Ameren said that excluding the effects of mark-to-market activity and the 2007 Illinois electric rate relief settlement in each year, the company has recorded first quarter 2009 core (non-GAAP) net income of $114 million, or 54 cents per share, against first quarter of 2008 core (non-GAAP) net income of $134 million, or 64 cents per share.
The decrease in core (non-GAAP) earnings per share in the first quarter of 2009, against the year-ago quarter, was mainly due to lower electric and gas sales volumes, higher fuel and related transportation prices, the impact of a severe winter ice storm and the effect of gas rate redesign in the Illinois regulated utility segment. The items noted above are more than offset the benefit to earnings of new utility service rates in Illinois, effective October 1, 2008, and in Missouri, effective March 1, 2009, among other factors.
Despite the challenges of the current economic downturn, we remain focused on executing our strategy, said Thomas R. Voss, president and chief executive officer of Ameren. That strategy calls for prudently investing in our regulated businesses to meet our customers’ needs and expectations, achieving constructive regulatory frameworks and returns and optimizing our non-rate-regulated generating assets. I expect execution of this strategy will position us to deliver solid, long-term shareholder value.
In the first quarter of 2009, milder weather and the absence of a leap day contributed to a 6% decline in kilowatthour sales to residential customers and a 2% sales decline to commercial customers, compared to the year-ago quarter. Absent these factors, Ameren estimates that first quarter 2009 residential and commercial kilowatthour sales each declined a more modest 1%, versus the year-ago period. The weak economy significantly impacted industrial electric sales. They declined 13% from the year-ago quarter, excluding the impact of reduced demand from AmerenUE’s largest customer, the Noranda Aluminum, Inc., smelter plant in New Madrid, Missouri. Noranda’s plant sustained damage because of a power interruption on non-Ameren-owned power lines during a severe January ice storm. This loss of operating capacity at Noranda is expected to last through much of 2009.
On the non-rate-regulated generation segment, the first quarter 2009 earnings were relatively flat, with those of the year-ago quarter. These 2009 results have reflected proactive forward sales of 2009 generation in previous years at more than present market prices.
2009 Earnings Guidance
The company has updated its expectations for full-year 2009 earnings. The GAAP earnings for 2009 are now estimated to be in the range of $2.63 to $2.98 per share, down from the prior $2.68 to $3.08, and core (non-GAAP) earnings are now estimated to be in the range of $2.70 to $3.05 per share, down from the prior $2.75 to $3.15 per share. An expected 7 cents per share negative impact in 2009 from the 2007 settlement agreement among parties in Illinois to offer comprehensive electric rate relief and customer assistance is excluded from core (non-GAAP) earnings guidance. Any net unrealized mark-to-market profits or losses will crash GAAP earnings, but are excluded from GAAP and core (non-GAAP) earnings guidance because Ameren is unable to reasonably expect the impact of any such profits or losses. The updated GAAP and core (non-GAAP) guidance include the effects of a severe January 2009 winter storm, including an estimate of the related full-year impact of reduced electric margins due to the loss of operating capacity at the Noranda Aluminum smelter plant. The prior earnings guidance, which was issued in mid-February 2009, had excluded these storm-related impacts.
Addition to incorporating the severe storm costs and the expected impact on electric margins of the related Noranda outage, the revised earnings guidance is also based on huge anticipated financing costs for new credit facilities and lower estimated sales to industrial customers than had been included in the prior guidance. These negatives are offset, in part, by higher estimated long-term sales for resale.
Missouri Regulated Operations Earnings
The company has reported that the core (non-GAAP) earnings in the first quarter of 2009 were $6 million, down from $45 million in the first quarter of 2008. This decrease was mainly due to lower native load electric sales reflecting the weak economy, milder weather, the outage at Noranda Aluminum smelter, and also less margins on electric off-system sales. Additionally, there were higher distribution system reliability expenses, including storm costs, higher fuel and related transportation costs and a 12-day unscheduled outage at the Callaway nuclear plant. The above negatives were offset, in part, by new, higher electric rates, effective March 1, 2009. The Missouri regulated operations recorded GAAP earnings in the first quarter of 2009 of $23 million, $29 million less than in the year-ago quarter. Additionally, this GAAP earnings decrease was reduced by net unrealized mark-to-market activity.
