Ameren Corporation reports higher year-end earnings

ST. LOUIS, Feb. 5, 2002 — Ameren Corporation today reported 2001 earnings of $469 million, or $3.41 per share, compared to earnings of $457 million, or $3.33 per share in 2000.

Excluding unusual items, the company reported ongoing 2001 earnings of $475 million, or $3.46 per share, compared to ongoing earnings of $472 million, or $3.44 per share, in 2000. For the 2001 fourth quarter, the company reported ongoing earnings of $49 million, or 35 cents per share, compared to 2000 ongoing fourth quarter earnings of $41 million, or 30 cents per share. All earnings per share numbers are expressed before dilution.

Ongoing 2001 earnings per share excluded the impact of a one-time charge of $7 million after income taxes, or 5 cents per share, associated with the required adoption in the first quarter of FAS 133, a new accounting standard related to derivative financial instruments. Ongoing earnings in 2000 excluded a $25 million fourth quarter nonrecurring charge ($15 million after income taxes, or 11 cents per share), resulting from the company’s decision to withdraw from the electric transmission-related Midwest Independent System Operator.

Full year 2001 electric revenues were up $629 million, or 18 percent above 2000. This increase is the result of higher kilowatthour sales, which rose 19 percent. Residential kilowatthour sales were comparable to the prior year, while commercial kilowatthour sales rose 1 percent. Industrial kilowatthour sales rose 11 percent, primarily due to an industrial contract that became effective Aug. 1, 2000.

The company also experienced an 85 percent increase in 2001 kilowatthour interchange sales. However, the company realized lower margins on these sales compared to the prior year due to lower energy prices in the wholesale markets. These lower energy prices also resulted in a decrease in the earnings contribution from the company’s energy trading subsidiary, AmerenEnergy, Inc., which contributed an estimated 23 cents per share in 2001, compared to 26 cents per share in 2000.

The negative impact on Ameren Energy of these lower prices was partially offset by lower levels of earnings being shared with customers in 2001 under the company’s Missouri retail electric experimental alternative regulation plan (EARP), discussed below.

Included in 2001 electric revenue numbers was the impact of a reduction in the total estimated customer EARP credit for the June 30, 2001 plan year, which increased revenues by $10 million. In contrast, 2000 revenues included estimated customer credits of $65 million. This innovative incentive regulation plan allowed customers and shareholders to share earnings above certain regulatory return-on-equity thresholds. The most recent plan expired on June 30, 2001.

Gas revenues increased $18 million, or 6 percent, due primarily to higher gas costs and a $4 million annual Missouri gas rate increase, which became effective in November 2000. These increases were offset by a decrease in total gas sales of 9 percent, which was driven by unusually warm winter weather in 2001 as compared to 2000.

In 2001, operations and maintenance expenses increased $607 million, up 27 percent over 2000 expenses. This increase was due primarily to higher fuel and purchased power costs, maintenance expenses and employee benefit costs. Fuel and purchased power expenses rose due to higher kilowatthour sales and scheduled power plant maintenance outages.

Maintenance expenses increased primarily due to the spring 2001 Callaway Nuclear Plant refueling, which was completed in 45 days. There was no refueling outage at the Callaway Plant in 2000. In 2001, employee benefits expenses also rose $29 million due to the unfavorable stock market performance for investments in the company’s benefits plans and changes in actuarial assumptions.

“Clearly, 2001 will long be remembered at the company for the national, economic and market-related challenges we encountered,” said Charles W. Mueller, Ameren chairman and chief executive officer. “Despite all these challenges, we were able to deliver solid earnings growth of over 5 percent after excluding the impact of weather and nonrecurring charges in 2001 and 2000. Our focus on our core energy operations continues to bring value to our shareholders and customers.”

The company estimates that ongoing earnings per share for the year ending Dec. 31, 2002 will range between $3.15 and $3.45 per share. This estimate is subject to, among other things, changing energy market and economic conditions, and the resolution of issues associated with an ongoing electric earnings complaint case against its subsidiary, AmerenUE, in Missouri.

However, it does assume a future form of incentive regulation for AmerenUE as a result of its pending complaint case, which could include electric rate reductions and additional customer credits for Ameren’s Missouri retail electric customers. Testimony on this case will be filed in the spring with public hearings scheduled for the summer of 2002. In the interim, the company expects to continue negotiations with all pertinent parties with the intent to continue with an incentive regulation plan.

“The satisfactory resolution of this case is very important to all of our stakeholders,” Mueller added. “As in the past, we firmly believe that a properly balanced incentive regulation plan will allow us to continue to deliver reliable energy to our customers at rates that are already below national and regional averages. Under incentive regulation, our already high customer satisfaction levels rose, while at the same time, we have been able to deliver solid returns on our shareholders’ investments.”

Mueller continued, “Looking ahead to 2002, we recognize that the energy industry will continue to present challenges and opportunities. In order to meet these challenges and capitalize on opportunities, we will concentrate on maintaining our strong financial position. We will remain focused on our core energy business, and we will tirelessly work with our regulators and other stakeholders to formulate sound regulatory frameworks for the future. Our concentrated efforts in these areas will bring value to our customers and shareholders.”

For more information, visit www.ameren.com.

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