Ameren executives have reassured shareholders that Missouri’s capacity shortfall beginning this summer is no cause for panic.  

Speaking May 3 on a first-quarter earnings call, CFO Michael Moehn said he doesn’t expect Missouri ratepayers to see “material” bill impacts from MISO’s capacity auction. The utility also doesn’t expect to encounter “any issues with providing reliable electric service throughout the year for our customers,” he said.  

MISO’s recent capacity auction returned insufficient capacity for the upcoming fall and spring 2025 in Missouri’s Zone 5, where capacity prices hit the $719.81/MW-day limit on par with building new generation.   

Otherwise, all local resource zones cleared at $30/MW-day for the summer, $15/MW-day for the fall, $0.75/MW-day for the winter and $34.10/MW-day for the spring. Zone 5 contains local balancing authorities Ameren Missouri and the Columbia, Mo., Water and Light Department. (See Missouri Zone Comes up Short in MISO’s 2nd Seasonal Capacity Auction, Prices Surpass $700/MW-day.)  

Moehn said the cost of new entry prices in MISO Zone 5 are a function of “higher load requirements, changes to the accredited capacity of generation available and reduced import capability.”  

He said auction results indicate that Ameren Missouri needs to redouble efforts to “execute the generation plans” laid out in its integrated resource planning. The pairing of new, large loads with new renewable generation means that significant transmission expansion is more necessary than ever to maintain reliability, he said.  

“We stand ready to work with stakeholders in our region to address the capacity needs,” Moehn said. He added that the Ameren Illinois and Ameren Missouri service territories are on track to experience mounting load growth, with new projects proposed from the automotive, aerospace manufacturing, data center and agricultural industries.  

Ameren’s retiring Rush Island Energy Center — which played a role in the Zone 5 capacity shortfall — also factored into the utility’s earnings picture for the first quarter.  

Ameren announced first-quarter earnings of $261 million ($0.98/share) compared to $264 million ($1/share) a year ago. CEO Marty Lyons said unseasonably warm conditions in February and March reduced profits, as did expenses related to mitigation relief stemming from Rush Island’s unresolved air pollution case.   

“Despite the year-to-date weather headwinds and the Rush Island charge, our team is taking steps to contain spending, and we remain on track to deliver within our 2024 earnings guidance range of $4.52 per share to $4.72 per share,” Lyons said. 

For the rest of 2024, Ameren will implement hiring restrictions, reduce its contractor and consultant workforce and cut back on discretionary spending, Moehn said. 

Coal Woes

The company recently filed a plan with the U.S. District Court of Eastern Missouri to remediate 14 years of unlawful air pollution from Rush Island. The $20 million plan involves a surrender of the plant’s sulfur dioxide allowances under EPA’s cap-and-trade program, distributing air filters to disadvantaged households downwind of the pollution and an offer to purchase 20 electric school buses and 40 charging stations for the St. Louis area. 

The U.S. Department of Justice, on the other hand, insists Ameren spend $120 million on a plan including more intensive bus electrification and residential filtration programs. (See Court: Ameren Still Without Remedy for Years of Rush Island Air Pollution.)  

Ameren expects evidentiary hearings on the matter this summer and the court’s decision by the end of the year.  

“When you look at the components of the two programs, they are very similar in terms of electric school buses, air filtration program, charging infrastructure. … It really is seemingly not a matter of the program mix, but sort of the extent of them and the cost of them. So, we can’t predict what mitigation the court would ultimately order,” Lyons said.  

He added that any penalty will be “nonrecurring and onetime and won’t be something that affects ongoing operations or earnings.” 

The district court last year ordered Rush Island to shut down no later than Oct. 15. Ameren opted to close the plant rather than spend several million dollars to install a flue gas desulfurization system to scrub excess emissions. The Justice Department and Ameren have been at an impasse for two years over how to remediate Rush Island’s longstanding environmental harms beyond the plant’s early retirement.  

Lyons said Ameren is progressing on its request with the Missouri Public Service Commission to securitize the remaining balance of Rush Island, noting that PSC staff in March recommended the company be allowed to securitize $497 million instead of an original request for $519 million. The PSC is expected to issue a ruling in late June.  

Lyons cautioned that another Ameren Missouri coal plant, the Labadie Energy Center, faces an uncertain future. While units at the plant aren’t slated to retire until 2036 and 2042, they are vulnerable to EPA’s new rule stipulating that coal plants either close by 2039 or use carbon capture or other technologies to capture 90% of their emissions by 2032. (See EPA Power Plant Rules Squeeze Coal Plants; Existing Gas Plants Exempt.)  

Lyons said EPA “expects generators to rely heavily on carbon capture and storage technologies, which are not ready for full-scale economy-wide deployment.” He added that the rule’s application to new gas-fired units with greater than 40% capacity factors will likely complicate Ameren’s plan to add a gas-fired combined cycle plant sometime in the early 2030s to maintain reliability.  Litigation by stakeholders is likely, Lyons said.  

“While we are still assessing the impact of the rules on our integrated resource plan, these new rules are making it more challenging and costly to maintain existing dispatchable generation or build new dispatchable generation. These challenges come at a time when supply and demand is tight, and the industry has seen significant potential load growth. … These rules, if not modified, would require significant investments beyond what’s in our current 10-year pipeline to meet compliance obligations and maintain a reliable system,” Lyons said.  

Transmission Awards

Finally, Lyons called attention to MISO selecting Ameren to build three competitively bid projects from its first, $10 billion long-range transmission portfolio. (See MISO Chooses Ameren for 3rd Long-range Tx Project.) He said the awards provide evidence of the company’s “record of being able to deliver cost-effective, high-value projects to our communities.”  

“Ultimately, Ameren was assigned or awarded approximately 25% of total Tranche 1 portfolio projects addressing the MISO Midwest region and 100% of the projects in our service territory,” Lyons said.  

Lyons said he expects construction on the projects to “substantially begin in 2026.” He noted also that Ameren representatives have been collaborating with MISO planners in “ultimately approving the most appropriate path forward” on the approximately $20 billion in long-range transmission projects proposed in the RTO’s second portfolio.