Ameren Corporation (AEE) announced that its subsidiary Ameren Transmission Company, also known as ATX, will begin work on expansion plans to invest an estimated $1.3 billion over a period of 10 years. The Midwest Independent Transmission System Operator or MISO already had approved the ATX projects which were part of its Transmission Expansion Plan 2011 or MTEP11.
According to MISO, the total investment for all of the MTEP11 projects is expected to be $6.5 billion over 10 years, including $5.1 billion allocated to 16 multi-value projects.
MISO is a regional organization serving a 12-state region, including the service territories of the Ameren utilities. MTEP11 is MISO's comprehensive long-term regional plan for the Midwest electric grid that meets the reliability, policy and economic needs of the region.
The ATX business wing was formed in August 2010 to develop regional transmission projects within the Ameren companies' 64,000-square-mile service territory and throughout the region.
Going forward, Ameren’s stable and regulated electric power operations in the Midwest generate a relatively steady and growing earnings stream. Future growth will be guided by improved plant operations, a focus on cost management, rate relief in Missouri, a recovering economy boosting industrial sales and installation of emissions reduction equipment at its generation plants. The company presently retains a short-term Zacks #2 Rank (Buy).
However, valuation continues to be restrained by merchant generation, its predominantly coal-based generation assets and pending regulatory cases. Given these headwinds, we believe that Ameren’s current valuation adequately reflects its fairly balanced risk/reward profile. As such, we see limited upside from current levels. Thus we have a long-term Neutral recommendation on the stock.
St. Louis-based Ameren Corporation owns a diverse mix of electric energy centers strategically located in the Midwest, with a generating capacity of more than 16,500 megawatts. Ameren owns electric plants with a generating capacity of more than 16,600 MW. Ameren operates in three segments: Missouri Regulated, Illinois Regulated and Non-rate-regulated Generation. Some of its main competitors include CenterPoint Energy Inc. (CNP) and Exelon Corp. (EXC).
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