Nov. 5--ST. LOUIS -- Ameren Corp. says it's hurting financially and will be asking permission to make Central Illinois families and businesses pay more.

The warning came Tuesday as the St. Louis-based power company announced third-quarter profit that was down 16 percent at $204 million, or 97 cents per share. That compares to third-quarter 2007 figures of $244 million, or $1.18 per share. Earning predictions for the full year have been scaled back to between $2.80 to $3 per share, as opposed to previous guidance of $2.80 to $3.20.

Ameren, corporate parent of electric and gas utilities AmerenIP, AmerenCIPS and AmerenCILCO, was just handed a $162 million delivery rate increase for electricity and natural gas in September by Illinois regulators. Its utilities had asked for hikes worth $247 million but the Illinois Commerce Commission cut the approved amount by $85 million.

As it turned out, the income from Illinois regulated operations was up dramatically in the latest third quarter: the utilities earned $13 million, compared to a loss of $8 million in the third quarter of 2007. But Ameren said a big chunk of that was due to a change in the way seasonally adjusted electric rates are calculated, a change that won't have much impact on full-year earnings figures.

Ameren said it needs customers to pay more because it's having to cope with escalating fuel and fuel delivery costs and higher borrowing rates in dealing with financial markets that have been in turmoil. Ironically, it also needs more money to make up for Illinois customers who can't pay their rising power and gas bills.

"Another area we are closely monitoring is bad debt expense," said Ameren's chief financial officer, Warner Baxter, in a conference call with industry analysts. "This year, we have seen bad debt expenses rise, most notably in our Illinois regulated operations."

Baxter said the company continued to work with "customers and local agencies" to help families behind on their bills and said it was too early to predict how much the struggling economy would make things worse.

Baxter said Ameren was now "evaluating" when will be the right moment to file its next request for a delivery rates increase in Illinois.

Gary Rainwater, Ameren's chairman, president and chief executive officer, said it needed to file rate cases more often to stop expenses outstripping revenues. He said more frequent, but smaller, price hikes would also make "bill increases more manageable for customers."

Looking in detail at the latest third-quarter results, Rainwater said even Mother Nature had not been kind to the company's bottom line. "Milder summer weather reduced our third quarter 2008 earnings by an estimated 18 cents per share as temperatures were less extreme than those experienced during last year's very hot summer," he added.

"During the third quarter of 2008, cooling degree days across the Ameren system were 27 percent lower than during the third quarter of 2007."

Ameren was also looking to cut expenses dramatically, with plans that could scale back capital and other expenditures companywide by up to $1 billion in 2009.

But the company's difficulties won little sympathy from the Citizens' Utility Board, a consumer watchdog group. The board's executive director, David Kolata, said Ameren needs to play another tune: "They sing the same song and the lyrics never change -- they want more, more and more," he added.

"We think it's very disturbing that they plan to keep coming back for rate increases at a time when people are having difficulty paying their bills and the economy is struggling."

The board says the last rate increase was too much anyway and is now trying to get the case reheard before regulators.

Ameren's share price finished up $1.43 (4.45 percent) at $33.57.

treid@herald-review.com|421-7977

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