Ameren Corp (AEE)

1. Ameren Corp(AEE) Presented by Alex Ring & Carl Wang November 16, 2006

2. Portfolio Position • Purchased 400 Shares on April 27, 2006 at $50.03 • Currently represents 6.1% of the market value of our portfolio • Price appreciation of 7.22% since purchase, or an annualized rate of 13.49%

3. Q3 Earnings • Earnings for the 3rd quarter of 2006 were up 4.6% to $293 or $1.42 per share • This compares favorably to analyst expectations of $1.36 a share • Reaffirmed outlook of $2.75 to $3.00 a share for 2006

4. Outline • Company Background & Structure • Regulation and Operations • Stock market prospects • DCF Analysis • Overall Portfolio Fit • Recommendation

5. Company Background • Ameren Corp is an electric utility holding company • Headquartered in St. Louis, Missouri • Formed by the merger of Union Electric Company and the Central Illinois Public Service Company (CIPSCO) • Began trading on the NYSE on January 2, 1998 • Headed by Chairman & CEO, Gary Rainwater since January 1, 2004 • Has held numerous executive positions with the company and its subsidiaries since 1979 when he joined Union Electric as an engineer

6. Company Background • Market Cap: $11.1 Billion • 2005 Net Income: $606 million • Stock Price: $53.65 • P/E: 21.68 • Dividend Yield: 4.70% • Beta: 0.69 • 2005 ROE: 9.52% • 2005 ROA: 3.34% • Debt/Capital: 36%

7. Company Operations • Ameren is a Midwest public utility holding company • Its electric and gas utilities operate in much of downstate Illinois as well as Missouri • Provides both natural gas and electricity to 3.4 million customers

8. Ownership Structure

9. Ameren Subsidiaries • Union Electric Company represents the company’s rate-regulated natural gas and electric operations in Missouri • CIPS operates Illinois rate-regulated electricity and natural gas distribution business under the AmerenCIPS name • Genco, or Ameren Energy Generating Company, is responsible for generating non-rate-regulated electricity in Illinois and Missouri

10. Subsidiaries continued • Central Illinois Light Company (CILCO) is an Illinois based subsidiary that distributes rate-regulated electricity and natural gas, and also generates non-rate-regulated electricity through Ameren Energy Resources Generating Company (AERG) • Illinois Power (IP) was acquired in 2004 and operates rate-regulated natural gas and distribution networks in Illinois under the AmerenIP name

11. Outline • Company Background & Structure • Regulation and Operations • Stock market prospects • DCF Analysis • Overall Portfolio Fit • Recommendation

12. Significance of Regulation “Rates that UE, CIPS, CILCO and IP are allowed to charge for their services are the single most important influence upon their and Ameren’s consolidated results of operations, financial position, and liquidity.” CILCO:CILCORP Inc., an Ameren Corp. subsidiary that operates as a holding company for CILCO and various non-rate-regulated subsidiaries CIPS: Central Illinois Public Service Company, an Ameren Corporation subsidiary that operates a rate-regulated electric and natural gas transmission and distribution business in Illinois as AmerenCIPS. IP: Illinois Power Company, which was acquired from Dynegy by, and became a subsidiary of, Ameren Corporation on September 30, 2004. IP operates a rate-regulated electric and natural gas transmission and distribution business in Illinois as AmerenIP. UE: Union Electric Co. an Ameren Corp. subsidiary that operates a rate-regulated electric generation, transmission and distribution business, and a rate-regulated natural gas transmission and distribution business

13. Regulation • The public utility sector is highly regulated. • Greatest overall variable determining the company’s profitability • In most markets, there hasn’t been a rate increase in 20-25 years • A rate freeze in Illinois was placed in 1997 and will expire at the end of this year

14. Utility Rate Freeze Expiration • A rate freeze in Illinois was placed in 1997 and extended for 3 years from 2004 to 2006 • Rate freeze expires at the end of this year • 40%-55% increase in rates in 2007, on average $365/yr per household

15. Customer Elect Payment Plan • Elective phase-in of higher electricity costs in 2007 • Deferral of billing costs in 2007 through 2009 with financing charge -- 33¢ per day increase versus $1 without a the plan • Caps annual increase at 15% through 2009 • After phase-in period, customers would have three years to repay the deferred costs at a carrying charge interest rate of 6.5 percent

16. Rate Increase Mitigation Plans • Rate increase phase-in plan with securitization • Deferral of some power supply costs in 2007 and 2008 • Securitization bonds would be issued to spread portion of increase over up to 10 years • Legislation is required to enable the Ameren Illinois utilities to defer and later recover purchased power costs • Ameren will recover that deferred amount in subsequent years as a separate charge on customers’ bills. The separate charge would be collected over the life of those bonds

17. Mitigation Plans Cont. • Benefits of both plans: • Significantly mitigate the impact of rate increases on customers and allows them to better plan for future increases • Maintains the financial integrity of the Ameren Illinois utilities • Keeps the lights on and the gas flowing • Avoids significant job losses • Ensures future reliability

18. Regulation Continued • Illinois based subsidiaries (CIPS, CILCO, IP) are regulated by the Illinois Commerce Commission (ICC) • Missouri based subsidiary Union Electric are regulated by the Missouri Public Service Commission (MoPSC)

19. Regulation Continued • In the past, Ameren’s results have been constrained by its inability to recover investments and other costs through electricity and natural gas rates • But much progress has been made: • PGA clauses allow the costs to purchase natural gas to be passed on to customers in Missouri and Illinois, but not yet in effect • A new law passed in Missouri would allow the company to recover costs associated with fuel, purchased power, and the environment • Much of this progress has just recently came about and could be a source of additional profitability in the coming 3-5 years

20. Financial Risks • Commodity Price Risk: Ameren uses long-term purchase and sales contracts, derivatives including forward contracts, futures contracts, options, and swaps to manage price risk associated with purchasing these commodities • Counterparty Risk: Risk that counterparties who owe Ameren money, energy, coal or other commodities or services will not be able to perform their obligations

21. Sources of Electricity

22. Recent Performance • 5 Year Compound Annual Growth Rates • Electricity Revenue 9.14% • Gas Revenue 31.5% • Total Revenues 11.94% • Net Income 5.26% • Stock Price 3.70%

23. Recent Acquisitions - CILCORP • On January 31, 2003, Ameren purchased CILCORP, the parent of CILCO, from AES Corp (AES) for $1.4 billion

24. Recent Acquisitions - IP • Purchase Illinois Power (IP) on September 30, 2004 from Dynegy (DYN) • Ameren paid $2.3 billion for the company, financed by issuing 30 million shares of Ameren Corp in February and July 2004. • The acquisition increased the number of electric customers by 625,000 and the number of gas customers by 425,000 • Increased 2005 revenues by $1.3 billion • IP consists primarily of electric and gas transmission and distribution, and has no significant generation facilities • Therefore, most of electricity is purchased under short and long-term purchase agreements

25. Outline • Company Background & Structure • Regulation and Operations • Stock market prospects • DCF Analysis • Overall Portfolio Fit • Recommendation

26. Comparables Analysis

27. DuPont Analysis ROE = PM * TAT * EM Where: PM = Profit Margin (NI/Sales) TAT = Total Asset Turnover (Sales/TA) EM = Equity Multiplier (TA/TE)

28. Stock Performance vs. Competitors

29. Stock Performance vs. Competitors

30. Stock Performance vs. Competitors

31. Outline • Company Background & Structure • Regulation and Operations • Stock market prospects • DCF Analysis • Overall Portfolio Fit • Recommendation

32. DCF Analysis assumptions • Total Revenue will increase by 15 in 2007 due to the end of the rate freeze, followed by sales growth of 8% which slows to 6% in the terminal year. • Net income will spike to 42% in 2007, then level off • WACC of 7.43%, conservative relative to Bloomberg estimate of 6.91% • Reasonable sustainable growth rate of 3%

33. DCF Results • DCF Value per share: $60 • Intrinsic value range of $54-67

34. Sensitivity Analysis

35. Outline • Company Background & Structure • Regulation and Operations • Stock market prospects • DCF Analysis • Overall Portfolio Fit • Recommendation

36. Correlation Matrix

37. Overall Portfolio Issues • Great diversification with existing portfolio • Excellent dividend yield of 4.70% versus S&P 500 dividend yield of 1.78%, representing a payout ratio of 90% • Source of consistent growth and will be a staple holding of our portfolio • Stock performance need not be spectacular to generate great returns • 5% per year CAGR in stock price will result in total return of 10% assuming constant dividend yield—greater than should be required given the level of risk embodied in beta

38. Outline • Company Background & Structure • Regulation and Operations • Stock market prospects • DCF Analysis • Overall Portfolio Fit • Recommendation

39. Recommendation • Hold our entire position of 400 shares, with a bullish outlook on the stock • Watch closely as news of the rate freeze and politics develop

40. Sources • Ameren Investor Relations Website • 2005 Ameren Corporation Annual Report, http://phx.corporate-ir.net/phoenix.zhtml?c=91845&p=irol-reportsannual • 2003 Ameren Corp 10-K Filing • 2004 Ameren Corp 10-K Filing • 2005 Ameren Corp 10-K Filing • Yahoo Finance <http://finance.yahoo.com>