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, 2016



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



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

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, 2016, 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
	Combined Notes to Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	59

PART II Other Information

Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 6.	Exhibits	61

Signatures		62

This report contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements should be read with the cautionary statements and important factors under the heading “Forward-looking Statements.” Forward-looking statements are all statements other than statements of historical fact, including those statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” and similar expressions.

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.

Form 10-K – The combined Annual Report on Form 10-K for the year ended December 31, 2015, filed by the Ameren Companies with the SEC.

MEEIA 2013 – Ameren Missouri’s portfolio of customer energy efficiency programs, net shared benefits, and performance incentive for 2013 through 2015, as approved by the MoPSC in August 2012.

MEEIA 2016 – Ameren Missouri’s portfolio of customer energy efficiency programs, throughput disincentive, and performance incentive for March 2016 through February 2019, as approved by the MoPSC in February 2016.

MoOPC – Missouri Office of Public Counsel.

New Madrid Smelter – Aluminum smelter located in southeast Missouri that was formerly owned by Noranda. Noranda sold the New Madrid Smelter to ARG International AG in October 2016.

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 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 Missouri’s July 2016 electric rate case filing, Ameren Missouri's appeal of a MoPSC order that clarified the method applied to determine an input used to calculate its performance incentive under MEEIA 2013, Ameren Illinois’ April 2016 annual electric distribution service 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, the related financial commitments required by the IEIMA;


•	our ability to align our overall spending, both operating and capital, with regulatory frameworks established by our regulators in an attempt to earn our allowed return on equity;


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


•	the effects of changes in federal, state, or local tax laws, regulations, interpretations, or rates 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;


•	the timing of increasing capital expenditure and operating expense requirements and our ability to recover these costs in a timely manner;


•	the cost and availability of fuel, such as coal, natural gas, and enriched uranium used to produce electricity; the cost and availability of purchased power 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 ultra-low-sulfur coal used for Ameren Missouri’s compliance with environmental regulations;


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


•	the ability to obtain sufficient insurance, including insurance relating to 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 key customers, interest rates, collection of our receivable balances, and demand for our products;


•	suspended operations at the New Madrid Smelter, and the resulting impacts to Ameren Missouri's ability to recover its revenue requirement in its July 2016 electric rate case and future rate cases to accurately reflect the New Madrid Smelter’s actual sales volumes;


•	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 distribution and transmission 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, 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, and any related tax implications;

•

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 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 data and account 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,
	2016		2015		2016		2015
Operating Revenues:
Electric	$	1,725	$	1,700	$	4,101	$	4,093
Gas	134		133		619		697
Total operating revenues	1,859		1,833		4,720		4,790
Operating Expenses:
Fuel	205		259		574		670
Purchased power	178		153		451		393
Gas purchased for resale	34		38		227		320
Other operations and maintenance	411		428		1,246		1,256
Provision for Callaway construction and operating license (Note 2)	—		—		—		69
Depreciation and amortization	211		201		628		594
Taxes other than income taxes	129		128		358		369
Total operating expenses	1,168		1,207		3,484		3,671
Operating Income	691		626		1,236		1,119
Other Income and Expense:
Miscellaneous income	18		19		54		54
Miscellaneous expense	8		5		21		22
Total other income	10		14		33		32
Interest Charges	97		87		287		264
Income Before Income Taxes	604		553		982		887
Income Taxes	233		208		356		333
Income from Continuing Operations	371		345		626		554
Income from Discontinued Operations, Net of Taxes	—		—		—		52
Net Income	371		345		626		606
Less: Net Income from Continuing Operations Attributable to Noncontrolling Interests	2		2		5		5
Net Income Attributable to Ameren Common Shareholders:
Continuing Operations	369		343		621		549
Discontinued Operations	—		—		—		52
Net Income Attributable to Ameren Common Shareholders	$	369	$	343	$	621	$	601

Earnings per Common Share – Basic:
Continuing Operations	$	1.52	$	1.42	$	2.56	$	2.27
Discontinued Operations	—		—		—		0.21
Earnings per Common Share – Basic	$	1.52	$	1.42	$	2.56	$	2.48

Earnings per Common Share – Diluted:
Continuing Operations	$	1.52	$	1.41	$	2.56	$	2.26
Discontinued Operations	—		—		—		0.21
Earnings per Common Share – Diluted	$	1.52	$	1.41	$	2.56	$	2.47

Dividends per Common Share	$	0.425	$	0.41	$	1.275	$	1.23
Average Common Shares Outstanding – Basic	242.6		242.6		242.6		242.6
Average Common Shares Outstanding – Diluted	242.9		243.9		243.0		243.8

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,
	2016			2015		2016		2015
Income from Continuing Operations	$	371		$	345	$	626	$	554
Other Comprehensive Income from Continuing Operations, Net of Taxes
Pension and other postretirement benefit plan activity, net of income taxes of $-, $-, $4, and $4, respectively	(1		)	—		1		4
Comprehensive Income from Continuing Operations	370			345		627		558
Less: Comprehensive Income from Continuing Operations Attributable to Noncontrolling Interests	2			2		5		5
Comprehensive Income from Continuing Operations Attributable to Ameren Common Shareholders	368			343		622		553

Comprehensive Income from Discontinued Operations Attributable to Ameren Common Shareholders	—			—		—		52
Comprehensive Income Attributable to Ameren Common Shareholders	$	368		$	343	$	622	$	605

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, 2016			December 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	18		$	292
Accounts receivable – trade (less allowance for doubtful accounts of $19 and $19, respectively)	543			388
Unbilled revenue	240			239
Miscellaneous accounts receivable	49			98
Materials and supplies	551			538
Current regulatory assets	107			260
Other current assets	76			88
Assets of discontinued operations	15			14
Total current assets	1,599			1,917
Property and Plant, Net	19,647			18,799
Investments and Other Assets:
Nuclear decommissioning trust fund	599			556
Goodwill	411			411
Regulatory assets	1,312			1,382
Other assets	566			575
Total investments and other assets	2,888			2,924
TOTAL ASSETS	$	24,134		$	23,640
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term debt	$	431		$	395
Short-term debt	608			301
Accounts and wages payable	513			777
Taxes accrued	159			43
Interest accrued	110			89
Customer deposits	104			100
Current regulatory liabilities	87			80
Other current liabilities	252			279
Liabilities of discontinued operations	27			29
Total current liabilities	2,291			2,093
Long-term Debt, Net	6,607			6,880
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes, net	4,255			3,885
Accumulated deferred investment tax credits	56			60
Regulatory liabilities	1,974			1,905
Asset retirement obligations	636			618
Pension and other postretirement benefits	499			580
Other deferred credits and liabilities	481			531
Total deferred credits and other liabilities	7,901			7,579
Commitments and Contingencies (Notes 2, 9, and 10)
Ameren Corporation Shareholders’ Equity:
Common stock, $.01 par value, 400.0 shares authorized – shares outstanding of 242.6	2			2
Other paid-in capital, principally premium on common stock	5,550			5,616
Retained earnings	1,643			1,331
Accumulated other comprehensive loss	(2		)	(3		)
Total Ameren Corporation shareholders’ equity	7,193			6,946
Noncontrolling Interests	142			142
Total equity	7,335			7,088
TOTAL LIABILITIES AND EQUITY	$	24,134		$	23,640

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,
	2016			2015
Cash Flows From Operating Activities:
Net income	$	626		$	606
Income from discontinued operations, net of taxes	—			(52		)
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for Callaway construction and operating license	—			69
Depreciation and amortization	625			582
Amortization of nuclear fuel	63			71
Amortization of debt issuance costs and premium/discounts	17			16
Deferred income taxes and investment tax credits, net	364			318
Allowance for equity funds used during construction	(20		)	(19		)
Share-based compensation costs	17			20
Other	(9		)	(8		)
Changes in assets and liabilities:
Receivables	(134		)	(71		)
Materials and supplies	(13		)	(23		)
Accounts and wages payable	(196		)	(172		)
Taxes accrued	119			116
Regulatory assets and liabilities	146			74
Assets, other	9			17
Liabilities, other	(29		)	(26		)
Pension and other postretirement benefits	(26		)	29
Net cash provided by operating activities – continuing operations	1,559			1,547
Net cash used in operating activities – discontinued operations	—			(5		)
Net cash provided by operating activities	1,559			1,542
Cash Flows From Investing Activities:
Capital expenditures	(1,496		)	(1,332		)
Nuclear fuel expenditures	(41		)	(30		)
Purchases of securities – nuclear decommissioning trust fund	(310		)	(301		)
Sales and maturities of securities – nuclear decommissioning trust fund	297			290
Proceeds from note receivable – Marketing Company	—			12
Contributions to note receivable – Marketing Company	—			(8		)
Other	(1		)	7
Net cash used in investing activities – continuing operations	(1,551		)	(1,362		)
Net cash used in investing activities – discontinued operations	—			—
Net cash used in investing activities	(1,551		)	(1,362		)
Cash Flows From Financing Activities:
Dividends on common stock	(309		)	(298		)
Dividends paid to noncontrolling interest holders	(5		)	(5		)
Short-term debt, net	307			69
Maturities of long-term debt	(389		)	(114		)
Issuances of long-term debt	149			249
Employee withholding taxes related to share-based payments	(32		)	(12		)
Capital issuance costs	(1		)	(2		)
Other	(2		)	—
Net cash used in financing activities – continuing operations	(282		)	(113		)
Net change in cash and cash equivalents	(274		)	67
Cash and cash equivalents at beginning of year	292			5
Cash and cash equivalents at end of period	$	18		$	72

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,
	2016		2015		2016		2015
Operating Revenues:
Electric	$	1,144	$	1,151	$	2,682	$	2,752
Gas	20		19		90		101
Other	1		1		1		2
Total operating revenues	1,165		1,171		2,773		2,855
Operating Expenses:
Fuel	205		259		574		670
Purchased power	77		29		169		87
Gas purchased for resale	6		5		33		43
Other operations and maintenance	220		233		670		673
Provision for Callaway construction and operating license (Note 2)	—		—		—		69
Depreciation and amortization	130		125		384		367
Taxes other than income taxes	96		97		252		262
Total operating expenses	734		748		2,082		2,171
Operating Income	431		423		691		684
Other Income and Expense:
Miscellaneous income	14		14		38		37
Miscellaneous expense	2		3		6		8
Total other income	12		11		32		29
Interest Charges	53		54		158		164
Income Before Income Taxes	390		380		565		549
Income Taxes	148		140		215		205
Net Income	242		240		350		344
Other Comprehensive Income	—		—		—		—
Comprehensive Income	$	242	$	240	$	350	$	344


Net Income	$	242	$	240	$	350	$	344
Preferred Stock Dividends	1		1		3		3
Net Income Available to Common Shareholder	$	241	$	239	$	347	$	341

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, 2016		December 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	1	$	199
Advances to money pool	201		36
Accounts receivable – trade (less allowance for doubtful accounts of $7 and $7, respectively)	272		174
Accounts receivable – affiliates	20		54
Unbilled revenue	144		128
Miscellaneous accounts receivable	33		78
Materials and supplies	392		387
Current regulatory assets	47		89
Other current assets	37		41
Total current assets	1,147		1,186
Property and Plant, Net	11,294		11,183
Investments and Other Assets:
Nuclear decommissioning trust fund	599		556
Regulatory assets	514		605
Other assets	335		321
Total investments and other assets	1,448		1,482
TOTAL ASSETS	$	13,889	$	13,851
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	431	$	266
Accounts and wages payable	209		417
Accounts payable – affiliates	89		56
Taxes accrued	149		31
Interest accrued	66		59
Current regulatory liabilities	11		28
Other current liabilities	116		120
Total current liabilities	1,071		977
Long-term Debt, Net	3,569		3,844
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes, net	3,003		2,844
Accumulated deferred investment tax credits	54		58
Regulatory liabilities	1,211		1,172
Asset retirement obligations	630		612
Pension and other postretirement benefits	183		234
Other deferred credits and liabilities	21		28
Total deferred credits and other liabilities	5,102		4,948
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	1,824		1,822
Preferred stock	80		80
Retained earnings	1,732		1,669
Total shareholders’ equity	4,147		4,082
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	13,889	$	13,851

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,
	2016			2015
Cash Flows From Operating Activities:
Net income	$	350		$	344
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for Callaway construction and operating license	—			69
Depreciation and amortization	381			356
Amortization of nuclear fuel	63			71
Amortization of debt issuance costs and premium/discounts	5			5
Deferred income taxes and investment tax credits, net	159			88
Allowance for equity funds used during construction	(16		)	(16		)
Other	—			1
Changes in assets and liabilities:
Receivables	(95		)	(51		)
Materials and supplies	(5		)	(26		)
Accounts and wages payable	(176		)	(177		)
Taxes accrued	165			243
Regulatory assets and liabilities	60			101
Assets, other	(8		)	6
Liabilities, other	13			11
Pension and other postretirement benefits	(8		)	15
Net cash provided by operating activities	888			1,040
Cash Flows From Investing Activities:
Capital expenditures	(500		)	(444		)
Nuclear fuel expenditures	(41		)	(30		)
Purchases of securities – nuclear decommissioning trust fund	(310		)	(301		)
Sales and maturities of securities – nuclear decommissioning trust fund	297			290
Money pool advances, net	(165		)	(250		)
Other	(5		)	(4		)
Net cash used in investing activities	(724		)	(739		)
Cash Flows From Financing Activities:
Dividends on common stock	(285		)	(490		)
Dividends on preferred stock	(3		)	(3		)
Short-term debt, net	—			(97		)
Maturities of long-term debt	(260		)	(114		)
Issuances of long-term debt	149			249
Capital contribution from parent	38			224
Capital issuance costs	(1		)	(2		)
Net cash used in financing activities	(362		)	(233		)
Net change in cash and cash equivalents	(198		)	68
Cash and cash equivalents at beginning of year	199			1
Cash and cash equivalents at end of period	$	1		$	69

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,
	2016			2015		2016			2015
Operating Revenues:
Electric	$	562		$	540	$	1,365		$	1,316
Gas	114			115		530			597
Total operating revenues	676			655		1,895			1,913
Operating Expenses:
Purchased power	110			128		304			317
Gas purchased for resale	28			33		194			277
Other operations and maintenance	198			202		592			606
Depreciation and amortization	80			74		237			220
Taxes other than income taxes	30			29		98			101
Total operating expenses	446			466		1,425			1,521
Operating Income	230			189		470			392
Other Income and Expense:
Miscellaneous income	4			4		15			15
Miscellaneous expense	3			3		11			10
Total other income	1			1		4			5
Interest Charges	35			33		105			99
Income Before Income Taxes	196			157		369			298
Income Taxes	77			59		144			114
Net Income	119			98		225			184
Other Comprehensive Loss, Net of Taxes:
Pension and other postretirement benefit plan activity, net of income taxes (benefit) of $(1), $(1), $(2) and $(2), respectively	(1		)	—		(3		)	(2		)
Comprehensive Income	$	118		$	98	$	222		$	182


Net Income	$	119		$	98	$	225		$	184
Preferred Stock Dividends	—			—		2			2
Net Income Available to Common Shareholder	$	119		$	98	$	223		$	182

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, 2016		December 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	3	$	71
Accounts receivable – trade (less allowance for doubtful accounts of $12 and $12, respectively)	259		204
Accounts receivable – affiliates	13		22
Unbilled revenue	96		111
Miscellaneous accounts receivable	11		19
Materials and supplies	159		151
Current regulatory assets	59		167
Other current assets	17		15
Total current assets	617		760
Property and Plant, Net	7,285		6,848
Investments and Other Assets:
Goodwill	411		411
Regulatory assets	791		771
Other assets	98		113
Total investments and other assets	1,300		1,295
TOTAL ASSETS	$	9,202	$	8,903
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	—	$	129
Short-term debt	157		—
Borrowings from money pool	54		—
Accounts and wages payable	214		249
Accounts payable – affiliates	59		66
Taxes accrued	8		13
Interest accrued	40		28
Customer deposits	68		69
Mark-to-market derivative liabilities	21		45
Current environmental remediation	35		28
Current regulatory liabilities	56		39
Other current liabilities	99		86
Total current liabilities	811		752
Long-term Debt, Net	2,344		2,342
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes, net	1,618		1,480
Accumulated deferred investment tax credits	2		2
Regulatory liabilities	761		732
Pension and other postretirement benefits	262		271
Environmental remediation	171		205
Other deferred credits and liabilities	212		222
Total deferred credits and other liabilities	3,026		2,912
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	952		825
Accumulated other comprehensive income	2		5
Total shareholders’ equity	3,021		2,897
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	9,202	$	8,903

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,
	2016			2015
Cash Flows From Operating Activities:
Net income	$	225		$	184
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	236			218
Amortization of debt issuance costs and premium/discounts	11			11
Deferred income taxes and investment tax credits, net	141			108
Other	(8		)	(7		)
Changes in assets and liabilities:
Receivables	(36		)	45
Materials and supplies	(8		)	3
Accounts and wages payable	(17		)	11
Taxes accrued	5			(10		)
Regulatory assets and liabilities	75			(31		)
Assets, other	11			6
Liabilities, other	6			(10		)
Pension and other postretirement benefits	(14		)	13
Net cash provided by operating activities	627			541
Cash Flows From Investing Activities:
Capital expenditures	(683		)	(620		)
Other	4			5
Net cash used in investing activities	(679		)	(615		)
Cash Flows From Financing Activities:
Dividends on common stock	(95		)	—
Dividends on preferred stock	(2		)	(2		)
Short-term debt, net	157			(32		)
Money pool borrowings, net	54			107
Maturities of long-term debt	(129		)	—
Other	(1		)	—
Net cash provided by (used in) financing activities	(16		)	73
Net change in cash and cash equivalents	(68		)	(1		)
Cash and cash equivalents at beginning of year	71			1
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, 2016

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005. Ameren’s primary assets are its equity interests in its subsidiaries, including Ameren Missouri and Ameren Illinois. 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 are listed below. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.


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


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

Additionally, Ameren has a subsidiary, ATXI, that 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 is also pursuing projects to improve electric transmission system reliability within Ameren Missouri's and Ameren Illinois' service territories as well as evaluating competitive electric transmission investment opportunities outside of these territories, including investments outside of MISO.

Ameren also has various other subsidiaries that conduct activities such as the provision of shared services.

Unless otherwise stated, these notes to Ameren’s financial statements exclude discontinued operations for all periods presented. See Note 12 – Discontinued Operations in this report and Note 16 – Divestiture Transactions and Discontinued Operations under Part II, Item 8, of the Form 10-K for additional information.

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, and therefore their financial statements are not prepared on a consolidated basis. All tabular dollar amounts are in millions, unless otherwise indicated.

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. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K.

Asset Retirement Obligations

AROs at Ameren, Ameren Missouri, and Ameren Illinois increased during the nine months ended September 30, 2016, to reflect the accretion of the estimated obligation due to the passage of time, partially offset by immaterial settlements.

Share-based Compensation

A summary of nonvested performance share units at September 30, 2016, and changes during the nine months ended September 30, 2016, under the 2006 Incentive Plan and the 2014 Incentive Plan are presented below:



	Performance Share Units
	Share Units		Weighted-average Fair Value per Share Unit
Nonvested at January 1, 2016	1,024,870		$	46.08
Granted^(a)	587,197		44.13
Forfeitures	(15,949	)	45.07
Vested^(b)	(23,114	)	44.41
Nonvested at September 30, 2016	1,573,004		$	45.39


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

The fair value of each performance share unit awarded in 2016 under the 2014 Incentive Plan was determined to be $44.13, which was based on Ameren’s closing common share price of $43.23 at December 31, 2015, 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 relative to the designated peer group beginning January 1, 2016. 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 1.31%, volatility of 15% to 20% for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period.

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 – 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 are therefore not included in Ameren Illinois’ revenues and expenses. The following table presents excise taxes recorded in “Operating Revenues – Electric,” “Operating Revenues – Gas” and “Operating Expenses – Taxes other than income taxes” for the three and nine months ended September 30, 2016 and 2015:



	Three Months				Nine Months
	2016		2015		2016		2015
Ameren Missouri	$	52	$	52	$	122	$	127
Ameren Illinois	9		9		40		42
Ameren	$	61	$	61	$	162	$	169

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 potential dilution that would occur if certain stock-based performance share units were settled. The number of performance share units assumed to be settled was 0.3 million and 0.4 million in the three and nine months ended September 30, 2016, respectively, and 1.3 million and 1.2 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, 2016 and 2015. The calculation of diluted earnings per share

prospectively reflected the adoption of FASB guidance related to employee share-based payment accounting discussed below.

Accounting and Reporting Developments

Below is a summary of recently issued authoritative accounting standards relevant to the Ameren Companies.

Revenue from Contracts with Customers

In May 2014, the FASB issued authoritative accounting 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 also 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. Entities can apply the guidance retrospectively to each reporting period presented or retrospectively by recording a cumulative effect adjustment to retained earnings in the period of initial adoption. The Ameren Companies are currently assessing the impact of this guidance on their results of operations, financial position, and disclosures, including their accounting for contributions in aid of construction and similar arrangements, as well as the transition method that they will use to adopt the guidance. The guidance will be effective for the Ameren Companies in the first quarter of 2018.

Amendments to the Consolidation Analysis

In February 2015, the FASB issued authoritative accounting guidance that amends the consolidation analysis for variable interest entities and voting interest entities. The new guidance affects (1) limited partnerships, similar legal entities, and certain investment funds, (2) the evaluation of fees paid to a decision maker or service provider as a variable interest, (3) how fee arrangements impact the primary beneficiary determination, and (4) the evaluation of related party relationships on the primary beneficiary determination. The adoption of this guidance in the first quarter of 2016 did not impact the Ameren Companies’ results of operations, financial position, liquidity, or disclosures.

Leases

In February 2016, the FASB issued authoritative accounting guidance that will require an entity to recognize assets and liabilities arising from a lease. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease will depend primarily on its classification as a finance or operating lease. The guidance also requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. The guidance will be effective for the Ameren Companies in the first quarter of 2019, with an option for entities to adopt early. Upon adoption, the Ameren Companies will recognize and measure operating leases on their respective balance sheets at the beginning of the earliest period presented. The Ameren Companies are currently assessing the impact of

this guidance on their results of operations, financial position, statement of cash flows, and disclosures.

Improvements to Employee Share-Based Payment Accounting

In March 2016, the FASB issued authoritative accounting guidance that simplifies the accounting for share-based payment transactions, including the income tax consequences, the calculation of diluted earnings per share, the treatment of forfeitures, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Ameren determines for each performance share unit award whether the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes results in either an excess tax benefit or an excess tax deficit. Previously, excess tax benefits were recognized in "Other paid-in capital" on Ameren’s consolidated balance sheet, and in certain cases, excess tax deficits were recognized in “Income taxes” on Ameren’s consolidated income statement. The new guidance increases income statement volatility by requiring all excess tax benefits and deficits to be recognized in “Income taxes,” and treated as discrete items in the period in which they occur. Ameren adopted this guidance in the first quarter of 2016 and prospectively applied the amendment in this guidance requiring recognition of excess tax benefits and deficits in the income statement, which resulted in recognition of a $21 million income tax benefit and a corresponding $21 million increase in income from continuing operations and net income (9 cents per diluted share) during that period. Also as a result of the adoption of this guidance, Ameren made an accounting policy election to continue to estimate the number of forfeitures expected to occur. The amendments in the guidance that require application using a modified retrospective transition method did not impact Ameren. Therefore, there was no cumulative-effect adjustment to retained earnings recognized as of January 1, 2016. Ameren applied the amendments in this guidance relating to classification on the statement of cash flows retrospectively. As a result, for the nine months ended September 30, 2015, Ameren reclassified, for comparison purposes, $2 million of excess tax benefits on the statement of cash flows from financing to operating activity, and $12 million of employee payroll taxes related to share-based payments from operating to financing activity.

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

2016 Electric Rate Case

On July 1, 2016, Ameren Missouri filed a request with the MoPSC seeking approval to increase its annual revenues for electric service by $206 million. The electric rate increase request

is based on a 9.9% return on equity, a capital structure comprised of 51.8% equity, a rate base of $7.2 billion, and a test year ended March 31, 2016, with certain pro-forma adjustments through the true-up date of December 31, 2016. The rate request includes $74 million that primarily relates to nearly $1.4 billion of new gross electric infrastructure investments since the true-up date in Ameren Missouri’s last electric rate case. This $74 million includes depreciation expenses of $39 million, return on rate base of $25 million, and increased property taxes of $10 million. The rate request also includes $51 million related to reduced customer sales volumes, including reductions from the suspended operations at the New Madrid Smelter, and $34 million related to increases in transmission charges. Other changes in expenses reflected in the rate request include decreases in pension and other post-employment benefit plan expenses of $24 million and solar rebate expenses of $15 million, both of which are subject to regulatory tracking mechanisms; increased net energy costs, excluding the impact of the suspended operations at the New Madrid Smelter and other customer sales volumes, of $23 million; and increased income taxes of $15 million.

As a part of its filing, Ameren Missouri requested the amortization over ten years of an estimated $81 million of lost fixed cost recovery due to lower sales volumes, as discussed below, from the New Madrid Smelter during the period April 2015 through May 2017.

Ameren Missouri also requested continued use of its FAC and the regulatory tracking mechanisms for pension and postretirement benefits and uncertain income tax positions that the MoPSC previously authorized in earlier electric rate orders. Additionally, Ameren Missouri requested the implementation of a new regulatory tracking mechanism for transmission charges and revenues.

The MoPSC proceeding relating to the proposed electric service rate changes will take place over a period of up to 11 months, with a decision by the MoPSC expected by late April 2017 and new rates effective in late May 2017. Ameren Missouri cannot predict the level of any electric service rate change the MoPSC may approve, when any rate change may go into effect, whether the requested regulatory tracking mechanisms will be approved, or whether any rate increase that may eventually be approved will be sufficient for Ameren Missouri to recover its costs and earn a reasonable return on its investments when the increase goes into effect.

Noranda and New Madrid Smelter

In the first quarter of 2016, Noranda suspended operations at the New Madrid Smelter and filed voluntary petitions for a court-supervised restructuring process under Chapter 11 of the United States Bankruptcy Code. In October 2016, Noranda sold the New Madrid Smelter to ARG International AG. As of September 30, 2016, Ameren Missouri has been paid in full for all previous electric service amounts, and expects to continue to be paid in full for the minimal amount of electric service it is currently providing to the New Madrid Smelter.

In its April 2015 electric rate order, the MoPSC approved a rate design that established $78 million in annual revenues, net of fuel and purchased power costs, as the New Madrid Smelter’s portion of Ameren Missouri’s revenue requirement. In 2016, as a result of the suspended operations, actual sales volumes to the New Madrid Smelter are significantly below the sales volumes reflected in rates. As a result, full recovery by Ameren Missouri of its revenue requirement has not occurred and will not occur until rates are adjusted prospectively by the MoPSC in the July 2016 electric rate case to accurately reflect the actual sales volumes to the New Madrid Smelter. In its July 2016 electric rate case, Ameren Missouri is seeking to recover the April 2015 through May 2017 lost fixed costs caused by the lower sales volumes to New Madrid Smelter. Also, as a result of the New Madrid Smelter’s suspended operations, Ameren Missouri is applying a provision in its FAC tariff that, under certain circumstances, allows Ameren Missouri to retain a portion of the revenues from any off-system sales it makes as a result of reduced sales to the smelter. The current market price of electricity is less than the New Madrid Smelter’s electric rate, and Ameren Missouri expects market prices to remain below the New Madrid Smelter’s electric rate through the date that new rates in the July 2016 rate case become effective. Accordingly, this FAC-tariff provision will not enable Ameren Missouri to fully recover its revenue requirement under current market conditions. Operations at the New Madrid Smelter remain suspended and Ameren Missouri is uncertain of future sales to the smelter.

MEEIA 2013

The MEEIA 2013 performance incentive allowed Ameren Missouri an opportunity to earn additional revenues by achieving certain customer energy efficiency goals, including $19 million if 100% of the goals were achieved during the three-year period, with the potential to earn a larger performance incentive if Ameren Missouri’s energy savings exceeded those goals. In September 2016, Ameren Missouri and the MoPSC staff filed a stipulation agreement with the MoPSC that supported a $29 million MEEIA 2013 performance incentive. The MoOPC opposed this stipulation agreement; however, it did not oppose the conclusion that Ameren Missouri achieved at least 100% of the customer energy efficiency goals. As there was no challenge to the achievement of at least 100% of the customer energy efficiency goals, Ameren Missouri recognized $19 million of revenue during the third quarter of 2016 related to the MEEIA 2013 performance incentive. In November 2016, the MoPSC approved a $28 million MEEIA 2013 performance incentive based on a revised stipulation agreement between Ameren Missouri, the MoPSC staff, and the MoOPC. As a result, Ameren Missouri will recognize $9 million of additional revenues in the fourth quarter of 2016 relating to the MEEIA 2013 performance incentive. Further, the revised stipulation agreement included a provision to incorporate the results of the appeal, discussed below, regarding the determination of an input used to calculate the performance incentive.

In November 2015, the MoPSC issued an order regarding the determination of an input used to calculate the performance incentive. Ameren Missouri filed an appeal of the order with the

Missouri Court of Appeals, Western District, which is expected to issue a decision in 2016. If the Missouri Court of Appeals, Western District, overturns the November 2015 MoPSC order, Ameren Missouri may recognize additional revenues in excess of the $28 million approved by the MoPSC in November 2016.

ATXI’s Mark Twain Project

The Mark Twain project is a MISO-approved 95-mile transmission line to be located in northeast Missouri. In April 2016, the MoPSC granted ATXI a certificate of convenience and necessity for the Mark Twain project. Before starting construction, ATXI must obtain assents for road crossings from the five counties where the line will be constructed. None of the five county commissions approved ATXI’s requests for the assents. In October 2016, ATXI filed suit in each of the five county circuit courts to obtain the assents. A decision from each of the county circuit courts is expected in 2017. ATXI plans to complete the project in 2018; however, delays in obtaining the assents could delay the completion date.

Illinois

IEIMA

Under the provisions of the IEIMA's performance-based formula rate-making framework, which currently extends through 2019, Ameren Illinois’ electric distribution service rates are subject to an annual revenue requirement reconciliation to its actual recoverable costs. Throughout 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. As of September 30, 2016, Ameren Illinois had recorded regulatory assets of $23 million, $66 million, and $22 million to reflect its expected 2016 and 2015 revenue requirement reconciliation adjustments, and the approved 2014 revenue requirement reconciliation adjustment, with interest, respectively.

In April 2016, Ameren Illinois filed with the ICC its annual electric distribution service formula rate update to establish the revenue requirement used for 2017 rates. Pending ICC approval, Ameren Illinois’ update filing will result in a $14 million decrease in Ameren Illinois’ electric distribution service revenue requirement, beginning in January 2017. This update reflects an increase to the annual formula rate based on 2015 actual costs and expected net plant additions for 2016, an increase to include the 2015 revenue requirement reconciliation adjustment, and a decrease for the conclusion of the 2014 revenue requirement reconciliation adjustment, which will be fully collected from customers in 2016, consistent with the ICC’s December 2015 annual update filing order. As of December 31, 2015, Ameren Illinois had recorded a regulatory asset of $103 million related to the approved 2014 revenue requirement reconciliation adjustment. In October 2016, an administrative law judge issued a proposed order that reflected a decrease to Ameren Illinois’

electric distribution service revenue requirement of $14 million. An ICC decision on the revenue requirement used for 2017 rates is expected by December 2016.

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 the 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 to 10.32%. The order was consistent with the initial decision an administrative law judge issued in December 2015 and requires customer refunds, with interest, to be issued for the 15-month period ended February 2015. In addition, the new allowed base return on common equity is reflected in rates prospectively from the September 2016 effective date of the order. Refunds for the November 2013 complaint case are expected to be issued in the first half of 2017.

After 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. The February 2015 complaint case seeks a reduction in the allowed base return on common equity for the FERC-regulated transmission rate base under the MISO tariff to 8.67%. In June 2016, an administrative law judge issued an initial decision in the February 2015 complaint case which would lower the allowed base return on common equity to 9.70% and would require customer refunds, with interest, to be issued for the 15-month period ended May 2016. The FERC is expected to issue a final order in the February 2015 complaint case in the second quarter of 2017. The final order in the February 2015 complaint case will determine the allowed base return on common equity for the 15-month period ended May 2016. The final order in the February 2015 complaint case will also establish the allowed base return on common equity that will apply prospectively from its expected second quarter 2017 effective date, replacing the 10.32% allowed base return on common equity, which became effective in September 2016. The 12.38% allowed base return on common equity was effective for the period that began at the conclusion of the 15-month period for the February 2015 complaint case in May

2016 through the September 2016 effective date of the final order in the November 2013 complaint case.

On January 6, 2015, a FERC-approved incentive adder of up to 50 basis points on the allowed base return on common equity for our participation in an RTO became effective. Beginning with its January 6, 2015 effective date, the incentive adder reduces any refund to customers relating to a reduction of the allowed base return on common equity from the complaint cases discussed above and will also be applied prospectively from the effective date of the September 2016 FERC order, resulting in a current allowed return on common equity of 10.82%.

As of September 30, 2016, Ameren and Ameren Illinois recorded current regulatory liabilities of $61 million and $42 million, respectively, to reflect the expected refunds, including interest, associated with the reduced allowed base returns on common equity in the September 2016 FERC order and the initial decision in the February 2015 complaint case. Ameren Missouri did not record a liability as of September 30, 2016, as it does not expect that a reduction in the FERC-allowed base return on common equity for MISO transmission owners would be material to its results of operations, financial position, or liquidity.

Combined Construction and Operating License

In 2008, Ameren Missouri filed an application with the NRC for a COL for a second nuclear unit at Ameren Missouri's existing Callaway County, Missouri, energy center site. In 2009, Ameren Missouri suspended its efforts to build a second nuclear unit at its existing Callaway site, and the NRC suspended review of the COL application. Prior to suspending its efforts, Ameren Missouri had capitalized $69 million related to the project. Primarily because of changes in vendor support for licensing efforts at the NRC, Ameren Missouri’s assessment of long-term capacity needs, declining costs of alternative generation technologies, and the regulatory framework in Missouri, Ameren Missouri discontinued its efforts to license and build a second nuclear unit at its existing Callaway site. As a result of this decision, in the second quarter of 2015, Ameren and Ameren Missouri recognized a $69 million noncash pretax provision for all of the previously capitalized COL costs. Ameren Missouri has withdrawn its COL application with the NRC.

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.

The Missouri Credit Agreement and the Illinois Credit Agreement, both of which expire on December 11, 2019, were not utilized for direct borrowings during the nine months ended September 30, 2016, 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, 2016, was $1.5 billion.

Commercial Paper

The following table presents commercial paper outstanding as of September 30, 2016, and December 31, 2015:



	2016		2015
Ameren (parent)	$	451	$	301
Ameren Missouri	—		—
Ameren Illinois	157		—
Ameren Consolidated	$	608	$	301

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, 2016 and 2015:



	Ameren (parent)			Ameren Missouri			Ameren Illinois			Ameren Consolidated
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		%
2015
Average daily commercial paper outstanding	$	770		$	56		$	6		$	832
Weighted-average interest rate	0.56		%	0.50		%	0.44		%	0.56		%
Peak commercial paper during period^(a)	$	874		$	294		$	48		$	1,108
Peak interest rate	0.70		%	0.60		%	0.60		%	0.70		%


(a)	The timing of peak commercial paper issuances varies by company; therefore, the peak amounts presented by company might not equal the Ameren Consolidated peak commercial paper issuances for the period.

Indebtedness Provisions and Other Covenants

The information below is a summary of the Ameren Companies’ compliance with financial covenants in the Credit Agreements. See Note 4 – Short-term Debt and Liquidity under Part II, Item 8, in the Form 10-K for a detailed description of these provisions. The Credit Agreements also contain nonfinancial covenants, including restrictions on the ability to incur liens, to transact with affiliates, to dispose of assets, to make investments in or transfer assets to its affiliates, and to merge with other entities.

The Credit Agreements require Ameren, Ameren Missouri, and Ameren Illinois to each maintain consolidated indebtedness of not more than 65% of its consolidated total capitalization pursuant to a defined calculation set forth in the agreements. As of September 30, 2016, the ratios of consolidated indebtedness to consolidated total capitalization, calculated in accordance with the provisions of the Credit Agreements, were 51%, 48%, and 46% for Ameren, Ameren Missouri, and Ameren Illinois, respectively. In addition, under the Credit Agreements, if Ameren does not have a senior long-term unsecured credit rating of at least Baa3 from Moody’s or BBB- from S&P, Ameren is required to maintain a ratio of consolidated funds from operations plus interest expense to consolidated interest expense of at least 2.0 to 1.0. As of September 30, 2016, Ameren’s senior long-term unsecured credit rating exceeded the minimum rating requirements; therefore, the interest coverage requirement was not applicable. Failure of a borrower to satisfy a financial covenant constitutes an immediate default under the applicable Credit Agreement.

The Credit Agreements contain default provisions that apply separately to each borrower; provided, however, that a default of Ameren Missouri or Ameren Illinois under the applicable Credit Agreement will also be deemed to constitute a default of Ameren under such agreement. Defaults include a cross-default resulting from a default of such borrower under any other agreement covering outstanding indebtedness of such borrower and certain subsidiaries (other than project finance subsidiaries and nonmaterial subsidiaries) in excess of $75 million in the aggregate (including under the other Credit Agreement). However, under the default provisions of the Credit Agreements, any default of Ameren under any Credit Agreement that results solely from a default of Ameren Missouri or Ameren Illinois thereunder does not result in a cross-default of Ameren under the other Credit Agreement. Further, the Credit Agreement default provisions provide that an Ameren default under any of the Credit Agreements does not constitute a default by Ameren Missouri or Ameren Illinois.

None of the Ameren Companies' credit agreements or financing arrangements contain credit rating triggers that would cause a default or acceleration of repayment of outstanding balances. The Ameren Companies were in compliance with the covenants in their credit agreements at September 30, 2016.

Money Pools

Ameren has money pool agreements with and among its subsidiaries to coordinate and provide for certain short-term cash and working capital requirements.

Ameren Missouri, Ameren Illinois, and ATXI may participate in the utility money pool as both lenders and borrowers. Ameren (parent) and Ameren Services may participate in the utility money pool only as lenders. Surplus internal funds are contributed to the utility money pool from participants. The primary sources of external funds for the utility money pool are the Credit Agreements and the commercial paper programs. The total amount available to the money pool participants from the utility money pool at any given time is reduced by the amount of borrowings made by participants, but is increased to the extent that the money pool participants advance surplus funds to the

utility money pool or remit funds from other external sources. The availability of funds is also determined by funding requirement limits established by regulatory authorizations. Participants receiving a loan under the utility money pool must repay the principal amount of such loan, together with accrued interest. The rate of interest depends on the composition of internal and external funds in the utility money pool. The average interest rate for borrowing under the utility money pool for the three and nine months ended September 30, 2016, was 0.53% and 0.54%, respectively (2015 – 0.10% and 0.09%, 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 nine months ended September 30, 2016 and 2015.

NOTE 4 – LONG-TERM DEBT AND EQUITY FINANCINGS

Ameren Missouri

In February 2016, Ameren Missouri's $260 million of 5.40% senior secured notes matured and were repaid with cash on hand and commercial paper borrowings.

In June 2016, Ameren Missouri issued $150 million of 3.65% senior secured notes due April 15, 2045, with interest payable semiannually on April 15 and October 15 of each year, beginning October 15, 2016. Ameren Missouri received proceeds of $148 million, which were used to repay commercial paper borrowings.

Ameren Illinois

In June 2016, Ameren Illinois’ $54 million of 6.20% senior secured notes and $75 million of 6.25% senior secured notes matured and were repaid with commercial paper borrowings.

Indenture Provisions and Other Covenants

Ameren Missouri’s and Ameren Illinois’ indentures, credit facilities, 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. The following table summarizes the required and actual interest coverage ratios for interest charges, dividend coverage ratios, and first mortgage bonds and preferred stock issuable as of September 30, 2016, at an assumed annual interest rate of 5% and dividend rate of 6%:



	Required Interest Coverage Ratio^(a)	Actual Interest Coverage Ratio		Bonds Issuable^(b)		Required Dividend Coverage Ratio^(c)	Actual Dividend Coverage Ratio		Preferred Stock Issuable
Ameren Missouri	≥2.0	4.7	$	3,838		≥2.5	105.9	$	2,357
Ameren Illinois	≥2.0	7.3		3,942	^(d)	≥1.5	3.0		203	^(e)


(a)	Coverage required on the annual interest charges on first mortgage bonds outstanding and to be issued. Coverage is not required in certain cases when additional first mortgage bonds are issued on the basis of retired bonds.


(b)	Amount of first mortgage bonds issuable based either on required coverage ratios or unfunded property additions, whichever is more restrictive. The amounts shown also include first mortgage bonds issuable based on retired bond capacity of $1,206 million and $279 million at Ameren Missouri and Ameren Illinois, respectively.


(c)	Coverage required on the annual dividend on preferred stock outstanding and to be issued, as required in the respective company’s articles of incorporation.


(d)	Amount of first mortgage bonds issuable by Ameren Illinois based on unfunded property additions and retired bonds solely under the former IP mortgage indenture. The amount of first mortgage bonds issuable by Ameren Illinois is also subject to the lien restrictions contained in the Illinois Credit Agreement.


(e)	Preferred stock issuable is restricted by the amount of preferred stock that is currently authorized by Ameren Illinois’ articles of incorporation.

Ameren's indenture does not require Ameren to comply with any quantitative financial covenants. The indenture does, however, include certain cross-default provisions. Specifically, either (1) the failure by Ameren to pay when due and upon expiration of any applicable grace period any portion of any Ameren indebtedness in excess of $25 million or (2) the

acceleration upon default of the maturity of any Ameren indebtedness in excess of $25 million under any indebtedness agreement, including borrowings under the Credit Agreements or the Ameren commercial paper program, constitutes a default under the indenture, unless such past due or accelerated debt is discharged or the acceleration is rescinded or annulled within a

specified period.

Ameren Missouri and Ameren Illinois and certain other Ameren subsidiaries are subject to Section 305(a) of the Federal Power Act, which makes it unlawful for any officer or director of a public utility, as defined in the Federal Power Act, to participate in the making or paying of any dividend from any funds “properly included in capital account.” The FERC has consistently interpreted the provision to allow dividends to be paid as long as (1) the source of the dividends is clearly disclosed, (2) the dividends are not excessive, and (3) there is no self-dealing on the part of corporate officials. At a minimum, Ameren believes that dividends can be paid by its subsidiaries that are public utilities from retained earnings. In addition, under Illinois law, Ameren Illinois may not pay any dividend on its stock unless, among other things, its earnings and earned surplus are sufficient to declare and pay a dividend after provision is made for reasonable and proper reserves, or unless Ameren Illinois has specific authorization from the ICC.

Ameren Illinois’ articles of incorporation require dividend

payments on its common stock to be based on ratios of common stock to total capitalization and other provisions related to certain operating expenses and accumulations of earned surplus. Ameren Illinois committed to the FERC to maintain a minimum of 30% equity in its capital structure. As of September 30, 2016, Ameren Illinois had 51% equity in its capital structure.

In order for the Ameren Companies to issue securities in the future, we have to comply with all applicable requirements in effect at the time of any such issuances.

Off-Balance-Sheet Arrangements

At September 30, 2016, 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. None of the Ameren Companies expect to engage in any significant off-balance-sheet financing arrangements in the near future.

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, 2016 and 2015:



	Three Months				Nine Months
	2016		2015		2016		2015
Ameren:^(a)
Miscellaneous income:
Allowance for equity funds used during construction	$	7	$	8	$	20	$	19
Interest income on industrial development revenue bonds	7		7		20		20
Interest income	3		4		11		12
Other	1		—		3		3
Total miscellaneous income	$	18	$	19	$	54	$	54
Miscellaneous expense:
Donations	$	1	$	—	$	8	$	10
Other	7		5		13		12
Total miscellaneous expense	$	8	$	5	$	21	$	22
Ameren Missouri:
Miscellaneous income:
Allowance for equity funds used during construction	$	6	$	7	$	16	$	16
Interest income on industrial development revenue bonds	7		7		20		20
Interest income	1		—		1		1
Other	—		—