Edgar Filing: AMEREN CORP

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 September 30, 2017



¨	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, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



	Large Accelerated Filer	Accelerated Filer	Non-Accelerated Filer	Smaller Reporting Company	Emerging Growth Company
Ameren Corporation	ý	¨	¨	¨	¨
Union Electric Company	¨	¨	ý	¨	¨
Ameren Illinois Company	¨	¨	ý	¨	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Ameren Corporation	¨
Union Electric Company	¨
Ameren Illinois Company	¨

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 October 31, 2017, 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
Glossary of Terms and Abbreviations		1

Forward-looking Statements		1

PART I Financial Information

Item 1.	Financial Statements (Unaudited)	3
	Ameren Corporation	3
	Consolidated Statement of Income	3
	Consolidated Statement of Comprehensive Income	4
	Consolidated Balance Sheet	5
	Consolidated Statement of Cash Flows	6
	Union Electric Company (d/b/a Ameren Missouri)	7
	Statement of Income and Comprehensive Income	7
	Balance Sheet	8
	Statement of Cash Flows	9
	Ameren Illinois Company (d/b/a Ameren Illinois)	10
	Statement of Income and Comprehensive Income	10
	Balance Sheet	11
	Statement of Cash Flows	12
	Note 1. Summary of Significant Accounting Policies	13
	Note 2. Rate and Regulatory Matters	16
	Note 3. Short-term Debt and Liquidity	18
	Note 4. Long-term Debt and Equity Financings	19
	Note 5. Other Income and Expenses	20
	Note 6. Derivative Financial Instruments	20
	Note 7. Fair Value Measurements	23
	Note 8. Related Party Transactions	28
	Note 9. Commitments and Contingencies	29
	Note 10. Callaway Energy Center	32
	Note 11. Retirement Benefits	34
	Note 12. Segment Information	34
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62
Item 4.	Controls and Procedures	64

PART II Other Information

Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 6.	Exhibits	65

Signatures		66

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.

EMANI – European Mutual Association for Nuclear Insurance.

Form 10-K – The combined Annual Report on Form 10-K for the year ended December 31, 2016, filed by the Ameren Companies with the SEC.

Westinghouse – Westinghouse Electric Company, LLC.

Zero-emission credit – A credit that represents the environmental attributes of one MWh of energy produced from certain zero-emissions nuclear-powered generating facilities, which Illinois utilities are required to purchase pursuant to the FEJA.

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 any changes in regulatory policies and ratemaking determinations, such as those that may result from the complaint case filed in February 2015 with the FERC seeking a reduction in the allowed base return on common equity under the MISO tariff, Ameren Illinois’ April 2017 annual electric distribution 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, and the related financial commitments;


•	the effects of changes in federal, state, or local laws and other governmental actions, including monetary, fiscal, and energy policies;


•	the effects of changes in federal, state, or local tax laws, regulations, interpretations, or rates, such as the July 2017 change in Illinois law that increased the state’s corporate income tax rate, or changes to federal tax laws as a result of tax reform legislation currently being developed by Congress, 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 private 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 revenues and performance incentives earned under its MEEIA plans;


•	Ameren Illinois’ ability to achieve FEJA electric energy efficiency goals and the resulting impact on its allowed return on program investments;


•	our ability to align overall spending, both operating and capital, with frameworks established by our regulators and to recover these costs in a timely manner in our attempt to earn our allowed returns on equity;

•

the cost and availability of fuel, such as ultra-low-sulfur coal, natural gas, and enriched uranium used to produce electricity; the cost and availability of purchased power, zero-emission credits, renewable energy credits, 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 nuclear fuel assemblies from Westinghouse, Callaway’s only NRC-licensed supplier of such assemblies, which is currently in bankruptcy proceedings;


•	the effectiveness of our risk management strategies and our use of financial and derivative instruments;


•	the ability to obtain sufficient insurance, including insurance for Ameren Missouri’s Callaway energy center, or, in the absence of insurance, the ability to recover uninsured losses from our customers;


•	business and economic conditions, including their impact on interest rates, collection of our receivable balances, and demand for our products;


•	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 actions of credit rating agencies and the effects of such actions;


•	the impact of adopting new accounting guidance and the application of appropriate accounting rules and guidance;


•	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 transmission and distribution 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, as well as potential wind and solar generation 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;

•

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 Ameren Missouri’s 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, among other things, 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 customer, employee, financial, and operating system 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.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

AMEREN CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(Unaudited) (In millions, except per share amounts)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Operating Revenues:
Electric	$	1,594	$	1,725	$	4,183	$	4,101
Natural gas	129		134		592		619
Total operating revenues	1,723		1,859		4,775		4,720
Operating Expenses:
Fuel	199		205		594		574
Purchased power	162		178		491		451
Natural gas purchased for resale	25		34		196		227
Other operations and maintenance	402		411		1,229		1,246
Depreciation and amortization	225		211		668		628
Taxes other than income taxes	129		129		364		358
Total operating expenses	1,142		1,168		3,542		3,484
Operating Income	581		691		1,233		1,236
Other Income and Expenses:
Miscellaneous income	13		18		42		54
Miscellaneous expense	2		8		16		21
Total other income	11		10		26		33
Interest Charges	97		97		295		287
Income Before Income Taxes	495		604		964		982
Income Taxes	205		233		376		356
Net Income	290		371		588		626
Less: Net Income Attributable to Noncontrolling Interests	2		2		5		5
Net Income Attributable to Ameren Common Shareholders	$	288	$	369	$	583	$	621

Earnings per Common Share – Basic	$	1.19	$	1.52	$	2.40	$	2.56

Earnings per Common Share – Diluted	$	1.18	$	1.52	$	2.39	$	2.56

Dividends per Common Share	$	0.44	$	0.425	$	1.32	$	1.275
Average Common Shares Outstanding – Basic	242.6		242.6		242.6		242.6
Average Common Shares Outstanding – Diluted	244.7		242.9		244.0		243.0

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

AMEREN CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited) (In millions)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016
Net Income	$	290	$	371		$	588	$	626
Other Comprehensive Income (Loss), Net of Taxes
Pension and other postretirement benefit plan activity, net of income taxes of $-, $-, $1 and $4, respectively	—		(1		)	2		1
Comprehensive Income	290		370			590		627
Less: Comprehensive Income Attributable to Noncontrolling Interests	2		2			5		5
Comprehensive Income Attributable to Ameren Common Shareholders	$	288	$	368		$	585	$	622

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

AMEREN CORPORATION

CONSOLIDATED BALANCE SHEET

(Unaudited) (In millions, except per share amounts)



	September 30, 2017			December 31, 2016
ASSETS
Current Assets:
Cash and cash equivalents	$	9		$	9
Accounts receivable – trade (less allowance for doubtful accounts of $20 and $19, respectively)	507			437
Unbilled revenue	262			295
Miscellaneous accounts receivable	85			63
Inventories	547			527
Current regulatory assets	75			149
Other current assets	96			113
Total current assets	1,581			1,593
Property, Plant, and Equipment, Net	20,906			20,113
Investments and Other Assets:
Nuclear decommissioning trust fund	672			607
Goodwill	411			411
Regulatory assets	1,509			1,437
Other assets	538			538
Total investments and other assets	3,130			2,993
TOTAL ASSETS	$	25,617		$	24,699
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term debt	$	777		$	681
Short-term debt	446			558
Accounts and wages payable	548			805
Taxes accrued	159			46
Interest accrued	106			93
Customer deposits	108			107
Current regulatory liabilities	119			110
Other current liabilities	318			274
Total current liabilities	2,581			2,674
Long-term Debt, Net	6,922			6,595
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes, net	4,721			4,264
Accumulated deferred investment tax credits	50			55
Regulatory liabilities	2,045			1,985
Asset retirement obligations	631			635
Pension and other postretirement benefits	711			769
Other deferred credits and liabilities	469			477
Total deferred credits and other liabilities	8,627			8,185
Commitments and Contingencies (Notes 2, 9, and 10)
Ameren Corporation Shareholders’ Equity:
Common stock, $.01 par value, 400.0 shares authorized – 242.6 shares outstanding	2			2
Other paid-in capital, principally premium on common stock	5,534			5,556
Retained earnings	1,830			1,568
Accumulated other comprehensive loss	(21		)	(23		)
Total Ameren Corporation shareholders’ equity	7,345			7,103
Noncontrolling Interests	142			142
Total equity	7,487			7,245
TOTAL LIABILITIES AND EQUITY	$	25,617		$	24,699

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



AMEREN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
	Nine Months Ended September 30,
	2017			2016
Cash Flows From Operating Activities:
Net income	$	588		$	626
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	653			625
Amortization of nuclear fuel	71			63
Amortization of debt issuance costs and premium/discounts	16			17
Deferred income taxes and investment tax credits, net	366			364
Allowance for equity funds used during construction	(16		)	(20		)
Share-based compensation costs	12			17
Other	(7		)	(9		)
Changes in assets and liabilities:
Receivables	(59		)	(134		)
Inventories	(20		)	(13		)
Accounts and wages payable	(183		)	(196		)
Taxes accrued	138			119
Regulatory assets and liabilities	89			146
Assets, other	14			9
Liabilities, other	12			(29		)
Pension and other postretirement benefits	(31		)	(26		)
Net cash provided by operating activities	1,643			1,559
Cash Flows From Investing Activities:
Capital expenditures	(1,523		)	(1,496		)
Nuclear fuel expenditures	(52		)	(41		)
Purchases of securities – nuclear decommissioning trust fund	(248		)	(310		)
Sales and maturities of securities – nuclear decommissioning trust fund	235			297
Other	3			(1		)
Net cash used in investing activities	(1,585		)	(1,551		)
Cash Flows From Financing Activities:
Dividends on common stock	(320		)	(309		)
Dividends paid to noncontrolling interest holders	(5		)	(5		)
Short-term debt, net	(112		)	307
Maturities of long-term debt	(425		)	(389		)
Issuances of long-term debt	849			149
Share-based payments	(39		)	(32		)
Debt issuance costs	(5		)	(1		)
Other	(1		)	(2		)
Net cash used in financing activities	(58		)	(282		)
Net change in cash and cash equivalents	—			(274		)
Cash and cash equivalents at beginning of year	9			292
Cash and cash equivalents at end of period	$	9		$	18

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

UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)

STATEMENT OF INCOME AND COMPREHENSIVE INCOME

(Unaudited) (In millions)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Operating Revenues:
Electric	$	1,098	$	1,144	$	2,757	$	2,682
Natural gas	17		20		83		90
Other	—		1		—		1
Total operating revenues	1,115		1,165		2,840		2,773
Operating Expenses:
Fuel	199		205		594		574
Purchased power	42		77		201		169
Natural gas purchased for resale	4		6		29		33
Other operations and maintenance	224		220		655		670
Depreciation and amortization	134		130		399		384
Taxes other than income taxes	95		96		255		252
Total operating expenses	698		734		2,133		2,082
Operating Income	417		431		707		691
Other Income and Expenses:
Miscellaneous income	13		14		36		38
Miscellaneous expense	2		2		6		6
Total other income	11		12		30		32
Interest Charges	50		53		157		158
Income Before Income Taxes	378		390		580		565
Income Taxes	143		148		218		215
Net Income	235		242		362		350
Other Comprehensive Income	—		—		—		—
Comprehensive Income	$	235	$	242	$	362	$	350


Net Income	$	235	$	242	$	362	$	350
Preferred Stock Dividends	1		1		3		3
Net Income Available to Common Shareholder	$	234	$	241	$	359	$	347

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

UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)

BALANCE SHEET

(Unaudited) (In millions, except per share amounts)



	September 30, 2017		December 31, 2016
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	—
Advances to money pool	18		161
Accounts receivable – trade (less allowance for doubtful accounts of $8 and $7, respectively)	274		187
Accounts receivable – affiliates	14		12
Unbilled revenue	151		154
Miscellaneous accounts receivable	45		14
Inventories	396		392
Current regulatory assets	23		35
Other current assets	43		49
Total current assets	964		1,004
Property, Plant, and Equipment, Net	11,538		11,478
Investments and Other Assets:
Nuclear decommissioning trust fund	672		607
Regulatory assets	576		619
Other assets	318		327
Total investments and other assets	1,566		1,553
TOTAL ASSETS	$	14,068	$	14,035
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	383	$	431
Accounts and wages payable	226		444
Accounts payable – affiliates	102		68
Taxes accrued	148		30
Interest accrued	61		54
Current regulatory liabilities	18		12
Other current liabilities	118		123
Total current liabilities	1,056		1,162
Long-term Debt, Net	3,584		3,563
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes, net	3,073		3,013
Accumulated deferred investment tax credits	49		53
Regulatory liabilities	1,275		1,215
Asset retirement obligations	627		629
Pension and other postretirement benefits	274		291
Other deferred credits and liabilities	13		19
Total deferred credits and other liabilities	5,311		5,220
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	1,828		1,828
Preferred stock	80		80
Retained earnings	1,698		1,671
Total shareholders’ equity	4,117		4,090
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	14,068	$	14,035

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

UNION ELECTRIC COMPANY (d/b/a AMEREN MISSOURI)

STATEMENT OF CASH FLOWS

(Unaudited) (In millions)



	Nine Months Ended September 30,
	2017			2016
Cash Flows From Operating Activities:
Net income	$	362		$	350
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	384			381
Amortization of nuclear fuel	71			63
Amortization of debt issuance costs and premium/discounts	5			5
Deferred income taxes and investment tax credits, net	55			159
Allowance for equity funds used during construction	(15		)	(16		)
Other	4			—
Changes in assets and liabilities:
Receivables	(117		)	(95		)
Inventories	(3		)	(5		)
Accounts and wages payable	(151		)	(176		)
Taxes accrued	160			165
Regulatory assets and liabilities	48			60
Assets, other	19			(8		)
Liabilities, other	4			13
Pension and other postretirement benefits	(7		)	(8		)
Net cash provided by operating activities	819			888
Cash Flows From Investing Activities:
Capital expenditures	(533		)	(500		)
Nuclear fuel expenditures	(52		)	(41		)
Purchases of securities – nuclear decommissioning trust fund	(248		)	(310		)
Sales and maturities of securities – nuclear decommissioning trust fund	235			297
Money pool advances, net	143			(165		)
Other	—			(5		)
Net cash used in investing activities	(455		)	(724		)
Cash Flows From Financing Activities:
Dividends on common stock	(332		)	(285		)
Dividends on preferred stock	(3		)	(3		)
Maturities of long-term debt	(425		)	(260		)
Issuances of long-term debt	399			149
Capital contribution from parent	—			38
Debt issuance costs	(3		)	(1		)
Net cash used in financing activities	(364		)	(362		)
Net change in cash and cash equivalents	—			(198		)
Cash and cash equivalents at beginning of year	—			199
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.

AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)

STATEMENT OF INCOME AND COMPREHENSIVE INCOME

(Unaudited) (In millions)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017			2016
Operating Revenues:
Electric	$	463	$	562		$	1,343		$	1,365
Natural gas	112		114			510			530
Other	—		—			1			—
Total operating revenues	575		676			1,854			1,895
Operating Expenses:
Purchased power	124		110			312			304
Natural gas purchased for resale	21		28			167			194
Other operations and maintenance	183		198			590			592
Depreciation and amortization	86		80			254			237
Taxes other than income taxes	33		30			101			98
Total operating expenses	447		446			1,424			1,425
Operating Income	128		230			430			470
Other Income and Expenses:
Miscellaneous income	1		4			7			15
Miscellaneous expense	—		3			8			11
Total other income (expense)	1		1			(1		)	4
Interest Charges	36		35			109			105
Income Before Income Taxes	93		196			320			369
Income Taxes	38		77			127			144
Net Income	55		119			193			225
Other Comprehensive Loss, Net of Taxes:
Pension and other postretirement benefit plan activity, net of income taxes (benefit) of $-, $(1), $- and $(2), respectively	—		(1		)	—			(3		)
Comprehensive Income	$	55	$	118		$	193		$	222


Net Income	$	55	$	119		$	193		$	225
Preferred Stock Dividends	—		—			2			2
Net Income Available to Common Shareholder	$	55	$	119		$	191		$	223

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

AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)

BALANCE SHEET

(Unaudited) (In millions)



	September 30, 2017		December 31, 2016
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	—
Accounts receivable – trade (less allowance for doubtful accounts of $12 and $12, respectively)	219		242
Accounts receivable – affiliates	21		10
Unbilled revenue	111		141
Miscellaneous accounts receivable	31		22
Inventories	151		135
Current regulatory assets	51		108
Other current assets	18		25
Total current assets	602		683
Property, Plant, and Equipment, Net	7,987		7,469
Investments and Other Assets:
Goodwill	411		411
Regulatory assets	921		816
Other assets	101		95
Total investments and other assets	1,433		1,322
TOTAL ASSETS	$	10,022	$	9,474
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	394	$	250
Short-term debt	169		51
Borrowings from money pool	11		—
Accounts and wages payable	247		264
Accounts payable – affiliates	50		63
Taxes accrued	8		16
Interest accrued	37		33
Customer deposits	69		69
Current environmental remediation	43		38
Current regulatory liabilities	85		78
Other current liabilities	153		109
Total current liabilities	1,266		971
Long-term Debt, Net	2,196		2,338
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes, net	1,874		1,631
Accumulated deferred investment tax credits	1		2
Regulatory liabilities	766		768
Pension and other postretirement benefits	322		346
Environmental remediation	143		162
Other deferred credits and liabilities	229		222
Total deferred credits and other liabilities	3,335		3,131
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	1,158		967
Total shareholders’ equity	3,225		3,034
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	10,022	$	9,474

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

AMEREN ILLINOIS COMPANY (d/b/a AMEREN ILLINOIS)

STATEMENT OF CASH FLOWS

(Unaudited) (In millions)



	Nine Months Ended September 30,
	2017			2016
Cash Flows From Operating Activities:
Net income	$	193		$	225
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	254			236
Amortization of debt issuance costs and premium/discounts	10			11
Deferred income taxes and investment tax credits, net	161			141
Other	(1		)	(8		)
Changes in assets and liabilities:
Receivables	59			(36		)
Inventories	(17		)	(8		)
Accounts and wages payable	(24		)	(17		)
Taxes accrued	(22		)	5
Regulatory assets and liabilities	45			75
Assets, other	(9		)	11
Liabilities, other	(2		)	6
Pension and other postretirement benefits	(19		)	(14		)
Net cash provided by operating activities	628			627
Cash Flows From Investing Activities:
Capital expenditures	(760		)	(683		)
Other	6			4
Net cash used in investing activities	(754		)	(679		)
Cash Flows From Financing Activities:
Dividends on common stock	—			(95		)
Dividends on preferred stock	(2		)	(2		)
Short-term debt, net	118			157
Money pool borrowings, net	11			54
Maturities of long-term debt	—			(129		)
Other	(1		)	(1		)
Net cash provided by (used in) financing activities	126			(16		)
Net change in cash and cash equivalents	—			(68		)
Cash and cash equivalents at beginning of year	—			71
Cash and cash equivalents at end of period	$	—		$	3

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

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)

September 30, 2017

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Ameren, headquartered in St. Louis, Missouri, is a public utility holding company whose primary assets are its equity interests in its subsidiaries. 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, Ameren Missouri, Ameren Illinois, and ATXI, are described below. Ameren also has other subsidiaries that conduct other activities, such as the provision of shared services. Ameren evaluates competitive electric transmission investment opportunities outside of MISO as they arise.


•	Union Electric Company, doing business as Ameren Missouri, operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri.


•	Ameren Illinois Company, doing business as Ameren Illinois, operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois.


•	ATXI 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’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. All tabular dollar amounts are in millions, unless otherwise indicated. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.

As of September 30, 2017 and December 31, 2016, Ameren had unconsolidated variable interests as a limited partner in various equity method investments, totaling $14 million and $9 million, respectively, included in “Other assets” on Ameren’s consolidated balance sheet. Ameren is not the primary beneficiary of these investments because it does not have the power to direct matters that most significantly impact the activities of these variable interest entities. As of September 30, 2017, the maximum exposure to loss related to these variable interests is limited to the investment in these partnerships of $14 million plus associated outstanding funding commitments of $23 million.

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. See Note 2 – Rate and Regulatory Matters for information regarding the 2017 change in Ameren Illinois' method used to recognize interim period revenue in connection with the revenue decoupling provisions of the FEJA. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K.

Discontinued operations were immaterial to all periods presented in Ameren’s financial statements. As such, the “Assets of discontinued operations” and “Liabilities of discontinued operations” included on the December 31, 2016 balance sheet have been reclassified in this report to “Other current assets” and “Other current liabilities,” respectively. See Note 1 – Summary of Significant Accounting Policies under Part II, Item 8, of the Form 10-K for additional information.

Asset Retirement Obligations

The following table provides a reconciliation of the beginning and ending carrying amount of AROs for the nine months ended September 30, 2017:



	Ameren Missouri				Ameren Illinois^(a)			Ameren
Balance at December 31, 2016	$	644		^(b)	$	6		$	650		^(b)
Liabilities settled	(4		)		(1		)	(5		)
Accretion^(c)	20				(d)			20
Change in estimates^(e)	(18		)		(1		)	(19		)
Balance at September 30, 2017	$	642		^(b)	$	4		$	646		^(b)


(a)	Included in “Other deferred credits and liabilities” on the balance sheet.


(b)	Balance included $15 million in “Other current liabilities” on the balance sheet as of both December 31, 2016 and September 30, 2017, respectively.


(c)	Accretion expense was recorded as a decrease to regulatory liabilities.


(d)	Less than $1 million.


(e)	Ameren Missouri changed its fair value estimate primarily due to an extension of the remediation period of certain CCR storage facilities, an update to the decommissioning of the Callaway energy center to reflect the cost study and funding analysis filed with the MoPSC in 2017, and an increase in the discount rate assumption.

Share-based Compensation

A summary of nonvested performance share units at September 30, 2017, and changes during the nine months ended September 30, 2017, under the 2014 Incentive Plan are presented below:



	Performance Share Units
	Share Units		Weighted-average Fair Value per Share Unit
Nonvested at January 1, 2017	1,059,639		$	48.04
Granted^(a)	500,943		59.16
Forfeitures	(48,661	)	52.54
Vested^(b)	(27,446	)	52.88
Nonvested at September 30, 2017	1,484,475		$	51.55


(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 vary depending on actual performance over the three-year measurement period.

The fair value of each performance share unit awarded in 2017 under the 2014 Incentive Plan was determined to be $59.16, which was based on Ameren’s closing common share price of $52.46 at December 31, 2016, and lattice simulations. Lattice simulations are used to estimate expected share payout based on Ameren’s total shareholder return for a three-year performance period beginning January 1, 2017, relative to the designated peer group. The simulations can produce a greater fair value for the performance share unit than the December 31 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 1.47%, volatility of 15% to 21% for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period.

Operating Revenue

The Ameren Companies record operating revenue for electric or natural gas service when it is delivered to customers. We accrue an estimate of electric and natural gas revenues for service rendered but unbilled at the end of each accounting period. For certain regulatory recovery mechanisms qualifying as alternative revenue programs, such as revenue requirement reconciliations, the Ameren Companies recognize revenues that have been authorized for rate recovery, are objectively determinable and probable of recovery, and are expected to be collected from customers within two years from the end of the year.

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 – Natural 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 therefore are not included in Ameren Illinois’ revenues and expenses. The following table presents

excise taxes recorded in “Operating Revenues – Electric,” “Operating Revenues – Natural gas” and “Operating Expenses – Taxes other than income taxes” for the three and nine months ended September 30, 2017 and 2016:



	Three Months				Nine Months
	2017		2016		2017		2016
Ameren Missouri	$	51	$	52	$	122	$	122
Ameren Illinois	10		9		40		40
Ameren	$	61	$	61	$	162	$	162

Earnings Per Share

Basic earnings per share is computed by dividing “Net Income Attributable to Ameren Common Shareholders” by the weighted-average number of common shares outstanding during the period. Earnings per diluted share is computed by dividing “Net Income Attributable to Ameren Common Shareholders” by the weighted-average number of diluted common shares outstanding during the period. Earnings per diluted share reflects the dilution that would occur if certain stock-based performance share units were settled. The number of performance share units assumed to be settled was 2.1 million and 1.4 million in the three and nine months ended September 30, 2017, respectively, and 0.3 million and 0.4 million, respectively, in the year-ago periods. There were no potentially dilutive securities excluded from the earnings per diluted share calculations for the three and nine months ended September 30, 2017 and 2016.

Income Taxes

In July 2017, Illinois enacted a law that increased the state's corporate income tax rate from 7.75% to 9.5% as of July 1, 2017. The law made the increase in the state’s corporate income tax rate, which was previously scheduled to decrease to 7.3% in 2025, permanent. In July 2017, Ameren recorded an expense of $14 million at Ameren (parent) due to the revaluation of accumulated deferred taxes and the estimated state apportionment of such taxes. Beyond this expense, Ameren does not expect this tax increase to have a material impact on its consolidated net income prospectively. The tax increase is not expected to materially impact the earnings of the Ameren Illinois Electric Distribution, the Ameren Transmission, or the Ameren Illinois Transmission segments, since these businesses operate under formula ratemaking frameworks. The tax increase is expected to unfavorably affect 2017 net income of the Ameren Illinois Natural Gas segment by less than $1 million. In addition, in the third quarter of 2017, Ameren’s and Ameren Illinois’ accumulated deferred tax balances were revalued using the state’s new corporate income tax rate, which resulted in a net increase to the liability balances of $97 million and $79 million, respectively. These increased liabilities were offset by a regulatory asset, as well as income tax expense, as discussed above.

Accounting and Reporting Developments

Below is a summary of updates related to our adoption of recently issued authoritative accounting standards. See Note 1 – Summary of Significant Accounting Policies under Part II, Item 8, of the Form 10-K for additional information about recently issued authoritative accounting standards relating to leases, financial instruments, and restricted cash.

Revenue from Contracts with Customers

In May 2014, the FASB issued authoritative 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 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, as well as separate presentation of alternative revenue programs on the income statement. Entities can apply the guidance to each reporting period presented (the full retrospective method) or by recording a cumulative effect adjustment to retained earnings in the period of initial adoption (the modified retrospective method).

We have substantially completed the evaluation of our contracts and do not expect material changes to the amount or timing of revenue recognition. We will finalize our contract assessments by the end of 2017. We will apply the guidance using the full retrospective method and include disaggregated revenue disclosures by segment and customer class in the combined notes to the financial statements in the first quarter of 2018.

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued authoritative guidance that requires an entity to retrospectively report the service cost component of net benefit cost in the same line item(s) as other compensation costs arising from services rendered by employees during the period and to present the other components of net benefit cost in the income statement separately from the service cost component and outside of operating income. The guidance also requires that an entity only capitalize the service cost component as part of an asset, such as inventory or property, plant, and equipment, on a prospective basis. Previously, all of the net benefit cost components were eligible for capitalization.

This change in the capitalization of net benefit costs will not affect our ability to continue to obtain recovery of net benefit costs through customer rates. See Note 11 – Retirement Benefits for the components of net benefit cost. This guidance will be effective for the Ameren Companies in the first quarter of 2018. We are currently assessing the impacts of this guidance on our results of operations, financial position, and disclosures.

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

March 2017 Electric Rate Order

In March 2017, the MoPSC issued an order approving a unanimous stipulation and agreement in Ameren Missouri’s July 2016 regulatory rate review. The order resulted in a $3.4 billion revenue requirement, which is a $92 million increase in Ameren Missouri’s annual revenue requirement for electric service, compared to its prior revenue requirement established in the MoPSC's April 2015 electric rate order. The new rates, base level of expenses, and amortizations became effective on April 1, 2017.

The order authorized the continued use of the FAC and the regulatory tracking mechanisms for pension and postretirement benefits, uncertain income tax positions, and renewable energy standards that the MoPSC authorized in earlier electric rate orders. These regulatory tracking mechanisms provide for a base level of expense to be reflected in Ameren Missouri’s base electric rates with differences in the actual expenses incurred recorded as a regulatory asset or liability. Excluding cost reductions associated with reduced sales volumes, the base level of net energy costs decreased by $54 million from the base level established in the MoPSC's April 2015 electric rate order. Changes in amortizations and the base level of expenses for the other regulatory tracking mechanisms, including extending the amortization period of certain regulatory assets, reduced expenses by $26 million from the base levels established in the MoPSC's April 2015 electric rate order.

ATXI’s Mark Twain Project

The Mark Twain project is a MISO-approved transmission line to be located in northeast Missouri. In the third quarter of 2017, ATXI finalized an alternative project route and reached agreements with a cooperative electric company in northeast Missouri and Ameren Missouri to locate nearly all of the Mark Twain project on existing transmission line corridors. It also received assents for road crossings from the five affected counties in northeast Missouri. ATXI had previously filed suit in the circuit courts to obtain assents for the original project route. ATXI has since withdrawn one of the lawsuits. The other lawsuits remain pending but have been stayed until the first quarter of 2018. In September 2017, ATXI filed for a certificate of convenience and necessity with the MoPSC and anticipates a decision from the MoPSC in the first half of 2018. ATXI plans to complete the project in December 2019; however, delays in obtaining approval from the MoPSC could delay completion.

Illinois

IEIMA & FEJA

Ameren Illinois’ electric distribution service rates are subject to an annual revenue requirement reconciliation to its actual recoverable costs and allowed return on equity under a formula ratemaking process effective through 2022. This formula ratemaking framework qualifies as an alternative revenue program under GAAP. 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 and investment return. As of September 30, 2017, Ameren Illinois had recorded regulatory assets of $24 million to reflect its 2016 revenue requirement reconciliation adjustment, which was included in the April 2017 formula rate update discussed below, and $16 million for the approved 2015 revenue requirement reconciliation adjustment, each with interest. As of September 30, 2017, Ameren Illinois had recorded a regulatory liability of $1 million to reflect the difference between Ameren Illinois’ estimate of its 2017 revenue requirement and the revenue requirement reflected in customer rates, including interest.

In April 2017, Ameren Illinois filed with the ICC its annual electric distribution service formula rate update to establish the revenue requirement used for 2018 rates. In June 2017, the ICC staff submitted its calculation of the revenue requirement, which Ameren Illinois supported in its revised July 2017 filing, and recommended a decrease to the electric distribution service revenue requirement. Pending ICC approval, this update filing will result in a $17 million decrease in Ameren Illinois’ electric distribution service revenue requirement beginning in January 2018. This update reflects an increase to the annual formula rate based on 2016 actual costs and expected net plant additions for 2017, as well as an increase to include the 2016 revenue requirement reconciliation adjustment. The increases in the update filing are more than offset by a decrease for the conclusion of the 2015 revenue requirement reconciliation adjustment, which will be fully collected from

customers in 2017, consistent with the ICC’s December 2016 annual update filing order. In November 2017, an administrative law judge issued a proposed order that was consistent with Ameren Illinois’ revised July 2017 filing. An ICC decision regarding the revenue requirement to be used for customer rates in 2018 is expected by December 2017.

The FEJA revised certain portions of the IEIMA, including extending the IEIMA formula ratemaking process through 2022 and clarifying that a common equity ratio of up to, and including, 50% is prudent. Beginning in 2017, the FEJA provides that Ameren Illinois will recover, within the following two years, its electric distribution revenue requirement for a given year, independent of actual sales volumes. Prior to the FEJA, Ameren Illinois’ interim period revenue recognition was volume-based, as revenues were affected by the timing of sales volumes due to seasonal rates and changes in volumes resulting from, among other things, weather and energy efficiency. This previous revenue recognition method resulted in more revenues during the third quarter and less revenues during the other quarters of each year. Beginning in 2017, in connection with the decoupling provisions of the FEJA, Ameren Illinois changed its method used to recognize interim period revenue. Ameren Illinois now recognizes revenue consistent with the timing of actual incurred electric distribution recoverable costs and recognizes revenue associated with the expected return on its rate base ratably over the year. Ameren Illinois recognized a reduction to electric revenue to reflect the difference between the estimate of its revenue requirement and the revenue requirement reflected in customer rates of $76 million and $1 million for the three and nine months ended September 30, 2017, respectively. Comparative electric revenues at Ameren Illinois for the three and nine months ended September 30, 2016, were increased $11 million and $24 million, respectively, for the difference between the estimate of its revenue requirement and the revenue requirement reflected in customer rates.

In June 2017, pursuant to the FEJA, Ameren Illinois filed with the ICC an energy efficiency plan for 2018 through 2021. In September 2017, the ICC issued an order approving Ameren Illinois' implementation of FEJA electric energy efficiency savings targets and investments. Ameren Illinois plans to invest up to $99 million in electric energy efficiency programs per year from 2018 through 2021 that will earn a return. The electric energy efficiency program investments and the return on those investments will be collected from customers through a rider and will not be included in the IEIMA formula ratemaking process.

ATXI’s Illinois Rivers Project

In August 2017, the Illinois Circuit Court for Edgar County dismissed several of ATXI’s condemnation cases related to one segment in the Illinois Rivers project, which has an estimated segment cost of approximately $85 million, of which $32 million was invested as of September 30, 2017. These cases had been filed in order to obtain necessary easements and rights of way to complete the segment. The court found that required notice was not given to the relevant landowners during the underlying ICC proceeding. ATXI intends to appeal this decision. ATXI plans to complete the project in 2019; however, delays associated with the condemnation proceedings or an appeal arising from the order dismissing the Edgar County cases could delay the completion date. The other eight segments of the Illinois Rivers project are not affected by these proceedings.

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 FERC-regulated transmission rate base under the MISO tariff from 12.38% to 9.15%. In September 2016, the FERC issued a final order in the November 2013 complaint case, which lowered the allowed base return on common equity for the 15-month period of November 2013 to February 2015 to 10.32%, or a 10.82% total allowed return on common equity with the inclusion of a 50 basis point incentive adder for participation in an RTO. The order required customer refunds, with interest, to be issued for that 15-month period. In the first six months of 2017, Ameren and Ameren Illinois refunded $21 million and $17 million, respectively, related to the November 2013 complaint case. In addition, the 10.82% allowed return on common equity has been reflected in rates since September 2016. The 10.82% allowed return on common equity may be replaced prospectively after the FERC issues a final order in the February 2015 complaint case, discussed below.

Since 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. MISO transmission owners have since filed a motion to dismiss the February 2015 complaint. See below for additional information about the motion. The February 2015 complaint case seeks a further reduction in the allowed base return on common equity for FERC-regulated transmission rate base under the MISO tariff. In June 2016, an administrative law judge issued an initial decision in the February 2015 complaint case, which, if approved by the FERC, would lower the allowed base return on common equity for the 15-month period of February 2015 to May 2016 to 9.70%, or a 10.20% total allowed return on equity with the inclusion of a 50 basis point incentive adder for participation in an RTO, and require customer refunds, with interest, for that 15-month period. The timing of the issuance of the final order in the February 2015 complaint case is uncertain for two reasons. First, while the FERC reestablished a quorum of commissioners in August 2017 after six months without a quorum, the FERC is under no deadline to issue a final order. Second, in the second quarter of 2017, the United States Court of Appeals for the District of Columbia Circuit vacated and remanded to the FERC an order in a separate case in which the FERC established the allowed base return on common equity methodology used in the two MISO complaint cases described above. Ameren is unable to predict the impact of the outcome of the United States Court of Appeals for the District of Columbia Circuit’s remand on the MISO FERC complaint cases at this time.

In September 2017, MISO transmission owners, including Ameren Missouri, Ameren Illinois, and ATXI, filed a motion to dismiss the February 2015 complaint case with the FERC. The MISO transmission owners maintain that the February 2015 complaint was predicated on the now superseded 12.38% allowed base return on common equity being an unjust and unreasonable return and is not applicable given the currently effective 10.32% allowed base return on common equity. The MISO transmission owners further maintain that the currently effective 10.32% allowed base return on common equity has not been proven to be unjust and unreasonable based on information provided, including the base return on common equity methodology ranges set forth in the February 2015 complaint case and the initial decision issued by an administrative law judge in June 2016. Additionally, the MISO transmission owners maintain that the February 2015 complaint should be dismissed because the approach utilized in the case to assert that a return on common equity was unjust and unreasonable is insufficient. That same approach was rejected by the United States Court of Appeals for the District of Columbia Circuit, as discussed above. FERC is under no deadline to issue an order on this motion.

As of September 30, 2017, Ameren and Ameren Illinois had recorded current regulatory liabilities of $41 million and $24 million, respectively, to reflect the expected refunds, including interest, associated with the reduced allowed returns on common equity in the initial decision in the February 2015 complaint case. Ameren Missouri does not expect that a reduction in the FERC-allowed base return on common equity 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. See Note 4 – Short-term Debt and Liquidity under Part II, Item 8, in the Form 10-K for a description of our indebtedness provisions and other covenants as well as a description of money pool arrangements.

The Missouri Credit Agreement and the Illinois Credit Agreement, both of which expire in December 2021, were not utilized for direct borrowings during the nine months ended September 30, 2017, but were used to support commercial paper issuances and to issue letters of credit. Based on commercial paper outstanding, as well as letters of credit issued under the Credit Agreements, the aggregate amount of credit capacity available under the Credit Agreements to Ameren (parent), Ameren Missouri, and Ameren Illinois, collectively, at September 30, 2017, was $1.7 billion. The Ameren Companies were in compliance with the covenants in their Credit Agreements as of September 30, 2017. As of September 30, 2017, the ratios of consolidated indebtedness to consolidated total capitalization, calculated in accordance with the provisions of the Credit Agreements, were 51%, 47%, and 46% for Ameren, Ameren Missouri, and Ameren Illinois, respectively.

Commercial Paper

The following table presents commercial paper outstanding as of September 30, 2017, and December 31, 2016:



	2017		2016
Ameren (parent)	$	277	$	507
Ameren Missouri	—		—
Ameren Illinois	169		51
Ameren Consolidated	$	446	$	558

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 nine months ended September 30, 2017 and 2016:



	Ameren (parent)			Ameren Missouri			Ameren Illinois			Ameren Consolidated
2017
Average daily commercial paper outstanding	$	669		$	7		$	78		$	754
Weighted-average interest rate	1.27		%	1.20		%	1.28		%	1.27		%
Peak commercial paper during period^(a)	$	841		$	64		$	193		$	948
Peak interest rate	1.50		%	1.41		%	1.50		%	1.50		%
2016
Average daily commercial paper outstanding	$	435		$	80		$	48		$	563
Weighted-average interest rate	0.81		%	0.74		%	0.72		%	0.79		%
Peak commercial paper during period^(a)	$	574		$	208		$	195		$	839
Peak interest rate	0.95		%	0.85		%	0.85		%	0.95		%


(a)	The timing of peak commercial paper issuances varies by company. Therefore, the sum of peak commercial paper issuances presented by company does not equal the Ameren Consolidated peak commercial paper issuances for the period.

Money Pools

Ameren has money pool agreements with and among its subsidiaries to coordinate and provide for short-term cash and working capital requirements. The average interest rate for borrowing under the utility money pool for the three and nine months ended September 30, 2017, was 1.24% and 1.18%, respectively (2016 – 0.53% and 0.54%, 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 and nine months ended September 30, 2017 and 2016.

NOTE 4 – LONG-TERM DEBT AND EQUITY FINANCINGS

Ameren Missouri

In June 2017, Ameren Missouri issued $400 million principal amount of 2.95% senior secured notes, due June 2027, with interest payable semiannually on June 15 and December 15 of each year, beginning in December 2017. Ameren Missouri received proceeds of $396 million, which were used, in conjunction with other available funds, to repay at maturity in June 2017 $425 million principal amount of its 6.40% senior secured notes.

ATXI

In June 2017, pursuant to a note purchase agreement, ATXI agreed to issue $450 million principal amount of 3.43% senior unsecured notes, due 2050, through a private placement offering exempt from registration under the Securities Act of 1933, as amended. ATXI issued $150 million principal amount of the notes in June 2017 and the remaining $300 million principal amount of the notes in August 2017. ATXI received proceeds of $449 million from the notes, which were used by ATXI to repay existing short-term and long-term affiliate debt owed to Ameren (parent).

ATXI may prepay at any time not less than 5% of the principal amount of notes then outstanding at 100% of the principal amount plus a make-whole premium. In the event of a change of control, as defined in the agreement, each holder of notes may require ATXI to prepay the entire unpaid principal amount of the notes held by such holder at a price equal to 100% of the principal amount of such notes together with accrued and unpaid interest thereon. The following table presents the principal maturities schedule for the notes:



Payment Date		Principal Payment
August 2022	$	49.5
August 2024		49.5
August 2027		49.5
August 2030		49.5
August 2032		49.5
August 2038		49.5
August 2043		76.5
August 2050		76.5
Total Principal Amount of Notes	$	450.0

The note purchase agreement includes financial covenants that require ATXI to not permit at any time: (i) debt to exceed 70% of total capitalization or (ii) secured debt to exceed 10% of total assets. The note purchase agreement also contains restrictive covenants that, among other things, restrict the ability of ATXI to: (i) enter into transactions with affiliates; (ii) consolidate, merge, transfer or lease all or substantially all of its assets; and (iii) create liens.

Indenture Provisions and Other Covenants

Ameren Missouri’s and Ameren Illinois’ indentures 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 first mortgage bonds or preferred stock. See Note 5 – Long-Term Debt and Equity Financings under Part II, Item 8, in the Form 10-K for a description of our indenture provisions and other covenants as well as restrictions on the payment of dividends. See the discussion above for covenants related to ATXI’s note purchase agreement. At September 30, 2017, the Ameren Companies were in compliance with the provisions and covenants contained in their indentures and articles of incorporation, as applicable, and ATXI was in compliance with the provisions and covenants contained in its note purchase agreement.

Off-Balance-Sheet Arrangements

At September 30, 2017, 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.

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 and nine months ended September 30, 2017 and 2016:



	Three Months				Nine Months
	2017		2016		2017		2016
Ameren:^(a)
Miscellaneous income:
Allowance for equity funds used during construction	$	6	$	7	$	16	$	20
Interest income on industrial development revenue bonds	7		7		20		20
Interest income	—		3		5		11
Other	—		1		1		3
Total miscellaneous income	$	13	$	18	$	42	$	54
Miscellaneous expense:
Donations	$	—	$	1	$	7	$	8
Other	2		7		9		13
Total miscellaneous expense	$	2	$	8	$	16	$	21
Ameren Missouri:
Miscellaneous income:
Allowance for equity funds used during construction	$	6	$	6	$	15	$	16
Interest income on industrial development revenue bonds	7		7		20		20
Interest income	—		1		—		1
Other	—		—		1		1
Total miscellaneous income	$	13	$	14	$	36	$	38
Miscellaneous expense:
Donations	$	—	$	—	$	2	$	2
Other	2		2		4		4
Total miscellaneous expense	$	2	$	2	$	6	$	6
Ameren Illinois:
Miscellaneous income:
Allowance for equity funds used during construction	$	—	$	1	$	1	$	4
Interest income	1		2		5		9
Other	—		1		1		2
Total miscellaneous income	$	1	$	4	$	7	$	15
Miscellaneous expense:
Donations	$	—	$	1	$	5	$	6
Other	—		2		3		5