Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ameren Corp (AEE, Financial) reported second quarter 2024 earnings of $0.97 per share, up from $0.90 per share in the same quarter of 2023.
- The company remains on track to deliver earnings within its guidance range of $4.52 to $4.72 per share for 2024.
- Significant progress was made on strategic infrastructure investments, including the approval of the Cass County solar project and the filing for the Castle Bluff Energy Center.
- Strong operational performance with over 22,000 Missouri and 11,000 Illinois customer outages prevented during storms due to automated switches.
- Robust pipeline of investment opportunities exceeding $55 billion over the next decade, promising significant value for stakeholders and job creation.
Negative Points
- The company faces potential regulatory and legislative challenges, particularly in securing approvals for new projects and tariffs.
- There is uncertainty regarding the ultimate net impact of incremental load from new data centers and other customer commitments.
- The retirement of the Rush Island Energy Center involves a securitization process with associated costs, which may impact future rate proceedings.
- The company needs to manage significant cost savings initiatives and continuous improvement efforts to maintain customer affordability.
- Potential impacts from new EPA regulations and the need to update the integrated resource plan (IRP) to accommodate future load growth and generation investments.
Q & A Highlights
Q: So just a real quick on Rush Island kind of that bid ask saw you guys got a third party media a few days ago. Any sort of read through from that timing or where the process could land within that $100 million range?
A: Yeah. Thanks Shar. We have posted a slide in the appendix Slide 27. That just provides to be listening a little bit of background on the case. But we were pleased that the judge ordered mediation, which hopefully will lead to some constructive settlement negotiations between the parties. We expect that mediation to take place this summer in the event that mediation isn't successful in reaching a settlement between the party. We would expect that the judge would likely have evidentiary hearings in September, and we'd still get resolution of the case this year. So I don't think any read-through on exactly where we'll end up between -- in that bid-ask spread, but nonetheless, we think of a positive step forward.
Q: And then just on the transmission side, and obviously, it was a little topical as part of the repairs on Tranche 2.0, 2.1. Any color at this point on how to think about the competitive allocation within that? Is it line-by-line, greenfield versus brownfield? And just remind us on potential timing of spend associated with these, what are what are in-service dates?
A: Yeah, Shar. All good questions. So when you look at Tranche 2.1 and you look at the map that we provided on page 9, you see a breakdown between the 765 kV lines and the 345 kV lines, and you see some of those in Missouri and Illinois. We're pretty excited about the way this is shaping up overall. With respect to the red lines, we see those as being more likely brownfield the green dotted lines more likely greenfield. And so you'll see a mix of those there. At this point, no specific cost estimates for those lines that run in our service territory. The $23 billion to $27 billion numbers we give overall or MISOs estimates for the total portfolio, but I can't give you a breakdown right now on those that are in our footprint. And of course, if the round brownfield, we would expect them to be allocated to us. If they're greenfield, we would expect to have to compete for those. And we were very pleased with our ability to compete for the Tranche 1 projects. As we noted on our -- in our prepared remarks, really winning all three that were in our service territory. And Shar, at the end of the day, we think it speaks to our ability to deliver these projects in a timely way in a cost effective way. And again, we feel like we are good at constructing these and great at operating them. And we've done a great job partnering with munis, co-ops, contractors and others to make sure we can we can deliver. Now with respect to the time line on the Tranche 1 projects, we really expect the construction of those to extend from 2026 to 2030. I think we have about $1.6 billion or so in our five year plan for this tranche one projects. And then with respect to with respect to the Tranche 2.1 projects, I think largely that spend is probably outside of our five year plan. However, there's really no reason that these have to happen sequentially to the extent that any of these Tranche 2.1 projects can be started and overlap with some of the work on Tranche 1. No problem there. And again, excited about this Tranche 2.1, but also expect and Tranche 2.2 that we'll see even more projects in our Missouri and Illinois footprints. And so overall, again, just very pleased with the work MISO is doing here and responsiveness to stakeholders in the process.
Q: So you just I wanted to ask on the on the data center construction slide. It just seems that you're really only kind of focusing on things where started turning on, but you have -- it looks looks like gigawatts of opportunity. The Missouri system seems to have capacity to supplement this 85 plus megawatts, if I'm right. But what do you think the tipping point is to really accelerate procurements in this next IRP? And I guess how many more megawatts do you think you'll have realistically kind of have clarity on by the time you get to that line?
A: Yeah. Nick, those are all good observations and takeaways from the information we provided on Slide 7. When you look at that graph on the right, there, we talk about the economic development pipeline we have thousands of megawatts or gigawatts of opportunity. And in fact, that that is true. So we've got just a number of parties that are doing engineering reviews and interconnection studies and all of that's great. Those are initial processes. What we called out on the left, however, is -- you mentioned you're turning. I would say we have construction agreements, it means we have an executed agreement between ourselves and a data center, which confirms transmission capacity cost to extend service and time lines, et cetera. And importantly, obligates the customer to pay for that extension of service with downpayments for equipment. So you're right, that things have begun to take shape. And so that's when we felt like we can move it into the category of really kind of talking about what we see in terms of the time line, how that would ramp up its overall size. And so we're pretty excited there to have a 250 megawatt data center that we see starting to use service in 2026 and ramping up through 2028. And of course, that's a nice tailwind as we think about that usage over that period of time. And then I mentioned this other 85 megawatts. We're not just going after data centers from an economic development standpoint, really going after manufacturing and others. And that 85 megawatts that you mentioned is really a mix of manufacturing, smaller data centers, et cetera. So look, we're pretty excited. There's a -- certainly, I think you mentioned there's a concentration of interest in Missouri. And to the extent that this load grows, that very well may require that we would provide an update to our IRP. So again, we expect that over the coming six months or so that we'll see a firming of some of these other economic development opportunities. As we further assess that load and what it means to our sales, and we give thought to what that means to our generation portfolio. That's where we expect that we would need to update our IRP with in mind right now, we're thinking February of next year.
Q: Just wanted to pick up -- I guess, start with the Chevron doctrine here. In recent changes, does that impact your thought process going forward? Or any thoughts you could share there?
A: Yeah. Nick, I don't know that it really changes our thought process going forward. Obviously, Chevron is going to probably have far-reaching implications for the
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
