Ameren NYSE: AEE

1. AmerenNYSE: AEE Presented by: Ed Kennedy Brandon Honey March 12, 2009

2. Overview • Company Introduction • Operations/Regulations • Comps and DCF Analysis • Final Outlook Introduction Operations Comps/DCF Outlook

3. Company Overview • Public utility holding company formed as a result of Union Electric and CIPSCO, Inc. in 1997 • Provides natural gas and electricity service to consumers in MO and IL • Headquartered in St. Louis, MO Introduction Operations Comps/DCF Outlook

4. Business Segments • Missouri regulated • Missouri Public Service Commission (MoPSC) • Federal Energy Regulatory Commission • Illinois regulated • Illinois Commerce Commission (ICC) • Federal Energy Regulatory Commission • Non-rate regulated Introduction Operations Comps/DCF Outlook

5. Subsidiaries • Missouri regulated services • Union Electric (AmerenUE) • Illinois regulated services • Central Illinois Light Company (AmerenCILCO) • Central Illinois Public Service Company (AmerenCIPS) • Illinois Power Company (AmerenIP) • Non-rate regulated services • Genco, AERG, EEI • Ameren-owned electricity generating subsidiaries • Ameren Energy Marketing Company Introduction Operations Comps/DCF Outlook

6. Regulation • Rates are the most influential factor for performance and liquidity • Allowed zero profit on the cost of power • Sell it what AEE bought it for • Make profit on delivery of power • Regulated rates • Rates are set by state and federal regulation entities • Increases occur upon Ameren’s request and regulator’s approval • FERC approval needed prior to issuing debt, issuing equity, merging, or acquiring utility companies • Environmental regulation Introduction Operations Comps/DCF Outlook

7. Electricity Open Market competitors regulated Ameren subsidiaries Consumer Demand 76% of sales Other AEE subsidiary generation Excess demand only Ameren Generates Electricity Ameren Energy Marketing Company non-regulated Municipalities, commercial, industrial, other utilities, etc. All Genco, AERG, EEI generation 24% of sales *AEE subsidiaries either generate or buy their electricity. They can buy it from the open market or AEMC if it’s cheaper than generating it, there is excess demand, there are plant outages, or there are extreme weather conditions. The marketing company has agreed to purchase all Genco, AERG, EEI generation. If it needs more, it buys more from the market.

8. Natural Gas • 100% of natural gas revenues regulated in 2008 • Any gas price fluctuations are reflected in customers’ bills • Ameren files requests for rate changes and the MoPSC and ICC either grant or deny the request • No MO volume-based rate increases until March 15, 2010 Introduction Operations Comps/DCF Outlook

9. 2008 Earnings Natural Gas Revenues 14% regulated by MoPSC 86% regulated by ICC Electric Revenues 35% regulated by MoPSC 41% regulated by ICC 24% based on market Inputs for electricity generation: Coal (85%), nuclear (12%), hydroelectric (2%), natural gas (1%), oil (< 1%) Introduction Operations Comps/DCF Outlook

10. 2008 Earnings Revenues: $7.8 B YOY Growth: 3.66% Operating Expenses: $6.5B YOY Growth: 4.40% Net Income: $605 M YOY Change: -1.945% Introduction Operations Comps/DCF Outlook

11. 2008 Margins Operating Margin: 17.375% 2007: 17.958% Net Profit Margin: 7.718% 2007: 8.159% Margins have gradually decreased since 2001 OPM: From 25% in 2001 NPM: From 12% in 2001 Introduction Operations Comps/DCF Outlook

12. SWOT Introduction Operations Comps/DCF Outlook

13. Industry Issues • Political and Regulatory resistance to higher rates • Obama looking to cap and tax carbon emissions by auction • Uncertainty in credit and capital markets • Environmental awareness • Cap Ex, Taxes, Litigation costs Introduction Operations Comps/DCF Outlook

14. Recent Rate Changes • Missouri regulated • Increase of $162 million annually • Based on allowed 10.76% ROE • Illinois regulated • Increase of $161 million annually • Based on allowed 10.7% ROE • Management expects an ROE of 6% for both Illinois and Missouri regulated in 2009 Introduction Operations Comps/DCF Outlook

15. Industry Trends • Returns expected are below the ROE’s allowed • Rates depend on historical costs and costs are expected to increase • Significant costs to update infrastructure to comply with environmental regulations • 50% is expected to be recoverable in MO market • Environmental Cost Recovery Mechanisms • Decreased plant availability during renovation • Higher operating costs Introduction Operations Comps/DCF Outlook

16. Macroeconomic Factors • Higher income taxes for the wealthy • Lower P/E ratios in the market, lesser discretionary income • Increased borrowing by US government provides competition for funds, possibly resulting in lower overall share prices in the market • Flight to safety continues to hurt share prices • Deteriorating International Market discourages foreign investors Introduction Operations Comps/DCF Outlook

17. Short Term Credit Facilities • Total = $2.029B from 18 banks • Revolving credit facilities up to: • $1B expire January 2010 • $1.029B expire July 2010 Introduction Operations Comps/DCF Outlook

18. Short Term Credit Facilities Total = $2.029B from 18 banks End of 2008, $1.291B drawn from the banks $584M/1.029B drawn from July 2010 expiration $707M/1B drawn from Jan 2010 expiration Currently limited in commercial paper market because of downgrades on ST debt Introduction Operations Comps/DCF Outlook

19. Long-Term Debt Maturities Introduction Operations Comps/DCF Outlook

20. Credit Ratings • Issuer/Corporate Credit Rating • Moody’s - Baa3 • Senior Unsecured Debt • Moody’s - Baa3 • Downgraded August 2008, affirmed afterward, stable • Liquidity concerns, costs rising faster than revenues, cap ex, labor costs, lack of environmental cost recovery • Affirmed only because reduced dividend will free up cash flows • Still likely to have interest rates reasonably higher due to market uncertainty Introduction Operations Comps/DCF Outlook

21. Equity Repurchase/Issuance Management issues shares through 401k plans Have not repurchased any common stock Introduction Operations Comps/DCF Outlook

22. Capital Expenditures • Plans $1.685B expenditure in 2009 • Provided an estimated range of $6.6-8.7B total expenditures 2010-2013 • Expenditures will be funded by debt and equity • Targeted range 50-55% equity • Expenditures will be towards infrastructure improvements and environmental regulation compliance • $4.5-5.5B towards environmental regulation until 2018 • May be recoverable by 2.5% annual rate increases Introduction Operations Comps/DCF Outlook

23. Commodity Risk • UE is exposed to 5% of electricity price fluctuations • Genco, AERG, EEI are exposed to 100% of electricity price fluctuations • IP, CIP, CILCO also have certain cost recovery abilities in electricity • Natural Gas costs are passed directly to the consumer • Uses hedging strategies to mitigate risks Introduction Operations Comps/DCF Outlook

24. Shareholder Makeup • UE is exposed to 5% of electricity price fluctuations • Genco, AERG, EEI are exposed to 100% of electricity price fluctuations • IP, CIP, CILCO also have certain cost recovery abilities in electricity • Natural Gas costs are passed directly to the consumer • Uses hedging strategies to mitigate risks Introduction Operations Comps/DCF Outlook

25. Correlation Average Correlation = .1898 Introduction Operations Comps/DCF Outlook

26. Comparable Companies • Centerpoint Energy Inc. • Natural gas distribution, electric transmission and distribution, approximately 3.2 million customers • Consolidated Edison Inc. • Electric, gas, and steam service provider, approximately 1.1 million customers • Exelon Corp. • Generation, distribution, transmission, and sale of electricity, approximately 5.8 million customers Introduction Operations Comps/DCF Outlook

27. Comparable Companies • Northeast Utilities • Electric distribution, natural gas distribution, electric transmission, approximately 2 million customers • PG&E Corp. • Electricity and natural gas distribution, approximately 9.4 million customers • Public Service Enterprise Group • Transmission, distribution, and sale of electric energy and natural gas, approximately 3.8 million customers Introduction Operations Comps/DCF Outlook

28. Comparable Companies • SCANA Corp. • Generates, transports, and sells electric power, approximately 1.8 million customers • Wisconsin Energy Corp. • Electricity and natural gas provider, approximately 2.1 million customers in the Wisconsin and Michigan region Introduction Operations Comps/DCF Outlook

29. Comparable Companies Introduction Operations Comps/DCF Outlook

30. Comparable Companies Introduction Operations Comps/DCF Outlook

31. DCF Assumptions • Increased Corporate Taxes • With the current changes in political climate, Ameren should expect to see increases in corporate taxes over the upcoming five years • Minimal Capital Expenditures • Ameren has recognized a decline in cash flows over the previous year that will likely diminish their plans for capital expenditures over the next five years. The firm continues to fund these capital expenditures through 50% equity and 50% debt, but this decrease in cash flows will make it tougher to fund these projects. • WACC Calculation • Using ROE “Goal-Post” Theory, we came to a WACC calculation based on the firms return on equity and CAPM analysis Introduction Operations Comps/DCF Outlook

32. DCF Calculation Ameren Share Price = $19.22 Introduction Operations Comps/DCF Outlook

33. Valuations • CAPM DCF Valuation: $20.33 • ROE DCF Valuation: $18.17 • “Goal Post” Valuation: $19.22 • Comparables Valuation: Slightly Overvalued • Constant Dividend Discount Model: $15.74 • Constant Growth Dividend Discount Model: $19.78 • Current Price: $19.78 Introduction Operations Comps/DCF Outlook

34. Final Outlook • Costs are rising faster than revenues and will continue to do so • Credit will be more difficult to come by • Equity investment is discouraged because of higher taxes for the rich, international economic deterioration, and flight to safety due to uncertainty • Ameren will incur large capital expenditures to meet environmental regulations • During renovation, plants will be unavailable Introduction Operations Comps/DCF Outlook

35. Final Outlook (cont.) • Ameren will pay higher taxes due to higher income taxes, carbon emission taxes, and elimination of tax breaks for corporations • Commodity prices will increase • Regulatory agencies will be more hesitant to increase rates due to economic circumstances and political views • Bad debt expense will increase due to economic conditions • Raising equity capital will be more difficult Introduction Operations Comps/DCF Outlook

36. Holding • Currently own 400 shares at $19.78 • 2.78% of the portfolio value • Purchased 400 shares at $50.03 on April 27, 2006 • Unrealized loss of 60.5% Introduction Operations Comps/DCF Outlook

37. Proposal • Ameren is currently overvalued and is exposed to many risks • Sell 200 shares at the market price Introduction Operations Comps/DCF Outlook