Good morning, ladies and gentlemen and thank you for standing by. Welcome to the Ameren Corporation Second Quarter 2008 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. [Operator Instructions]. As a reminder, this conference call is being recorded, today, Friday, August 1, 2008. I would now like to turn the conference over to Bruce Steinke, Vice President and Controller. Please go ahead sir.

Thank you, Metchen. Good morning, everyone. I'm Bruce Steinke, Vice President and Controller of Ameren Corporation. On the call with me today is our Chairman, President and Chief Executive Officer, Gary Rainwater; our Executive Vice President and Chief Financial Officer, Warner Baxter; our Senior Vice President and Chief Accounting Officer, Marty Lyons and other members of the Ameren management team. Before we begin, let me cover a few administrative details. This call will be available by telephone for one week to anyone who wishes to hear it by dialing a playback number. The announcement you received and our news release carry instructions on replaying the call by telephone. This call is also being broadcast live on the Internet and the webcast will be available for one year on our website www.amn.com. This call contains time sensitive data that is accurate only as of the date of today's live broadcast. Redistribution of this broadcast is prohibited. I also need to let you know the comments made on this conference call may contain statements that are commonly referred to as forward-looking statements. Such statements include those about future expectations, beliefs, plans, strategies, objectives, and financial performance. We caution you that various factors could cause actual results to differ materially from those anticipated in the forward-looking statements. For additional information concerning these factors, we ask you to read the forward-looking statements section in the news release we issued today and the forward-looking statements and risk factors sections in our periodic filings with the SEC. To assist in our call this morning, we have posted a presentation on our website that includes a slide that reconciles our earnings per share for the second quarter and first six months of 2008 to our earnings per share for the second quarter and first six months of 2007 on a comparable share basis. And a slide that compares our full year 2008 earnings per share guidance to full year 2007 earnings per share, again on a comparable share basis. To access this presentation, you may look in the Investors section of our website under Presentations or follow the link for the webcast. Gary will begin this call with an overview of key second quarter 2008 activities and Warner will follow with a discussion of our second quarter 2008 financial results and 2008 earnings guidance. We will then open it up for questions. Here is Gary.

Thanks, Bruce. Good morning and thank you for joining us. This morning, we reported core earnings per share of $0.67 in the second quarter of 2008, which were comparable to the same period in 2007, and in line with our expectations. However, our GAAP earning improves significantly, as there were some unusual items related to unrealized mark-to-market gains, a coal contract settlement and a Missouri Public Service Commission order. Warner will go through these items in more detail in his remarks. From an operational and regulatory perspective, a great deal of activity took place in our business in the first half of this year. Compared to the first six months of 2007, the equivalent availability of our coal-fired units rose nearly 2% to 84% through June 2008. Importantly, our effective coal procurement and management strategies allowed us to run our coal plants at full available capacity, despite meaningful delays in coal deliveries at some of our plants due to significant flooding in the Midwest. In addition, we successfully negotiated a coal contract settlement with a coal supplier over a higher fuel cost we expect to incur in 2008 and 2009 due to the coal supplier's premature closing of a mine in termination of a contract. The settlement compensates us in total for the incremental fuel cost we expect to incur. Warner will also discuss this in greater detail a bit later. Increasing cost of the fuel we need to run our business, are indicative of the rising cost environment that our entire industry is facing. In particular, like our customers are seeing for every day items, our business is experiencing significant cost increases across the board. This is occurring during the period when we also need to make substantial investments in our infrastructure for improved reliability and cleaner air. We've…

Great. Thanks, Gary. I would now like to refer you to the slide presentation on our website, as I provide a more detailed discussion of our second quarter 2008 earnings. Turning first to page three of our slide presentation, today we announced second quarter 2008 net income, in accordance with Generally Accepted Accounting Principles, of $206 million or $0.98 per share, compared to second quarter 2007 GAAP net income of $143 million or $0.69 per share. Excluding certain items in each year, Ameren recorded second quarter 2008 core net income of $142 million or $0.67 per share compared with second quarter 2007 core net income of $138 million or $0.67 per share. We reported several significant unusual items in the second quarter of 2008 that we have excluded from our core earnings. Net unrealized mark-to-market gains from non-qualifying hedges boosted second quarter 2008 net income by $0.23 per share as compared to net unrealized gains of $0.02 per share in the second quarter of 2007. These unrealized gains primarily related to financial instruments that were acquired to mitigate the risk of rising diesel fuel price adjustments embedded in coal cost transportation contracts for the period 2008 through 2012. These financial instruments effectively warped [ph] in diesel fuel transportation prices at the time we entered into the contracts. Large unrealized mark-to-market gain was driven by the skyrocketing value of the heating oil option contracts utilized to hedge this risk. Of course, the value of these non-qualifying hedges will vary over time based on current market prices. Another significant item excluded from core earnings in the second quarter was a lump sum payment from a coal supplier for expected higher fuel costs for our unregulated generation operations in 2009 as a result of the premature closure of a mine in May 2007…

Thank you, sir. [Operator Instructions]. Okay, and our first question comes from Greg Gordon with Citi. Go ahead please.

Good morning, gentlemen.

Good morning, Greg. How are you doing?

I'm hanging in there.

Good.

How about you guys?

Well, great. Thank you.

I was just looking at the forward power curves in relation to the commentary you made about your incremental hedging. And it doesn't... I know markets have been extremely volatile, but it doesn't look like 2009 around the clock, prices in Illinois or the Midwest are meaningfully different today and they were January... first couple of weeks of January, which you know right before you gave your analyst presentation. So we had a huge run up in prices, we know prices have come back down, but as you look at the guidance you gave for short and long-term earnings, based on the markets at that time, are you seeing something different than I'm seeing or prices materially lower and is that why you thought you have to disclose it.

Yeah, Greg thanks. This is Warner. And... now your observation I think is accurate. On analyst day, we gave ranges for the future ranging between $48 and $54 per megawatt hour. That included 2008. If you look today, you'd see a range approximating 50 to $52 per megawatt hour. And as we said even then and as we even said just few moments ago, we think that the fundamentals of the marketplace will continue to drive those prices upward. But by a large, we're very consistent with what we have said before.

So if anything, incremental hedges that you did, if you're putting them in sort of on a ratable basis over the course of the year, there were several prolonged trading periods where you could have gone out higher prices in that range?

Yeah, that's certainly... we will give more specificity around it. But certainly, earlier in the year, our hedge strategy was to try and take some of that risk off and certainly as you pointed out, the power prices were stronger in the first half of the year. So we had those opportunities, absolutely.

Alright, thank you.

Sure.

Thank you and our next question comers from Dan Jenkins with the State of Wisconsin Investment. Go ahead please.

Good morning.

Good morning, Dan.

First of all, I was wondering, could you give a little more color on what the issues were in with regard to the court decision on the environmental laws or regulations and...

Dan, this is Gary Rainwater. I won't profess to be an expert on environmental rules. But my take on it is that the courts decided the rule making was fundamentally flawed because it didn't address emission reductions on a state-by-state basis. And the court's interpretation was that it should have addressed those reductions state-by-state rather than over a broad region. So for that reason, the court send it back to EPA was, somewhat with guidance that it needed to take an entirely different approach, which then raises a whole lot of questions about where we are because it took years to develop the CAIR ruling. Our industry felt it was in general a pretty good ruling. We really didn't expect it to be thrown out in the way it was, and now it's... we have no idea how long it will take to develop another rule making. Ultimately though, we have to do something to reduce SO2 and NOx, there is no question about that, just the question about how long does it take for the EPA or for the legislature to decide what the final requirements are going to be.

Okay. Does that change your environmental CapEx plans in any way?

we are evaluating our environmental CapEx plans and the question there is well, what do we evaluate them based on. There is a possibility that some of our scrubber projects could slip. And of course we would like to be able to defer those CapEx requirements if it is at all possible. There's probably a greater possibility that it could slip in... those requirements could slip in Missouri because Missouri adopted the federal Clean Air and Mercury standards pretty much straight in line with the federal requirements, while Illinois set requirements that were somewhat more stringent and developed its own multi-pollutant rulemaking. Now the online rule making though, was also based on CAIR and CAMR in the assumption that those rulemakings would stand, so we are uncertain where the Illinois requirement leaves us as well. But, you know we are certainly focused on deferring any capital expenditures here that we can.

Okay. The other thing I was curious about is your Illinois rate request and you mentioned U.S. for 207 and the staff was at 87 I think. And so I was curious, if you could break down the main items that are behind that difference?

Yeah. Warner can probably fill you in on the detail there. There are a couple of big ticket items. One is allocation of A&G cost and one is the inclusion of additional planned investment in the rates. But Warner?

I think Gary, you hit on really the two main items that are out there and so indeed we have put our case before the administrative law judge now on those particular issues and we expect to hear from the Ministry of Law judge here in August, what the final decision come from the ICC in September. And those are really the two big ticket items among other small or less, but those are the main drivers.

So what were the plant disallowance... what was kind of the idea behind that? Was it just...

Yes, part of the issue related to the plant disallowances related to a documentation issue, for lack of a better term in terms of some of the invoices that were reviewed by the staff and were I guess in dispute. We believe we have satisfactorily provided that documentation to show that the investments that we've made that were indeed put into the ground, if you will. And so, we feel strongly that that documentation is going to be satisfactory, but of course it's ultimately up to the Illinois Commerce Commission to review those facts and circumstances.

Okay. And then on... I know there's... the industrial sales were down, is that... do you think that's impact from the economy or is there a specific factors going on in...?

I am sorry, Dan, you are breaking up. Could you repeat that question?

Yeah, the industrial sales, I noticed were down and I just wondered, do you think that's impact from the economy or are there specific factors going on in your service territory which caused the industrial to be down?

Again we really haven't seen much decline, and when we look at sales in general, we see pretty solid growth in the residential commercial sector with just a moderate downturn in industrial and net-net some positive growth. So I wouldn't say that our economy has been in recession, but it's just sluggish. And your guess is as good as mine, where the economy will go over the next year. Speculation is all over the map on that.

Okay. And the last thing I was wondering is your short-term debt is well over 1 billion. Do you have any plans to term that out or how you're going address that?

We'll let Jerre Birdsong address that one, who is our VP and Treasurer.

Yes, we do have plans on terming that out. On our analyst day presentation, we gave the information on what the expected negative free cash flow was for the year and we have termed out approximately half of that amount that was just over $1 billion in total. And we will continue to term that out and complete the rest of it during the remainder of the year.

Okay. Thank you.

Welcome Dan.

Okay, thank you. And our next question comes from Paul Ridzon with KeyBanc. Go ahead please.

What level of EA sales were kind of in this year's budget or guidance?

I am sorry, Paul repeat it again?

Paul, we had included just the 5 million that we are allowed to sell in Missouri under the last rate order.

I am sorry, I disallowance as of site [ph], yes, that's correct.

And then how much of the mine settlement did you book in this quarter?

$0.10 per share.

And you're calling that ongoing?

Yeah. There was two parts to it, Paul. There was the $0.08 that we carved out that relates to '09 and the $0.10 that is related to higher costs we expect in current 2008. We're calling that current year piece ongoing and then 2009 piece non-ongoing.

As simply as I said, Paul, this is Warner. As you know, we are incurring incremental costs in both 2008 and 2009. And so the piece that we are really, that we are paid for in the second quarter for 2008, and those monies well go to offset the incremental costs we'll incur throughout this year. And then for those that we were paid in advance for 2009 that's what we've carved our of core earnings for 2008.

But you have put that back in '09.

At this point in time, what we simply do, we just carved it out as an item. Certainly, we've identified it as a difference compared to where we were in analyst day, whether we'll end up carving it out or not, I guess that remains to be seen. I think the most important thing is that people are aware that the fuel cost information that we've given you at the beginning of the year had already factored that Exxon settlement out. But on a GAAP basis that will not show up that way next year.

Okay, I understand. So that could be a [indiscernible] sense that disappears from earnings if you don't... you had to factor next year?

I mean, if you had factored that into your non-rate-regulated generation that's what we said, you had that in there on the GAAP basis that will go away.

Okay, thank you very much.

Sure.

And thank you. And our next question comes from Yiktak Fung with Zimmer Lucas Partners. Go ahead please.

Good morning

Good morning

I just have a couple of quick questions with regards to the Missouri rate case filing. I think Union Electric updated their filing in the middle of June. I was wondering if there is another opportunity for an update as when your case progresses because of the test year?

I am sorry, you are breaking up little bit. You're asking the question whether there was an opportunity to update further existing rate case in Missouri and maybe Marty, you can address, I was a little...

Sure. Right now as we mentioned earlier on the call, the rate request stands at around 250 million, and there will be pro forma adjustments made to the test year through September of 2008.

Okay. And those pro forma adjustments, those have already been made in the update that was filed in the middle of the June of this year, right?

I am sorry, you were breaking up. Could you mind repeating that question?

The June filing, sorry. Does the June filing already include these pro forma adjustments through September '08?

No, I don't believe it does.

Okay.

The June filing Yiktak was basically when we make the file and used nine months of actual and three months of budget. And for the June filing, we're replacing that three months of budget with three months of actual essentially through March 31st?

I see. So there will be yet another update that updates that performance with September '08?

Yes, there will be.

Okay, thank you. And just one clarification question, before you were talking to Greg about power pricing and you gave some sort of range of 52 to $62 per megawatt hour. Can you just remind me what years is that for?

That was really for 2009 and 10.

2009 and '10.

That we're talking about there.

Thank you. That's all.

Sure.

Okay, thank you. And our next question comes from Steve Gambuzza with Longbow Capital. Go ahead please.

Good morning.

Hi Steve, how are you?

Good, thanks. Just you've actually you're going to update your longer term earnings guidance later this year. You usually provide full guidance with the first quarter earnings release is that... or with the fourth quarter earnings release, is that correct?

Yeah, with regard to this year, as you know we did it in January. And we've provide that in advance of our year-end conference call, about a couple or three weeks. Our expectation would be that we would come in either late this year or early next to in a manner similar to where we provide 2009 and beyond earnings guidance. And then of course if there is a meaningful update to 2008, we'd do that as well.

Okay, great. And then just to make I understood some of the commentary regarding the CAIR changes and its impact on your CapEx budget. Is it fair to say that it's unlikely to have a significant impact on your Illinois spending, but may have more of an impact on your Missouri spending long term?

Steve, I wouldn't characterize that at all, I think we are looking at both Missouri and Illinois. I think Gary said that this is likely it could be more Missouri, we don't disagree with that. But I think that is re-step back, we are looking at all of our alternatives, we have to think about the changes in laws. So it would be premature to speculate in terms of magnitude, but I wouldn't say that it would not have... it couldn't potentially have a material impact on Illinois, just too early to say.

But does this impact the settlement agreement that you signed with the Governor?

You know certainly that agreement is out there, and it is part of law or regulations if you will. And so, but having said that, there still may be some opportunities for us to manage our capital expenditures within that framework.

Thank you.

Sure.

Thank you. [Operator Instructions]. And our next question comes from David Grumhaus with Copia Capital Partners. Go ahead please.

Good morning, guys.

Hi, David. How are you?

Good, how are you?

Good, thanks.

A couple of questions on the rate case. You've touched a little bit on Illinois, obviously you have got these two large items. Do you see where the... with the staff coming on these things or is the staff just missed some thing? I mean I know you talked a little bit about giving them some receipts on the plans and that type of thing, but what's your confidence level that you are going to be able to get the commission...?

Well, I am sorry to interrupt you. I think the bottom line is that we strongly disagree with the views ever expressed. We've put forth what we believe is very good evidence to address the A&G cost issue as well as the capital rate based addition issue. And so we've... so in terms of confidence, we feel confident in the position that we think and that ultimately will be up to the Illinois Commerce Commission to assess that. But you know when we look at the positions taken, we think that our view is the correct one.

Okay. Overall Missouri, I saw that Empire got their fuel cost this week. Does that give you more confidence that you are going to be a little get something like that as yours had done after that? I mean do you have any reactions to it?

So. As you know, Empire just received their order the other day and we are still on the process of reviewing the details. But, from what I have seen in terms of the fuel adjustment clause, their order looks very close to the request that we've made in our pending rate case. And similarly, the ROE that they receive, which is 10.8% is very similar to the ROE that we requested in that rate case. So, while we don't know the details, it certainly appears that they received a constructive regulatory order and that's certainly what we are seeking in Missouri as well, as a constructive regulatory order so we can continue to do the things we are doing in terms of making investments in the infrastructure and improving customer service and satisfaction. So always precedent I believe is a good thing and as we've said before as Tom Voss has said at our analyst day and we've said it consistently through out that we feel confident that we will have fair treatment in the Missouri rate case as well as the opportunity to receive a fuel adjustment clause.

Are settlements possible in either of these two cases, what is your expectation that they will go through this?

I would say with regard to Illinois, settlement is really past that stage at this point in time. I think we are at the stage where it's going to be put ALJ in the Illinois Commerce Commission here very shortly, and Missouri certainly. I mean I think there is always the opportunity to settle certain aspects of the case as well as potentially the entire case. But I'll tell you where we sit today is very early in that process, as you know. We are still going through the data request process and we expect to see the staff's position and others a little bit later in the summer. But if you recall in Missouri, they actually put on their agenda, settlement dates where the parties actually do get together to try and talk about the issues, to try and minimize the level of... that ultimately go before the commission and potentially settle the entire case.

Okay, that's very helpful. Thanks guys.

Thank you. Our next question comes from Michael Lapides with Goldman Sachs. Go ahead please.

Hi guys. Quick question on your non-rate-regulated generation. Can you give an update or you may have it, I just missed it, on coal hedging increment to what you talked about in January, coal and rail I am sorry, all in?

Yeah. You didn't miss it, but we can give you an update on some of that in terms of what we've done on the coal and transportation side. As you know, we've historically, have a historical approach to where we try and layer in our hedges for coal and transportation over time and consistent with that approach, we've done more since the beginning of the year Now going into 2008 and focusing on unregulated generation which is what I think your question was, basically for 2008 in the analyst day we are 100% hedging and of course that's we are basically at now. During analyst day, we're out there for coal and transportation, for 2009 net range in around 70%, it is around 72%. We have done... we have increased our hedge percent closer to 85, approximately 85% today. And then in 2010, we're... for the non-regulated, we had hedged 16% of our total coal and transportation costs. That number has now moved up to in excess of 25%. Now, that seems like the low number, let me tell you why that seems like a low number. It's because out in 2010, we have not locked up our transportation contracts yet for our unregulated generations, which as you know is a meaningful portion of our costs. Having said that, we have on the coal commodity side, hedged up to 70% of our coal commodity for 2010. So we have made meaningful progress and we are currently in good faith negotiations with our rail suppliers to try and secure our needs for a little bit of 2009 and than for 2010 and beyond.

Got it. And can you just give roughly what the break out, PRB coal right now is around 15 or 16 bucks with the break out how much of the total cost is coal versus rail?

Generally speaking, a rule of thumb in the past has been about two-thirds of our costs has been rail and a third coal.

Okay, got it. Thank you, guys.

Welcome Michael.

Thank you. And our next question comes from Alex Kania with Merrill Lynch. Go ahead please.

Hey, good morning.

Good morning.

A quick question just on the 2008 guidance and how things were shaping up year-to-date. Just one that kind of stood up for me and I was just wondering if you could give a little more detail on it was just the dilution and financing. You're running about $0.03 down for the year-to-date period and I think the full year balance is still about $0.12. And I was just wondering what are the pieces of that we should be looking at in the second half of the year?

Sure. I'll tell you the principal driver that change related to the refinancing of auction rate debt. If you remember obviously the credit markets would happen to them earlier in the year, we had a fair amount of that auction rate debt primarily in both our Missouri regulated and Illinois regulated businesses. And we very quickly went out and refinanced that debt during the first half of the year. And obviously at rates that were higher than what were probably very low rates historically run, 3 to 4% if not then refinanced it, 5 to 6% type of rates. So that incremental piece is what's driving it. And then... so therefore those increases are primarily in the Missouri regulated and Illinois regulated businesses, that's what it's been driven by.

Okay. Great. And just another question was just on the just any updates on the development of capacity in kind of the ancillary markets and how you see it right now?

Okay. Andy Serri, who you met at analyst day, who is the President of our AmerenEnergy Marketing Company can frankly give the best update in terms of what's going on in the ancillary services market, a little bit of an update on capacity as well.

Yeah Alex, good to hear from you. MISO did certify, John Bear, their Chief Operating Officer did certify that they are ready for a September 9 start of the ancillary services market in MISO. And so, we are as other market because has been and the whole industry is preparing for that start on September 9. MISO is probably talking of a year, year and a half, two years before a formal capacity markets develops in MISO. Right now there is a capacity market, it is fairly robust but it is strictly bilateral at this time.

Great. And just the last follow-up question would be... so have you seen any strengths in those bilateral capacity prices recently over the past quarter or two?

Yeah, the bilateral capacity market for say, in 2009, 2010 is in that 60 to $70 per megawatt day range and for '10, '11 we are seeing that range in the 70 to $80. And as we said back on our analyst day, we are shooting for that 75 to 80% edge on our capacity.

Great, thanks guys.

No problem.

Thank you. [Operator Instructions]. And we have no further audio questions at this time. I would like to turn the conference back over to management for any closing statements.

Right, and thank you all for participating in this call. Let me remind you again that this call is available till August 8 on playback and for one year on our website. Announcement carries instructions on listening to the playback. You can also call the contacts listed on our news release. For those on the call who are financial analysts, please call Bruce Steinke, media should call Susan Gallagher. Contact numbers are on the news release. Again, thanks for dialing in.

Ladies and gentlemen, this concludes the Ameren Corporation second quarter 2008 earnings conference call. If you would like to listen to a replay of today's conference please dial 800-405-2236 or 303-590-3000 with the passcode 11117661. ACT would like to thank you for your participation and you may now disconnect.