Ameren Corp (NYSE: AEE) Q1 2020 Earnings Call Transcript

Ameren Corp (AEE) Q1 2020 earnings call dated May 12, 2020

Corporate Participants:

Andrew Kirk — Investor Relations Director

Warner L. Baxter — Chairman, President and Chief Executive Officer

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

Martin J. Lyons Jr. — Chairman and President, Ameren Missouri

Analysts:

Julien Dumoulin-Smith — Bank of America Merrill Lynch — Analyst

Richard W. Sunderland — JPMorgan — Analyst

Paul Patterson — Glenrock Associates LLC — Analyst

James Thalacker — BMO Capital Markets — Analyst

Presentation:

Operator

Greetings, and welcome to the Ameren Corporation First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Andrew Kirk, Director of Investor Relations for Ameren Corporation. Thank you. You may begin.

Andrew Kirk — Investor Relations Director

Thank you, and good morning. On the call with me today are Warner Baxter, our Chairman, President and Chief Executive Officer; and Michael Moehn, our Executive Vice President and Chief Financial Officer; as well as other members of the Ameren management team joining remotely. Warner and Michael will discuss our earnings results and guidance as well as provide a business update. Then we will open the call for questions.

Before we begin, let me cover a few administrative details. This call contains time-sensitive data that is accurate only as of the date of today’s live broadcast and redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on the amereninvestors.com homepage that will be referenced by our speakers.

As noted on page two of the presentation, 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. For additional information concerning these factors, please read the forward-looking statements section in the news release we issued yesterday and the forward-looking statements in Risk Factors sections in our filings with the SEC. Lastly, all per share earnings amounts discussed during today’s presentation, including earnings guidance are presented on a diluted basis unless otherwise noted.

Now here’s Warner, who will start on page four of the presentation.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Thanks, Andrew. Good morning everyone and thank you for joining us. This morning, I’m going to begin our presentation by providing a COVID-19 update and in particular, highlight some of the key efforts we are taking for the safety and security of our co-workers and customers during this difficult time while providing essential electric and natural gas service. I will then touch on our first quarter results and 2020 earnings guidance. Finally, I will discuss our long-term growth prospects, while highlighting some important strategic matters while positioning Ameren for future success.

Before I jump into the details, I hope that you, your families and colleagues are safe and healthy during this unprecedented time. As our world works to address COVID-19, many things are uncertain, but the Ameren’s commitment to safety for our coworkers, our customers and our communities remains constant. At Ameren, we never compromise on safety, it is one of our core values. I want to express my profound appreciation for those who are on the front lines battling this virus; to the healthcare workers, first responders, grocery store workers, local leaders, community workers, and of course, all utility workers across our nation, thank you. In particular, I want to express my sincere appreciation to my Ameren coworkers who remain focused every day on delivering safe, reliable power and natural gas to millions of people in Missouri and Illinois. To ensure that we continue to deliver safe and reliable service, we took swift action in January and in some of the cross-functional crisis management response team, filing reports about threats related to COVID-19. Since January, our team has been planning and implementing our pandemic response consistent with established guidelines and industry best practices as well as in consultation with world-class health experts and state and local government leaders. We quickly restricted domestic and international travel and implemented work from home policies for any one that could to limit exposure of our coworkers. Of course, our coworkers are crucial to the execution of our mission and many continue to be in our communities and in our energy centers every day, keeping the lights on and the natural gas flowing for millions of customers in Missouri and Illinois.

Our actions to continue safe operations also include securing and supplying personal protective equipment, separating more crews, adjusting more schedules, performing robust health screenings at home and on-site and of course practicing social distancing with coworkers and customers. Our transition to our new work practices went very well, not only where we able to quickly take significant actions to protect the safety of our co-workers and customers, we have been able to continue executing our projects and strategic plan across our entire business. We also recognize this is a difficult time for many of our customers who are struggling financially due to loss of wages and other circumstances related to COVID-19. That’s why we currently have voluntarily suspended all electric and gas disconnects for non-payment and waived, all late payment fees for customers unable to pay their energy bill on time. In addition, we have contributed $1 million in energy assistance and nearly $1 million to fund other COVID-19 relief efforts to help families and businesses in Illinois and Missouri communities and we are not done helping our customers and our communities.

As part of our Ameren Missouri rate review settlement, we are working with the Missouri Office of the Public Counsel to provide another $3.5 million and energy assistance funds for Missouri residential customers in need. Our proposal is pending approval from the Missouri Public Service Commission. In addition, we live and work in our communities and we want to go beyond keeping the lights on and natural gas flowing for our millions of customers. As a result, we recently launched an Ameren Cares initiative whereby our leadership team, Board of Directors and all Ameren coworkers can contribute to COVID-19 relief efforts, including energy assistance for our customers.

Operationally, we are exercising financial discipline and taken several actions to mitigate the expected financial impacts of COVID-19 on our business. Those actions include among other things, stringent hiring restrictions, managing spending on outside of consultants, significantly restricting travel and modifying the scope of our energy center maintenance outages, in large part to enhance the safety of our coworkers. In addition, we have taken several actions to strengthen our already solid liquidity position. Those steps included proactively accessing the capital markets earlier this year. Michael will share some of those details with you a bit later.

Looking ahead, we are putting the final touches on the first phase of a return to facilities transition plan for our coworkers that are working remotely. Safety will remain at the top of our mind and this transition will be done in a very measured and thoughtful way. We will also continue to work with state and local leaders, as well as with the healthcare community to support re-opening the regional economy in a safe measured and timely fashion. Stay at home orders in Missouri were lifted on May 4th, on the St. Louis area, those orders were being lifting on May 18th. In Illinois, the stay at home order remains in place till May 30th. Of course, we expect restrictions on economic and social activity will continue in all of our communities for some time.

Since we’re on essential business, these orders have not limited our operations or the execution of our strategic plan beyond the safety measures we have implemented for the protection of our coworkers and customers. I am very proud of our work that our coworkers have done over the last several months. Having said that, we are not letting our guard down. We will continue to be relentlessly focused on safety and delivering on our mission to power the quality of life for our customers and communities in managing through this unprecedented period of time.

With that, let’s now turn to page five, for an update on first quarter results and 2020 earnings guidance. Yesterday, we announced first quarter 2020 earnings of $0.59 per share compared to $0.78 per share earned in 2019. This slide outlines some of the key drivers that impacted earnings in the first quarter. While we had some items that drove earnings down compared to last year, I am pleased to tell you that we continue to effectively execute all elements of our strategic plan. In addition, due to the actions we have taken to mitigate the expected financial impacts of COVID-19, which I described earlier, combined with the constructive outcome in our Missouri rate review, which benefited all stakeholders, we remain on track to deliver within our 2020 earnings guidance range of $3.40 per share to $3.60 per share. In affirming our 2020 guidance, we have assessed several economic scenarios and taken into consideration expectations associated with lower Missouri total electric sales, the potential for higher bad debt expenses and lower returns in our Illinois Electric Distribution business due to lower interest rates among other things. Mike will discuss our first quarter earnings, 2020 earnings guidance, and other related items in more detail later.

Turning now to page six. Yesterday, we also affirmed our expectation to deliver 6% to 8% compound annual earnings per share growth from 2020 through 2024, driven by robust compound annual rate base growth of approximately 9%. Simply put, we continue to believe our strategy to deliver strong long-term earnings growth remains intact. This outlook accommodates several factors, including a range of treasury rates, sales growth, spending levels, regulatory developments and impacts of COVID-19. And of course, earnings growth in any individual year will be impacted by the timing of capital expenditures, regulatory rate reviews and sales volumes, including those driven by weather impacts from COVID-19 and other factors.

Moving to page seven, here we reiterate our strategic plan. The first pillar of our strategy stresses investing in and operating our utilities in a manner consistent with existing regulatory frameworks. This has driven our multiyear focus on investing in energy infrastructure for the long-term benefit of customers. As a result, and as you can see on the right side of this page, during the first three months of this year, we invested significant capital in each of our business segments and the pipeline remains robust. In addition, we remain on track to achieve our capital expenditure target for 2020.

Regarding regulatory matters I am pleased to report that in March, the Missouri Public Service Commission approved a constructive settlement in Ameren Missouri’s electric rate review that included a $32 million annual revenue decrease, incorporates lower fuel and transportation costs, taxes and regulatory asset amortization expenses, while providing for recovery of significant infrastructure investments, as well as an opportunity to earn within the implicit range of 9.4% to 9.8% return on equity on a growing Missouri rate base. This decrease marks the second consecutive decrease since 2018, when customers received a 6% rate cut as a result of the federal corporate income tax reduction and our Smart Energy Plan.

In Illinois last month, we made our required annual electric distribution from the rate update filing, requesting a $45 million base rate decrease. If approved as requested, all in 2021 residential electric rates for customers taking delivery and energy supply from Ameren Illinois would be down approximately 1% since formula rate making began in 2012. As you can see with these rate decreases, we are clearly focused and keeping our customers’ cost competitive and affordable through continuous improvement and disciplined cost management, while we make significant investments in energy infrastructure to deliver long-term value. Mike will provide more detail about the electric and natural gas rate reviews in a moment.

Turning now to page eight, and the second pillar of our strategy, enhancing regulatory frameworks and advocating for responsible energy and economic policies. Beginning with Ameren Illinois Electric Distribution, The Downstate Clean Energy Affordability Act legislation was filed in February. This important legislation would allow Ameren Illinois to make significant investments in solar energy and battery storage to improve reliability as well as to make investments in transportation electrification, in order to benefit customers in the economy across Central and Southern Illinois. In addition, this legislation will modify the allowed return on equity formula to increase the basis point adder to the average 30-year treasury rate from 5.80 to 6.80, and would also extend electric formula rate making through 2032.

The Downstate Clean Energy Affordability Act will move the State of Illinois closer to reaching its goal of 100% Clean Energy by 2015 and builds on Ameren Illinois’ efforts to modernize the energy grid under a transparent and stable regulatory framework that has supported significant investment to modernize the energy grid, while improving reliability and creating jobs, all while keeping rates well below the Midwest and national averages. With all these benefits in mind, we are focused on working with key stakeholders to get this important legislation passed. Prior to adjournment of the Illinois General Assembly in mid-March due to COVID-19, [Indecipherable] had advanced to the Public Utilities Committee and a Senate Bill still awaited assignment to the Energy and Public Utilities Committee. With lot of the challenges that exist with COVID-19, it’s unclear whether these bills will advance in this spring session, which is currently set to end May 31st that is extended by the leadership in Illinois House and Senate. If not pass this spring, these bills could also be addressed in a veto session or potentially other special sessions later this year.

Turning to page nine for an update on FERC regulatory matters. In terms of the FERC’s November 2019 order and its subsequent order to extend time to reconsider hearing requests, I do not have any significant updates. However, the FERC did recently take some constructive actions that could further support investment and transmission. In particular, in March, the FERC issued a Notice of Proposed Rulemaking on the electric transmission ROE incentives. And on notice, the FERC proposed several changes to ROE incentives, including an increase in the regional transmission organization, or RTO, participation adder from 50 basis points to 100 basis points.

For perspective, every 50 basis point change in our FERC ROE impacts annual earnings per share by approximately $0.04. I know this also proposes incentives on new projects by considering the benefits rather than the risks of a project. We are pleased with the direction that FERC has taken with this notice. This suggests that the FERC understands the importance of incentivizing transmission investment to both upgrade and replace the aging infrastructure to also unable to transition to more renewable generation across the country. We expect to file comments by the July 1st deadline. Of course, we are unable to predict the ultimate timing or impact of these FERC matters as the FERC is under no timeline to issue decision.

Moving now to Page 10 for an update on the third pillar of our strategy, creating and capitalizing on opportunities for investment for the benefit of our customers, shareholders and the environment. Here we provide an update on our wind generation investment plans to achieve compliance with Missouri’s Renewable Energy Standard and continue to transition our generation portfolio. We have received all regulatory approvals to acquire 700 megawatts of new wind generation at two sites in Missouri. Construction is well underway and continues at both wind generation facilities. We continue to work closely with the developers for both projects to monitor the timely manufacturing, shipment and installation of facility components, which are coming from various parts of the world.

We continue to expect the 400 megawatt facility to be in service by the end of 2020, however, the 300 megawatt facility is facing greater challenges given that this project was originally scheduled to be completed later in the year. The developer continues to work towards completing the entire project in 2020, however, manufacturing, shipping and other supply chain issues have negatively impacted the schedule on this project. While we have not received formal notice from the developer that any portion of this project will be delayed beyond December 31st, 2020 at this time, our discussions with the developer indicate that a completion of a portion of the project representing approximately $100 million of investment may go into service in the first quarter of 2021.

While we would be disappointed, if this entire project is not completed in 2020, it is important to keep some key factors in mind. First, if only this portion or this project is not completed in 2020, we would still be closing on approximately $1.1 billion or 92% of our planned 2020 wind generation investment of $1.2 billion. In addition, for any portion of the project completed in 2021, we have contractual protections to pay a reduced amount to account for the potential loss of production tax credits subject to an obligation to later pay the original contracted amount should Ameren being entitled to receive those credits.

Finally, late last week, US Department of the Treasury indicated plans to modify the wind production tax credit rules, which is expected to result in a one-year extension of in-service criteria. The bottom line is, we expect to deliver on the vast majority of our wind generation investment in 2020. We believe these investments will deliver clear long-term benefits to our customers, the communities we serve and the environment. Finally, consistent with our goal to meet our customers’ long-term energy needs in a responsible manner, we will assess additional renewable generation opportunities and the context of our next Integrated Resource Plan, which will be filed in September of this year. This comprehensive stakeholder process is well underway to evaluate our future customer demand as well as generation resources needed over the next 20 years and beyond. We continue to work with key stakeholders in this process and are committed to transitioning Ameren Missouri’s generation to a cleaner, more diverse portfolio in a responsible fashion for our customers, our shareholders in the environment.

Moving to page 11, looking ahead to the end of this decade, we have a robust pipeline of investments, over $36 billion that will deliver significant value to all of our stakeholders by making our energy grid stronger, smarter and cleaner. These investment opportunities exclude any potential new renewable generation for the next Missouri Integrated resource plan, which as I just noted will be filed in September, as well as any potential new multi-value transmission projects. Of course, our investment opportunities not only create a stronger and cleaner energy grid to meet our customers’ needs and exceed their expectations, I think it also creates thousands of jobs for local economies. Needless to say, this is very important for our country and the communities we serve at this time. Maintaining constructive energy policies to support robust investment in energy infrastructure will be critical to meeting our country’s future energy needs and delivering on our customers’ expectations.

Moving to page 12, to sum-up our value proposition, our current environment is challenging. We are optimistic about the future. The consistent execution of our strategy over many years and on many fronts has positioned us well for future success [Technical Issues] that the execution of this same strategy in 2020 and over the next decade will deliver superior value to our customers, shareholders and the environment. We believe the expectation of a 6% to 8% earnings per share compound annual growth rate in 2020 through 2024, driven by strong rate base growth compares very favorably with our regulated utility peers. I am confident in our ability to execute our investment plans and strategies across all four of our business segments as we have an experience and dedicated team to get it done. Further, our shares continue to offer investors a solid dividend. Our strong earnings growth expectations outlined today position us well for future dividend growth. Of course, future dividend decisions will be driven by earnings growth, in addition to cash flows and other business conditions. Together, we believe our strong earnings growth outlook combined with our shallow dividend results in a very attractive total return opportunity for shareholders.

Before I turn the call over to Michael, I’d like to mention an important report that we recently issued. Just last week, we published the Annual Ameren Sustainability Report. This report outlines how we are effectively managing a wide range of environmental, social and governance matters for the benefit of all stakeholders. I encourage you to read it at amereninvestors.com.

Again, thank you all for joining us today. I’ll now turn the call over to Michael.

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

Thanks, Warner, and good morning, everyone.

Turning now to page 14 of our presentation, today we reported first quarter 2020 earnings of $0.59 per share compared to earnings of $0.78 per share for the year-ago quarter. The key factors that drove the overall $0.19 per share decrease are highlighted by segment on this page. Earnings for Ameren Missouri, our largest segment were down $0.20 per share. The results reflected lower electric retail sales, primarily driven by mild winter temperatures in 2020 compared to colder than normal temperatures in the year ago period as well as the absence of energy efficiency, performance incentives in the first quarter of 2020, which combined reduced earnings by $0.11 per share. In addition, earnings were impacted by higher operations and maintenance expenses, which reduced earnings by $0.08 per share [Technical Issues] operation and maintenance expense was primarily driven by changes in the cash surrender value of our company-owned life insurance.

Finally, under return to the Missouri rate review settlement in order, we’ve recognized a one-time charitable contributions in the first quarter, which reduced earnings by $0.02 per share. Earnings for Ameren Illinois Natural Gas were slightly lower due to higher operation and maintenance expenses also due to change in the cash surrender value of COLI, mostly offset by increased investments and infrastructure. Ameren Illinois Electric Distribution earnings were flat, reflecting increased investments in infrastructure, offset by a lower allowed return on equity. Ameren Transmission earnings were $0.01 per share higher due to an increased investments in infrastructure, partially offset by a lower allowed return on equity. Finally, Ameren Parent and other results also increased $0.01 per share, driven primarily by the timing of income tax expense, which is not expected to impact full year earnings, offset by reduced tax benefits associated with share-based compensation.

Before moving on, let me briefly cover electric sales trends for Ameren Missouri and Ameren Illinois Electric Distribution for the first three months of this year compared to the first three months of last year. While we did see an impact on electric margins for Ameren Missouri and Ameren Illinois Electric Distribution due to COVID-19, the impact was not material in the first quarter due in part to the timing of the stay at home order in Illinois that began March 21st, and the stay at home orders in the city, St. Louis City and St. Louis County that began at March 23rd.

In addition, March is a [Indecipherable] month. As a result, we tend to have less earnings exposure to large percentage changes in sales than we would otherwise have in winter or summer months. Weather normalized kilowatt-hour sales to Missouri residential customers increased, 2.5%, excluding the effects of our Missouri energy efficiency plan under MEEIA. Weather normalized kilowatt-hour sales to Missouri commercial and industrial customers decreased 1.5% and 2%, respectively, after excluding the effects of our energy efficiency plan. We exclude MEEIA effects because the plan provides rate recovery to ensure that earnings are not affected by the reduced electric sales resulting from our energy efficiency efforts. Weather normalized kilowatt hour sales to Illinois residential customers increased about 1% and weather normalized kilowatt-hour sales to Illinois, commercial and industrial customers decreased 1.5% and 2% respectively. Recall that changes in our electric sales in Illinois, no matter the cause did not affect our earnings since we have full revenue decoupling. I’ll touch a bit more on sales expectations for the second quarter and the balance of the year in a moment.

Turning to page 15. As you think about the financial uncertainties for the remainder of the year due to COVID-19, this page lays out the regulatory mechanisms available in our business segments to mitigate certain COVID-19 uncertainties, including lower sales revenues, higher bad debt and pension expense. As you can see on the slide, we have constructive regulatory mechanisms to address these uncertainties for business segments that accounted for approximately 50% of our 2019 earnings. We have limited exposure to changes in sales in Illinois as we are fully decoupled in our electric distribution business as well as for residential and small non-residential natural gas sales. In addition, any variance in bad debt expense in Illinois recovered through the electric and gas uncollectible adjustment riders [Phonetic]. Also formula rates in our Ameren Transmission business provide full recovery of any variance in revenues, bad debt expense or pension expense.

In Missouri, we currently do not have any — have a regulatory mechanism to mitigate the financial impacts of changes in sales volume or bad debt expense. For perspective, approximately 50% of our annual Missouri electric margins are residential, 40% are commercial, and 10% are industrial. The earnings impact of a 1% change in annual sales in 2020 by class is approximately $0.03 for residential, $0.02 for commercial and $0.005 [Phonetic] for industrial. It should be noted that we have seasonal electric rates in Missouri. Because of seasonal rates, approximately 50% of our electric margins are typically realized from June through September, assuming normal weather. We are monitoring the financial impacts of COVID-19 and have the ability to seek an accounting authority order from the Missouri PSC to track such impact to recovery in a future rate review. Finally, any variance in pension expense from Missouri is recovered through a pension tracker.

With that in mind, turning to page 16, I would like to briefly touch on key drivers impacting our 2020 earnings guidance. As Warner stated, we continue to expect 2020 diluted earnings to be in the range of $3.40 per share to $3.60 per share. This guidance range assumes normal weather in the remaining nine months of the year as well as reflects several other updates from our February call, primarily related to COVID-19. While it’s still very difficult to predict the ultimate impacts of COVID-19 on our business, our team reviewed several COVID-19 scenarios, incorporated what we believe are prudent and reasonable assumptions into our earnings guidance.

Our guidance contemplates the stay at home orders currently in effect. As Warner mentioned, the Governor of Missouri lifted the statewide stay at home order on May 4th, although St. Louis City and county will begin lifting in their orders on May 18th. While these restrictions are being lifted in May, our guidance assumes limited business activity during the entire second quarter, which will significantly impact commercial industrial sales, while favorably impacting residential sales. As the year goes on, we expect to see commercial industrial sales improved in the third and fourth quarters, but never fully recovering by year-end. We also expect residential sales to taper-off as the year goes on, especially in the fall when schools re-open. As a result, our guidance assumes a gradual recovery.

As we sit here today, we expect lower sales in Ameren Missouri due to COVID-19 to reduce earnings of approximately $0.10 per share compared to 2019 weather normalized sales. For the year, we expect total weather normalized sales to be down approximately 2.5%. Broken down by class, we expect 2020 commercial sales to decline approximately 7%, industrial to decline approximately 4%, and residential to increase approximately 2.5%. Before moving on, I would note that Ameren Missouri customer sales for April, excluding the impact of COVID and normal weather were down approximately 7%, reflecting the negative impact from COVID-19 compared to the prior year.

Broken down by class and compared to the prior year, preliminary in Missouri April weather normalized commercial industrial sales declined approximately 15% and 10% respectively, which more than offset the margins on increased weather normalized sales to residential customers of approximately 6%, similar to March, April and May are mild weather months. As a result, our annual earnings have less exposure to large percentage changes in residential and commercial sales than in those months.

Moving on to other guidance considerations. Despite the extensive federal actions being taken to provide COVID-19 relief to individual and businesses across the country, as well as the energy assistance funding the Ameren is providing, we understand that some customers will still face challenges in paying their bills and we incorporate an increase in bad debt expense into our guidance for the balance of the year. Today’s guidance also incorporates an estimated 2020 allowed ROE for Ameren Illinois Electric Distribution of 7.3%, which reflects a 30-year treasury yield of approximately 1.5% as well as an increase in parent interest expense associated with the accelerated $800 million note issuance at Ameren Corp, which I’ll touch on more in a moment.

On the positive side, we’ve incorporated the final terms of the Ameren Missouri electric rate review settlement, which we will discuss later as well. In addition, as Warner mentioned, we’ve already taken certain actions to put in place other actions to reduce costs to help mitigate the expected negative financial impacts of COVID-19. Rest assured, we will remain very disciplined in managing our cost for the remainder of the year. Finally, select earnings considerations by quarter for the balance of the year are listed on this page.

Moving now to page 17 for a discussion of Ameren Missouri regulatory matters. In March, the PSC approved a stipulation agreement to resolve the Ameren Missouri rate review. As many of you know, the agreement was a black box settlement and therefore the final order does not provide certain specific details. Effective April 1st, base electric revenues were decreased by $32 million annually or a decrease of approximately 1%; 80% of which we expect to realize this year.

Concurrently, net base energy costs, which will be the basis used for prospective changes to the fuel adjustment clause rider, decreased by approximately $115 million annually. In addition, net regulatory asset and liability amortization expenses and the base level expenses for regulatory tracking mechanisms reduced by approximately $50 million annually. The agreement did not specify and allow ROE, a rate base level or a common equity ratio. However, the PSC determined an implicit ROE in the range of 9.4% to 9.8% is reasonable. In the absence of the stated ROE, our goal continues to be earn as close to 9.6%, then midpoint of the ROE range as possible.

The agreement also called for a continued use of a 9.53% ROE to calculate allowance for funds used during construction. Finally, the approved agreement provided for continuation of key trackers and riders, including the fuel adjustment clause, where the sharing percentage of 95.5% [Phonetic] was affirmed by the commission in April. Looking ahead, we will continue to assess the timing of our next Missouri rate review. In making this determination, we will take into account considerations and constructed rate settlement of this recent rate review, the ongoing impacts of COVID-19 on our customers and our business, our capital expenditures, including the planned win acquisitions, coupled with the flexibility provided by Senate Bill 564 plant in-service accounting, and other cost of service considerations.

Turning to page 18, for a financing and liquidity update. We feel very good about our liquidity and financial position today, in particular, after taking a number of steps in March and early April to access the capital markets. On March 20th, Missouri issued $465 million of 2.95% first mortgage bonds due in 2030. This ties for the lowest rate for a 10-year bond issuance in Ameren Missouri’s history, which helps keeps customers rates low as proceeds were used to repay short-term debt, including short-term debt incurred to repay a maturity, an $85 million of 5% senior unsecured notes that matured on February 1st.

Additionally, on April 3rd, Ameren Corp issued $800 million of 3.5% senior unsecured notes due in 2031. These proceeds were used for general corporate purposes, including to repay short-term debt and to fund the repayment of Ameren Corp’s 2.7% senior notes due November 15th, which is the only maturity remaining in 2020. We decided to accelerate the holding company debt offering to secure our liquidity position during an uncertain time in the credit markets. We continue to expect to issue long-term debt at Ameren Missouri later this year to fund a portion of the wind generation investments expected to be in service by the end of 2020. And I would note there are no long-term debt maturities in 2021.

In December, we also increased the capacity of our credit facilities by $200 million and extended the maturity dates up to December 2024. Ameren’s available liquidity on April 30th was approximately $2.5 billion. This includes the $2.3 billion of combined credit facilities available and approximately $150 million of cash on hand at the end of the month. There are no outstanding credit facility or commercial paper borrowings as of April 30th. In addition, we also expect to receive between $540 million and $550 million upon the physical settlement of the August 2019 forward sale agreement on or before March 31st, 2021, which expected to be used for to fund a portion of the Ameren Missouri’s wind generation investments. Finally, I’m pleased to report that last month, both Moody’s and S&P affirmed their credit rating outlook as stable.

Moving now to page 19 for an update on the Ameren Illinois regulatory matters. Last month, we made our required annual electric distribution formula rate update filing requesting a $45 million base rate decrease. Under Illinois’ formula rate making, Ameren Illinois is required to make an annual rate updates to systematically adjust cash flows over-time for changes in cost of service and to true-up any prior period over or under recoveries of such cost. If approved, as requested all-in 2021 residential electric rates for customers taking delivery and energy supply for Ameren Illinois would be down by approximately 1% since formula rate making began in 2012. The ICC will review the matter in the months ahead with a decision expected in December of this year and new rates effective in January of next year. This along with our natural gas rate review remain on track.

Finally, turning to page 20, I’ll summarize. We have a strong team and are well positioned to continue executing on our plan during these unprecedented times. We continue to expect to deliver strong earnings growth in 2020, as we successfully executed our strategy. As we look to the longer term, we continue to expect strong earnings per share growth driven by robust rate base growth and disciplined cost management. Further, we believe this growth compares very favorably with the growth of our regulated utility peers. And Ameren shares continue to offer investors an attractive dividend. In total, we have an attractive total shareholder return story that compares very favorably to our peers.

This concludes our prepared remarks. We now invite your questions.

Questions and Answers:

Operator

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Julien Dumoulin-Smith with Bank of America. Please proceed with your question.

Julien Dumoulin-Smith — Bank of America Merrill Lynch — Analyst

Hey, good morning, team. Thank you for all the extensive commentary. Hope you all are doing well.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Yeah. Thank you, Julien. Hope you’re doing well as well. Good to hear your voice.

Julien Dumoulin-Smith — Bank of America Merrill Lynch — Analyst

Likewise. Thank you. Wanted to follow up on Missouri. And [Technical Issues] 1Q you had a number of called higher expenses. You listed them out fairly in some detail. How do you think about those cascading through the course of the year into ’21? I imagine much of it like weather and one-time contributions are pretty limited to 1Q ’20, but separately from focusing on higher spend, how do you think about the totality of O&M opportunities to offset the details that you provided on the lower 2.5% sales altogether?

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

Perfect. Thank you. Good morning, Julien. This is Michael. So I’ll take a stab at this and then certainly Warner can add anything as well. But I mean, if I heard you right, you broke up a little bit there, but in terms of the higher cost that we saw in the first quarter, clearly we were impacted by this company-owned life insurance, which we indicated in there. So it obviously provided a headwind. You think back in terms of where we were at the beginning of the year, we talked about O&M cost being higher in general. We didn’t guide to a specific number. We just said that we’re going to be higher. We obviously had these headwinds that are occurring in the first quarter as we think about all these COVID-related issues that we outlined in terms of what’s going on with sales and bad debts, we are clearly focused on guiding to a lower O&M number today. And so hopefully gives you some context as not giving you the specifics of it, but clearly we were higher O&M going into the year got these headwinds. We’ve taken a number of actions as Warner said in terms of just managing headcount, obviously travel, conferences, watching over time or we can all those kind of things to make sure that we can keep a firm grasp on this.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Yeah. I think Michael, you hit it right. So look we’re guiding down now from O&M expenses from where they were last year. And looking at some of those things Julien, clearly we’re mindful of several things. Of course, we’re mindful of the expected impacts of COVID-19, which Michael did a nice job of outlining before. But of course, we’re also mindful that we need to make sure we’re delivering safe and reliable service to our customers, but clearly we never lose our focus to earn as close to our [Indecipherable] return as possible. So when we think about all of those things and providing that guidance that’s how we think about the O&M actions that were taken.

Julien Dumoulin-Smith — Bank of America Merrill Lynch — Analyst

Got it. Okay. But no specific pinpoint number here for the total totality of the year.

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

And at this point I think we’re going to continue to monitor it and as you can appreciate here we’re here in the first quarter. And so we’ll continue to monitor operations for the rest of the year. So yeah, but that gives you, I think a good sense of the direction that we’re headed.

Julien Dumoulin-Smith — Bank of America Merrill Lynch — Analyst

Absolutely. And then related to this, if I can. What about the Missouri’s rate case strategy, I know you put a bullet in your slides about that, but can you elaborate on your thinking today and again also being cognizant that, yes, we’re still in the first quarter here in terms of results. But how are you these conceptually think about approaching it.

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

Yeah. So Julien just a couple of thoughts there and then Marty, who is joining us remotely. All of our leaders, just say our Presidents are joining us remotely today as we continue to make sure we do the proper social distancing. So look, I think at the end of the day, really no decision has been made at this time, but clearly when you think about your next rate case filings, there are several things you have to think about and certainly the wind projects, right, which we’ve talked about on the call. But we also have to be mindful of the implications and impacts of COVID-19. And so those coupled with the fact that we just completed our last rate review and those are some of the things that you would put on the list in terms of making a final determination there.

Marty I know that, that you’re on — anything that you would add some of the things that you and your team are kicking around?

Martin J. Lyons Jr. — Chairman and President, Ameren Missouri

Warner, you hit on a couple of the key ones. I think Julien, when you look back at our last rate review filings, it was really to set up the timing for this next one, given the wind projects that we have going into service later this year. So those projects will still be top of mind in terms of getting those completed and making sure we think about how to time a rate case around those. Of course Senate Bill 564, the plant in-service accounting has really provided us some better flexibility on capital expenditures and the ability to be able to defer depreciation return and get full recovery. So that’s a consideration. But as Warner said, we feel good about the constructive rate settlement that we just had in this past rate review. I think that puts us in a good position to really think about the timing going forward. COVID-19 obviously is having impacts on our customers and our business is Warner mentioned and so all of those will be considerations as well as other cost of service considerations that we’ll go into it. So I think all of that consider just means that we’ll be thinking about really the best timing for this next rate review.

Julien Dumoulin-Smith — Bank of America Merrill Lynch — Analyst

Excellent guys. Thank you for the time. Stay well.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Thanks Julien. Take care.

Operator

Thank you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Good Morning, Jeremy. This is Warner. How are you doing?

Richard W. Sunderland — JPMorgan — Analyst

Hi, good morning. This is Rich Sunderland on for Jeremy. Thanks for taking the questions today.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Sure.

Richard W. Sunderland — JPMorgan — Analyst

Sure. So just starting off with the wind project, appreciate the update there. Could you speak to any regulatory obligations with regards to the in-service dates and maybe just a little bit more color with the line of sight to the potential end of year versus slight push into Q1 for the 300 megawatts?

Warner L. Baxter — Chairman, President and Chief Executive Officer

Yeah. And so this is Warner. So in terms of regulatory obligations really none. By the end of this year, of course, we’re very focused on getting those done in a timely fashion as we outlined during the call. But if some of the projects and we talked about at this time, we think there is a possibility for $100 million of that second project get pushed into 2021, that doesn’t cause any particular regulatory challenges for us. So that’s how I see that.

Richard W. Sunderland — JPMorgan — Analyst

Yeah. I mean, you got renewable standard here in the State of Missouri, you got 15% by 2021, but we’ll be in compliance with [Technical Issues]

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

That’s what what we want to see, no issues with that.

Richard W. Sunderland — JPMorgan — Analyst

Great. Thank you. And then about bad debt expense, could you speak to a little bit about trends from maybe ’08, ’09 and what you’re baking in the guidance for 2020?

Warner L. Baxter — Chairman, President and Chief Executive Officer

Yeah. Michael, why don’t you take that one, please?

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

Yeah. You bet. So we’re looking and mindful of everything that’s happening to the customers. They are looking at in terms of why heap is providing, obviously an unprecedented amount of dollars here, I think Warner mentioned as well, that we have dollars that are being allocated obviously to energy assistance as well. But as we step back and look at and going back to ’08, ’09, you’re right, I think that’s a great place for us to spend some time. I mean, we’ve done a nice job of driving down bad debt expense over-time. We’re probably at about $8 million today in bad debt expense. If you think about ’08-’09 time-frame you’re probably closer to $14 million, $15 million. So that’s probably a good proxy to think about in terms of couple of cents about $6 million in terms of headwind potentially associated with bad debt expense.

Richard W. Sunderland — JPMorgan — Analyst

Great. Thanks for the update, Warner and Michael.

Warner L. Baxter — Chairman, President and Chief Executive Officer

My pleasure. Thank you. Stay well.

Operator

Thank you. Our next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Good morning, Paul. How are you doing?

Paul Patterson — Glenrock Associates LLC — Analyst

Hey, all right, I’m managing. Just on your comments, you mentioned that the long-term growth had certain expectations with respect to the 30-year treasury. And I know you guys have legislation pending in Illinois, which you mentioned and went over. But how should we think about what the long-term growth rate is, if we do have this 30-year treasury where it’s at. And also just your rate base growth seems to be unchanged and what have you — how should we think about what your expectation is, absent any legislation changing whatever your treasury would be?

Warner L. Baxter — Chairman, President and Chief Executive Officer

So Michael, why don’t you address sort of the overall 30-year treasury and then maybe I can jump in and talk about potential allocation of capital.

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

I appreciate the question. Yeah, I think as you think about the long-term guidance and if you think about the 350 [Phonetic] is the midpoint for 2020 and take the 6% to 8% off of that, Paul. I mean, you get to about a $0.35 range out there in 2024, so a decent size range. And I think that, that range accommodates a number of things, which I think Warner maybe you can refer to that certainly, I mean it refers potential treasury outcomes certainly rate case outcomes, the timing of capex, other things. I mean there are a number of levers that can be pulled over-time. I would remind you a couple of I think key data points just to keep in mind. I mean, for every 50 basis points move in that distribution business, it’s worth about, it’s an impact of about $0.035.

And the other thing to keep in mind too is, I mean, as you think about how we’re allocating capital today and where rate base growth is going over-time and you get out to 2024 that Illinois distribution business is only about 18% of the overall rate base. So those are things just to keep in the back of your mind, as you think about different impacts associated with that $0.035 range.

Warner L. Baxter — Chairman, President and Chief Executive Officer

That’s a good point. So maybe I’ll add then a little bit more color because you had a specific question around how we might think about our investments in Illinois. So look, we’re mindful of the fact that I would turn on equity in Illinois below industry averages. And I mean that’s why we’re supporting legislation, that’s going to add 100 basis points to the current 580 basis points to the 30-year treasury. And so at the same time too, now we’ve recognized that we’re currently and then frankly unprecedented period in our country’s history that’s obviously driving historically low interest rates. And so what I would say is that, look we’re not going to have a knee-jerk reaction to our investment strategy because the investments that we’ve been making in Illinois have been delivering value to both our customers and shareholders. But look, we’re also going to continue to monitor the situation. And at the same time, Rich and his team, they’re going to be relentless and trying to make sure we pass what we think is really good legislation for our customers, the state of Illinois and certainly for our shareholders. And so doing we’re going to continue to advocate for fair returns on those infrastructure investments. And then so doing to — we think if we continue to make them, they’re going to deliver a lot of value to our customers. So that’s the color. That’s in terms of how we think about it right now.

Paul Patterson — Glenrock Associates LLC — Analyst

Okay. I mean and I appreciate the color. I’m just sort of wondering though, if we don’t get legislation and if the rate is so low, I mean, would you, I mean, I would assume that there will probably be some change in how you would allocate capital. I mean, it is a pretty robust rate base growth that you have in those slides and stuff.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Sure. Like I said before, we’re going to be mindful of our returns in our businesses. We always are mindful about how we allocate capital. We obviously are very thoughtful and strategic in doing, but at the same time, as I said here today, we’re not going to be making any predictions or knee-jerk reactions.

Paul Patterson — Glenrock Associates LLC — Analyst

Okay. Fair enough.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Thanks, Paul.

Paul Patterson — Glenrock Associates LLC — Analyst

I’m just —

Warner L. Baxter — Chairman, President and Chief Executive Officer

Please, if you have another comment, please.

Paul Patterson — Glenrock Associates LLC — Analyst

Okay. I’m sorry. Just the COLI, you broke it out for Missouri and this was sort of just to understand why the Illinois distribution isn’t affected the [Indecipherable] and could you just give us a little bit more color about how that COLI is distributed? And I mean not anything huge, if it’s very complicated, don’t bother, but just want to get more in order to —

Warner L. Baxter — Chairman, President and Chief Executive Officer

No worries. Good question. Certainly not, it’s not complicated. I mean, it really that Illinois, it doesn’t impact the online distribution business because of the formula rate nature of it. So where you do have a little bit of impact is on the Illinois natural gas side. And so really focused in on the primary piece of Missouri, because that’s where the biggest impact is just because of the nature of that regulatory regime.

Paul Patterson — Glenrock Associates LLC — Analyst

Awesome. Thanks so much guys.

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

You bet.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Thanks, Paul. Have a good day.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of James Thalacker with BMO Capital Markets. Please proceed with your question.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Good morning, Jim. How are you doing?

James Thalacker — BMO Capital Markets — Analyst

Good morning, Warner. How are you?

Warner L. Baxter — Chairman, President and Chief Executive Officer

I am good. Hope you’re staying well and your family staying well as well.

James Thalacker — BMO Capital Markets — Analyst

Thank you guys. I appreciate it. Just following quickly on Paul’s question, as you kind of look out at the reaffirmation of the 6% to 8% in the past, I know you guys have used kind of the forward curve for treasuries. Is that kind of what we should assume is embedded in the growth rate from here?

Michael L. Moehn — Executive Vice President, Chief Financial Officer and President of Ameren Services

Yeah. No, Paul. No, Jim. Historically, I think we maybe did guide to that several years ago. I think we kind of moved away from that a bit ago. And so again just we have various internal assumptions in there. And again as Warner stated when we have a lot of different levers that we can pull, I know there is some sensitivity about just given obviously where that 30-year treasury sits today. But again it’s a $0.35 range talked about the size that overall distribution out there in 2024 talked about the sensitivity to those rates. And so I think there are things that we continue to do to manage around that.

Warner L. Baxter — Chairman, President and Chief Executive Officer

I think too, Michael just to add, I mean, so don’t lose sight despite that we show up the robust pipeline of investments that we have across all of our enterprises that goes not just beyond this first five years, but the $36 billion in total over 10 years. So that’s certainly a lever that we have and of course, all along, we’re mindful of customer affordability and those types of things. So look, we never say anything is a layup, right? But at the same time we’re going to be very thoughtful in terms of how we manage the business that drives value for our customers and value for our shareholders.

James Thalacker — BMO Capital Markets — Analyst

Got it, okay. Thank you. And I guess just as a real quick follow-up. As you look at the range, I know that you’ve affirmed today, but are you guys comfortable at this point in kind of talking about with your cost containment and what you see for your sort of sales progression through the year through the various scenarios of kind of where you see yourself within that range? Would it be sort of at the midpoint and I’ll sort of lower half like how are you thinking about that.

Warner L. Baxter — Chairman, President and Chief Executive Officer

Yeah, Jim. So this is Warner. So I assume you’re talking about our 2020 EPS guidance. And so, no, look, consistent with our past practice, we just don’t disclose where we’re at within our guidance range, frankly, in any given time. And so the only thing I would say is that this team is focused and has a strong record of not just being focused, but delivering within our guidance. And that’s where we’re going to continue to be focused in 2020.

James Thalacker — BMO Capital Markets — Analyst

Got it. Thank you very much for the time and hope everyone’s safe and well.

Warner L. Baxter — Chairman, President and Chief Executive Officer

We are. Thank you very much. You do the same.

Operator

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Kirk for any final comments.

Andrew Kirk — Investor Relations Director

Thank you for participating in this call. A replay of this call will be available for one year on our website. If you have questions, you may call the contacts listed on our earnings release. Financial analyst inquiries should be directed to me, Andrew Kirk; media should call Erin Davis. Again, thank you for your interest in Ameren and have a great day.

Operator

[Operator Closing Remarks]