Ameren Corporation (Ameren) has reported total operating revenues of $7.8 billion for the year-end 2008, compared with the total operating revenues of $7.5 billion in the previous year-end. It has also reported a net income of $605 million, or $2.88 per share, for the year-end 2008, compared with the net income of $618 million, or $2.98 per share, in the previous year-end.
2008 Earnings
Ameren has announced 2008 net income excluding certain items in each year, it also reported 2008 core (non-GAAP) net income of $622 million, or $2.95 per share, compared to 2007 core (non-GAAP) net income of $685 million, or $3.30 per share.
For the fourth quarter of 2008, Ameren reported GAAP net income of $57 million, or 27 cents per share, compared to $108 million, or 52 cents per share, for the year-ago quarter. Excluding certain items in each period, Ameren reported fourth quarter 2008 core (non-GAAP) net income of $97 million, or 45 cents per share, compared to year-ago quarter core (non-GAAP) net income of $125 million, or 60 cents per share.
The decrease in core (non-GAAP) earnings per share in 2008 versus 2007 was mainly due to higher fuel and related transportation prices, higher plant operations and maintenance costs, increased spending on utility distribution system reliability, and milder weather, among other things. These items over offset the positive impacts of improved generating plant output and higher realized margins from non-rate-regulated generation operations, and net increases in electric and natural gas rates, among other things.
The below items have been excluded from 2008 and 2007 core (non-GAAP) earnings:
Net unrealized mark-to-market losses decreased 2008 net income by $17 million as compared to net unrealized profits of $7 million in 2007.
A lump-sum settlement payment in 2008 from a coal supplier for expected higher fuel costs in 2009 as a result of the premature closure of a mine and termination of a contract. This payment benefited 2008 net income by $16 million, but the contract termination will result in higher fuel costs for non-rate-regulated generation in 2009.
A 2008 advantage reflecting Missouri accounting and electric rate orders directing our Missouri utility to record a regulatory asset for the January 2007 severe ice storm costs and authorizing amortization and recovery of these costs over five years. These orders improved 2008 net income by $16 million, offsetting virtually the whole Missouri portion of company-wide net costs of $18 million reported in 2007 for the January 2007 severe ice storm.
A 2008 advantage to net income of $7 million related to a Missouri rate order directing our Missouri utility to record a regulatory asset for previously incurred costs pursuant to a 2007 Federal Energy Regulatory Commission (FERC) order. The Missouri order authorizes amortization and recovery of these costs over two years. The 2007 FERC order retroactively reallocated certain Midwest Independent Transmission System Operator (MISO) costs among MISO market participants resulting in a 2007 company-wide net charge to earnings of $12 million.
The net costs related to the Illinois comprehensive electric rate relief and customer assistance settlement agreement reached in 2007, which reduced 2008 net income by $27 million as compared with the 2007 reduction of $44 million.
Asset impairment charges mainly related to the Indian Trails cogeneration plant as a result of the suspension of operations by the plant’s only customer. These charges reduced 2008 net income by $12 million.
2009 Earnings Guidance
The company also announced that it anticipates 2009 GAAP earnings to be in the range of $2.68 to $3.08 per share and core (non-GAAP) earnings to be in the range of $2.75 to $3.15 per share. An anticipated 7 cents per share negative impact in 2009 from the 2007 settlement agreement among parties in Illinois to provide comprehensive electric rate relief and customer support is excluded from core (non-GAAP) earnings guidance. Any net unrealized mark-to-market profits or losses will impact GAAP earnings, but are excluded from GAAP and core (non-GAAP) earnings guidance because Ameren is unable to reasonably estimate the impact of any such gains or losses at this time. In addition, the effects of January 2009 severe winter storm, including the related impact of reduced electric margins due to the loss of operating capacity at our Missouri regulated operation’s customer, the Noranda Aluminum, Inc. smelter plant in New Madrid, Missouri, are also excluded from GAAP and core (non-GAAP) earnings guidance. At this time, Ameren is unable to reasonably guess the impact of the severe storm on earnings.
Despite recent rate increases in Missouri and Illinois, as well as our proactive sales of 2009 non-rate-regulated generation in early 2008, we believe our 2009 core earnings will be relatively flat compared to our 2008 core earnings. We believe that the weak economy, the volatile commodity markets, and unprecedented strains in the capital and credit markets will result in lower regulated customer sales versus 2008, lower power prices for unsold non-rate-regulated generation, and higher financing costs throughout 2009 and perhaps longer, said Gary L. Rainwater, chairman, president and chief executive officer.