 In Missouri, we settled all state and federal
issues associated with the 2005 Taum Sauk plant reservoir breach and began rebuilding this valuable power facility. The project, scheduled
for completion in the fall of 2009, is expected to cost approximately $450 million and to be substantially covered by insurance. The reconstruction
of the plant will also serve as an engine for economic growth for Southeast Missouri.
And for all our customers, in the wake
of the severe storms that hit our system in both states, we significantly increased investments to harden our electrical delivery system in order to provide industry-leading reliability and service.
 Our belief is that by investing in infrastructure,
we can make material improvements in service, which, in turn, will bring meaningful improvement in customer satisfaction. As in
any business, serving customers well is critical to achieving solid returns for investors. I believe
improved customer service and satisfaction will enable us to bring our rates of return more
in line with returns normally allowed by utility regulatory commissions.
One example of this increased investment
is Power On, AmerenUE’s three-year, $1 billion investment to improve the reliability of the company’s Missouri electric delivery system
and reduce emissions at its coal-fired plants. Ameren’s Illinois utilities—AmerenCIPS,
AmerenCILCO and AmerenIP—also plan to spend $1 billion on infrastructure improvements
between 2008 and 2010.
These and future investments will contribute
to long-term earnings growth. In the near term, however, our rates are well below the levels
necessary to recover current costs and to earn a fair return on investment. Returns in 2007
and expected returns in 2008 in our regulated Missouri and Illinois businesses are well below
the levels allowed by both state utility commissions in our last rate cases.
A Need to Recover Rising Costs
For decades, we have been industry leaders
in keeping our rates low through disciplined
cost control and efficient operations. Even
after recent rate increases, AmerenUE’s electric
rates are still about 40 percent below the
national average, and rates for our Illinois
utilities approximate the national average.
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