Earnings Labs

Ameren Corporation (AEE)

Q2 2011 Earnings Call· Thu, Aug 4, 2011

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Transcript

Operator

Operator

Greetings, and welcome to the Ameren Corporation Second Quarter Earnings. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Douglas Fischer, Director of IR for Ameren Corporation. Thank you, Mr. Fischer. You may now begin.

Douglas Fischer

Management

Thank you, and good morning. I’m Doug Fischer, Director of Investor Relations for Ameren Corporation. On the call with me today are our Chairman, President, and Chief Executive Officer, Tom Voss; our Senior Vice President and Chief Financial Officer, Marty Lyons; and other members of the Ameren management team. Before we begin, let me cover a few administrative details. The call will be available by telephone for one week to anyone who wishes to hear it by dialing a playback number. The announcement you received in our news release include instructions for replaying the call by telephone. The call is also being broadcast live on the Internet, and the webcast will be available for one year on our website at www.ameren.com. This call contains time-sensitive data that is accurate only as of the date of today’s live broadcast. Redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on our website to which we will refer during this call. To access this presentation, please look in the Investors section of our website under Webcasts and Presentations, and follow the appropriate link. Turning to page two of the presentation, I need to inform you that comments made during this conference call may contain statements that are commonly referred to as forward-looking statements. Such statements include those about future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. We caution you that various factors could cause actual results to differ materially from those anticipated and described in the forward-looking statements. For additional information concerning these factors, please read the forward-looking statement section in the news release we issued today, and the forward-looking statements and risk factors sections in our filings with the SEC. Tom will begin this call with a brief overview of second quarter 2011 earnings and updated 2011 guidance, followed by a discussion of recent regulatory and other business developments. Marty will follow with more detailed discussions of second quarter 2011 financial results and guidance, as well as regulatory and financial matters. We will then open the call for questions. Here is Tom, who will start on page three of the presentation.

Thomas Voss

Management

Thanks, Doug. Good morning, and thank you for joining us. Today we announced second quarter 2011 core earnings of $0.59 per share, compared to second quarter 2010 core earnings of $0.73 per share. These results were on track with our expectations. The decline in second quarter 2011 earnings, compared to second quarter 2010 earnings reflected a 4% decrease in kilowatt hour sales to regulated utility native load customers. The lower sales were due in part to milder temperatures through June. Second quarter 2011 earnings also included a charge to earnings resulting from an April 2011 Missouri Public Service Commission order associated with our fuel adjustment clause or FAC. You will remember from our first quarter call that a PSC order required the net margins associated with certain long-term, partial requirement sales included in the FAC calculation and, therefore, be credited to customers. Other factors reducing second quarter 2011 earnings included increased storm-related expenses, higher property taxes as well as our higher effective income tax rate. Factors that favorably contributed second quarter 2011 earnings compared to second quarter 2010, included rate increases, the absence of a nuclear refueling and maintenance outage at our Callaway energy center and lower interest expense. Turning to page four. We were challenged by an unusually large number of storms in the first half of this year but in every instance, in Illinois and in Missouri our employees responded aggressively and effectively to quickly and safely restore service and meet our customer’s expectations. Our management team also took action during the quarter to align client spending with business conditions. Further while we estimate that about half of the second quarter 2011 decline in electric sales to native load customers compared to the second quarter of 2010 was due to milder weather, economic conditions and customer’s conservation efforts…

Martin Lyons

Management

Thanks, Tom. Turning to page seven of the presentation, today we reported second quarter 2011 earnings in accordance with Generally Accepted Accounting Principles or GAAP of $0.57 per share, compared to second quarter 2010 GAAP earnings of $0.64 per share. Second quarter 2011 core earnings were $0.59 per share compared with second quarter 2010 core earnings of $0.73 per share. Core results excluded net unrealized mark-to-market losses from the second quarters of 2011 and 2010 of $0.02 and $0.09 per share respectively. These mark-to-market impacts are primarily related to non-qualified power and fuel related hedges. Moving now to page eight, we highlight key drivers of the variance between core earnings per share for the second quarter of 2011 and for the second quarter of 2010. Factors adversely affecting the comparison included the decline in margins at our regulated utilities of $0.14 per share after excluding rate changes and net of certain related expenses compared to the second quarter of 2010. Five of these $0.14 were due to milder temperatures compared to the second quarter of 2010. Another $0.05 were due to the previously discussed charge for the Missouri Public Service Commission, fuel adjustment clause related order and while mentioning this charge I do want to let you know that we have appealed this PSC order to the courts. Regarding weather cooling degree days were 13% fewer in the second quarter of 2011 than in the very hot second quarter of 2010. Expenses for the numerous 2011 storms that Tom mentioned earlier reduced earnings by $0.04 per share. Tax related items reduced second quarter 2011 earnings by $0.04 per share. Half of this variance reflected higher property taxes and the other half was due to a higher effective income tax rate. The second quarter 2011 earnings comparison was also negatively impacted…

Operator

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Julien Dumoulin-Smith with UBS. Please proceed with your question. Your line is live. Julien Dumoulin-Smith – UBS: Can you hear me?

Warner Baxter

Analyst · UBS

Yes Julien, we can. Julien Dumoulin-Smith – UBS: Hi, good morning. So I wanted to ask on your comments regarding environmental CapEx. It seems like a pretty favorable move here to reduce it in Missouri. Just curious to see or get some more flavor as to exactly how you were able to do that. What is it about the coal, what is it about the technology of the plants or perhaps what is it about the policy that’s changed quarter-over-quarter that gave you the flexibility here?

Warner Baxter

Analyst · UBS

Hi Julien, this Warner Baxter. I would say a couple things gave us the flexibility. One, frankly is really what we’ve been doing for several years and that is really converting our plants to burn the low sulfur coal. But secondly, the thing that gave us quite a bit of flexibility was the proactive installation of our Sioux scrubbers which we just installed late last year. That gave us the option to take a look at this ultra-low sulfur coal strategy and consequently in looking at that and looking at our system we’re able to purchase this coal through 2017 and execute not only our coal purchase which is necessary for our customers’ needs but frankly is going to avoid significant capital expenditures for things like fabric filters, as well as DSI and brought significant savings for our customers. So I wouldn’t say it’s a meaningful change. It’s something we’ve been doing for some time to try and anticipate where these regulations were going to come and we were able to execute the strategy successfully. Julien Dumoulin-Smith – UBS: Just as a follow-up, is it that you’re using treated coal of any sorts to avoid any kind of mercury complications?

Warner Baxter

Analyst · UBS

No. Simply put we’re using ultra low sulfur coal and we’re able to enter into a contract for the term that Tom had laid out a little bit earlier today. Julien Dumoulin-Smith – UBS: And just a clarification. Is 2017 just the term of the contractor is there some meaningful regulatory change at that point in time that would alter this decision?

Warner Baxter

Analyst · UBS

No meaningful change in the regulatory framework. It is – that was the term of the contract. Of course, we have the option to look even and purchase ultra-low sulfur coal beyond that should we want to, but nothing beyond that. That was just the appropriate term we felt to enter into the contract given that the – what we – we renewed not only were the regulations were but also obviously the tenure of such a long-term contract. Julien Dumoulin-Smith – UBS: Thanks, guys.

Operator

Operator

Thank you. Our next question comes from the line of David Paz with Banc of America Merill Lynch. Please proceed with your question. Your line is live. David Paz – Banc of America Merill Lynch: Good morning.

Thomas Voss

Management

Good morning, David. David Paz – Banc of America Merill Lynch: Thanks for the environmental disclosures. It’s very helpful. Just had some questions. What are your environmental plans for the Joppa, Meredosia, and Huntsville plants?

Thomas Voss

Management

Well, I think overall what we’ve sketched out is, the plans for compliance as we said on the call with the Multi-Pollutant Standard, as well as the Cross State Air Pollution Rules, as well as HAP MACT, et cetera. Our compliance plans have very much focused on keeping our overall fleet compliant and I think when we look at these rules as we outlined on the call, the thing we’re still obviously taking a look at are the NOX compliance components of the – excuse me, the CSAPR rule. So as it relates to the rules and it relates to our plans, our focus has been keeping all of those plants intact. Of course when you look at the Multi-Pollutant Standard rule, you look at CSAPR, you look in at fleet wide averages, and so controls on certain power plants say other than those ones can help to keep the whole fleet running. David Paz – Banc of America Merill Lynch: Okay. But before you guys were intending to use DSI, Joppa, and now you are not, so I guess should we assume, what...

Thomas Voss

Management

Yes, sure. I think with respect to Joppa, I think what you’re looking at there is simply moving the DSI from there to Edwards to get the compliance you need on the sulfur dioxide and mete your fleet wide emission reductions in a more efficient way where you’re taking advantage of that bag house that we have planned for Edwards. So the DSI is moving from Jappa to Edwards but as you look at the Jappa plant, for things like HAP MACT in particular matter control you’re probably still looking at things like ESP upgrades and the like. David Paz – Banc of America Merill Lynch: ESP upgrades, okay. And how much does the DSI raise costs even on a per ton or per megawatt hour basis?

Thomas Voss

Management

Yeah, I don’t have the based on a per megawatt hour. There certainly will be some O&M expense related to that DSI, but I don’t have the per ton number with me. David Paz – Banc of America Merill Lynch: Okay, all right. Thank you.

Operator

Operator

Thank you. Our next question comes from the line of Erica Piserchia with Wunderlich Securities. Please proceed with your question. Your line is live. Erica Piserchia – Wunderlich Securities: Hi, thanks. Just a couple of questions. First, just I guess on the environmental to continue with that, I guess, you mentioned you’re considering some options as far as NOx control are concerned and I’m just wondering if you can clarify, are you talking about refined coal options on that side. I know Julien, was asking about the Sox side, but I know there’s some options on the refined coal side on NOx to treat that and derive some tax benefits and such out of that. Can you just provide a little bit more color there on options you’re considering?

Warner Baxter

Analyst · Erica Piserchia with Wunderlich Securities

Hi, Erica. This is Warner Baxter. I can speak for the Missouri side of the house. We are looking at a variety of options. Some of those options would not include purchasing different types of coal from a NOx perspective. What we would be looking at would be things like doing some more over-fired area that some of our power plants, potentially some reinjections. Of course we now have the ability to potentially look at NOx allowances with this potential – with this rule. Those types of things and of course, you can always look at SCRs. All those things are I guess part of the portfolio of things that we’ll look at. We’re going to continue to assess those through the course of this year and make a determination towards the end of this year and execute that, but it would not include a different purchase of coal. Erica Piserchia – Wunderlich Securities: Okay.

Warner Baxter

Analyst · Erica Piserchia with Wunderlich Securities

On the merchant side of the house, Erica, we already have substantial controls that are in place. We have low NOx burners in all of our non-cycle plants, over fire air at our cycling plants, combustion optimization technology, we have selective catalytic reduction at Duck Creek, Coffine , Edwards so we already have substantial controls in place for reduction of NOx because of course, the Illinois multi-pollutant standard has been requiring us to reduce those emissions and positions us well for compliance with these Casper rules but we are still looking at additional options like selective non-catalytic reduction, combustion optimization, some of the things that Warner talked about as well. Erica Piserchia – Wunderlich Securities: Got you, okay. And then on the sales side you mentioned you adjusted your weather normalized expectations for sales demand. Can you share what level of sales growth you’re now assuming?

Warner Baxter

Analyst · Erica Piserchia with Wunderlich Securities

Sure, Erica. Thanks for the question. I recall you asking a question about this last quarter. As we’ve gone through the year, what we certainly have seen is that while weather has played a role as we talked about, we did have much milder temperatures this year than last. They’ve been warmer than normal this year, but certainly lower than last. We had a very hot June last year. And we estimate weather and strip that out. For the six months year-to-date, we are still seeing declining sales trends as it relates to our residential and commercial categories. And so, we have revised our expectations for the year. I think Erica, you’ll recall that we had talked about some very modest growth plus or minus 1% expectations in residential commercial when we talked last quarter, but as we’ve gone through the six months and looked at the data, we felt it more prudent to lower our forecast and what we’ve now got built in is sales declines of around 1% on residential with the expectation of really no growth in commercial this year. We’re still seeing overall for the company positive trends in industrial primarily on the Illinois side of our business and we’re still expecting to see low to mid single-digit kind of growth in industrial, but we felt it prudent to lower those sales forecast expectations and again, as we talked about, align our spending plans to make sure we’re able to deliver on the earnings guidance that we’ve provided so we have built those in. Looking back at last year, it’s interesting. Last year, we had pretty solid growth in 2010 over 2009 levels, residential came in about 1.2% up, commercial about 2.6% up, so what we’re seeing here in the six months, we feel like we need to adjust to and we’ll continue to assess it. Erica Piserchia – Wunderlich Securities: Okay. And just maybe one last kind of bigger picture question here. Can you share any thoughts on where you expect you can earn on an ROE basis this year or maybe put another way, what sort of what coming out of this Missouri case and obviously the Illinois case, but sort of what maybe at least on the Missouri side is kind of left to help you reduce regulatory lag that you’d have to seek in a future case?

Warner Baxter

Analyst · Erica Piserchia with Wunderlich Securities

Sure, Erica. Let me take a stab at that. If you look at our guidance range that we’ve got, we’ve provided $2.10, $2.25 for the regulated portion of our business. I think that implies an ROE range in the neighborhood of 8.3% to 8.9% and so if you take the midpoint of that for example, obviously you’re right around 8%, 8.6%. As you look ahead we’ve just completed the Missouri rate case so we’re only getting a partial benefit of that rate case this year and as you point out, we’ve got a rate case pending in Illinois that would adjust rates in January of 2012 and of course that’s based on a forecasted test year. And also our commitment to continue to align our spending to the overall business conditions we face. We are focused on improving our earned returns and on the call we talked about for instance in Missouri expecting to significantly narrow that gap between our earned returns this year and our allowed returns, so that’s what we’re focused on and just as a metric, I mean if we improve the earned returns from say that mid-point I gave you around 8.6% by 100 basis points to 9.6%, that adds about $0.20 to $0.25 of earnings year-over-year to the guidance that range that I gave you. Erica Piserchia – Wunderlich Securities: Right. Okay. Okay, thank you.

Operator

Operator

Thank you. Our next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed with your question. Your line is live. Paul Patterson – Glenrock Associates: Good morning, guys.

Thomas Voss

Management

Good morning. Paul Patterson – Glenrock Associates: On the Casper rule, you guys mentioned that it was more stringent than you thought it was but that you didn’t expect NOx CapEx to be meaningfully higher as a result of it or are you expecting any difference in operational costs and I’m talking particularly on the merchant side with respect to compliance with that or SO2 or is there any sense that what we might see there in terms of a potential increase on operational expenses?

Thomas Voss

Management

Yeah, I don’t think, Paul, thanks for the question. I wouldn’t say we’re expecting any operational cost increases either. We are as I said before, we’ve had good controls in place over time to reduce our NOx emissions. We are looking at a low cost kind of options like the selective non-catalytic reduction, combustion optimization, and really evaluating all options and other options obviously have to do with certainly you could look at reduced levels of generation and low margin periods or purchases of allowances which right now I would say we don’t have much of a clear indication of what the value of those kinds of things are going to be but we’ll certainly look at all options on the table. Paul Patterson – Glenrock Associates: Okay. So we look at this $200 million reduction. It’s kind of meaningful. You guys are lowering CapEx. Is that just because you guys have been invented and you found things or is there, I guess should we think of any change in the profit margin outlook, do you see what I’m saying? I just want to make sure it’s a tradeoff here?

Thomas Voss

Management

There really wasn’t a tradeoff between those $200 million of reductions and profitability or margins and what the team has continued to do over time is look at spending plans both for environmental and non-environmental and some of the environmental what the team continues to do is to further design work, do further value engineering work and seek ways to drive costs out of the plans that we have in place and on the non-environmental same thing. Take a look at the planned spending we have in light of overall business conditions and look for opportunities to reduce bit plan spending and I’d note though when you look at our spending plans and you look at some of the investments we’re making this year, we are still investing in our power plants and making what we consider to be prudent necessary investments to keep those plants running well and in fact, this year they have been running very well. Paul Patterson – Glenrock Associates: Okay, that’s just great. Now, let me ask you on the MISO capacity thing, do you guys see any meaningful increase in capacity value as a result of what came out or you did mentioned that you weren’t completely happy with it but do you see any potential upside from that and also, if you don’t get a potential upside from it can you do what these other guys have done and go to PJM?

Martin Lyons

Management

Yeah, I think is that – this is Marty. I’ll take the point about the capacity price themselves. I think, this is not all that we wanted to be as we outlined in the call, and we don’t necessarily believe that this proposed construct, which isn’t multiyear number one, and number two, we don’t think we’ll necessarily send the right price signals over time for investment in new capacity. So we do believe that it is, however, a good first foundational step for moving forward. We’re certainly going to provide comments to FERC with respect to MYSO’s proposal and obviously this isn’t the final rule. We’ll see what comes out of FERC. Paul Patterson – Glenrock Associates: Okay.

Thomas Voss

Management

Yeah. And this is Tom Voss. We also hope that we’ll get portable that we’ll be able to put our capacity across markets and across seems, and so we’re going to work with MYSO on that option also. Paul Patterson – Glenrock Associates: Okay, great. And then just finally on the fuel FAC flow through, what’s the outlook for that going forward in terms of the impact on earnings?

Thomas Voss

Management

Yeah, I think that – I believe what you’re asking about is the... Paul Patterson – Glenrock Associates: The $0.05?

Thomas Voss

Management

Yeah, the $0.05. So what that related to was during a discrete historical period, while Noranda Aluminum was down, and we are seeing other industrial sales declines, we had made some sales off system, which the margins were held outside of the fuel adjustment clause, what the Commission ordered was that certain of those revenues beflow through the fuel adjustment clause, and so that was about $17 million $0.05 charge. There was, Paul, one period subsequent to that – period subsequent of that were similarly we held certain revenues outside the fact there’s about another $25 million exposure there, the Commission has not ruled on that at this time. However, beyond that there isn’t any exposure because after the last rate case we had, all of those types of revenues from those types of sales were through the rate making process, actually included in our base – net base fuel cost that go into the fuel adjustment clause. So it was really a finite or discrete period in time. It’s not something that is an exposure moving forward. Paul Patterson – Glenrock Associates: Then why not treat it like Taum Sauk and make it a one – and make it a non-core item, I guess is what I’m wondering. I mean, is it just a judgment call? I’m wondering is there any reason not to do that though I guess?

Thomas Voss

Management

Well, sure it’s a judgment call. I think what we felt like, however, was that in prior periods, we had reported these revenues as part of our core earnings in revenues and we felt like the appropriate thing to do then was to – as we backed these revenues out essentially because they were flowing through the fuel adjustment clause that we would include those in our core earnings but certainly it’s a judgment item. When you look at the Taum Sauk charge that we have, it’s certainly large and unusual in nature. It’s a non-operating item and again in terms of differentiation, there are no prior earnings recognized for Taum Sauk. Paul Patterson – Glenrock Associates: Thanks for the clarity.

Operator

Operator

Thank you. Our next question comes from the line of Robert Howard with Prospector Partners. Please proceed with your question, your line is live. Robert Howard – Prospector Partners: Hi. Just wanted to check a couple things. This may have been kind of implied in some of your other answers but just the decision to use the ultra-low PRB Coal in Missouri versus in Illinois, I guess just wanted to kind of clarify the reasons is it really just the technologies in the various plants that is different enough, so that it works in Missouri versus it wasn’t a decision to do in Illinois?

Martin Lyons

Management

This is Marty. Thanks, good question. It does have somewhat to do with the technology. Warner talked about in Missouri certainly having the benefit of the Sioux scrubbers on the merchant side, we have more extensive scrubber equipment in place with scrubbers at Coffin, Duck Creek scrubber, and we certainly are using low sulfur coal and plan to use low sulfur coal there as well. So there is a difference in some of the technologies that’s been deployed. I would also note that the other differentiation is that in the merchant side of our fleet we’re also complying with the multi-pollutant standard, so you’ve got the over layoff those rules on top of CSAPR that impacts your overall compliance decisions. And lastly when you look at the sales profile in Missouri, we certainly have steady regulated load growth to meet over time and in the merchant business, we do seek to line the hedging between our power sales and our fuel hedges over time, so those are some of the differentiating things that we think about. Robert Howard – Prospector Partners: Okay. So we can’t say, okay, anybody out there in the country whose got some new state-of-the-art scrubbers that stayed like the Sioux plant can be sort of meet these requirements with ultra-low sulfur there is lot of these other factors going in there?

Martin Lyons

Management

Yeah, I think that there are a number of factors that go in there. Obviously the lower sulfur content in your coal is going to help you in terms of your overall emissions but what makes sense for any particular generator I think is a function of equipment they have in place and the various cost tradeoff they have. Robert Howard – Prospector Partners: Okay, and then for the ultra-low sulfur, how much of a premium is that in ballpark compared to what might be standard PRB coal?

Warner Baxter

Analyst · Robert Howard with Prospector Partners

Hi, this is Warner Baxter. Certainly, we don’t disclose the terms of our contracts but I’ll tell you that those arrived at fair market prices. Robert Howard – Prospector Partners: But I guess is it significant? I don’t, is it something that’s tradable or I’m just trying to get a feel for is this something you have to pay a 10% premium on or some kind of ballpark?

Martin Lyons

Management

Yeah, as Warner said we aren’t going to comment on the specific pricing related to the contract. Robert Howard – Prospector Partners: Okay. Anyway, then your merchant fuel hedges, it looks like the new hedges were all kind of at lower prices. Is that just market prices declining, was there some other causes to get you better terms compared to the previous fuel hedges?

Martin Lyons

Management

Sure. It is really related to market prices versus the coal costs that are embedded in the hedges that we put in place previously and so for I’d say a couple of quarters, we’ve been suggesting that as we layer on additional hedges based on market prices, broker quotes that you could go out and see that we would expect that the average price as we layered in additional hedges would come down. As we sit here today, I would say that those broker quote prices still look to be a little bit below the pricing that we have in the embedded contracts, a little more than below as it relates to 2013 frankly where the embedded costs are a bit higher because of the mix of some of the coal purchases that we actually have in the embedded hedges, so what you see on that fuel slide is as we’ve added megawatt hours hedged in terms of our coal, its brought the blended average price down. Robert Howard – Prospector Partners: Okay, great. Thanks a lot.

Operator

Operator

Thank you. Our next question comes from the line of Michael Lapides with Goldman Sachs. Please proceed with your question. Your line is live. Michael Lapides – Goldman Sachs: Hi guys. Thanks for the update on Missouri capital spending. Really two questions there. One, do you think the lower capital spending likely reduces regulatory lag and there for increases your ability to earn your authorized ROE in Missouri?

Warner Baxter

Analyst · Michael Lapides with Goldman Sachs

Michael, this is Warner. With regard to any type of spending especially with regard to capital expenditures to the extent you can mitigate especially mandated capital spending that tends to have a more favorable direction from a regulatory lag perspective but of course when you’re doing these major environmental projects much of that is done and the key is making sure that you align the timing of any of these major environmental controls with when you put rates into place, so there are actions you can take to mitigate that regulatory lag just as we did with the subscriber. We used unique approach to really mitigate some of that regulatory likes. So in a bigger picture it is helpful and no doubt, and certainly it’s a tremendous benefit for our customers.

Douglas Fischer

Management

This is Doug Fischer. We have time for one more question. We want to respect some of the other calls coming right after us.

Operator

Operator

Thank you. Our next question comes from the line of Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live.

Unidentified Analyst

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Hi, good morning.

Warner Baxter

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Good morning, Dan.

Unidentified Analyst

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

First I was wondering on the Taum Sauk appeal. What was the revenue requirement related to the Taum Sauk disallowance?

Warner Baxter

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Hello, Dan. This is Warner Baxter. That impact was approximately $11 million from a revenue requirement standpoint in total.

Unidentified Analyst

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

And what kind of timeframe would you expect on the appeal? Is there any way to know?

Warner Baxter

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Yeah, with regard to the appeal to the courts, there is no set timeframe on that. Typically, it is several months and we’re not surprised to see that decision move out into 2012 but I can’t predict a lot of it depends upon the court’s docket in front of them and so we filed immediately as soon as we’re able to do that and so we look forward to presenting our case before the courts here in the near future.

Unidentified Analyst

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

And then you mentioned that you had I think a $0.11 positive benefit from no Callaway outage, and with the scope and scale of the upcoming outage be similar that we would expect about an $0.11 hit in the second half comparison?

Warner Baxter

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Dan, this is Warner Baxter. I would say generally the scope and overall timing of the outage would be consistent and of course in any given outage you have sometimes the difference between the level of capital expenditures in O&M, but by and large it’s probably roughly in that ballpark.

Unidentified Analyst

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Okay. And then just on the July weather I assume it was a lot hotter this year than it was last year; is that correct?

Warner Baxter

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Yeah, it was, Dan. It’s one of the – I’d say one of the hottest Summers in the last 40 plus years, so it was very warm in July and August has started out pretty warm as well.

Unidentified Analyst

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Okay. And then I guess, the last thing I was wondering was on industrial sales that looked for either slightly negative or flat in the second quarter. Did you have any impact from say auto plants or anything there or what are you looking for or seeing?

Warner Baxter

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Yeah, it wasn’t so much auto plants, as you look through the various categories, one that’s certainly sticks out in Missouri and Illinois is some that related to I’d say the building or construction industry like cement certainly popped out, general manufacturing. Some refining, some of which we think is really temporary in nature in terms of just some specific plant outages in our service territory in the second quarter that we think will again short-term in nature that will be back online in the third quarter. So I think some of what we saw looks like it might be a function of the economy and others looks like spotty and had to do with just specific outages at certain major industrial customers, so that’s kind of what we’re seeing.

Unidentified Analyst

Analyst · Dan Jenkins with the State of Wisconsin Investment Board. Please proceed with your question. Your line is live

Okay. Thank you.

Douglas Fischer

Management

Okay. This is Doug. I’d like to wrap up. Thanks for participating in this call. Let me remind you again that this call is available through August 11th on playback and for one year on our website. Today’s press release includes instructions on listening to the playback. You may also call or email the contacts listed on the release, financial analyst inquiries should be directed to me, Doug Fischer. Media should call Susan Gallagher. Our contact information is on the press release we issued today. Again, thank you for your interest in Ameren.

Operator

Operator

Ladies and gentlemen, this concludes today’s conference. You may disconnect your lines at this time. And we thank you all for your participation. Good day.