
$
88

 
$
7

 
$
76

Ameren Illinois
77

 
2

 
71

Ameren
$
165

 
$
9

 
$
147

(a)
Before consideration of master netting arrangements or similar agreements and including NPNS and other accrual contract exposures.
(b)
As collateral requirements with certain counterparties are based on master netting arrangements or similar agreements, the aggregate amount of additional collateral required to be posted is determined after consideration of the effects of such arrangements.

22



NOTE 7 - FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use various methods to determine fair value, including market, income, and cost approaches. With these approaches, we adopt certain assumptions that market participants would use in pricing the asset or liability, including assumptions about market risk or the risks inherent in the inputs to the valuation. Inputs to valuation can be readily observable, market-corroborated, or unobservable. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Authoritative accounting guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value.
All financial assets and liabilities carried at fair value are classified and disclosed in one of three hierarchy levels. See
 
Note 8 - Fair Value Measurements under Part II, Item 8, of the Form 10-K for information related to hierarchy levels. We perform an analysis each quarter to determine the appropriate hierarchy level of the assets and liabilities subject to fair value measurements. Financial assets and liabilities are classified in their entirety according to the lowest level of input that is significant to the fair value measurement. All assets and liabilities whose fair value measurement is based on significant unobservable inputs are classified as Level 3.


23



The following table describes the valuation techniques and unobservable inputs utilized by the Ameren Companies for the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the periods ended March 31, 2016, and December 31, 2015:
 
 
Fair Value
 
 
 
Weighted Average
 
 
Assets
Liabilities
Valuation Technique(s)
Unobservable Input
Range
Level 3 Derivative asset and liability - commodity contracts(a):
 
 
 
2016
 
 
 
 
 
 
 
 
Natural gas
$

$
(1
)