NOTE 16 – DIVESTITURE TRANSACTIONS AND DISCONTINUED OPERATIONS

On December 2, 2013, Ameren completed the divestiture of New AER to IPH in accordance with the transaction agreement between Ameren and IPH dated March 14, 2013, as amended by a letter agreement dated December 2, 2013.

Ameren retained certain pension and postretirement benefit obligations associated with current and former employees of AER, with the exception of the pension and postretirement benefit obligations associated with current and former employees of EEI, which were assumed by IPH. Ameren retained the Meredosia and Hutsonville energy centers, including their AROs. These energy centers were abandoned and had an immaterial property and plant asset balance as of December 31, 2014. The EPA's regulations issued in December 2014 regarding the management and disposal of CCR, as discussed in Note 15 – Commitments and Contingencies, do not apply to inactive ash ponds at plants no longer in operation, such as the Meredosia and Hutsonville energy centers. All other AROs associated with AER were assumed by New AER or by Rockland Capital, the third-party buyer of the Grand Tower energy center, as discussed below.

The transaction agreement with IPH, as amended, provides that if the Elgin, Gibson City, and Grand Tower gas-fired energy centers are subsequently sold by Medina Valley and if Medina Valley receives additional proceeds from such sale, Medina Valley will pay Genco any proceeds from such sale, net of taxes and other expenses, in excess of the $137.5 million previously paid to Genco. On January 31, 2014, Medina Valley completed the sale of the Elgin, Gibson City, and Grand Tower gas-fired energy centers to Rockland Capital for a total purchase price of $168 million. The agreement with Rockland Capital requires $17 million of the purchase price to be held in escrow until January 31, 2016, to fund certain indemnity obligations, if any, of Medina Valley. The Rockland Capital escrow receivable balance and the corresponding payable due to Genco is reflected on Ameren's December 31, 2014, consolidated balance sheet in "Other assets" and in "Other deferred credits and liabilities," respectively. Medina Valley expects to pay Genco any remaining portion of the escrow balance on January 31, 2016. Ameren did not record a gain from its sale of the Elgin, Gibson City, and Grand Tower gas-fired energy centers.

Discontinued Operations Presentation

In March 2013, Ameren determined that New AER and the Elgin, Gibson City, and Grand Tower gas-fired energy centers qualified for discontinued operations presentation. In addition, in December 2013, coinciding with the completion of the divestiture of New AER to IPH, Ameren determined that the Meredosia and Hutsonville energy centers, which were both not operating, had been abandoned and also qualified for discontinued operations presentation. Ameren has begun to demolish the Hutsonville energy center and expects to demolish the Meredosia energy center thereafter. The disposal groups have been aggregated in the disclosures below. The following table presents the components of discontinued operations in Ameren's consolidated statement of income (loss) for the years ended December 31, 2014, 2013, and 2012:



	Year ended
	2014			2013				2012
Operating revenues	$	1		$	1,037			$	1,047
Operating expenses	(2		)	(1,207		)	^(a)	(3,474		)	^(b)
Operating income (loss)	(1		)	(170		)		(2,427		)
Other income (loss)	—			(1		)		—
Interest charges	—			(39		)		(56		)
Income (loss) before income taxes	(1		)	(210		)		(2,483		)
Income tax (expense) benefit	—			(13		)		987
Income (loss) from discontinued operations, net of taxes	$	(1	)	$	(223	)		$	(1,496	)


(a)	Includes a $201 million pretax loss on disposal relating to the New AER divestiture.


(b)	Includes a noncash pretax asset impairment charge of $2.58 billion to reduce the carrying value of AER's energy centers to their estimated fair value under held and used accounting guidance.

Ameren’s results of operations for the year ended December 31, 2014, include adjustments for the New AER net working capital amount owed to IPH and for certain contingent liabilities associated with the New AER divestiture. In 2014, Ameren paid $13 million to IPH for the final working capital adjustment and a portion of the previously-recorded contingent liabilities. Additionally, Ameren recognized the operating revenues and operating expenses associated with the Elgin, Gibson City, and Grand Tower gas-fired energy centers prior to the completion of their sale to Rockland Capital on January 31, 2014. The final tax basis of the AER disposal group and the related tax benefit resulting from the transaction with IPH are dependent upon the resolution of tax matters under audit. It is reasonably possible in the next 12 months these tax audits will be completed. As a result, tax expense and benefits ultimately realized from the divestitures may differ materially from those recorded as of December 31, 2014, including the final resolution of Ameren's uncertain tax positions.

Ameren recorded a pretax charge to earnings related to the New AER divestiture of $201 million for the year ended December 31, 2013. The loss was recorded in “Operating expenses” within the components of the discontinued operations statement of income (loss). Ameren did not receive any cash proceeds from IPH for the divestiture of New AER. In 2013, Ameren adjusted the accumulated deferred income taxes on its consolidated balance sheet to reflect the excess of tax basis over financial reporting basis of its stock investment in AER. This change in basis resulted in a discontinued operations deferred tax expense of $99 million, which was partially offset by the expected tax benefits of $86 million related to the pretax loss from discontinued operations, including the loss on disposal, during the year ended December 31, 2013.

As discussed above, on January 31, 2014, Medina Valley completed the sale of the Elgin, Gibson City, and Grand Tower gas-fired energy centers to Rockland Capital for a total purchase price of $168 million. Ameren did not recognize a gain from the third-party sale to Rockland Capital for any value in excess of its $137.5 million carrying value for this disposal group because any excess amount that Medina Valley may receive, net of taxes and other expenses, over the carrying value, will ultimately be paid to Genco pursuant to the transaction agreement with IPH.

New AER and the Elgin, Gibson City, and Grand Tower energy centers were impaired under held and used accounting guidance in 2012. In early 2012, the observable market price for power for delivery in that year and in future years in the Midwest sharply declined below 2011 levels. As a result of this sharp decline in the market price of power and the related impact on electric margins, Ameren evaluated, during the first quarter of 2012, whether the carrying values of Merchant Generation coal-fired energy centers were recoverable. AERG's Duck Creek energy center's carrying value exceeded its estimated undiscounted future cash flows. As a result, Ameren recorded a noncash pretax asset impairment charge of $628 million to reduce the carrying value of that energy center to its estimated fair value during the first quarter of 2012. In December 2012, Ameren determined that the estimated undiscounted cash flows during the period in which it expected to continue to own its Merchant Generation energy centers would be insufficient to recover the carrying value of those energy centers. Accordingly, Ameren recorded a noncash pretax impairment charge of $1.95 billion in the fourth quarter of 2012.

The following table presents the carrying amounts of the components of assets and liabilities segregated on Ameren's consolidated balance sheets as discontinued operations at December 31, 2014 and 2013:



	December 31, 2014		December 31, 2013
Assets of discontinued operations
Accounts receivable and unbilled revenue	$	—	$	5
Materials and supplies	—		5
Property and plant, net	—		142
Accumulated deferred income taxes, net^(a)	15		13
Total assets of discontinued operations	$	15	$	165
Liabilities of discontinued operations
Accounts payable and other current obligations	$	1	$	5
Asset retirement obligations^(b)	32		40
Total liabilities of discontinued operations	$	33	$	45


(a)	The December 31, 2014 balance primarily consists of deferred income tax assets related to the abandoned Meredosia and Hutsonville energy centers.


(b)	Includes AROs associated with the abandoned Meredosia and Hutsonville energy centers of $32 million and $31 million at December 31, 2014 and 2013, respectively.

Ameren has continuing transactions with New AER. Ameren Illinois has power supply agreements with Marketing Company, which are a result of the power procurement process in Illinois administered by the IPA, as required by the Illinois Public Utilities Act. Ameren Illinois continues to purchase power and to purchase trade receivables as required by Illinois law. Ameren Illinois and ATXI continue to sell transmission services to Marketing Company. Also, the transaction agreement requires Ameren (parent) to maintain certain guarantees discussed below. Immediately prior to the transaction agreement closing, the money pool borrowings through which Ameren provided cash collateral to Marketing Company were converted to a note payable to Ameren, with interest, on December 2, 2015, or sooner, as cash collateral requirements are reduced. Ameren has determined that the continuing cash flows generated by these arrangements are not significant and, accordingly, are not deemed to be direct cash flows of the divested business. Additionally, these arrangements do not provide Ameren with the ability to significantly influence the operating results of New AER. Ameren did not have significant continuing involvement with or material cash flows from the Elgin, Gibson City, or Grand Tower energy centers after their sale.

Pursuant to the IPH transaction agreement, as amended, Ameren is obligated to pay up to $29 million for certain contingent liabilities as of December 31, 2014, which were included in "Other current liabilities" on Ameren's December 31, 2014 consolidated balance sheet.

The note receivable from Marketing Company related to the cash collateral support provided to New AER was $12 million and $18 million at December 31, 2014 and 2013, respectively, and was reflected on Ameren's consolidated balance sheet in "Miscellaneous accounts and notes receivable" at December 31, 2014. This receivable is due to Ameren, with interest, on December 2, 2015, or sooner as cash collateral requirements are reduced. In addition, as of December 31, 2014, if Ameren’s credit ratings had been below investment grade, Ameren could have been required to post additional cash collateral in support of New AER in the amount of $26 million, which includes $11 million currently covered by Ameren guarantees. This cash collateral support is part of Ameren’s obligation to provide certain limited credit support to New AER until December 2, 2015, as discussed below.

Ameren Guarantees and Letters of Credit

The IPH transaction agreement, as amended, requires Ameren to maintain its financial obligations with respect to all credit support provided to New AER as of the December 2, 2013 closing date of the divestiture. Ameren must also provide such additional credit support as required by contracts entered into prior to the closing date, in each case until December 2, 2015. IPH shall indemnify Ameren for any payments Ameren makes pursuant to these credit support obligations if the counterparty does not return the posted collateral to Ameren. IPH's indemnification obligation is secured by certain AERG and Genco assets. In addition, Dynegy has provided a limited guarantee of $25 million to Ameren pursuant to which Dynegy will, among other things, guarantee IPH's indemnification obligations until December 2, 2015.

In addition to the $29 million of contingent liabilities recorded on Ameren’s December 31, 2014 consolidated balance sheet, Ameren had a total of $114 million in guarantees outstanding for New AER that were not recorded on Ameren’s December 31, 2014 consolidated balance sheet, which included:

•

$106 million related to guarantees supporting Marketing Company for physically and financially settled power transactions with its counterparties that were in place at the December 2, 2013 closing of the divestiture, as well as for Marketing Company's clearing broker and other service agreements. If Marketing Company did not fulfill its obligations to these counterparties who had active open positions as of December 31, 2014, Ameren would have been required under its guarantees to provide $11 million to the counterparties.


•	$8 million related to requirements for lease agreements and potential environmental obligations. If New AER had not fulfilled its lease obligation as of December 31, 2014, Ameren would have been required to provide approximately $7 million to the leasing counterparty.

Additionally, at December 31, 2014, Ameren had issued letters of credit totaling $9 million as credit support on behalf of New AER.

Ameren has not recorded a reserve for these contingent obligations because it does not believe a payment with respect to any of these guarantees or letters of credit was probable as of December 31, 2014.