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#Sure, <UNK>.
This is <UNK>.
You may recall when we gave the long-term guidance outlook back in February we, number one, said we expected 5% to 8% compound-annual EPS growth from 2016 through 2020.
The foundational element of that, of course, is the 6.5% rate-base growth that we have which we showed from 2015 to 2020.
Importantly, when we talked about that 5% to 8% compound-annual EPS growth, we were basing that off of an adjusted 2016 EPS guidance of $2.63.
Obviously if you took our guidance for this year, the midpoint's $2.50, but we added to that the impact we estimated at that time of the Noranda outage which was $0.13 at that time, to get to an adjusted midpoint of $2.63 and then base the earnings guidance off of that.
The reason we did that is that we do believe the impact of Noranda's outage on our earnings to be temporary.
As we mentioned on the call, we do expect to file a Missouri rate case in early July of this year.
We expect that, that rate case will reflect the reduced usage by Noranda and as our rates are adjusted next year, then the temporary impact of this earnings decline from the outage would be erased.
So that's how we expect it to go.
Long term in terms of our earnings growth guidance, Noranda may be there, Noranda may not be there; we are not speculating on that.
But we do believe that through the rate case process that the impact of the outage will be mitigated.
Yes.
That's absolutely right.
We said that in February, we stand by that.
As you know, the overall 6.5% rate-base growth is the foundation.
We've got about 2% growth forecasted for Missouri over that period of time.
We do believe both that rate-base growth as well as our earnings growth expectation of 5% to 8% can be achieved without the need for legislation in Missouri.
<UNK>, it's a good question.
I think going forward, continuing to think about that 38% effective tax rate is probably the right way to think about it, but to be aware that there could be some variation up or down from year to year based upon this new accounting guidance.
As mentioned on the call, what it would really be a function of is what the fair value is of long-term share-based compensation is at the time it vests, versus what's been reflected in book expense over the three years as it relates to our plans over the three-year vesting period.
That can create a little bit of volatility in the effective rate.
In this particular period, as you see, the value of what vested was greater than what had been recognized in expense over the past three years.
Therefore, the tax benefit was greater than the effective tax rate reflected over the past few years, so we ended up with a benefit this year.
But as noted on the talking points, it could be a benefit or it could be a detriment.
But I think in the absence of any further information, I think I would expect that 38% effective tax rate.
As it relates to this year, that item had a discrete impact on the first quarter, so it lowered the first-quarter effective tax rate.
At the end of the year, as we mentioned in the prepared remarks, we expect the effective tax rate to be around 35%, which would imply over the remainder of this year in the remaining three quarters that effective tax rate somewhere between 37% to 38%.
<UNK>, this is <UNK> <UNK>.
At this point in time, we are fully expecting just to go to each county and present the evidence of ---+ really their statutory obligation in each county is to ensure that the transmission line doesn't have any impact on the user safety of public roadways.
We will put that packet of information together for each county and pursue getting their assent when we make that demonstration.
At this point in time, we're not anticipating any additional litigation in that regard.
Thanks, <UNK>.
You bet, <UNK>.
How are you.
<UNK>, this is <UNK>.
Could you restate your first question.
We're not clear what statistics you are referring to.
<UNK>, this is <UNK>.
I think a couple things.
Number one, by and large, Illinois has clearly made progress in an improving reliability as well as responding to outage duration as a result of the grid modernization project.
By and large, what you are seeing between the two jurisdictions is that they are moving closer in terms of what their overall reliability and ultimate responsiveness to outages are.
Illinois will continue ---+ they have specific metrics that they have to hit as part of the Grid Modernization Act and they will continue to pursue that.
As part of the legislative effort in Missouri, there were specific performance metrics that are put out there as well for reliability and that was in the legislation.
I think importantly what really we were focused on and will continue to be focused on Missouri is to address the aging infrastructure.
So what are the kind of things that we would think about doing.
Well, we would certainly be doing many of the things that you're seeing over in Illinois.
Investing in smart meters, Missouri needs to do that.
And it's an opportunity not just for our customers ultimately to be able to use the more advanced meters, it's investing in a smarter grid, whether it be in the power lines, whether it be in automating much of the grid compared to where it is today.
Substations, all of these things are very important and things that we're doing in Illinois that we would be focused on doing in Missouri.
But also as part of the legislative effort we would be looking at the generation portfolio.
Clearly we have aging infrastructure there and we could do improvements in a more timely fashion, we think, in our generating power plants as well as investing in renewable energy which was a significant aspect of this bill.
So when you put all those things together, these are things that we would be focused on in Missouri, should we get legislation passed that would support that investment.
Those are the kind of things that we are going to continue to talk about with policymakers, both the remaining part of this session as well as, frankly, moving into next year, both during the rate case as well as preparing for the next legislative session.
We're going to have <UNK> <UNK>, she can jump in.
As we've seen some of these retirements, we think there are some transmission opportunities.
And so, <UNK>, why don't you jump in talk a little bit about some of those.
Yes.
It's a little too early to be specific about what projects, but process-wise when a generator applies to MISO to shut down even on a interim basis, there's a study that is done by our transmission planners if it's a generator on our system to determine what the transmission needs would be to make sure the system can still operate reliably.
So there's certainly the potential as these reported shutdowns are studied for our additional transmission investment.
The one thing I would point out is that because any needed investment here would be for reliability purposes, that would be outside of the competitive process and it would be Ameren's own companies that would be making any investment that was identified.
So, <UNK>, I apologize, I think I was saying <UNK> a moment ago.
It's <UNK>, so I apologize for that.
I'm sure <UNK> was not offended; hope that you're not as well.
<UNK>, this is <UNK> again.
I think a couple things.
It would be premature for us to say if we're going to do something special from a regulatory framework perspective.
Every time we move into a rate case we step back and say, okay, what from a policy perspective things that we want to pursue.
So we'll step back and think about that.
And in terms of the overall rate increase, it too is premature.
You will see a lot of that here coming up very soon in early July.
We will give you all of the specifics and as we move forward in the rest of the year, we will explain the case in more detail to you and the rest of our shareholders.
Thank you, <UNK>.
Good morning, <UNK>.
<UNK>, this is <UNK>.
That 2% I was referencing was rate base.
So overall we are expecting 6.5% compound-annual rate-base growth.
In Missouri, we expect it to be 2% compound-annual rate-base growth.
So really not commenting specifically there on earnings, but overall I would say that 6.5% rate-base growth is the midpoint of our long-term earnings-per-share growth guidance of 5% to 8%.
Consistent with what we've talked about in prior quarters, the bulk of that growth is coming in our FERC-regulated transmission and our Illinois electric and Illinois gas distribution businesses where we're allocating a significant amount of capital because of the constructive regulation we have in those jurisdictions.
We've typically experienced 11-month resolution of the rate cases in Missouri.
We hadn't given that, but to your point, what we said on our call today is we expect the impact to be about $0.15 this year.
And just to give you an idea of how that breaks down, this year we expect ---+ obviously, we experienced in the first quarter about a $0.03 drag on earnings.
We expect another $0.03 drag in the second quarter, $0.06 in the third quarter, and $0.03 again in the final quarter of the year in the fourth quarter.
So through the first half of this year about $0.06.
To your point, Noranda was up and running to some extent in the first quarter.
So I would say an impact on the order of $0.07, $0.06 to $0.07 in the early half of next year until we can get rates updated is probably a fair assumption.
Yes.
Noranda ---+ and we talked about this at some length in our February call.
Noranda has differential in rates, so between October and May of each year their rate has been $31 and during ---+ per megawatt hour, and June to September about $46.
So they've had differential, I'll call them winter and summer rates, and so there is a differentiated impact in those various quarters.
Sure, <UNK>.
What you're referring to in the Q, I believe, is that we actually lay out what the amount was that was actually included in rates when rates were set and then contrast that with the transmission costs that we are actually experiencing in 2016 and so there is a differential there.
The transmission costs have grown.
During our last rate case the transmission costs were removed from recovery in the FAC.
That's an element of lag that we are experiencing.
So you would expect as we go to file this next rate case that we would update our cost of service for the transmission costs that we're incurring and through the rate-case process you would expect then that, that increased cost would be incorporated into the revenue requirement.
You know, <UNK>, in the absence of a change in the regulatory framework or some mechanism to avoid that, there would be continuing drag on earnings or regulatory lag associated with that item.
It's something that certainly we will consider as we go into this next rate case is how to deal with that.
But absolutely at this point in time it is not incorporated into the FAC.
I would remind, <UNK>, that overall we continue to work very hard to earn as close to our allowed returns as we can.
We have had that lag from transmissions since the last rate case and we have been working hard to do what we can to find cost reductions in other areas.
We mentioned in the guidance earlier this year that year over year as we move from 2015 to 2016 that we expect overall our operations and maintenance expenses to be down in Missouri.
When you normalize for the Callaway refueling and remove the effect of Noranda, we expect to earn within 50 basis points of the allowed this year.
In isolation absolutely, yes, the increases in transmission costs are creating lag for us.
Yes.
I think was ---+ you might look.
I think it was in 2015, but I can't remember what the exact cutoff date was.
I think I'll let <UNK> address it.
I think we would have to give that one some thought whether that simplified works or not.
I don't know if I'd assume that to be the case.
As we work through the rate case, maybe there will be clarity brought to that issue.
But I wouldn't want to speculate that there would be some windfall that would be achieved as a result of that.
Good morning.
<UNK>, this is Warren.
A couple things.
Just in general, as you know, from a buyer perspective obviously you look in the past we have been a buyer of M&A.
But as I've said before and will continue to say, our policy has been we don't get into the specifics or comment on speculative transactions or M&A activities just in general.
That's not very constructive.
As you know, we've grown in the past through acquisitions.
But to be clear, our current plan is focused on the plan that I laid out before and that's on the organic growth in our regulated business.
We plan to deliver strong earnings growth that I outlined and it's driven by the rate-base growth, of course.
With our strong dividend, we believe we will deliver the superior value to our shareholders and ultimately to customers too.
M&A is happening in our space, so it doesn't surprise us that there continues to be some level of consolidation.
In particular, we continue to be attentive to the things going on in our space like other companies.
But whether we're a buyer or anything, that probably takes it one step too farther than just what we've done in the past.
<UNK>, this is <UNK>.
I will ask <UNK> <UNK> to speak up as well.
I think that there's ---+ whether there's going to be a specific workshop, I don't think there's anything that's been decided in particular on that, that's always a possibility.
I don't think the Commission has come out with a specific statement or ruling that they plan on doing that.
<UNK>, I don't know.
I'll let you ---+
I think that's right, <UNK>.
I think the Commission remains focused on trying to help deal with this regulatory lag issue.
I think that could potentially be an outcome to work through the summer to help gain some additional support with respect to what we're trying to do here in Missouri.
Sure, <UNK>, this is <UNK>.
I guess a couple things.
Number one, the session, as I said, ends this Friday.
The reality is time is very short.
While comprehensive performance based regulation legislation will not pass, at least from our perspective, it doesn't mean that we still don't have conversations with key stakeholders to see if we can make some level of progress.
It's probably not appropriate for me to speculate, frankly, to say what that may or may not look like.
We will know, frankly, in a few short days whether anything happens.
But time is short.
While it may be difficult, it doesn't mean that we are still not at the table talking to the key stakeholders.
Stay tuned That's a good way to put it.
Sure.
Yes, <UNK>, this is <UNK>.
Still if you look at our slides that we've got out there today, we look to keep a parent Company cap structure around 50% equity.
Today I think in our Missouri rates we've got a little north of 51%, in Illinois about 50%.
The transmission business, depending on where it's at, anywhere from 51% to 56% with our hypothetical cap structure for ATXI.
We have, over time, tried to keep those all in the ballpark in the general vicinity of one another and generally keep strong balance sheets and solid credit ratings.
I would say in Missouri we really haven't experienced any sort of look-through kind of issue, if that's what you're getting at.
I think over time in Missouri we have been able to demonstrate that the equity in the utility balance sheet hasn't been funded by any debt at the parent.
So largely, I would say, it's by choice.
We think it's good to keep all of those in general alignment.
Like I said, keep a strong balance sheet.
I do think as you look around the state there's different historical practices in terms of use of the parent Company balance sheet or utility-specific balance sheet, but seems more situational versus some bright-line test or standard practice.
You're welcome.
