Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Ameren Corporation 2008 Third Quarter 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]. This conference is being recorded today Tuesday, November 04, 2008. I would now like to turn the conference over to Doug Fischer. Please go ahead, sir.

Thank you and good morning. I'm Doug Fischer, Director of Investor Relations for 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; our Vice President and Treasurer, Jerre Birdsong 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 in our news release carrying 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.ameren.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 that 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 statements 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 presentation slides on our website that we will refer to during this call. To access this presentation you may look in the investors' section of our website under presentation or follow the links for the webcast. Gary will begin this call with an overview of key third quarter 2008 operations and regulatory developments as well as comments on the current volatility in the financial markets and our strategies to address this issue. Warner will follow with the discussion of our third quarter 2008 financial results and revised 2008 earnings guidance as well as provide some more detailed comments on our available liquidity and other issues related to the current financial markets. We will then open the call for questions. Here is Gary.

Thanks Doug. Good morning and thank you for joining us. This morning we reported non-GAAP or core earnings per share of $1.17 per share for the third quarter of 2008 down from $1.33 we earned in the same period in 2007. The fact that earnings declined from the year ago quarter was not a surprise given last year's very hot summer weather which drove higher electric margins in the 2007 period. In addition, as we previously discussed with you in 2008, we expected rising costs for, among other things, fuel and enhancements to distribution system reliability. However, the magnitude of the decline was somewhat greater than expected because of weaker than expected power prices and milder that normal weather this quarter. As you all know, we've seen tremendous volatility in power prices this year and most recently meaningful downward pressure on these prices. Lower power prices and the mild third quarter weather are the primary reasons we narrowed our core earnings guidance range for 2008 to $2.80 to $3 per share, which is in the lower half of our previous guidance range of $2.80 to $3.20 per share. Warner will go through these items in more details in his remarks. Turning now to some key regulatory developments, in September, we received a rate order in Illinois. Specifically on September 24th, the Illinois Commerce Commission or ICC authorized increases in rates for AmerenCIPS, AmerenCILCO, and AmerenIP totaling approximately $161 million based on a lot of returns on equity of 10.65% for electric delivery service and 10.68% for gas delivery service; and common equity range ratios ranging from approximately 47% to 52%. These increases were about 78% of our updated 2007... $207 million request. Across the Ameren Illinois Utilities pledged to limit overall residential electric bill increases to 10% in the first…

Thanks Gary. I would now like to refer you to the slide presentation on our website that Doug mentioned, as I provide a more detailed discussion of our third quarter 2008 earnings. Turning first to page 3 of our slide presentation. Today we announced third quarter 2008 net income in accordance with generally accepted accounting principles of $204 million or $0.97 per share compared to third quarter 2007 GAAP net income of $244 million or $1.18 per share. Excluding certain items in each year, Ameren recorded third quarter 2008 core or non-GAAP income of $246 million or $1.17 per share compared to third quarter 2007 core net income of $277 million or $1.33 per share. We recorded several significant items in the third quarter of 2008 that we have excluded from our core earnings. Net unrealized mark-to-market losses from non-qualifying hedges produced third quarter 2008 net income at $0.17 per share as compared to net unrealized gains of $0.03 per share in the third quarter of 2007. These unrealized mark-to-market losses in the third quarter were primarily driven by a decline in the value of heating oil option contracts as well as the decline in the cash surrender value of company owned life insurance policies offset in part by unrealized mark-to-market gains related to power sales contracts. As you know, we're utilizing heating oil option contracts to hedge the volatility of diesel fuel price adjustments embedded in coal transportation contracts for the period 2008 through 2012. The value of these non-qualifying hedges will vary overtime based on then current prices. You may recall we had significant gains earlier in the year. Of course in the long run, a decline in diesel fuel prices is beneficial for our company. Continuing with non-core items, Red Cross associated with the Illinois comprehensive electric…

Thank you, sir. [Operator Instructions]. Our first question comes from the line of Greg Gordon with Citi. Please go ahead.

Thanks. Good morning gentlemen.

Good morning Greg, how are you?

I'm good. Not to beat a dead horse because I know you reiterated it a couple of times, but you've already identified 4 to $500 million of capital and O&M cost at these non-regulated business, correct?

That's correct.

I was hopping back and forth to another call, did you breakout how much of that is capital versus how much of that is O&M?

I have not, but I'll give that to you now. In terms of the unregulated generation business, and again this is related to 2009 expected spend that of the $400 million to $500 million, we estimate that the O&M piece of that is $50 million to $100 million and that the capital piece ranges from $350 million to $400 million.

Thanks. And are these deferments necessary expenditures or you have some flexibility on timing or are these expenditures that you have sort of be permanently shelved if economic conditions don't improve?

We know certainly that the majorities are deferments that we have some flexibility in terms of timing, but as we calibrate our plans; and certainly some of these expenditures could be reduced for some period of time. That piece is still under review, but its deferment as well as the potential reduction in future spending.

And what's the total targeted megawatt hour production in deregulated business for 2009 with the $3 million... with the 3 million megawatt hours added, how much total are you expecting now?

Yeah, I think in general, as we went into the beginning of the year Greg, we expected their generation levels will be around 30 million or so. With this additional 3, we expected it to be 33 million to 34 million megawatt hours.

Thank you. And then, the $400 million to $500 million that you're contemplating potentially deferring or cutting at the regulated businesses, should I assume that there's a similar sort of percentage breakdown of operating versus capital cost as you identified on the Genco?.

No, in terms of those numbers Greg, that we mentioned, those are primarily capital versus the other had a more meaningful opponent and components. But the numbers I gave was primarily capital for under regulated businesses.

Thank you. And then, you said on the pension that Missouri has a tracker. I would presume that Missouri is the vast majority, and may be it's a wrong presumption, but it is a vast majority of your pension expenses, what percentage of pension is in Missouri versus in other areas, whether there will be some lagging effect, because you have regulatory lagging in Illinois, where you'd have to manage it because it is a Genco?

Sure. In Missouri, I would ask about half, little more flattish roughly is the pension and post retirement benefits in that regulated business.

And then how much in Illinois versus how much at Genco?

Yes, with regard to that specific breakdown, I'm not quite sure maybe about 25% would be my estimate in terms of the Illinois regulated operations with Genco being the other 25%. But on that one, we will have to get back to you more specifically on that Greg.

I'll talk to you about it. Final question, then you may not be able to answer this on the call, but if I think about your analyst presentation you gave in January and the earnings aspiration that you laid out to them, power prices were higher in Powder River Basin, coal prices were lower at least based on fuller curves. So, as we look at generation market pricing today and we look at Powder River Basin coal prices today, would you still be able to endorse the sort of $4 earning power guidance you gave for... I think it was 2011 today if you were looking the current order curves and reassessing that guidance?

Greg, I think you have answered a little bit of your own question at the outset. As we said here today, its probably difficult to say how all of those factors sort of weigh in because now when you look at the changes in the power prices but as well as the coal commodity prices, but obviously we are modifying some of our short-term spending plans that we laid out in January. And so, a lot of things have changed and so we are in the process of recalibrating all of our plans across our entire enterprise and we will be able to give you a better look at all of these things when we come out and talk about our future guidance in early next year.

Alright. I do have one more question, I apologize. The... if the CapEx cuts and the O&M cuts here are meaningful and from my perspective necessary, the stock is trading frankly at the yield its trading because of investor concern over whether in a long run a company who is evolved from being a regulated company... primarily a regulated to a company that's got a significant portion of its earnings now coming from lot of the cyclical business and I think there was an implicit question as to whether the current dividend policy is the correct policy, given your... the capital intensity of the business, the volatility of the cash flows. Can you comment on how you guys are thinking about that, obviously the CapEx and O&M because you have identified, created a lot of head room in the short run, but how are you thinking about dividend policy in the long run?

Sure. I guess I'll answer that in a couple of ways. Number one, as we laid out in January and as we still sit here today, we see that primary growth from our business is really going still come from our regulated business. That's where we are allocating the majority of our capital and that's where we expect to see our growth from what are currently depressed levels up to, to more appropriate levels in the future. And so, our level of cash flows that have come from across our businesses are going to become more regulated compared to where they are today, at least this is what our expectations are. Secondly, with regard to how that then implies... impact the dividends as we discussed in January, we believe that with greater contribution from the regulated businesses, from an earnings perspective as well as from a cash flow perspective, that obviously gives greater comfort in terms of our overall dividend levels. And of course as you point out with our current stock levels the yield is obviously very high, but the bottom line is as you said, we have created meaningful head room in terms of the capital expenditure reductions that we are making as well as O&M. We were mindful of our dividend payout and as we recalibrate those plans, we will continue to be mindful and focused on maintaining a strong dividend for our shareholders. So really beyond that, I think that as we discussed in the past, our policy is to remain focused on that and we will continue to be and of course we can't guarantee any future dividend levels, but as you know that's an important aspect of our investment profile and we will continue to be mindful of that.

Thank you Warner.

Of course.

Thank you. Our next question comes from the line of Hashar Kin [ph] with SAP Capital Management. Please go ahead.

Good morning. Warner if... could you just... if I look back to what guidance was provided earlier this year and what's the changes nearly all of the shortfall is coming from the Illinois regulated area and could you just go over why there is like a $0.20 drag from what you contemplated in the beginning to present, I just wanted to get a sense of as to why the Illinois regulated operations fell apart?

Yes, and thanks Hashar [ph]. Yes and I think that's a good point. I would point to really three areas; one, we've talked a little bit about this quarter, certainly weather has a had a negative impact on the Illinois operations. Two, as we look over the entire year, bad debt expenses are higher than we had originally anticipated they will be and then thirdly, recall at the beginning of the year our Illinois regulated operations held at auction rate debt securities and we went in and refinance those when those markets became very destructive. So if you look at those three pieces and you look at the change in the Illinois earnings profile, those are impacting that. So as we look ahead while we're here with suggestion and experience from regulatory lag in terms of bad debt expenses as well as higher financing cost as we continue growing with more frequent rate cases in Illinois. We believe that those increased expenditures will ultimately have the opportunity to recover in the regulatory framework.

Let me ask you, in case of the rate case decision that you got recently, is there higher cost of debt and the bad debt expense recovery factored into it, or it was too late to include it into this rate case that got just decided?

Hashar, it is clearly the latter, they were not factored into the rate case of higher cost of capital with the refinancing or the increased bad debt expense that we have incurred this year.

Okay. And Warner, just wanted to, I think so I got a little bit missed these numbers. What is the free cash flow of short fall for 2008, it was like 1.455 in the Jan, I guess January presentation. What is it expected to be in '08?

We expect it now to be at the end of the year approximately $1 billion.

$1 billion. And that's what you expect in '09 as well?

I've not given the specifics for '09 at this point in time. Of course, our free cash flow, I gave you some of the numbers in terms of how they compared to 2008 spending levels and clearly if we execute all those plans, our level of spending in both the O&M and capital stand point will be meaningfully below 2008 levels.

Okay. And then, could you just remind us how much of this billion is being funded with the grip 401 equity and debt?

Yeah in general, about --

In '08

About a $100 million a year Hashar, comes from our grip program.

And the remaining 900 is coming from the debt?

Yes. It is principally debt re-financing is correct. Even through the credit facilities are terminated out long term.

Is it fair to say that the debt costs are running above 200 to 250 basis points higher than what was planned, if you look at it what you just, did some bond offerings recently?

Certainly, when you look at the most recent offering, those debt costs were probably 2 to 300 basis points what we had seen historically. And whether there'll be prospect remains to be seen, but certainly, we'd expect that as we said earlier, that the capital markets will continue to be disrupted and consequently we expect higher cost of capital still, as we go into 2009.

Okay. Thanks.

You are welcome.

Thank you. Our next question comes from the line of Yiktak Fung with Zimmer Lucas. Please go ahead.

Good morning.

Good morning.

With regards to the $50 million to $100 million decrease in... generation, are these... is that one time kind on MR, should we expect it to carry forward into 2010 and 2011?

I think with regard to the O&M, I wouldn't characterize it as necessarily one time O&M. As I said before, we're recalibrating all of our plans and so if you look at the plans that we laid out again in January, and see how they affect the plans that we'd originally expected to take place in '09, '10, '11, and '12 how that O&M ultimately rolls through those other years, frankly remains to be seen as we finished our work.

Okay. And the $350 million to $400 million other reduction and expenditures that's related to capital expenditures, how much of that is related to environmental?

Well, we haven't finalized those plans, we haven't turned to the specificity. We certainly pointed out that the most significant environmental project that is going on in the regulated business relates to our new scrubber project. And that's obviously, a meaningful expenditure that we have there, if you're talking about the regulated businesses. Was that your question?

No, I was actually talking about the unregulated, but that was kind of my next question.

Excuse me.

Warner obviously anticipated that one.

I think the other one with regard to the scrubber projects in our Illinois operations, we're gong to continue to move forward on those to meet the environmental regulations. Now, we maybe moving some of those capital expenditures in terms of what we're spending specifically in '09 and '10 a little bit, but the bottom line, we're going to meet those environmental requirements in Illinois.

Okay. There might be just one to two year slowdown on that, in the implementation of those scrubbers?

Right. I think that those numbers in general, when you look at what we have moved out, its probably$50 million to $100 million in terms of those scrubber projects. Now, keep in mind too, the other thing that we pointed out is that we're seeking a variance of an incremental $500 million that we were seeking to move outside of the 2009-2012 time frame, largely incremental with the numbers I just gave you. And we are awaiting to... we'll seek approval of that. So, that could be... while, that may not effect 2009, but could have a meaningful effect on '09 through '12.

With regards to Sioux scrubbers, it seems that the bulk of that $400 million to $500 million CapEx cuts related businesses is really just that scrubber right?

Well, I wouldn't characterize necessarily as the $400 million to $500 million or the bulk of that project in itself, it's a big piece certainly and in terms of environmental project, it was private, clearly the single biggest environmental project that we're doing on the regulated business.

And with that, I guess deferred the need for another rate case?

Well in terms of rate case, as you know again, we are in the middle of our existing rate case in Missouri and so I wouldn't necessarily say that these expenditures will impact our future rate case plans. As we said before, we expect to file more frequent rate cases in all of our jurisdictions and so it's too premature to certainly say that.

Does it cause anything to... do you have any like contracts or rate lined up to build these scrubber projects and does it cause anything to cancel these contracts that you have them?

Was your question do we have contracts to...

Do you have contracts to raise up to build these scrubbers and does it require you to I guess break these contracts in order to move these scrubbers project past 2009?

Well on the Coffeen and Duck Creek scrubbers, we are moving forward on those who were not affecting the contracts. On the Sioux contracts, we do have flexibility in the contract to delay the project. Our plan is to stop construction; complete the engineering of the project, and then when the engineering is a 100% completed at some point come back and complete the project. We haven't determined exactly when that will be.

And just one last question, you said that there were still some power unhedged for 2008, for fourth quarter, how much was that?

We've said that for 2008 well we have not hedged for the remainder of the years, its 2.5 megawatt hours of our generation across the enterprise.

Okay. Thank you very much.

Welcome.

Thank you. Our next question comes from the line of Paul Ridzon with KeyBanc Capital Markets. Please go ahead.

Good morning Warren.

Good morning Paul, how are you?

When are you going to file in Illinois? I'm sorry if I missed that.

Paul we have not stated when we are going to file in Illinois at this point in time. We said that we are evaluating when we're going to file the next rate case in Illinois. As you know we just wrapped our last one up just about a month or so ago. So we are evaluating that and we'll take a look at are capital on O&M expenditures and make a decision on that here sometime in the near future.

And you gave a lot of opportunities to reduce CapEx, have you finalized an '09 CapEx number or range yet?

No. Paul we have not. I think in terms of the unregulated generation piece of the business, we certainly were clear in terms of the plans that we were moving forward and executing there. We identified several meaningful opportunities in the regulated business. Those plans will be finalized later this year or early next and then we'll be able to give that to you when we come out later.

But over about 750 to 900 less than your previous subject to change?

Yes. I mean I think when you do that math what I just gave you, that's right, below 2008 levels throughout this, right.

And then I understand that some resurrection of care seems to be somewhat high legislative priority in Washington, what are you hearing on that front?

Gary, I know you've been closest to that, you want to touch on that one.

I have not heard anything on care. I think the focus today is on the economy and the election and environmental issues have kind of taken a backseat and I would not expect any new environmental legislation any time in the near future.

Okay. Thank you.

Welcome.

Thank you. Our next question comes from the line of Daniele Seitz with Seitz Research. Please go ahead.

I just want to ring regarding possibly due next filing in Illinois. Would you ask for an automatic rider on bad debts or is it something that you feel is temporary?

Yeah, Daniele. With regards to the bad debt rider, that's something that we've explored in the past and that's something we continue to look at in terms of future rate case filings. So, I wouldn't necessarily say that there's a lot of bad debt expense here, sort of one-time, it's too early to say at this point in time. Certainly, you've seen a meaningful increase and certainly a rider maybe a appropriate in those circumstances but we've not made a decision on that.

You don't anticipate to have some sort of a tally at the end of the year to start the year fresh, can you carry those bad debts for a while?

I guess, Daniele, in terms of carrying the bad debts I'm not quite sure I understand.

Of the expense dramatically as they come along, are you deferring some of them?

No, I mean in terms of the bad debt expenses we're certainly recognizing those as incurred and those are reflected in our financial results and so they are not being deferred. Of course in the next rate case we would seek recovery of these incremental revenues.

I understand. And just on the point of financing, do you anticipate that you may have to at the end of the year, you may have to issue equity, or is it something that you think the grip will be sufficient? So the 1 billion financing you were talking about?

Yes. That's right. In terms of the overall financing plan, as we said in the past and as we said early today, we are taking aggressive actions to do several things. One is certainly to reduce levels of spending to limit the need for incremental financings or to reduce the level of financings that we have to make across our enterprise during these choppy and turbulent markets. And so, we think those plans certainly go a long way in terms of what plans we may have to do in terms of equity, or really frankly debt financings. So, as we said earlier in the year, we had no plans for the rest of 2008 to issue equity. And as we sit right there, the answer to your question is we have no plans to issue any additional equity in 2008.

Thank you.

Thank you and our next question comes from the line of Michael Lapides with Goldman Sachs. Please go ahead.

Hey, guys. I apologize if this is rehashing stuff. I just want to make sure, I understand a handful of things, first of all, what are the major projects you're deferring in 2009, if you're going forward with Duck Creek and Coffeen?

Primarily, their plant maintenance projects that would have been done in 2009 are slipping in to 2010 and then we would expect projects that would have been done in 2010 to slip a year in to 2011 kind of just moving out the planned maintenance that we have on all of our large co-units. And then on the regulated business side, in addition the Sioux plant, because Care was vacated, we no longer had a requirement to complete that project, so we are going to defer the Sioux plant scrubber project for sometime.

Okay. I want to make sure you are saying roughly $400 million of lower CapEx at the non-regulated business, how much lower at the regulated?

Yes Michael, what we had said was that the $400 million to $500 million that we quoted earlier that was primarily all capital expenditures.

Right.

And so with that,... to answer your question its 400 to $500 million for the regulated business and then $350 million or $400 million of capital in the unregulated generation business.

Right. But the $400 million to $500 million at the regulated is capital enough, but in the number you just quoted on the non-regulated is also capital?

That's correct.

Okay. So,...

Remember on the O&M side, we also had quoted $50 million to $100 million on the unregulated generation business as well.

Okay. So, it's a net cut of over $750 million of capital for next year?

Well, two things; number one, we are executing on the plans for the unregulated generation business. Two, we expect to make meaningful reductions in the regulated business. Those plans will be finalized. And three, when you sum it all, when you look at both capital O&M as well as when you look at the incremental revenues that we make, the plan looks in excess of or close to $1 billion.

Okay. One last item, can you repeat what the expected output, megawatt output for '09 and beyond is likely to be at the non-regulated coal units?

At this time for 2009 O&M, we expect it to be around 33 million to 34 million megawatt hours.

Got it. Okay. Thanks.

We have not updated that beyond that.

Okay. Thank you, guys. Much appreciate it Warner.

You are welcome.

Thank you. Ladies and gentlemen, if you queued off, we ask that you limit yourself to one question. Thank you. And our next question comes from the line of Greg Koral [ph] with [indiscernible] Capital, please go ahead.

Thanks very much.

Good morning Greg.

Good morning. I was wondering if... back on the care issue, if the delays and spending you're seeking on various product, how would they... how would that impacted if the core were to reinstate care?

Yes, Greg in Illinois we're subject to a multi pollutant standard legislated by the state. However, we're seeking to defer some of the requirements of that. And as I said, we've gotten the support of the Illinois EPA, the Illinois EPA will not oppose the deferral. It's up to the pollution control board but we believe we have a fair chance of getting that requirements slipped.

Okay, and maybe if I could just ask one another. Its... as you went through the positive and negative drivers incremental on the call what I heard were on the positive side, additional megawatt hours of generation as well as some cost cuts, and on the negative side potential pension increases in Illinois and at the unregulated business and weakness in the economy, is it your intention to sort of be up guiding down on the EBITDA level on this call?

In this particular call, the message simply is to give you some of the key plans that we're moving forward with into 2009 to address the issues in the financial markets. Obviously, there are a lot of moving pieces as you just described including what we hope to use to obviously not just reduce some of the capital spend to give us greater financial flexibility in the markets. But beyond that with regard to 2009, what we've said is that we expect to come out in early 2009 after we... after trying in early February to provide you a more thorough outlook for 2009 and give you the specifics on EBITDA, earnings, and the like. So, we're here to give you some of the meaningful pieces, some of the things that we're working on, and some of the proactive things we are doing in our business to address these conditions.

Thanks Warner.

Sure. I think we have time for one more question because we're running over time and others trying to be moving on to other calls, so if there is one more question we can take it otherwise we'll close out.

Okay and our next question comes from the line of Ben Sung, Luminous Management.

Hi, on the environmental CapEx reduction or deferral that you guys talked about, you said that you'd be taking other steps to make sure that you're admission is neutral, is that correct and if it is then what are the actions that you guys are taking to do that?

Hi, Ben. This is Warner Baxter. We have Chuck Naslund who is our President and CEO of Unregulated Generations. He will probably give you little more insight in terms of those specifics that we are talking about.

Yes, as far as keeping emissions neutral, the Illinois EPA is looking at a time frame of 2010 through 2020, so it's a long time horizon. Basically, we adjusted our plan so over that long time period we kept our SO2 nox emissions again neutral ton wise and that was actually not too difficult to do by tightening up on some of the facilities that were installing and getting better reduction out of them

Got it, thank you.

Thank you and I'll turn the call back over to management at this time.

Great. We want to thank you all for participating in this call this morning. Let me remind you again that this call is available through November 11th on playback 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. One final matter, as we announced on our second quarter call, Doug Fischer is now heading up our Investor Relations group and Bruce Steinke is focusing on his control responsibilities. And hence analyst inquiries should be directed to Doug rather than to Bruce. Media should call Susan Gallagher. Contact numbers are on the news release please. Again thanks for dialing in and we look forward to seeing you down at DEI later this week and early next.

Thank you ladies and gentlemen. This concludes the Ameren Corporation 2008 third quarter earnings conference call. The phone numbers for the replay are 303-590-3000 or 1-800-405-2236 followed by pass code 11121637 followed by "#". AEE would like to thank you for your participation, you may now disconnect. .