SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Ameren, headquartered in St. Louis, Missouri, is a public utility holding company under PUHCA 2005, administered by FERC. Ameren’s primary assets are its equity interests in its subsidiaries. Ameren’s subsidiaries are separate, independent legal entities with separate businesses, assets, and liabilities. These subsidiaries operate, as the case may be, rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and merchant electric generation businesses. Dividends on Ameren’s common stock and the payment of expenses by Ameren depend on distributions made to it by its subsidiaries. Ameren’s principal subsidiaries are listed below. Also see the Glossary of Terms and Abbreviations at the front of this report and in the Form 10-K.


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


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


•	AER consists of non-rate-regulated operations, including Genco, AERG, and Marketing Company, and, through Genco, an 80% ownership interest in EEI, which Ameren consolidates for financial reporting purposes.

Ameren has various other subsidiaries responsible for activities such as the provision of shared services. Ameren also has a subsidiary, ATXI, that operates a FERC rate-regulated electric transmission business.

On March 14, 2013, Ameren entered into a transaction agreement to divest New AER to IPH, which Ameren expects will close during the fourth quarter of 2013. Immediately prior to Ameren’s entry into the transaction agreement with IPH, on March 14, 2013, Genco exercised its option under the amended put option agreement with Medina Valley and received an initial payment of $100 million with respect to the sale of its Elgin, Gibson City, and Grand Tower gas-fired energy centers to Medina Valley. On October 11, 2013, Ameren received FERC approval for the divestiture of New AER to IPH and Genco’s sale of the Elgin, Gibson City, and Grand Tower gas-fired energy centers to Medina Valley. Immediately after receipt of FERC approval, Genco completed its sale of these gas-fired energy centers to Medina Valley and received additional cash proceeds of $37.5 million. Medina Valley has entered into an agreement to sell the Elgin, Gibson City, and Grand Tower gas-fired energy centers to Rockland Capital. Ameren expects this third-party sale of these gas-fired energy centers to close by the end of 2013, subject to FERC and other regulatory approvals. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information regarding these divestitures.

As a result of the transaction agreement with IPH and Ameren’s plan to sell its Elgin, Gibson City, and Grand Tower gas-fired energy centers, Ameren determined that New AER and the Elgin, Gibson City, and Grand Tower gas-fired energy centers qualified for discontinued operations presentation beginning March 14, 2013. Therefore, Ameren has segregated New AER’s and the Elgin, Gibson City, and Grand Tower gas-fired energy centers’ operating results, assets, and liabilities and presented them separately as discontinued operations for all periods presented in this report. Unless otherwise stated, these notes to Ameren’s financial statements exclude discontinued operations for all periods presented. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information regarding that presentation.

The financial statements of Ameren are prepared on a consolidated basis. Ameren Missouri and Ameren Illinois have no subsidiaries, and therefore their financial statements are not prepared on a consolidated basis. All significant intercompany transactions have been eliminated. All tabular dollar amounts are in millions, unless otherwise indicated.

Our accounting policies conform to GAAP. Our financial statements reflect all adjustments (which include normal, recurring adjustments) that are necessary, in our opinion, for a fair presentation of our results. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The results of operations of an interim period may not give a true indication of results that may be expected for a full year. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K.

During preparation of the 2012 annual statements of cash flows, it was identified that Ameren’s and Ameren Missouri’s 2012 interim statements of cash flows incorrectly classified certain activity from the nuclear decommissioning trust fund. Although not material, operating cash flows were overstated by $49 million for the nine months ended September 30, 2012. The overstated operating cash flows resulted in the investing cash flows being understated by the same amounts. The cash flows for the nine months ended September 30, 2012, for Ameren and Ameren Missouri have been revised in this report to correct for this error.

Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to Ameren Corporation common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to common stockholders by the diluted weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that would occur if certain stock-based performance share units were settled.

The following table presents Ameren’s basic and diluted earnings per share calculations and reconciles the weighted-average number of common shares outstanding to the diluted weighted-average number of common shares outstanding for the three and nine months ended September 30, 2013, and 2012:



	Three Months					Nine Months
	2013			2012		2013			2012
Net income (loss) attributable to Ameren Corporation:
Continuing operations	$	305		$	309	$	464		$	507
Discontinued operations	(3		)	65		(212		)	(325		)
Net income (loss) attributable to Ameren Corporation	$	302		$	374	$	252		$	182

Average common shares outstanding - basic	242.6			242.6		242.6			242.6
Assumed settlement of performance share units	2.5			0.3		1.8			0.3
Average common shares outstanding - diluted	245.1			242.9		244.4			242.9

Earnings (loss) per common share – basic:
Continuing operations	$	1.26		$	1.28	$	1.92		$	2.09
Discontinued operations	(0.01		)	0.26		(0.88		)	(1.34		)
Earnings (loss) per common share – basic	$	1.25		$	1.54	$	1.04		$	0.75

Earnings (loss) per common share – diluted:
Continuing operations	$	1.25		$	1.28	$	1.91		$	2.09
Discontinued operations	(0.01		)	0.26		(0.88		)	(1.34		)
Earnings (loss) per common share – diluted	$	1.24		$	1.54	$	1.03		$	0.75

Average performance share units excluded from calculation^(a)	—			1.0		0.1			1.0


^(a)	Weighted-average number of performance share units that were excluded from the “Assumed settlement of performance share units” provided above because the performance or market conditions related to the awards had not yet been met.

Stock-based Compensation

A summary of nonvested performance share units at September 30, 2013, and changes during the nine months ended September 30, 2013, under the 2006 Omnibus Incentive Compensation Plan (2006 Plan) are presented below:



	Performance Share Units
	Share Units		Weighted-average Fair Value Per Unit at Grant Date
Nonvested as of January 1, 2013	1,192,487		$	33.56
Granted^(a)	837,199		31.19
Forfeitures	(7,757	)	32.66
Vested^(b)	(131,960	)	31.30
Nonvested as of September 30, 2013	1,889,969		$	32.67


(a)	Includes performance share units (share units) granted to certain executive and nonexecutive officers and other eligible employees in 2013 under the 2006 Plan.


(b)	Share units vested due to the attainment of retirement eligibility by certain employees. Actual shares issued for retirement-eligible employees will vary depending on actual performance over the three-year measurement period.

The fair value of each share unit awarded in 2013 under the 2006 Plan was determined to be $31.19. That amount was based on Ameren’s closing common share price of $30.72 at December 31, 2012, and lattice simulations. Lattice simulations are used to estimate expected share payout based on Ameren’s total stockholder return for a three-year performance period relative to the designated peer group beginning January 1, 2013. The simulations can produce a greater fair value for the share unit than the applicable closing common share price because they include the weighted payout scenarios in which an increase in the share price has occurred. The significant assumptions used to calculate fair value also included a three-year risk-free rate of 0.36%, volatility of 12% to 21% for the peer group, and Ameren’s attainment of a three-year average earnings per share threshold during the performance period.

Intangible Assets

Ameren and Ameren Missouri classify emission allowances and renewable energy credits as intangible assets. Ameren Illinois consumes renewable energy credits as they are purchased through the IPA procurement process and expenses them immediately. We evaluate intangible assets for impairment if events or changes in circumstances indicate that their carrying amount might be impaired.

At September 30, 2013, Ameren’s and Ameren Missouri’s intangible assets consisted of renewable energy credits obtained through wind and solar power purchase agreements. The book value of Ameren’s and Ameren Missouri’s renewable energy credits was $19 million and $19 million, respectively, at September 30, 2013. The book value of Ameren’s and Ameren Missouri’s renewable energy credits was $14 million and $14 million, respectively, at December 31, 2012.

Renewable energy credits and emission allowances are charged to purchased power expense and fuel expense, respectively, as they are used in operations. In accordance with the MoPSC's 2012 electric rate order, the majority of Ameren Missouri's amortization of intangible assets is deferred as a regulatory asset pending future recovery from customers through rates. The following table presents amortization expense based on usage of renewable energy credits and emission allowances, net of gains from sales, for Ameren, Ameren Missouri, and Ameren Illinois, during the three and nine months ended September 30, 2013, and 2012.



		Three Months			Nine Months
	2013		2012		2013		2012
Ameren Missouri	$	—	$	1	$	(a)	$	1
Ameren Illinois		2		1		9		1
Ameren	$	2	$	2	$	9	$	2


(a)	Less than $1 million.

Excise Taxes

Excise taxes levied on us are reflected on Ameren Missouri electric customer bills and on Ameren Missouri and Ameren Illinois natural gas customer bills. They are recorded gross in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” on the statement of income or the statement of income and comprehensive income. Excise taxes reflected on Ameren Illinois electric customer bills are imposed on the consumer and are therefore not included in revenues and expenses. They are recorded as tax collections payable and included in “Taxes accrued” on the balance sheet. The following table presents excise taxes recorded in “Operating Revenues - Electric,” “Operating Revenues - Gas” and “Operating Expenses - Taxes other than income taxes” for the three and nine months ended September 30, 2013, and 2012:



	Three Months				Nine Months
	2013		2012		2013		2012
Ameren Missouri	$	49	$	46	$	120	$	111
Ameren Illinois	10		9		43		37
Ameren	$	59	$	55	$	163	$	148

Uncertain Tax Positions

The amount of unrecognized tax benefits (detriments) as of September 30, 2013, was $86 million, $27 million, and $(2) million, for Ameren, Ameren Missouri, and Ameren Illinois, respectively. Unrecognized tax benefits are included in “Other deferred credits and liabilities” on Ameren’s, Ameren Missouri’s, and Ameren Illinois’ September 30, 2013 balance sheets. The amount of unrecognized tax benefits (detriments) as of September 30, 2013, that would impact the effective tax rate, if recognized, was $51 million, $2 million, and $(1) million for Ameren, Ameren Missouri, and Ameren Illinois, respectively. The Ameren amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, increased by $50 million primarily during the first quarter of 2013. This increase was primarily due to uncertainty related to the historical computation of Ameren’s tax basis in its stock investment in AER.

During the three months ended September 30, 2013, unrecognized tax benefits related to the deductibility of expenditures to maintain, replace, or improve steam or electric power generation property, along with casualty loss deductions for storm damage, were reduced by $113 million, $103 million, and $5 million, for Ameren, Ameren Missouri, and Ameren Illinois, respectively, with an offset to “Accumulated deferred income taxes, net.” This was the result of recent Internal Revenue Service guidance establishing new rules for the amount and timing of these deductions.

Ameren’s federal income tax returns for the years 2007 through 2011 are before the Appeals Office of the Internal Revenue Service. Ameren’s federal income tax return for the year 2012 is currently under examination.

It is reasonably possible that a settlement will be reached with the Appeals Office of the Internal Revenue Service in the next 12 months for the years 2007 through 2011. This settlement, which is primarily related to uncertain tax positions for research tax deductions, is expected to result in a decrease in uncertain tax benefits of $23 million, $15 million, and $- million for Ameren, Ameren Missouri, and Ameren Illinois, respectively. In addition, it is reasonably possible that other events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits for the Ameren Companies to increase or decrease. However, the Ameren Companies do not believe any such increases or decreases, including the decrease from the reasonably possible Internal Revenue Service Appeals Office settlement discussed above, would be material to their results of operations, financial position, or liquidity.

State income tax returns are generally subject to examination for a period of three years after filing of the return. The Ameren Companies do not currently have material state income tax issues under examination, administrative appeals, or litigation. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

Ameren Missouri has an uncertain tax position tracker. Under Missouri’s regulatory framework, uncertain income tax positions do not reduce Ameren Missouri’s electric rate base. When an uncertain income tax position liability is resolved, the MoPSC requires, through the uncertain tax position tracker, the creation of a regulatory asset or regulatory liability to reflect the time value (using the weighted-average cost of capital included in each of the electric rate orders in effect before the tax position was resolved) of the difference between the uncertain income tax position liability that was excluded from rate base and the final tax liability. The resulting regulatory asset or liability will be amortized over three years beginning on the effective date of new rates established in the next electric rate case.

Asset Retirement Obligations

The following table provides a reconciliation of the beginning balance and ending carrying amount of AROs for the nine months ended September 30, 2013:



	Ameren Missouri^(a)		Ameren Illinois^(b)		Other^(c)		Ameren^(a)
Balance at December 31, 2012	$	346	$	3	$	26	$	375
Liabilities incurred	—		—		—		—
Liabilities settled	(d)		(d)		(d)		(d)
Accretion in 2013^(e)	14		(d)		1		15
Change in estimates^(f)	2		(d)		(d)		2
Balance at September 30, 2013	$	362	$	3	$	27	$	392


(a)	The nuclear decommissioning trust fund assets of $459 million and $408 million as of September 30, 2013, and December 31, 2012, respectively, were restricted for decommissioning of the Callaway energy center.


(b)	Balance included in “Other deferred credits and liabilities” on the balance sheet.


(c)	Represents amounts for the Meredosia and Hutsonville energy centers. Pursuant to the transaction agreement to divest New AER to IPH, Ameren will retain the AROs associated with the Meredosia and Hutsonville energy centers. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information.


(d)	Less than $1 million.


(e)	Accretion was recorded as an increase to regulatory assets at Ameren Missouri and Ameren Illinois.


(f)	Ameren Missouri changed its fair value estimates for asbestos removal and certain CCR storage facilities.

Noncontrolling Interest

Ameren's noncontrolling interests comprised the 20% of EEI not owned by Ameren and the preferred stock not subject to mandatory redemption of Ameren's subsidiaries. These noncontrolling interests were classified as a component of equity separate from Ameren's equity on its consolidated balance sheet. A reconciliation of the equity changes attributable to the noncontrolling interests at Ameren for the three and nine months ended September 30, 2013, and 2012, is shown below:



	Three Months						Nine Months
	2013			2012			2013			2012
Noncontrolling interests, beginning of period ^(a)	$	151		$	145		$	151		$	149
Net income from continuing operations attributable to noncontrolling interests	2			2			5			5
Net loss from discontinued operations attributable to noncontrolling interests	—			(2		)	—			(6		)
Dividends paid to noncontrolling interest holders	(2		)	(2		)	(5		)	(5		)
Other comprehensive income attributable to noncontrolling interests^(b)	—			9			—			9
Noncontrolling interests, end of period ^(a)	$	151		$	152		$	151		$	152

(a)

Includes the 20% EEI ownership interest not owned by Ameren. The assets and liabilities of EEI were consolidated in Ameren’s balance sheet at a 100% ownership level and were included in “Current assets of discontinued operations” and “Current liabilities of discontinued operations.” The 20% ownership interest not owned by Ameren was included in “Noncontrolling interests” on Ameren’s September 30, 2013, and December 31, 2012 balance sheets. See Note 2 - Divestiture Transactions and Discontinued Operations for additional information.


(b)	Represents the noncontrolling interest of EEI’s pension and other postretirement benefit plan activity, net of income taxes of $-, $6, $-, and $6, respectively.

Accounting and Reporting Developments

The following is a summary of recently adopted authoritative accounting guidance, as well as guidance issued but not yet adopted, that could impact the Ameren Companies.

Presentation of Comprehensive Income

In June 2011, FASB amended its guidance on the presentation of comprehensive income in financial statements. The amended guidance changed the presentation of comprehensive income in the financial statements. It requires entities to report components of comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. This guidance was effective for the Ameren Companies beginning in the first quarter of 2012 with retroactive application required. The implementation of the amended guidance did not affect the Ameren Companies’ results of operations, financial position, or liquidity.

In February 2013, FASB amended this guidance to require an entity to provide information about the amounts reclassified out of accumulated OCI by component. In addition, an entity is required to present significant amounts reclassified out of accumulated OCI by the respective line items of net income either on the face of the statement where net income is presented or in the footnotes. This guidance was effective for the Ameren Companies beginning in the first quarter of 2013. The implementation of this amended guidance did not affect the Ameren Companies’ results of operations, financial position, or liquidity. The only amounts reclassified out of accumulated OCI for the Ameren Companies related to pension and other postretirement plan activity and derivatives. These amounts were immaterial for the three and nine months ended September 30, 2013, and therefore no additional disclosures were required.

Disclosures about Offsetting Assets and Liabilities

In December 2011, FASB issued additional authoritative accounting guidance to improve information disclosed about financial and derivative instruments. The guidance requires an entity to disclose information about offsetting and related arrangements to enable users of the financial statements to understand the effect of those arrangements on its financial position. In January 2013, FASB amended this guidance to limit the scope to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The Ameren Companies adopted this guidance for the first quarter of 2013. The implementation of this additional guidance did not affect the Ameren Companies’ results of operations, financial positions, or liquidity, as this guidance only requires additional disclosures. See Note 7 - Derivative Financial Instruments for the required additional disclosures.

Presentation of an Unrecognized Tax Benefit

In July 2013, FASB issued additional authoritative accounting guidance to provide clarity for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The objective of this guidance is to eliminate diversity in practice related to the presentation of certain unrecognized tax benefits. It requires entities to present an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is available under the tax law. Currently, any unrecognized tax benefit is recorded in “Other deferred credits and liabilities” on Ameren's, Ameren Missouri's, and Ameren Illinois' balance sheets. After this guidance becomes effective, any unrecognized tax benefit will be recorded in “Accumulated deferred income taxes, net” as a reduction to the deferred tax assets for net operating loss and tax credit carryforwards on the respective balance sheets. To the extent that an unrecognized tax benefit exceeds these carryforwards, the excess would continue to be recorded in “Other deferred credits and liabilities,” on the respective balance sheets, consistent with current authoritative accounting guidance. The amended guidance will not affect the Ameren Companies' results of operations or liquidity, as this guidance is presentation-related only. This guidance will be effective for the Ameren Companies beginning in the first quarter of 2014.