AEE

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How AEE rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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words, now 9,154

New in FY2025

In the planning and management of our operations, we must address the effects of existing and proposed laws and regulations and potential changes in our regulatory frameworks, including new interpretations of existing regulations, as well as executive orders, initiatives by federal and state legislatures, RTOs, utility regulators, and taxing authorities, and actions by local jurisdictions that may affect the constructing or siting of facilities.
Significant changes in the nature of the regulation of our businesses, including expiration or discontinuation of, or significant changes to, existing regulatory mechanisms, and the presidential administration’s approach to environmental and energy policy and resultant changes in regulatory enforcement priorities, and/or evolving interpretations of existing regulatory requirements, could require changes to our business planning, strategy and management of our businesses and could adversely affect our results of operations, financial position, and liquidity.
Pursuant to the PPRA, Ameren Missouri’s natural gas utility rates established in proceedings filed after June 2026 will be allowed to be based on future costs, revenues, and sales volumes, subject to MoPSC approval.
Ameren Missouri and Ameren Illinois, and the utility industry generally, have experienced higher maintenance costs and capital expenditures to operate their electric, natural gas, and transmission businesses, which has led to increases in customer rates and the related revenue requirements needed to recover such costs and earn a return on investments.
This could result in more frequent regulatory rate reviews and requests for cost recovery mechanisms.
Beginning in 2024 through at least 2027, electric distribution rates for Ameren Illinois are established through an MYRP, which are subject to ongoing regulatory and judicial proceedings and associated risks, and are subject to a reconciliation cap.
Pursuant to the CEJA, Ameren Illinois has the option to establish electric distribution rates through an MYRP or a traditional regulatory rate review.
Pursuant to the PPRA, Ameren Missouri’s PISA election was extended through 2035 and an additional extension through 2040 is allowed if requested by Ameren Missouri and approved by the MoPSC.
This law also reduced the annual limit on increases to the electric service revenue requirement used to set customer rates, compared to the revenue requirement established in the immediately preceding rate order, due to the inclusion of incremental PISA deferrals in the revenue requirement.
The annual limit in effect was 2.5% and changed to 2.25%, prorated monthly, for revenue requirements approved by the MoPSC after August 2025.
Increased capital expenditures could cause incremental PISA deferrals to exceed the 2.25% limitation, and such amounts exceeding the 2.25% limitation would be excluded from recovery under future revenue requirements.
Failure to limit capital investments to an amount which maintains PISA deferrals under the 2.25% limitation could adversely affect Ameren’s and Ameren Missouri’s results of operations, financial position, and liquidity.
Such environmental laws regulate air emissions; protect water bodies; regulate the handling and disposal of hazardous substances and waste materials; establish siting and land use requirements; and protect against ecological impacts.
Additionally, the use and handling of various chemicals and hazardous materials require release prevention plans and emergency response procedures.
Environmental regulations impact the electric utility industry, and compliance obligations could be costly for Ameren Missouri, which operates coal-fired and natural gas-fired energy centers.
As of December 31, 2025, Ameren Missouri’s coal-fired energy centers represented 5% and 11% of Ameren’s and Ameren Missouri’s rate base, respectively.
Compliance obligations under the Clean Air Act stem from a variety of programs including the NSPS, the MATS, emission allowance programs, the CSAPR, and the National Ambient Air Quality Standards, which are subject to periodic review for certain pollutants.
Collectively, these regulations cover a variety of pollutants, such as SO 2 , particulate matter, NO x , mercury, toxic metals and acid gases, and CO 2 emissions, although the scope of covered pollutants can change.
To the extent our operations impact surface water bodies, including wetlands, the Clean Water Act requires permitting as well as evaluation of the ecological and biological impact of those operations.
Implementation of requirements under the Clean Air Act and the Clean Water Act typically occurs through the issuance of permits by state regulators or resource agencies, and capital expenditures associated with compliance could be significant.
The management and disposal of coal ash from our coal-fired energy centers must comply with federal regulations known as the CCR Rule issued under the Resource Conservation and Recovery Act and require the closure of surface impoundments at our coal-fired energy centers along with groundwater monitoring requirements and the implementations of corrective measures if necessary.
The combined effects of compliance with existing and future environmental regulations could result in significant capital expenditures, increased operating costs, and the potential for closure or alteration of operations at some of Ameren Missouri’s energy centers.
Further reductions to emissions limits will become effective between 2030 and 2040, resulting in the possible closure of the Venice Energy Center by the end of 2029.
We are subject to business and financial risks related to the impact of climate-related legislation, regulation, and emission reduction initiatives.
There is concern and activism among various external stakeholders, both nationally and internationally, about climate-related risks, including public concerns about the potential environmental impacts from the combustion of fossil fuels, as well as pressure from public interest groups regarding limiting the use of natural gas.
Further, federal, state, and local authorities have considered initiatives to further restrict greenhouse gases to address global climate-related risks.
The United States withdrew from the Paris Agreement and the United Nations Framework Convention on Climate Change in January 2025 and 2026, respectively.
The EPA has revised, and has proposed revisions to, compliance requirements under a number of federal environmental regulatory programs related to greenhouse gases; however, differences in energy policy priorities adopted by future presidential administrations could result in additional greenhouse gas reduction requirements in the United States.
Excessive costs to comply with future legislation or regulations related to climate-related risks might force Ameren Missouri to close its remaining coal-fired energy centers earlier than planned, which could lead to possible loss on abandonment and reduced revenues.
Achievement of these targets is dependent on many factors, including the pace and extent of development and deployment of low- to zero-carbon energy technologies and carbon capture technologies, the cost of those technologies, and support of such technologies by regulators; natural gas and energy prices; operational performance of low- to zero-carbon resources; new transmission infrastructure; the ability to maintain system reliability; customer demand for energy including carbon-free energy; and constructive energy and economic policies, including those that address investment in energy infrastructure, global climate-related risks, incentives for clean energy technologies, and environmental regulations.
The strategy to achieve these goals also relies on continuing to pursue a diverse portfolio, including low-carbon and carbon-free resources and energy-efficiency resources, while still meeting load growth opportunities; continuing to participate in efforts to help advance the development of technologies such as carbon capture and sequestration; the use of hydrogen fuel for electric production and energy storage, next generation nuclear, and large-scale long-cycle battery storage; and constructively engaging with legislators, regulators, investors, customers, and other stakeholders to support outcomes leading to a net-zero future.
We are subject to FERC regulations, rules, and orders, including standards issued by the NERC.
We may also incur higher operating costs to comply with potential new executive orders, regulations, or interpretations of existing regulations issued by these regulatory bodies.
We estimate that we will invest up to $33.1 billion (Ameren Missouri – up to $22.2 billion; Ameren Illinois – up to $8.3 billion; ATXI – up to $2.6 billion) of capital expenditures from 2026 through 2030.
These factors include, but are not limited to, the following: project management expertise; the ability of suppliers, contractors, and developers to meet contractual commitments and timely complete projects, which is dependent upon the availability of necessary labor, materials, and equipment; escalating costs, including but not limited to changes to tariffs on materials or government actions; changes in the scope and timing of projects; the ability to obtain required regulatory, project, and permit approvals; the ability to obtain necessary rights-of-way, easements, and transmission connection agreements at an acceptable cost in a timely fashion; unsatisfactory performance by the projects when completed; the ability to raise capital on reasonable terms; geopolitical conflict and other events beyond our control, including delays arising from government shutdowns or construction delays due to weather.
With respect to the transition of Ameren Missouri’s generation fleet included in its 2025 Change to the 2023 PRP and carbon emission reduction targets, factors also include Ameren Missouri’s ability to obtain CCNs from the MoPSC, and any other required state or federal approvals for the addition of renewable resources, battery storage, or nuclear or natural gas-fired generation, retirement of energy centers, and new or continued customer energy-efficiency programs; the ability to enter into agreements for renewable, natural gas-fired, or nuclear generation or battery storage and acquire or construct those resources at a reasonable cost; the ability to enter into natural gas supply agreements at reasonable prices and adequate quantities to power Ameren Missouri’s natural gas-fired energy centers; the ability to obtain NRC approval for an extension of the operating license for the Callaway Energy Center beyond its current 2044 expiration date; the continued existence and ability to qualify for, and use or transfer, federal production or investment tax credits; the ability to maintain system reliability; new and/or changes in environmental regulations, including those related to CO 2 and other greenhouse gas emissions; energy prices; and demand.
Also, changes to capacity accreditation rules adopted by the MISO could reduce the accredited capacity of renewable generation and battery storage and increase regional capacity prices, potentially requiring additional investment and higher costs to satisfy resource adequacy requirements.
In addition, the presidential administration has issued executive orders and taken other actions to increase investment in fossil fuel infrastructure.
This change in federal domestic energy policy has created uncertainty regarding the role existing renewable generation will play in supporting the United States’ energy grid and the timing and extent of future renewable generation infrastructure development.
Ameren Missouri’s plan could be affected by this change in energy policy.

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Gone since FY2024

In the planning and management of our operations, we must address the effects of existing and proposed laws and regulations and potential changes in our regulatory frameworks, including reinterpretation of such regulations, as well initiatives by federal and state legislatures, RTOs, utility regulators, and taxing authorities, and actions by local jurisdictions that may affect the constructing or siting of facilities.
Significant changes in the nature of the regulation of our businesses, including expiration or discontinuation of, or significant changes to, existing regulatory mechanisms, and the current federal administration’s approach to United States energy policy and resultant changes in regulatory enforcement priorities, and/or evolving interpretations of existing regulatory requirements, could require changes to our business planning, strategy and management of our businesses and could adversely affect our results of operations, financial position, and liquidity.
Ameren Missouri and Ameren Illinois, and the utility industry generally, have an increased need for cost recovery and to earn a return on investments, primarily driven by capital investments, which is likely to continue in the future.
The resulting increase to the revenue requirement needed to recover such costs and earn a return on investments could result in more frequent regulatory rate reviews and requests for cost recovery mechanisms.
In addition, in June 2024, the MoPSC issued a financing order authorizing the issuance of securitized utility tariff bonds by a wholly owned, special purpose subsidiary of Ameren Missouri to finance approximately $476 million of costs related to the accelerated retirement of the Rush Island Energy Center, which included the remaining unrecovered net plant balance associated with the facility, among other costs.
Ameren Missouri will collect the amounts necessary to repay the bonds over approximately 15 years from the date of bond issuance.
The securitized tariff bonds were issued in December 2024.
The financing order also included a determination that the decision to retire the Rush Island Energy Center was reasonable and prudent.
The MoPSC did not make a determination regarding the prudency of Ameren Missouri's prior actions that resulted in the adverse ruling in the NSR and Clean Air Act litigation discussed in Note 14 – Commitments and Contingencies under Part II, Item 8, of this report, however, claims regarding such actions could be considered in future regulatory proceedings.
If future regulatory proceedings result in revenue reductions based on Ameren Missouri’s prior actions that resulted in the adverse ruling in the NSR and Clean Air Act litigation, it could have a material adverse effect on the results of operations, financial position, and liquidity of Ameren and Ameren Missouri.
In 2024 through at least 2027, electric distribution rates for Ameren Illinois are established through an MYRP, which are subject to ongoing regulatory and judicial proceedings and associated risks, and are subject to a reconciliation cap.
Additionally, Ameren Illinois is subject to certain performance metrics that if not achieved would result in a reduction to the company’s allowed ROE.
The CEJA resulted in changes to the regulatory framework applicable to Ameren Illinois’ electric distribution business by giving Ameren Illinois the option to file an MYRP with the ICC or establish rates through a traditional regulatory rate review, among other things.
Ameren Illinois’ electric distribution service business is also subject to performance metrics.
Failure to achieve the metrics would result in a reduction in the company’s allowed ROE calculated under the MYRP.
In 2022, the ICC issued an order approving total ROE incentives and penalties of 24 basis points under the MYRP, allocated among seven performance metrics.
These performance metrics include improvements in service reliability in both the frequency and duration of outages, a reduction in peak loads, an increased percentage of spend with diverse suppliers, a reduction in disconnections for certain customers, and improved timeliness in response to customer requests for interconnection of distributed energy resources.
These performance metrics apply annually from 2024 through 2027 under the MYRP, and the impact of any incentives and penalties will be excluded from the reconciliation cap described above.
In addition, the allowed ROE on energy-efficiency investments can be increased or decreased up to 200 basis points, depending on the achievement of annual energy savings goals.
Any adjustments to the allowed ROE for energy-efficiency investments will depend on annual performance for a historical period relative to energy savings goals.
Pursuant to a Missouri law, Ameren Missouri’s PISA election was extended through December 2028 and an additional extension through December 2033 is allowed if requested by Ameren Missouri and approved by the MoPSC, among other things.
This law also established a 2.5% annual limit on increases to the electric service revenue requirement used to set customer rates, compared to the revenue requirement established in the immediately preceding rate order, due to the inclusion of incremental PISA deferrals in the revenue requirement.
The limitation is effective for revenue requirements approved by the MoPSC after January 1, 2024.
Increased capital expenditures could cause incremental PISA deferrals to exceed the 2.5% limitation, and such amounts exceeding the 2.5% limitation would be excluded from recovery under future revenue requirements.
Failure to limit capital investments to an amount which maintains PISA deferrals under the 2.5% limitation could adversely affect Ameren’s and Ameren Missouri’s results of operations, financial position, and liquidity.
Such environmental laws regulate air emissions; protect water bodies; manage the handling and disposal of hazardous substances and waste materials; siting and land use requirements; and potential ecological impacts.
Additionally, the use and handling of various chemicals or hazardous materials require release prevention plans and emergency response procedures.
Environmental regulations have a significant impact on the electric utility industry and compliance with these regulations could be costly for Ameren Missouri, which operates coal-fired and natural gas-fired energy centers.
As of December 31, 2024, Ameren Missouri’s coal-fired energy centers represented 6% and 11% of Ameren’s and Ameren Missouri’s rate base, respectively.
Compliance obligations under the Clean Air Act include the NSPS, the MATS, emission allowance programs and the CSAPR, and the National Ambient Air Quality Standards, which are subject to periodic review for certain pollutants.
Collectively, these regulations cover a variety of pollutants, such as SO 2 , particulate matter, NO x , mercury, toxic metals and acid gases, and CO 2 emissions.
Regulations implementing the Clean Water Act govern potential impacts from our operations on water bodies including wetlands subject to the Act, as well as evaluation of the ecological and biological impact of those operations.
Implementation of the Clean Air Act and the Clean Water Act requirements typically occurs through the issuance of permits by state regulators or resource agencies, and capital expenditures associated with compliance could be significant.
Coal-fired energy centers must comply with management and disposal requirements for coal ash under the Resource Conservation and Recovery Act and federal regulations known as the CCR Rule.
Surface impoundments at Ameren Missouri’s coal-fired energy centers are subject to closure and groundwater monitoring requirements and the implementations of corrective measures if necessary.
The individual or combined effects of compliance with existing and new environmental regulations could result in significant capital expenditures, increased operating costs, or the closure or alteration of operations at some of Ameren Missouri’s energy centers.
In April 2024, the EPA issued a final rule that sets CO 2 emission standards for existing coal-fired and new natural gas-fired power plants based on the emissions expected from adoption of carbon capture technology and/or natural gas co-firing for coal-fired power plants and carbon capture technology for new natural gas-fired power plants.
Affected power plants are required to comply with the rule through a phased-in approach or retire.
Compliance with the new rule could be required as early as 2030 for certain existing coal-fired power plants and 2032 for certain new natural gas-fired power plants.
In December 2024, the United States Court of Appeals for the District of Columbia Circuit heard arguments from various stakeholders including the EPA, environmental organizations, state attorney generals, and industry groups regarding the legal merits of the final rule.

and 48 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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