RATE AND REGULATORY MATTERS

Below is a summary of significant regulatory proceedings and related lawsuits. We are unable to predict the ultimate outcome of these matters, the timing of final decisions of the various agencies and courts, or the effect on our results of operations, financial position, or liquidity.

Missouri

February 2017 Unanimous Stipulation and Agreement

In July 2016, Ameren Missouri filed a request with the MoPSC seeking approval to increase its annual revenues for electric service. Relating to that request, in February 2017, Ameren Missouri, the MoPSC staff, the MoOPC, and all intervenors filed a unanimous stipulation and agreement with the MoPSC. The stipulation and agreement, which is subject to MoPSC approval, would result in a $3.4 billion revenue requirement, which is a $92 million increase in Ameren Missouri’s annual revenue requirement for electric service compared to its prior revenue requirement established in the MoPSC's April 2015 electric rate order. The stipulation and agreement did not specify the common equity percentage, the rate base, or the allowed return on common equity. The new revenue requirement reflects the current actual sales volumes of the New Madrid Smelter, whose operations remain suspended, as well as other agreed upon sales volumes.

The stipulation and agreement includes the continued use of the FAC and the regulatory tracking mechanisms for pension and postretirement benefits, uncertain income tax positions, and renewable energy standards that the MoPSC previously authorized in earlier electric rate orders. These regulatory tracking mechanisms provide for a base level of expense to be reflected in Ameren Missouri’s base electric rates with differences in the actual expenses incurred recorded as a regulatory asset or liability. Excluding cost reductions associated with reduced sales volumes, the base level of net energy costs under the stipulation and agreement would decrease by $54 million from the base level established in the MoPSC's April 2015 electric rate order. Changes in amortizations and the base level of expenses for the other regulatory tracking mechanisms, including extending the amortization period of certain regulatory assets, would reduce expenses by $26 million from the base levels established in the MoPSC's April 2015 electric rate order.

The stipulation and agreement contemplates that new rates will become effective on or before March 20, 2017. Ameren Missouri cannot predict whether the MoPSC will approve the stipulation and agreement or, if approved, whether any application for rehearing or appeal will be filed or the outcome if so filed.

Noranda and New Madrid Smelter

In the first quarter of 2016, Noranda, which was historically Ameren Missouri's largest customer, suspended operations at the New Madrid Smelter and filed voluntary petitions for a court-supervised restructuring process under Chapter 11 of the United States Bankruptcy Code. In October 2016, Noranda sold the New Madrid Smelter to ARG International AG. Operations at the New Madrid Smelter remain suspended and Ameren Missouri is uncertain of future sales to the smelter. As a result, Ameren Missouri will not fully recover its revenue requirement until rates are adjusted prospectively by the MoPSC to accurately reflect the actual sales volumes to the New Madrid Smelter. As of December 31, 2016, Ameren Missouri has been paid in full for all previous electric service amounts, and expects to continue to be paid in full for the minimal amount of electric service it is currently providing to the New Madrid Smelter.

MEEIA

In November 2016, the MoPSC approved a $28 million MEEIA 2013 performance incentive based on a stipulation and agreement between Ameren Missouri, the MoPSC staff, and the MoOPC. Ameren Missouri will collect the performance incentive over a two-year period that began in February 2017.

In November 2015, the MoPSC issued an order regarding the determination of an input used to calculate the performance incentive. Ameren Missouri filed an appeal of the order with the Missouri Court of Appeals, Western District. In December 2016, the Missouri Court of Appeals, Western District, upheld the November 2015 MoPSC order. Ameren Missouri has appealed the decision to uphold the MoPSC order to the Missouri Supreme Court.

ATXI’s Mark Twain Project

The Mark Twain project is a MISO-approved 95-mile transmission line to be located in northeast Missouri. In April 2016, the MoPSC granted ATXI a certificate of convenience and necessity for the Mark Twain project. Before starting construction, ATXI must obtain assents for road crossings from the five counties where the line will be constructed. None of the five county commissions have approved ATXI’s requests for the assents. In October 2016, ATXI filed suit in each of the five county circuit courts to obtain the assents. A decision in each of the five lawsuits is expected in 2017. ATXI plans to complete the project in 2019; however, further delays in obtaining the assents could delay the completion date.

Illinois

IEIMA

Under the provisions of the IEIMA's performance-based formula rate-making framework, which currently extends through 2022, Ameren Illinois’ electric distribution service rates are subject to an annual revenue requirement reconciliation to its actual recoverable costs. Each year, Ameren Illinois records a regulatory asset or a regulatory liability and a corresponding increase or decrease to operating revenues for any differences between the revenue requirement reflected in customer rates for that year and its estimate of the probable increase or decrease in the revenue requirement expected to ultimately be approved by the ICC based on that year's actual recoverable costs incurred. As of December 31, 2016, Ameren Illinois had recorded regulatory assets of $23 million and $68 million, including interest, to reflect its expected 2016 and the 2015 approved revenue requirement reconciliation adjustments, respectively. As of December 31, 2015, Ameren Illinois had recorded a $103 million regulatory asset to reflect its approved 2014 revenue requirement reconciliation adjustment, which was collected, with interest, from customers during 2016.

In December 2016, the ICC issued an order in Ameren Illinois’ annual update filing approving a $14 million decrease in Ameren Illinois’ electric delivery service revenue requirement beginning in January 2017. This update reflects an increase to the annual formula rate based on 2015 actual recoverable costs and expected net plant additions for 2016, an increase to include the 2015 revenue requirement reconciliation adjustment, which was initially recorded as a regulatory asset in 2015, and a decrease for the conclusion of the 2014 revenue requirement reconciliation adjustment, which was fully collected from customers in 2016.

FEJA

The FEJA revised certain portions of the IEIMA, including extending the IEIMA formula ratemaking process through 2022 and clarifying that a common equity ratio of up to and including 50% is prudent. Also, beginning in 2017, the FEJA decouples electric distribution revenues established in a rate proceeding from actual sales volumes by providing that any revenue changes driven by actual electric distribution sales volumes differing from sales volumes reflected in that year's rates will be collected from or refunded to customers within two years. This portion of the law extends beyond the end of the IEIMA in 2022. Through 2022, revenue differences will be included in the annual IEIMA revenue requirement reconciliation. Additionally, this law creates a customer surcharge relating to certain nuclear energy centers located in Illinois that, like the cost of power purchased by Ameren Illinois on behalf of its customers, will be passed through to electric distribution customers with no effect on Ameren Illinois' earnings.

Beginning as early as June 2017, the FEJA will allow Ameren Illinois to earn a return on its electric energy efficiency program investments. Ameren Illinois electric energy efficiency investments will be deferred as a regulatory asset and will earn a return at the company’s weighted average cost of capital, with the equity return based on the monthly average yield of the 30-year United States Treasury bonds plus 580 basis points. The equity portion of Ameren Illinois’ return on electric energy efficiency investments can also be increased or decreased by 200 basis points based on the achievement of annual energy savings goals. The FEJA increased the level of electric energy efficiency saving targets through 2030. Based on a formula provided in the act, Ameren Illinois estimates it can annually invest up to $100 million from 2018 through 2021, up to $107 million annually from 2022 through 2025, and up to $114 million annually from 2026 through 2030. The ICC has the ability to lower the electric energy efficiency saving goals if there are insufficient cost effective measures available. The electric energy efficiency program investments and the return on those investments will be recovered through a rider, and will not be included in the IEIMA formula rate process.

Federal

FERC Complaint Cases

In November 2013, a customer group filed a complaint case with the FERC seeking a reduction in the allowed base return on common equity for FERC-regulated transmission rate base under the MISO tariff from 12.38% to 9.15%. In September 2016, the FERC issued a final order in the November 2013 complaint case which lowered the allowed base return on common equity to 10.32%, or a 10.82% total return on common equity with the inclusion of the 50 basis point incentive adder for participation in an RTO. The order was consistent with the initial decision an administrative law judge issued in December 2015, and requires customer refunds, with interest, to be issued for the 15-month period ended February 2015. In addition, the new allowed return on common equity is reflected in rates prospectively from the September 2016 effective date of the order. Refunds for the November 2013 complaint case are expected to be issued in the first half of 2017.

As the maximum FERC-allowed refund period for the November 2013 complaint case ended in February 2015, another customer complaint case was filed in February 2015. The February 2015 complaint case seeks a reduction in the allowed base return on common equity for the FERC-regulated transmission rate base under the MISO tariff to 8.67%. In June 2016, an administrative law judge issued an initial decision in the February 2015 complaint case, which if approved by FERC, would lower the allowed base return on common equity to 9.70%, or a 10.20% total return on equity with the inclusion of the 50 basis point incentive adder for participation in an RTO. It would also require the issuance of customer refunds, with interest, for the 15-month period ended May 2016. The FERC is expected to issue a final order in the February 2015 complaint case in the second quarter of 2017. That final order will determine the allowed return on common equity for the 15-month period ended May 2016. That final order will also establish the allowed return on common equity that will apply prospectively from its expected second quarter 2017 effective date, replacing the current 10.82% total return on common equity, which became effective in September 2016. The 12.38% allowed return on common equity was effective for the period that began at the conclusion of the 15-month period for the February 2015 complaint case in May 2016 through the September 2016 effective date of the final order in the November 2013 complaint case.

Beginning with the January 2015 effective date, the RTO participation incentive adder reduces any refund to customers relating to a reduction of the allowed base return on common equity from the complaint cases discussed above and has been applied prospectively from the effective date of the September 2016 FERC order, resulting in a current allowed return on common equity of 10.82%.

As of December 31, 2016, Ameren and Ameren Illinois recorded current regulatory liabilities of $62 million and $42 million, respectively, to reflect the expected refunds, including interest, associated with the reduced allowed returns on common equity in the September 2016 FERC order and the initial decision in the February 2015 complaint case. Ameren Missouri does not expect that a reduction in the FERC-allowed base return on common equity would be material to its results of operations, financial position, or liquidity.

Combined Construction and Operating License

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

Regulatory Assets and Liabilities

In accordance with authoritative accounting guidance regarding accounting for the effects of certain types of regulation, we defer certain costs as regulatory assets pursuant to actions of regulators or because we expect to recover such costs in rates charged to customers. We may also defer certain amounts as regulatory liabilities because of actions of regulators or because we expect that such amounts will be returned to customers in future rates. The following table presents our regulatory assets and regulatory liabilities at December 31, 2016 and 2015:



	2016						2015
	Ameren Missouri		Ameren Illinois		Ameren			Ameren Missouri		Ameren Illinois		Ameren
Current regulatory assets:
Under-recovered FAC^(a)(b)	$	21	$	—	$	21		$	37	$	—	$	37
Under-recovered Illinois electric power costs^(c)	—		3		3			—		3		3
Under-recovered PGA^(c)	—		4		4			—		8		8
MTM derivative losses^(d)	9		15		24			29		45		74
Energy efficiency riders^(e)	5		—		5			23		—		23
IEIMA revenue requirement reconciliation adjustment^(a)(f)	—		68		68			—		103		103
FERC revenue requirement reconciliation adjustment^(a)(g)	—		7		13			—		8		12
VBA rider^(a)(h)	—		11		11			—		—		—
Total current regulatory assets	$	35	$	108	$	149		$	89	$	167	$	260
Noncurrent regulatory assets:
Pension and postretirement benefit costs⁽ⁱ⁾	$	175	$	319	$	494		$	95	$	202	$	297
Income taxes^(j)	229		1		230			247		4		251
Uncertain tax positions tracker^(a)(k)	7		—		7			7		—		7
ARO^(l)	—		3		3			—		4		4
Callaway costs^(a)(m)	29		—		29			32		—		32
Unamortized loss on reacquired debt^(a)(n)	65		59		124			69		69		138
Environmental cost riders^(o)	—		196		196			—		230		230
MTM derivative losses^(d)	9		178		187			15		175		190
Storm costs^(a)(p)	—		15		15			—		9		9
Demand-side costs before the MEEIA implementation^(a)(q)	18		—		18			31		—		31
Workers’ compensation claims^(r)	6		7		13			6		7		13
Credit facilities fees^(s)	4		—		4			4		—		4
Construction accounting for pollution control equipment^(a)(t)	19		—		19			20		—		20
Solar rebate program^(a)(u)	49		—		49			74		—		74
IEIMA revenue requirement reconciliation adjustment^(a)(f)	—		23		23			—		62		62
FERC revenue requirement reconciliation adjustment^(a)(g)	—		8		10			—		5		11
Other	9		7		16			5		4		9
Total noncurrent regulatory assets	$	619	$	816	$	1,437		$	605	$	771	$	1,382
Current regulatory liabilities:
Over-recovered FAC^(b)	$	—	$	—	$	—		$	9	$	—	$	9
Over-recovered Illinois electric power costs^(c)	—		25		25			—		6		6
Over-recovered PGA^(c)	—		—		—			3		—		3
MTM derivative gains^(d)	12		11		23			16		1		17
Estimated refund for FERC complaint cases^(v)	—		42		62			—		32		45
Total current regulatory liabilities	$	12	$	78	$	110		$	28	$	39	$	80
Noncurrent regulatory liabilities:
Income taxes^(w)	$	33	$	4	$	37		$	36	$	6	$	42
Uncertain tax positions tracker^(k)	3		—		3			6		—		6
Asset removal costs^(x)	970		697		1,669			933		671		1,605
ARO^(l)	162		—		162			167		—		167
Bad debt rider^(y)	—		3		3			—		6		6
Pension and postretirement benefit costs tracker^(z)	35		—		35			19		—		19
Energy efficiency riders^(e)	—		45		45			—		36		36
Renewable energy credits^(aa)	—		15		15			—		12		12
Storm tracker^(ab)	7		—		7			9		—		9
Other	5		4		9			2		1		3
Total noncurrent regulatory liabilities	$	1,215	$	768	$	1,985		$	1,172	$	732	$	1,905


(a)	These assets earn a return.


(b)	Under-recovered or over-recovered fuel costs to be recovered or refunded through the FAC. Specific accumulation periods aggregate the under-recovered or over-recovered costs over four months, any related adjustments that occur over the following four months, and the recovery from or refund to customers that occurs over the next eight months.


(c)	Under-recovered or over-recovered costs from utility customers. Amounts will be recovered from or refunded to customers within one year of the deferral.


(d)	Deferral of commodity-related derivative MTM losses or gains. See Note 7 – Derivative Financial Instruments for additional information.

(e)

The Ameren Missouri balance relates to the MEEIA. The MEEIA rider allows Ameren Missouri to collect from or refund to customers any annual difference in the actual amounts incurred and the amounts collected from customers for the MEEIA program costs, net shared benefits, and the throughput disincentive. Under the MEEIA rider, collections from or refunds to customers occur one year after the program costs, net shared benefits, and the throughput disincentive are incurred. The Ameren Illinois balance relates to a regulatory tracking mechanism to recover its electric and natural gas costs associated with developing, implementing, and evaluating customer energy efficiency and demand response programs. Any under-recovery or over-recovery will be collected from or refunded to customers over the year following the plan year.


(f)	The difference between Ameren Illinois' annual revenue requirement calculated under the IEIMA's performance-based formula ratemaking framework and the revenue requirement included in customer rates for that year. The under-recovery will be recovered from or refunded to customers with interest within two years.


(g)	Ameren Illinois' and ATXI's annual revenue requirement reconciliation calculated pursuant to the FERC's electric transmission formula ratemaking framework. The under-recovery or over-recovery will be recovered from or refunded to customers within two years.


(h)	Under-recovered natural gas sales volumes, including deviations from normal weather conditions. Each year's amount will be recovered from or refunded to customers from April through December of the following year.


(i)	These costs are being amortized in proportion to the recognition of prior service costs (credits) and actuarial losses (gains) attributable to Ameren’s pension plan and postretirement benefit plans. See Note 11 – Retirement Benefits for additional information.


(j)	Tax benefits related to the equity component of allowance for funds used during construction, as well as the effects of tax rate changes. This amount will be recovered over the expected life of the related assets.


(k)	The tracker is amortized over three years, beginning from the date the amounts are included in rates. See Note 13 – Income Taxes for additional information.


(l)	Recoverable or refundable removal costs for AROs, including net realized and unrealized gains and losses related to the nuclear decommissioning trust fund investments. See Note 1 – Summary of Significant Accounting Policies – Asset Retirement Obligations.


(m)	Ameren Missouri’s Callaway energy center operations and maintenance expenses, property taxes, and carrying costs incurred between the plant in-service date and the date the plant was reflected in rates. These costs are being amortized over the remaining life of the energy center's original operating license through 2024.


(n)	Losses related to reacquired debt. These amounts are being amortized over the lives of the related new debt issuances or the original lives of the old debt issuances if no new debt was issued.


(o)	The recoverable portion of accrued environmental site liabilities that will be collected from electric and natural gas customers through ICC-approved cost recovery riders. The period of recovery will depend on the timing of remediation expenditures. See Note 15 – Commitments and Contingencies for additional information.


(p)	Storm costs from 2013, 2015, and 2016 deferred in accordance with the IEIMA. These costs are being amortized over five-year periods beginning in the year the storm occurred.

(q)

Demand-side costs incurred prior to implementation of the MEEIA in 2013, including the costs of developing, implementing, and evaluating customer energy efficiency and demand response programs. Costs incurred from May 2008 through September 2008 are being amortized over a 10-year period that began in March 2009. Costs incurred from October 2008 through December 2009 are being amortized until May 2017. Costs incurred from January 2010 through February 2011 are being amortized over a six-year period that began in August 2011. Costs incurred from March 2011 through July 2012 are being amortized over a six-year period that began in January 2013. Costs incurred from August 2012 through December 2012 are being amortized over a six-year period that began in June 2015. The February 2017 stipulation and agreement, if approved, would modify these amortization periods.


(r)	The period of recovery will depend on the timing of actual expenditures.


(s)	Ameren Missouri’s costs incurred to enter into and maintain the Missouri Credit Agreement. These costs are being amortized over the life of the credit facility to construction work in progress, which will be depreciated when assets are placed into service. Additional costs were incurred in December 2016 to amend and restate the Missouri Credit Agreement.


(t)	The MoPSC’s May 2010 electric rate order allowed Ameren Missouri to record an allowance for funds used during construction for pollution control equipment at its Sioux energy center until the cost of that equipment was included in customer rates beginning in 2011. These costs are being amortized over the expected life of the Sioux energy center, currently through 2033.


(u)	Costs associated with Ameren Missouri's solar rebate program to fulfill its renewable energy portfolio requirement. These costs are being amortized over a three-year period that began in June 2015. The February 2017 stipulation and agreement, if approved, would modify this amortization period.


(v)	Estimated refunds to transmission customers related to FERC orders. See FERC Complaint Cases above.


(w)	Unamortized portion of investment tax credits and reductions to deferred tax liabilities recorded at rates in excess of current statutory rates. The unamortized portion of investment tax credits and the reduction to deferred tax liabilities are being amortized over the expected life of the underlying assets.


(x)	Estimated funds collected for the eventual dismantling and removal of plant retired from service, net of salvage value.

(y)

A regulatory tracking mechanism for the difference between the level of bad debt incurred by Ameren Illinois under GAAP and the level of such costs included in electric and natural gas rates. The over-recovery relating to 2014 was refunded to customers from June 2015 through May 2016. The over-recovery relating to 2015 is being refunded to customers from June 2016 through May 2017. The over-recovery relating to 2016 will be refunded to customers from June 2017 through May 2018.

(z)

A regulatory tracking mechanism for the difference between the level of pension and postretirement benefit costs incurred by Ameren Missouri under GAAP and the level of such costs included in rates. For periods prior to December 2014, the MoPSC's April 2015 electric rate order directed the amortization to occur over three to five years, beginning in June 2015. For periods after December 2014, the amortization period will be determined in the July 2016 electric rate case. The February 2017 stipulation and agreement, if approved, would modify these amortization periods.


(aa)	Funds collected from customers for the purchase of renewable energy credits through IPA procurements for distributed generation. The balance will be amortized as renewable energy credits are purchased.

(ab)

A regulatory tracking mechanism at Ameren Missouri for the difference between the level of storm costs incurred in a particular year and the level of such costs included in rates. For periods prior to December 2014, the MoPSC's April 2015 electric rate order directed the amortization to occur over a five-year period that began in June 2015. For periods after December 2014, the amortization period will be determined in the July 2016 electric rate case. The April 2015 MoPSC order did not approve the continued use of the storm cost regulatory tracking mechanism. The February 2017 stipulation and agreement, if approved, would modify these amortization periods.

Ameren, Ameren Missouri, and Ameren Illinois continually assess the recoverability of their regulatory assets. Regulatory assets are charged to earnings when it is no longer probable that such amounts will be recovered through future revenues. To the extent that payments of regulatory liabilities are no longer probable, the amounts are credited to earnings.