Ameren Corp. (AEE)

Matt ThompsonSteve ProfferChris Ehley Presented April 3, 2007

Overview

Ameren was formed in 1997 by the merger of UE and CIPSCO, the former parent company of CIPS. Ameren’s primary assets are the common stock of its subsidiaries, including UE, CIPS, Genco, CILCORP and IP. Ameren’s primary assets are the common stock of its subsidiaries. Ameren’s subsidiaries, which are separate, independent legal entities, operate rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and non-rate-regulated electric generation businesses in Missouri and Illinois. Dividends on Ameren’s common stock depend upon distributions made to it by its subsidiaries.

Overview

Ameren’s primary assets are the common stock of its subsidiaries. Ameren’s subsidiaries, which are separate, independent legal entities, operate rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses, and non-rate-regulated electric generation businesses in Missouri and Illinois. Dividends on Ameren’s common stock depend upon distributions made to it by its subsidiaries.

Customer Base

AmerenUE serves 1.2 million electric and 125,000 natural gas customers across Missouri.

Ameren, through its subsidiaries, serves 2.4 million electric and nearly one million natural gas customers in a 64,000-square- mile area of Illinois and Missouri.

Three business segments

Missouri regulated: Union Electric (UE)

Illinois regulated: Central Illinois Public Service Company (CIPS) Central Illinois Light Company (CILCO) Illinois Power Company (IP)

Non-rate-regulated generation: American Generating Energy Company (Genco) CILCO (AERG)

Operating income by company(subject to Illinois regulation)

UE – 56.1% IP – 12.8% (12.8%) CILCORP – 5.9% (5.6%) CILCO – 7.2% (6.8%) GENCO – 12% CIPS – 6% (6%) Total % of operating income regulated by state

of Illinois = 31.2%

•Increased Competition“On Feb. 7, Great Plains Energy Inc. (NYSE: GXP - News), agreed to buy Aquila's Missouri electric utility assets for $1.7 billion and assume $1 billion of Aquila's debt.1

•If rate freeze does occur, it will eliminate any price competition.

•Only way to stay profitable, increase internal efficiencies

•Beneficial after rate freeze is removed

Risk

•Rate freeze/Rollbacks

•Will hurt electric margins

•Maintained profitability prior to 1997 deregulation

•Current talks of rate freeze extension would expire in 1 - 3 years – our investment horizon is approximately 10 years

Risk

Risk

Rising input costs (coal, gas)Hedged natural gas prices using derivatives

and contracts with suppliersCoal and related transportation costs are

expected to increase by 15% to 20% in 2007 and another 5% to 10% in 20082

Buy from lowest priced region in country (Powder Region Basin (PRB))

Gas, although volatile, only makes up 1% percent of inputs to produce electricity

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070322:MTFH63886_2007-03-22_19-16-42_N22366490&type=comktNews&rpc=44

http://www.eia.doe.gov/cneaf/coal/page/coalnews/coalmar.html

Comparables

EXELON CORPORATION(EXC) Largest electricity provider (based on customers) in Illinois Distributor of gas Facing same legislation as Ameren

Great Plains Energy Electricity provider in western Missouri Does business in Kansas Does not face same Illinois legislation as Illinois

Comparables also “direct competitors” - Most useful because of the currentLegislative battle.

Comparables - 1 Year

Comparables – 5 Years

Sensitivity Analysis

  2.25% 2.50% 2.85% 3.00% 3.15%

6.00% $ 49.10 $ 50.65 $ 53.23 $ 54.51 $ 55.94

6.25% $ 47.27 $ 48.60 $ 50.81 $ 51.89 $ 53.09

6.50% $ 45.62 $ 46.79 $ 48.69 $ 49.62 $ 50.63

6.75% $ 44.14 $ 45.16 $ 46.82 $ 47.62 $ 48.49

7.00% $ 42.79 $ 43.70 $ 45.15 $ 45.85 $ 46.60

7.25% $ 41.56 $ 42.37 $ 43.65 $ 44.26 $ 44.92

7.50% $ 40.43 $ 41.15 $ 42.29 $ 42.83 $ 43.41

WACC Calculations

Portfolio Fit

Correlation Matrix

RCMP Position

Transaction History April 27, 2006

Bought 400 shares @ $50.03

Last Trade as of March 26, 2007, 4:04 PM ET: $50.63

MV of holding: $20,252 BV of holding: $20,012 Realized Capital Gain: $0 Unrealized Capital Gain:

$240

AE E6%

AE O19%

CP RT9%

FR7%

FR7%JK HY

3%

JPM14%

KMB6%

MS9%

MVS N1%

S RC L5%

S RZ7%

WAG7%

AE E

AE O

CP RT

FR

FR

JK HY

JPM

KMB

MS

MVS N

S RC L

S R Z

WAG

Recent News

In November 2006, Ameren received an oreder to increase their electric delivery service rates by $97 million. This order authorized a 10% return on equity, but was significantly less than the Ameren Illinois Utilities’ request for approximately a $200 million increase

The timing and amount of additional electric delivery services rate increase requests in Illinois is expected to be voted on in Springfield in May 20072

Recent News

March 7: Illinois House approves electric rate freezeAmeren spokesman Leigh Morris said a rate

freeze would have "dire financial consequences."

"Ameren Illinois utilities are spending up to $1 billion more for electricity than we did in 2006," Morris said. "We need to be able to recover those costs through our rate structure.3"

Recent News

March 28: Regulatory Research Associates report cited rumors of

progress in the discussions between Exelon's and Ameren's utilities, power suppliers, legislators, consumer groups and others.

An agreement would forestall legislation rolling back electricity rates to 2006 levels and freezing rates at those prices for a year.

"It appears that the deal currently being considered would include contributions by the utilities and power marketers aggregating to as much as $150 million to be distributed as credits to customers that were 'hardest hit' by the price increases," RRA said.4

Recent News

March 30 Even if a short-term agreement can be struck that

forestalls the rate rollback, House Speaker Michael Madigan will keep pushing to cut rates for all residential customers in Illinois.

Mr. Madigan provided a glimpse into his thinking last week by introducing a bill to establish a non-profit state power authority with the ability to float bonds, negotiate deals with power generators and build power plants. His spokesman says the authority, composed of five members appointed by the governor, would foster price competition in state power markets.5

Recent News

March 30: Other solutions include restoring regulation allowing

ComEd and Ameren's regulated utilities to own power plants, as they did before the market was deregulated in 1997, or allowing utilities to buy power directly from generators over multiyear terms, with the contracts subject to state oversight.

Attorney General Lisa Madigan is asking state regulators to force Ameren Corp. to address "troubling questions" about its relationship with credit rating agencies6

Recommendation

HOLD position

Reasonsphase in for rate increase likelyApproximately 1/3 of operating income

influenced by Illinois legislators

Sources

1. Assoc. Press “Kansas agency OKs Aquila's sale to Mid-Kansas Electric.” Kansas City Business Journal. 26 Feb 2007 http://biz.yahoo.com/bizj/070226/1423680.html?.v=1

2. Ameren 2006 10-K3. Keith, Ryan. “Ill. House OKs Electric Rate Freeze.” Associated

Press. 7 Mar 2007 http://biz.yahoo.com/ap/070328/exelon_mover.html?.v=1

4. Assoc. Press “Exelon shares rise on possible rate compromise.” Reuters. 28 Mar 2007 http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070328:MTFH07455_2007-03-28_18-38-56_N28383293&type=comktNews&rpc=44

5. Keith, Ryan. “AG Wants Help on Ameren Credit Probe.” Associated Press. 30 Mar 2007 http://biz.yahoo.com/ap/070330/il_electric_rates.html?.v=1

6. Daniels, Steve. “Power struggle: Pols eye rate fix.” Crains Chicago Business. 2 Apr 2007 http://chicagobusiness.com/cgi-bin/mag/article.pl?article_id=27502&bt=ameren&arc=n&searchType=all