WEBVTT 00:00:00.000 --> 00:00:02.020 Welcome back to the Deep Dive. This is where 00:00:02.020 --> 00:00:04.500 we take the colossal machinery of modern life, 00:00:04.639 --> 00:00:07.099 the infrastructure, the finance, the history, 00:00:07.219 --> 00:00:10.320 and distill it down into the core facts and surprising 00:00:10.320 --> 00:00:13.220 insights that shape our world. Today, we are 00:00:13.220 --> 00:00:15.619 undertaking a deep dive into Ummer Incorporation. 00:00:15.900 --> 00:00:19.079 This company is, quite literally, the indispensable 00:00:19.079 --> 00:00:22.079 power engine for a huge swath of the American 00:00:22.079 --> 00:00:23.960 Midwest. When you think about infrastructure, 00:00:24.120 --> 00:00:27.120 utilities often feel like this monolithic, almost 00:00:27.120 --> 00:00:29.670 invisible force until... you know, your power 00:00:29.670 --> 00:00:31.829 bill or a storm hits. Right. But understanding 00:00:31.829 --> 00:00:34.229 the sheer scale and complexity of a company like 00:00:34.229 --> 00:00:36.890 Ameren is crucial, not just for financial literacy, 00:00:37.070 --> 00:00:39.070 but for understanding public health, environmental 00:00:39.070 --> 00:00:42.770 history, and state regulatory policy. Exactly. 00:00:43.090 --> 00:00:46.009 Ameren is listed on the NYSE under AEE. It's 00:00:46.009 --> 00:00:48.090 an S &P 500 component, and it operates across 00:00:48.090 --> 00:00:51.950 a staggering 64 ,000 square miles. 64 ,000. Yeah, 00:00:51.969 --> 00:00:54.149 stretching across central and eastern Missouri, 00:00:54.310 --> 00:00:56.070 and then the southern, well, the southern four 00:00:56.070 --> 00:00:57.929 -fifths of Illinois. Yeah. That service area 00:00:57.929 --> 00:00:59.969 alone. just defines the scope of their responsibility. 00:01:00.310 --> 00:01:02.710 And what does that translate to in terms of customer 00:01:02.710 --> 00:01:04.530 base? Because that is, I mean, that's the public 00:01:04.530 --> 00:01:06.790 trust we're talking about here. They serve approximately 00:01:06.790 --> 00:01:12.989 2 .4 million electric customers and about 900 00:01:12.989 --> 00:01:16.370 ,000 natural gas customers. Wow. When you look 00:01:16.370 --> 00:01:18.250 at those numbers, you move past just looking 00:01:18.250 --> 00:01:20.650 at a corporate logo and start seeing a critical 00:01:20.650 --> 00:01:24.209 historical entity. Emarin is a holding company, 00:01:24.390 --> 00:01:27.230 but its story is one of rapid consolidation built 00:01:27.230 --> 00:01:30.049 on infrastructure that is, in some cases, almost 00:01:30.049 --> 00:01:33.230 a century old. OK, let's unpack this. Our mission 00:01:33.230 --> 00:01:35.349 for this deep dive is to trace that history. 00:01:35.709 --> 00:01:37.689 To understand the corporate maneuvering that 00:01:37.689 --> 00:01:41.189 created this power giant in the 1990s and 2000s. 00:01:41.189 --> 00:01:43.549 And most critically, to grapple with the massive 00:01:43.549 --> 00:01:45.769 environmental and regulatory liabilities that 00:01:45.769 --> 00:01:48.010 come attached to operating such essential yet 00:01:48.010 --> 00:01:50.969 often ailing assets. Right. This is the story 00:01:50.969 --> 00:01:52.650 of keeping the lights on at a pretty significant 00:01:52.650 --> 00:01:55.489 cost. It really is. Utility formation is never 00:01:55.489 --> 00:01:58.129 a simple business launch. It's almost always 00:01:58.129 --> 00:02:01.469 a combination of deeply rooted, highly capital 00:02:01.469 --> 00:02:04.790 intensive local monopolies. And Ameren is the 00:02:04.790 --> 00:02:06.900 tech. textbook example of this, emerging from 00:02:06.900 --> 00:02:09.139 the convergence of two significant players in 00:02:09.139 --> 00:02:11.879 the late 1990s. That's right. The formal birth 00:02:11.879 --> 00:02:14.740 of Ameren Corporation occurred on December 31st, 00:02:14.740 --> 00:02:18.259 1997. New Year's Eve. Yeah, exactly. And it was 00:02:18.259 --> 00:02:21.460 a merger of two previously NYSE listed companies, 00:02:21.900 --> 00:02:24.680 Union Electric Company, or UE, out of St. Louis, 00:02:24.759 --> 00:02:26.819 Missouri, and Central Illinois Public Service 00:02:26.819 --> 00:02:30.500 Company, C -I -P -S -D -O, Inc., from Springfield, 00:02:30.560 --> 00:02:32.550 Illinois. And the scale difference between the 00:02:32.550 --> 00:02:34.629 two precursors is important to note here. I mean, 00:02:34.689 --> 00:02:36.669 Union Electric was listed at the time of the 00:02:36.669 --> 00:02:39.569 merger as roughly twice the size of CIPSO. It 00:02:39.569 --> 00:02:41.930 was. This wasn't a merger of equals in terms 00:02:41.930 --> 00:02:44.789 of asset base, but rather the creation of a unified 00:02:44.789 --> 00:02:47.479 regional powerhouse. And the financial context 00:02:47.479 --> 00:02:49.740 really explains why this merger happened when 00:02:49.740 --> 00:02:51.639 it did. The initial agreement was actually struck 00:02:51.639 --> 00:02:54.740 in 1995, and it was driven heavily by the need 00:02:54.740 --> 00:02:57.900 to manage massive historical liabilities, specifically 00:02:57.900 --> 00:03:00.379 the long term debt these companies had accrued. 00:03:00.400 --> 00:03:02.939 Mostly from building things out in the 80s. Primarily 00:03:02.939 --> 00:03:04.699 from the expansive infrastructure build outs 00:03:04.699 --> 00:03:07.259 of the 1980s. Yes. Can you put some numbers on 00:03:07.259 --> 00:03:10.120 that debt? Because it illustrates the sheer weight 00:03:10.120 --> 00:03:12.139 they were carrying. Certainly. So Union Electric, 00:03:12.439 --> 00:03:15.340 despite having assets listed near $600 million, 00:03:15.740 --> 00:03:18.520 carried substantial long -term debt around $1 00:03:18.520 --> 00:03:22.400 .8 billion. Wow. Three times its asset value. 00:03:22.520 --> 00:03:24.439 Exactly. And while that's significant, it was 00:03:24.439 --> 00:03:26.979 actually a reduction from a staggering high of 00:03:26.979 --> 00:03:30.400 $2 .5 billion in debt earlier in the 1980s. So 00:03:30.400 --> 00:03:31.900 they were already trying to dig themselves out. 00:03:32.000 --> 00:03:35.099 They were. And CIPSEO was similarly leveraged. 00:03:35.099 --> 00:03:38.610 It had assets around $210 million. but was carrying 00:03:38.610 --> 00:03:41.569 nearly half a billion dollars in long -term debt 00:03:41.569 --> 00:03:44.189 from that same period. So the merger wasn't just 00:03:44.189 --> 00:03:46.330 about operational synergy. It was a financial 00:03:46.330 --> 00:03:49.169 consolidation strategy. I mean, combining forces 00:03:49.169 --> 00:03:51.949 lets them leverage scale, refinance debt under 00:03:51.949 --> 00:03:55.229 better terms, and maybe stabilize future rates 00:03:55.229 --> 00:03:58.050 by spreading those costs over a much bigger customer 00:03:58.050 --> 00:04:01.060 base. Precisely. They were seeking economy of 00:04:01.060 --> 00:04:03.219 scale to manage these substantial historical 00:04:03.219 --> 00:04:06.060 obligations and, of course, the ongoing need 00:04:06.060 --> 00:04:08.780 for capital expenditure. So once the merger was 00:04:08.780 --> 00:04:12.120 approved, they needed a new unifying corporate 00:04:12.120 --> 00:04:15.699 identity. And they settled on Ameren. Why such 00:04:15.699 --> 00:04:18.639 a broad, national sounding name like American 00:04:18.639 --> 00:04:22.379 Energy, especially for two distinctly Midwestern 00:04:22.379 --> 00:04:24.939 utilities? It's a classic corporate naming convention 00:04:24.939 --> 00:04:27.160 of the late 90s, isn't it? It's a portmanteau 00:04:27.160 --> 00:04:29.899 of American Energy. Right. It signaled ambition 00:04:29.899 --> 00:04:32.899 and scale beyond their immediate geographic borders, 00:04:33.100 --> 00:04:35.899 even if their operations remain local. Following 00:04:35.899 --> 00:04:37.680 the merger, the name sort of reflected their 00:04:37.680 --> 00:04:41.019 origins. Union Electric became Amerine UE, which 00:04:41.019 --> 00:04:44.300 is now Amerine Missouri, and CIPSCO became Amerine. 00:04:44.329 --> 00:04:47.430 Before Aaron, there was Union Electric. And this 00:04:47.430 --> 00:04:49.350 company wasn't just connecting wires. It was 00:04:49.350 --> 00:04:51.389 fundamentally shaping the physical landscape 00:04:51.389 --> 00:04:54.310 and, I mean, the hydrology of Missouri. Let's 00:04:54.310 --> 00:04:55.790 look at the infrastructure projects that define 00:04:55.790 --> 00:04:58.389 their legacy. The story starts deep in the infrastructure 00:04:58.389 --> 00:05:02.850 age. The most monumental project was the 1929 00:05:02.850 --> 00:05:06.009 completion of the Bagnell Dam on the Osage River. 00:05:06.779 --> 00:05:09.540 This was a massive undertaking, generating almost 00:05:09.540 --> 00:05:13.360 175 megawatts of crucial hydroelectricity. Okay, 00:05:13.399 --> 00:05:15.819 but defining legacy is geographical, right? Yeah. 00:05:15.879 --> 00:05:17.759 It created the Lake of the Ozarks. It created 00:05:17.759 --> 00:05:20.439 the Lake of the Ozarks. That's a staggering civil 00:05:20.439 --> 00:05:23.459 engineering feat that had unintended massive 00:05:23.459 --> 00:05:25.699 consequences for recreation and development. 00:05:25.899 --> 00:05:27.899 I mean, it's a huge tourist destination. Absolutely. 00:05:27.959 --> 00:05:30.839 The Lake of the Ozarks has 1 ,400 miles. That's 00:05:30.839 --> 00:05:34.839 2 ,300 kilometers of shoreline. 1 ,400 miles. 00:05:35.120 --> 00:05:37.399 Think about that. in Missouri, through the ownership 00:05:37.399 --> 00:05:40.100 of that dam, effectively manages a coastline 00:05:40.100 --> 00:05:42.420 larger than the state of California's. That's 00:05:42.420 --> 00:05:44.459 unbelievable. Their operational scope extends 00:05:44.459 --> 00:05:47.279 far beyond electricity into federal water management 00:05:47.279 --> 00:05:50.000 and, you know, shoreline regulation. And they 00:05:50.000 --> 00:05:51.920 continued their hydro expansion pretty early 00:05:51.920 --> 00:05:55.459 on. Two years later, in 1931, Union Electric 00:05:55.459 --> 00:05:59.379 acquired the Keokuk Dam in Iowa. This added another 00:05:59.379 --> 00:06:03.970 134 megawatts of hydroelectric capacity. What 00:06:03.970 --> 00:06:06.410 was technologically impressive here was that 00:06:06.410 --> 00:06:08.930 the power was successfully carried over a significantly 00:06:08.930 --> 00:06:11.730 greater distance than previous attempts. So that 00:06:11.730 --> 00:06:13.889 signaled their edge in long distance transmission, 00:06:14.129 --> 00:06:15.930 which is really the groundwork for the modern 00:06:15.930 --> 00:06:18.209 grid. It laid the groundwork for the modern regional 00:06:18.209 --> 00:06:21.250 grid structure. Absolutely. Union Electric wasn't 00:06:21.250 --> 00:06:23.519 solely focused on power generation, though. They 00:06:23.519 --> 00:06:26.879 diversified early into natural gas. By the 1950s, 00:06:26.879 --> 00:06:29.980 yes. Union Electric had expanded into gas distribution, 00:06:30.279 --> 00:06:33.079 particularly around Alton, Illinois. They grew 00:06:33.079 --> 00:06:35.560 to become the third largest natural gas distributor 00:06:35.560 --> 00:06:37.980 in the entire state of Missouri, adding another 00:06:37.980 --> 00:06:40.600 layer of complex utility regulation and infrastructure 00:06:40.600 --> 00:06:43.100 to their portfolio. Then we shift to the pump 00:06:43.100 --> 00:06:45.220 storage model, which is a high -tech solution 00:06:45.220 --> 00:06:47.220 for storing energy that we talk about a lot today, 00:06:47.279 --> 00:06:50.569 but this was back in the 60s. It was. In 1963, 00:06:50.790 --> 00:06:54.449 they completed the Tarrin Sock Plant, a 350 megawatt 00:06:54.449 --> 00:06:57.290 pumped storage facility in Reynolds County, Missouri. 00:06:57.490 --> 00:07:00.389 This was a massive technical achievement. It 00:07:00.389 --> 00:07:04.149 involves pumping water uphill during times of 00:07:04.149 --> 00:07:06.350 low demand and then releasing it through turbines 00:07:06.350 --> 00:07:09.290 when peak power is needed. It's basically a giant 00:07:09.290 --> 00:07:11.449 water battery. A giant water battery. However, 00:07:11.689 --> 00:07:14.550 as we will discuss later, Tower Msoc is now intrinsically 00:07:14.550 --> 00:07:16.970 linked to one of Ameren's most damaging incidents. 00:07:17.329 --> 00:07:19.769 Right. And finally, the move into nuclear power, 00:07:19.910 --> 00:07:22.589 establishing themselves as a true multi -fuel 00:07:22.589 --> 00:07:25.449 generating company. In 1984, the Callaway Nuclear 00:07:25.449 --> 00:07:28.069 Generating Station began operations, providing 00:07:28.069 --> 00:07:32.670 11 ,143 megawatts of highly reliable, you know, 00:07:32.670 --> 00:07:35.290 baseload power. So decades before the Ameren 00:07:35.290 --> 00:07:37.870 merger, Union Electric had already built an extraordinarily 00:07:37.870 --> 00:07:41.470 diverse and large -scale asset base. hydro, gas 00:07:41.470 --> 00:07:44.470 distribution, pump storage, and nuclear. So with 00:07:44.470 --> 00:07:46.689 that foundation set in 1997, the next decade 00:07:46.689 --> 00:07:48.750 was really defined by Ameren's aggressive consolidation 00:07:48.750 --> 00:07:51.389 strategy, primarily focused on absorbing the 00:07:51.389 --> 00:07:53.610 rest of downstate Illinois. The groundwork for 00:07:53.610 --> 00:07:56.300 this was actually set much, much earlier. In 00:07:56.300 --> 00:08:00.879 1952, three Midwestern utilities, CIPS, Union 00:08:00.879 --> 00:08:03.540 Electric, and Illinois Power formed what was 00:08:03.540 --> 00:08:05.939 called the Midwest Power Pool. A power pool, 00:08:06.040 --> 00:08:08.279 okay. It was a non -minding agreement to share 00:08:08.279 --> 00:08:11.259 and pool energy for reliability. It established 00:08:11.259 --> 00:08:13.759 a technical and operational relationship that 00:08:13.759 --> 00:08:16.319 Ameren later capitalized on. And Ameren's corporate 00:08:16.319 --> 00:08:18.899 strategy seemed to be to acquire the entire pool. 00:08:19.139 --> 00:08:21.339 It sounds like they went on a shopping spree 00:08:21.339 --> 00:08:23.560 starting in the early 2000s. That's one way to 00:08:23.560 --> 00:08:26.160 put it. In 2003, they acquired Peoria -based 00:08:26.160 --> 00:08:28.680 Silcorp, which is Central Illinois Light Company, 00:08:28.819 --> 00:08:32.399 or Silco from AES Corporation. Silco was historically 00:08:32.399 --> 00:08:35.019 significant. It was noted for its financial stability 00:08:35.019 --> 00:08:37.860 as a pioneer utility that had continuously paid 00:08:37.860 --> 00:08:40.879 dividends since 1921. A very stable asset to 00:08:40.879 --> 00:08:43.860 acquire. Very. And this acquisition created Ameren 00:08:43.860 --> 00:08:46.399 Silco. So they acquired Silco, known for its 00:08:46.399 --> 00:08:48.620 financial reliability, and then immediately went 00:08:48.620 --> 00:08:50.659 after the third partner in that power pole. That 00:08:50.659 --> 00:08:53.059 happened in 2004 with the acquisition of the 00:08:53.059 --> 00:08:56.259 Illinois Power Company, or IP, from Denji Inc. 00:08:57.129 --> 00:08:59.490 Illinois Power was primarily a generating company, 00:08:59.690 --> 00:09:02.210 deriving almost all its electricity from coal 00:09:02.210 --> 00:09:05.090 plants in the late 1980s alongside its natural 00:09:05.090 --> 00:09:08.649 gas distribution. IP was then reorganized into 00:09:08.649 --> 00:09:11.950 Ameren IP. This purchase was the definitive move 00:09:11.950 --> 00:09:14.669 then. It essentially cemented Ameren's position 00:09:14.669 --> 00:09:16.909 as the primary investor -owned power company 00:09:16.909 --> 00:09:19.450 covering the entire southern four -fifths of 00:09:19.450 --> 00:09:21.850 Illinois. Absolutely. You had three... Major 00:09:21.850 --> 00:09:24.309 Illinois utilities, each with its own history, 00:09:24.450 --> 00:09:26.409 its own rate structures, infrastructure, and 00:09:26.409 --> 00:09:28.570 debt, all brought under the Arm & Holding Company 00:09:28.570 --> 00:09:30.830 umbrella in really quick succession. And that 00:09:30.830 --> 00:09:32.230 must have led to some kind of administrative 00:09:32.230 --> 00:09:35.049 mess. It led to an inevitable administrative 00:09:35.049 --> 00:09:37.429 restructuring in 2010. And this restructuring 00:09:37.429 --> 00:09:39.549 is crucial for understanding the consumer landscape 00:09:39.549 --> 00:09:42.690 today. It is. In 2010, the three Illinois operating 00:09:42.690 --> 00:09:46.190 companies, Marin CIPS, Amerin Silco, and Amerin 00:09:46.190 --> 00:09:49.090 IP, were legally merged into a single entity. 00:09:49.759 --> 00:09:52.360 the Ameren Illinois Company. This was a major 00:09:52.360 --> 00:09:54.299 efficiency move for management and operations. 00:09:54.779 --> 00:09:57.080 But wait, if they merged three different companies, 00:09:57.159 --> 00:09:59.220 they must have had three different sets of historical 00:09:59.220 --> 00:10:03.019 costs and regulatory agreements. How does that 00:10:03.019 --> 00:10:05.519 translate to the consumer today? That's the complex 00:10:05.519 --> 00:10:08.500 part. While it's one operational entity, the 00:10:08.500 --> 00:10:10.700 service territory is still segmented into three 00:10:10.700 --> 00:10:14.240 distinct rate zones. Zone 1, Zone 2, and Zone 00:10:14.240 --> 00:10:17.049 3. Right. And these zones correspond precisely 00:10:17.049 --> 00:10:19.009 to the service areas of the former individual 00:10:19.009 --> 00:10:22.490 companies. The reason this persists is that historical 00:10:22.490 --> 00:10:25.730 infrastructure investments, localized debt obligations, 00:10:25.909 --> 00:10:28.789 and specific regulatory decisions were made at 00:10:28.789 --> 00:10:31.730 the company level decades ago. So those costs 00:10:31.730 --> 00:10:34.149 are legally baked into the rates for the customers 00:10:34.149 --> 00:10:36.409 in those specific areas. Exactly. Meaning your 00:10:36.409 --> 00:10:38.830 neighbor across the rate zone line might have 00:10:38.830 --> 00:10:41.289 a fundamentally different cost structure, even 00:10:41.289 --> 00:10:43.879 if the power lines look exactly the same. That 00:10:43.879 --> 00:10:46.480 detail perfectly illustrates the challenge of 00:10:46.480 --> 00:10:49.879 deregulation and utility consolidation. You can 00:10:49.879 --> 00:10:52.120 consolidate the infrastructure, but you can't 00:10:52.120 --> 00:10:54.879 easily erase decades of varied financial history 00:10:54.879 --> 00:10:57.340 that were approved by regulators. It's fascinating. 00:10:57.580 --> 00:10:59.659 On the Missouri side, the change was simpler. 00:10:59.940 --> 00:11:04.139 On that same date in 2010, Amerinew E. formally 00:11:04.139 --> 00:11:06.460 changed its name to the Amerine Missouri Company. 00:11:06.799 --> 00:11:09.740 So we have a clear picture of how this corporate 00:11:09.740 --> 00:11:12.990 giant was assembled. through decades of massive, 00:11:13.129 --> 00:11:15.870 diverse infrastructure building, followed by 00:11:15.870 --> 00:11:18.889 a rapid debt management driven acquisition phase 00:11:18.889 --> 00:11:22.029 that consolidated nearly all non -Chicago power 00:11:22.029 --> 00:11:24.789 assets in the region. That's the story in a nutshell. 00:11:25.049 --> 00:11:27.330 OK, so now we move from the history books to 00:11:27.330 --> 00:11:29.929 the current operational reality. Here's where 00:11:29.929 --> 00:11:32.840 it gets really interesting. The day -to -day 00:11:32.840 --> 00:11:35.460 scope of Ameren is immense. I mean, it involves 00:11:35.460 --> 00:11:37.840 federal dam regulation, nuclear asset management, 00:11:37.960 --> 00:11:41.059 and operating a truly massive, complex, high 00:11:41.059 --> 00:11:43.159 -voltage grid. Let's start with the service area 00:11:43.159 --> 00:11:45.580 detail. Ameren, Illinois and Ameren, Missouri 00:11:45.580 --> 00:11:47.759 distribute power and gas across their designated 00:11:47.759 --> 00:11:50.279 territories, which includes St. Louis and vast 00:11:50.279 --> 00:11:52.799 stretches of central and southern Illinois. But 00:11:52.799 --> 00:11:55.340 we need to stress that key exclusion again. Right, 00:11:55.379 --> 00:11:57.659 they don't serve Chicago. They specifically exclude 00:11:57.659 --> 00:11:59.740 the most densely populated region, the Chicago 00:11:59.740 --> 00:12:02.159 metropolitan area. Why is that distinction so 00:12:02.159 --> 00:12:04.840 important? Because it defines Ameren's operational 00:12:04.840 --> 00:12:08.259 profile. The utility serving Chicago, which is 00:12:08.259 --> 00:12:11.039 ComEd, deals with intense population density 00:12:11.039 --> 00:12:14.460 over a small area. That requires specific investments 00:12:14.460 --> 00:12:17.750 in urban infrastructure. Ameren, by contrast, 00:12:18.049 --> 00:12:21.250 manages a sprawling territory. So their challenge 00:12:21.250 --> 00:12:23.370 is distance. Their challenge is scale and distance, 00:12:23.710 --> 00:12:26.629 not hyperdensity. They require enormous investment 00:12:26.629 --> 00:12:29.769 in high voltage transmission and substation infrastructure 00:12:29.769 --> 00:12:33.190 to reach smaller dispersed populations across 00:12:33.190 --> 00:12:36.210 rural and suburban areas. And as this massive 00:12:36.210 --> 00:12:38.490 holding company, what are the primary points 00:12:38.490 --> 00:12:40.470 of the corporate machine today? Ameren Corporation 00:12:40.470 --> 00:12:43.840 holds four major subsidiaries. Ameren, Missouri, 00:12:44.100 --> 00:12:46.940 which serves 1 .2 million power and about 110 00:12:46.940 --> 00:12:49.659 ,000 gas customers, primarily in the St. Louis 00:12:49.659 --> 00:12:52.279 metro. Okay. Then there's Ameren, Illinois, which 00:12:52.279 --> 00:12:54.220 manages that consolidated Illinois territory 00:12:54.220 --> 00:12:56.480 we talked about, Ameren Transmission Company, 00:12:56.679 --> 00:12:58.840 and Ameren Services, which handles centralized 00:12:58.840 --> 00:13:01.659 support functions like IT and HR. The transmission 00:13:01.659 --> 00:13:03.799 lines themselves are the backbone of the operation. 00:13:04.350 --> 00:13:07.330 We listed a variety of voltages, 345 kV, 230 00:13:07.330 --> 00:13:12.490 kV, 161 kV, down to 34 .5 kV. Why is managing 00:13:12.490 --> 00:13:15.230 that complexity of varying voltage levels such 00:13:15.230 --> 00:13:18.610 a huge undertaking? Well, it matters intensely 00:13:18.610 --> 00:13:21.570 for reliability and stability. The high voltages, 00:13:21.870 --> 00:13:25.470 like 345 kV and 230 kV, those are the superhighways. 00:13:25.590 --> 00:13:28.370 They carry bulk power over vast distances from 00:13:28.370 --> 00:13:30.710 generation plants like Callaway Nuclear or Labadee 00:13:30.710 --> 00:13:33.450 Coal to major load centers. And the lower voltages. 00:13:33.669 --> 00:13:37.129 The lower voltages, like 69 kV and 34 .5 kV, 00:13:37.289 --> 00:13:39.809 act as the local feeder roads, distributing power 00:13:39.809 --> 00:13:42.409 from substations to communities. Managing this 00:13:42.409 --> 00:13:44.990 complex, multi -tiered network requires precise 00:13:44.990 --> 00:13:47.590 monitoring, sophisticated software, and a massive 00:13:47.590 --> 00:13:50.210 capital outlay to meet mandatory NERC standards. 00:13:50.090 --> 00:13:52.549 standards. NERC being the North American Electric 00:13:52.549 --> 00:13:55.269 Reliability Corporation. That's right. If a 345 00:13:55.269 --> 00:13:58.210 KLV line fails, the cascade effect can be regional. 00:13:58.389 --> 00:14:00.669 It's a huge responsibility. Let's pivot to the 00:14:00.669 --> 00:14:03.009 energy portfolio. Like all utilities, Ameren 00:14:03.009 --> 00:14:04.909 has faced regulatory pressure to transition away 00:14:04.909 --> 00:14:07.350 from coal and integrate renewables. What steps 00:14:07.350 --> 00:14:09.129 have they taken to diversify their generation 00:14:09.129 --> 00:14:12.129 mix? One early and critical move came in 2009. 00:14:12.990 --> 00:14:16.570 Amerinewe committed to purchasing 102 megawatts 00:14:16.570 --> 00:14:20.149 of wind power from Phase 2 of Horizon Wind Energy's 00:14:20.149 --> 00:14:23.789 Pioneer Prairie Wind Farm in Iowa. OK, 102 megawatts. 00:14:23.789 --> 00:14:25.870 And this was important because it fulfilled a 00:14:25.870 --> 00:14:28.049 specific regulatory commitment, right? This wasn't 00:14:28.049 --> 00:14:30.370 just them being proactive. That's a key point. 00:14:30.879 --> 00:14:33.200 It fulfilled a specific commitment Maranui had 00:14:33.200 --> 00:14:36.480 made to Missouri state regulators, adding a 100 00:14:36.480 --> 00:14:39.059 milliw of renewable capacity to serve Missouri 00:14:39.059 --> 00:14:42.220 customers by 2010. So this wasn't just a corporate 00:14:42.220 --> 00:14:44.399 choice. It was meeting a state mandated goal. 00:14:44.659 --> 00:14:47.860 That 100 milliw is enough to power tens of thousands 00:14:47.860 --> 00:14:50.500 of homes. But in the context of their total generation 00:14:50.500 --> 00:14:55.419 capacity, which includes the 11 ,143 milliw Callaway 00:14:55.419 --> 00:14:57.700 nuclear plant, it's still a small piece of the 00:14:57.700 --> 00:14:59.940 pie. It illustrates the incremental nature of 00:14:59.940 --> 00:15:02.759 utility transition. But the most unique and complex 00:15:02.759 --> 00:15:05.179 asset they manage is their hydroelectric system, 00:15:05.500 --> 00:15:07.860 particularly the Bagnell Dam and the Lake of 00:15:07.860 --> 00:15:09.860 the Ozarks. The coastline bigger than California's. 00:15:09.860 --> 00:15:12.519 Exactly. This is where Ameren's regulatory reach 00:15:12.519 --> 00:15:15.220 extends beyond power and into environmental and 00:15:15.220 --> 00:15:18.120 really municipal governance. How does their responsibility 00:15:18.120 --> 00:15:20.940 for the Lake of the Ozarks go beyond just generating 00:15:20.940 --> 00:15:24.220 electricity? Well, Ameren, Missouri, owns the 00:15:24.220 --> 00:15:28.080 dam and is federally licensed by FERC, the Federal 00:15:28.080 --> 00:15:30.320 Energy Regulatory Commission, to operate the 00:15:30.320 --> 00:15:34.220 facility. That license dictates water level management, 00:15:34.299 --> 00:15:37.059 which has huge implications for everything from 00:15:37.059 --> 00:15:41.019 flood control to recreational boating. So they're 00:15:41.019 --> 00:15:43.460 managing the lake itself. But because the creation 00:15:43.460 --> 00:15:45.879 of the lake was tied to the creation of the utility, 00:15:46.340 --> 00:15:49.320 Ameren also regulates all development within 00:15:49.320 --> 00:15:52.039 what's called the Osage project boundary. So 00:15:52.039 --> 00:15:54.159 they're essentially the property authority for 00:15:54.159 --> 00:15:56.299 1 ,400 miles of shoreline. Effectively, yes. 00:15:56.480 --> 00:15:58.860 They are responsible for issuing permits for 00:15:58.860 --> 00:16:01.379 boat docks, seawalls, breakwaters, and other 00:16:01.379 --> 00:16:03.679 permanent structures. They maintain a dedicated 00:16:03.679 --> 00:16:06.299 lake and shoreline protection hotline and run 00:16:06.299 --> 00:16:08.779 programs like Adopt the Shoreline for litter 00:16:08.779 --> 00:16:11.509 control. That's not typical utility work. That's 00:16:11.509 --> 00:16:13.850 quasi -governmental. It is, and it's a constant 00:16:13.850 --> 00:16:16.090 source of friction because every lakeside property 00:16:16.090 --> 00:16:18.529 owner is dealing with a power company that acts 00:16:18.529 --> 00:16:20.990 as their zoning board. That's a huge burden of 00:16:20.990 --> 00:16:23.669 public relations and regulatory compliance that 00:16:23.669 --> 00:16:26.070 is entirely separate from simply delivering electrons. 00:16:27.319 --> 00:16:30.120 Speaking of structure, Ameren is a major utility, 00:16:30.299 --> 00:16:32.320 so its ownership must reflect that stability. 00:16:32.539 --> 00:16:35.700 That's right. As of 2017 data, Ameren shares 00:16:35.700 --> 00:16:38.379 are predominantly held by institutional investors. 00:16:39.100 --> 00:16:41.440 We are talking about the largest fund managers 00:16:41.440 --> 00:16:45.090 in the world, Vanguard Group, BlackRock. State 00:16:45.090 --> 00:16:47.950 Street Corporation. The usual suspects. The usual 00:16:47.950 --> 00:16:50.269 suspects. They invest in utilities because they 00:16:50.269 --> 00:16:52.970 are stable, regulated entities that provide reliable 00:16:52.970 --> 00:16:55.389 dividends and predictable cash flow, which is 00:16:55.389 --> 00:16:57.309 exactly what these massive institutional funds 00:16:57.309 --> 00:16:59.789 are looking for. Moving from operations to corporate 00:16:59.789 --> 00:17:03.029 evolution. How is Ameren preparing for the future 00:17:03.029 --> 00:17:05.829 grid? They seem to be making investments in innovation 00:17:05.829 --> 00:17:09.339 rather than just relying on legacy assets. That 00:17:09.339 --> 00:17:11.640 is necessary given the complexity of their aging 00:17:11.640 --> 00:17:14.839 network. In 2015, Ameren took a significant step 00:17:14.839 --> 00:17:17.279 by becoming the first major energy company to 00:17:17.279 --> 00:17:19.539 open an innovation center at the research park 00:17:19.539 --> 00:17:22.480 at the University of Illinois at Urbana -Champaign. 00:17:22.579 --> 00:17:25.180 What's the practical benefit of a utility opening 00:17:25.180 --> 00:17:26.819 an innovation center like that? What are they 00:17:26.819 --> 00:17:29.940 working on? It signals a dedication to modernizing 00:17:29.940 --> 00:17:32.859 the grid. Specifically, they're focusing on smart 00:17:32.859 --> 00:17:36.240 grid technology, cybersecurity, predictive maintenance, 00:17:36.559 --> 00:17:39.380 and integrating intermittent renewables like 00:17:39.380 --> 00:17:42.420 solar and wind effectively. So finding ways to 00:17:42.420 --> 00:17:44.960 make their vast, sprawling infrastructure more 00:17:44.960 --> 00:17:48.400 reliable and resilient. Exactly. Especially against 00:17:48.400 --> 00:17:50.960 severe weather events, which are becoming more 00:17:50.960 --> 00:17:53.559 frequent. And on the human resources side, they 00:17:53.559 --> 00:17:55.559 have received recognition for their workplace 00:17:55.559 --> 00:17:58.410 environment. which suggests... they're investing 00:17:58.410 --> 00:18:00.970 in talent retention. That is key for a technical 00:18:00.970 --> 00:18:04.230 enterprise like this. In 2016, Ameren was cited 00:18:04.230 --> 00:18:07.410 as 10th on Business Insider's list of best energy 00:18:07.410 --> 00:18:09.630 companies to work for in America. That's pretty 00:18:09.630 --> 00:18:12.230 high. It is. And the statistic that jumps out 00:18:12.230 --> 00:18:15.029 is that 74 % of employees felt their job had 00:18:15.029 --> 00:18:18.349 high meaning. In an industry facing massive workforce 00:18:18.349 --> 00:18:21.130 turnover, retaining skilled engineers and technical 00:18:21.130 --> 00:18:23.769 staff is absolutely critical to maintaining complex 00:18:23.769 --> 00:18:26.450 facilities like nuclear plants and major dams. 00:18:26.470 --> 00:18:28.509 Finally, Let's ground ourselves in the sheer 00:18:28.509 --> 00:18:30.930 financial weight of the company. Let's use, say, 00:18:31.069 --> 00:18:34.130 fiscal year 2020 data. The numbers confirm the 00:18:34.130 --> 00:18:38.029 scale. In FY 2020, Ameren reported revenues nearing 00:18:38.029 --> 00:18:42.529 $5 .8 billion. Their total assets were a colossal 00:18:42.529 --> 00:18:46.710 $32 .03 billion, which generated a net income 00:18:46.710 --> 00:18:50.170 of $871 million. And those assets aren't just 00:18:50.170 --> 00:18:52.569 sitting there. They require constant upkeep, 00:18:52.690 --> 00:18:56.049 continuous multibillion dollar capital expenditure 00:18:56.049 --> 00:18:58.349 cycles just to ensure that the lights stay on 00:18:58.349 --> 00:19:01.369 across 64000 square miles, while also trying 00:19:01.369 --> 00:19:03.869 to meet modern compliance standards. The maintenance 00:19:03.869 --> 00:19:06.210 cost of this legacy infrastructure is astronomical. 00:19:06.630 --> 00:19:08.970 We've established a marine scale and the historical 00:19:08.970 --> 00:19:11.490 debt load they inherited. Now we have to turn 00:19:11.490 --> 00:19:13.410 to the consequences of operating this massive 00:19:13.410 --> 00:19:16.160 aging infrastructure. The reality is that immense 00:19:16.160 --> 00:19:18.740 infrastructure carries immense risk, and Ameren 00:19:18.740 --> 00:19:20.819 has faced catastrophic failures and enormous 00:19:20.819 --> 00:19:23.220 regulatory penalties as a result. And we must 00:19:23.220 --> 00:19:26.039 start with the Tamsoc disaster. Right. The giant 00:19:26.039 --> 00:19:28.579 water battery. The Tamsoc pumped storage plant, 00:19:28.740 --> 00:19:31.160 which we noted earlier as a 1963 engineering 00:19:31.160 --> 00:19:33.779 marvel, became synonymous with negligence in 00:19:33.779 --> 00:19:37.099 December 2005. On December 14th, the upper reservoir 00:19:37.099 --> 00:19:40.240 failed catastrophically. The dam breached, unleashing 00:19:40.240 --> 00:19:42.240 over a billion gallons of water in less than 00:19:42.240 --> 00:19:46.240 half an hour. A billion gallons. That's an unimaginable 00:19:46.240 --> 00:19:49.089 volume of water. released as an environmental 00:19:49.089 --> 00:19:51.890 torrent impacting the natural landscape immediately 00:19:51.890 --> 00:19:54.750 downstream. The environmental damage was widespread 00:19:54.750 --> 00:19:57.490 and devastating. It caused extensive damage to 00:19:57.490 --> 00:19:59.970 the east fork of the Black River, and critically, 00:20:00.210 --> 00:20:03.049 it obliterated sections of Johnson's shut -in 00:20:03.049 --> 00:20:05.410 state park, which is one of Missouri's crown 00:20:05.410 --> 00:20:07.789 jewels for natural recreation. And the regulatory 00:20:07.789 --> 00:20:10.589 response must have been severe. FERC, the Federal 00:20:10.589 --> 00:20:13.369 Energy Regulatory Commission, fined Ameren $15 00:20:13.369 --> 00:20:17.089 million. But more importantly, the state of Missouri 00:20:17.289 --> 00:20:19.730 sued Ameren for actual and punitive damages. 00:20:20.109 --> 00:20:22.289 And what was the core allegation? The central 00:20:22.289 --> 00:20:24.829 allegation was that Ameren had recklessly operated 00:20:24.829 --> 00:20:27.910 the plant. The state argued the company prioritized 00:20:27.910 --> 00:20:30.789 maximizing power sales, running the pumps hard 00:20:30.789 --> 00:20:33.509 when energy prices were good over sound engineering, 00:20:33.670 --> 00:20:35.869 safety checks, and basic maintenance procedures. 00:20:36.210 --> 00:20:38.509 And the detail about the operational oversight, 00:20:38.890 --> 00:20:41.930 or lack thereof, is key to the negligence claim. 00:20:42.319 --> 00:20:44.619 It is a critical finding. During the pumping 00:20:44.619 --> 00:20:47.299 operations at the time of the failure, the plant 00:20:47.299 --> 00:20:50.500 was operated entirely by remote control. There 00:20:50.500 --> 00:20:53.019 was no one physically on site to monitor the 00:20:53.019 --> 00:20:56.460 water level sensors or respond to immediate warnings 00:20:56.460 --> 00:20:59.859 before the breach occurred. So a model that prioritized 00:20:59.859 --> 00:21:02.539 cost efficiency was directly linked to the catastrophe. 00:21:02.859 --> 00:21:05.279 Directly. What was the remediation and the ultimate 00:21:05.279 --> 00:21:08.759 cost? of this failure. The rebuilding was a monumental 00:21:08.759 --> 00:21:12.579 undertaking that cost Ameren $450 million. Almost 00:21:12.579 --> 00:21:14.200 half a billion dollars. They had to completely 00:21:14.200 --> 00:21:17.519 reconstruct the upper reservoir. When it reopened 00:21:17.519 --> 00:21:22.000 in 2010, the new 54 .5 -acre reservoir was constructed 00:21:22.000 --> 00:21:25.339 using roller -compacted concrete, or RCC, making 00:21:25.339 --> 00:21:28.240 it the largest RCC dam in North America, built 00:21:28.240 --> 00:21:30.720 to be inherently safer and more robust than the 00:21:30.720 --> 00:21:32.920 original structure. Moving from a physical disaster 00:21:32.920 --> 00:21:35.500 to a regulatory battle, Ameren has been repeatedly 00:21:35.500 --> 00:21:37.460 challenged over its compliance with the Clean 00:21:37.460 --> 00:21:40.160 Air Act, focusing heavily on its legacy coal 00:21:40.160 --> 00:21:42.980 plants. Let's unpack the specifics of the Rush 00:21:42.980 --> 00:21:45.579 Island plant litigation. This specific legal 00:21:45.579 --> 00:21:49.140 action began in 2011 when the U .S. EPA filed 00:21:49.140 --> 00:21:51.380 suit against Ameren, Missouri, concerning excess 00:21:51.380 --> 00:21:54.759 sulfur dioxide, or SO2, emissions from the Rush 00:21:54.759 --> 00:21:57.519 Island plant in Festus, Missouri. And the core 00:21:57.519 --> 00:22:00.700 issue wasn't the plant's age, but Ameren's actions 00:22:00.700 --> 00:22:03.519 while operating it. What exactly did the EPA 00:22:03.519 --> 00:22:06.859 allege Ameren did wrong? The allegations centered 00:22:06.859 --> 00:22:09.759 on specific environmental regulations. The EPA 00:22:09.759 --> 00:22:12.240 claimed Ameren undertook major modifications 00:22:12.240 --> 00:22:15.900 at Rush Island between 2007 and 2010. According 00:22:15.900 --> 00:22:18.099 to the Clean Air Act, if you undertake a major 00:22:18.099 --> 00:22:20.480 modification that causes a significant net emissions 00:22:20.480 --> 00:22:23.019 increase at an old facility, you trigger a whole 00:22:23.019 --> 00:22:25.339 set of rules. The new source review rules. Exactly. 00:22:25.420 --> 00:22:28.079 The prevention of significant deterioration or 00:22:28.079 --> 00:22:30.680 PSD provisions of the new source review program. 00:22:30.920 --> 00:22:32.400 And the requirement triggered by those rules 00:22:32.400 --> 00:22:34.960 is that you must install the best available pollution 00:22:34.960 --> 00:22:37.539 technology. You can't just do a patch job. That's 00:22:37.539 --> 00:22:40.140 it. The EPA argued Ameren made these changes 00:22:40.140 --> 00:22:42.359 without getting the required permits or installing 00:22:42.359 --> 00:22:44.900 the necessary pollution controls, effectively 00:22:44.900 --> 00:22:47.240 extending the plant's life and increasing its 00:22:47.240 --> 00:22:50.220 pollution footprint illegally. In January 2017, 00:22:50.680 --> 00:22:52.900 the district court agreed. They found them liable. 00:22:52.980 --> 00:22:56.079 The judge explicitly stated the company. violated 00:22:56.079 --> 00:22:58.019 the Clean Air Act without obtaining the necessary 00:22:58.019 --> 00:23:00.660 permits, installing best available pollution 00:23:00.660 --> 00:23:03.119 technology, and otherwise meeting applicable 00:23:03.119 --> 00:23:06.640 requirements. That is a definitive ruling. The 00:23:06.640 --> 00:23:10.059 judge then mandated the remedy, pollution controls. 00:23:10.359 --> 00:23:13.160 The court ordered Ameren to equip the Rush Island 00:23:13.160 --> 00:23:16.339 coal plant with scrubbers, the technology required 00:23:16.339 --> 00:23:20.880 to dramatically cut SO2 emissions. However, Ameren 00:23:20.880 --> 00:23:23.400 made a calculated corporate decision That speaks 00:23:23.400 --> 00:23:25.619 volumes about the economics of environmental 00:23:25.619 --> 00:23:28.200 compliance. Which was to close the plant entirely 00:23:28.200 --> 00:23:30.960 rather than pay for the retrofit. Yes. Ameren 00:23:30.960 --> 00:23:33.480 chose to close the Rush Island plant in 2024, 00:23:33.980 --> 00:23:37.400 15 years ahead of its anticipated scheduled operational 00:23:37.400 --> 00:23:40.420 lifespan, citing the massive expense of installing 00:23:40.420 --> 00:23:42.339 the pollution technology the court mandated. 00:23:42.680 --> 00:23:45.140 So it was financially simpler, and likely cheaper 00:23:45.140 --> 00:23:47.160 in the long run, to shut down the generation 00:23:47.160 --> 00:23:49.160 source than to comply. That's what their math 00:23:49.160 --> 00:23:51.660 told them. That decision sets an enormous precedent. 00:23:52.329 --> 00:23:55.230 The cost of compliance, even if court -ordered, 00:23:55.289 --> 00:23:58.609 can exceed the value of the asset. It does, but 00:23:58.609 --> 00:24:00.849 we should note a critical judicial complication 00:24:00.849 --> 00:24:03.430 tied to that ruling. The judge also attempted 00:24:03.430 --> 00:24:05.950 to order scrubbers installed on another Ameren 00:24:05.950 --> 00:24:08.490 facility, the Labadee plant, as part of the overall 00:24:08.490 --> 00:24:10.730 remedy. But that was overturned. A federal appeals 00:24:10.730 --> 00:24:13.410 court overturned that specific condition. Why 00:24:13.410 --> 00:24:15.569 was the Labadee part of the ruling tossed out? 00:24:16.079 --> 00:24:18.759 Because the government had never properly noticed 00:24:18.759 --> 00:24:21.259 or alleged a specific Clean Air Act violation 00:24:21.259 --> 00:24:24.279 related to Labadee within the scope of that particular 00:24:24.279 --> 00:24:27.940 Rush Island case. It underscores the highly technical 00:24:27.940 --> 00:24:30.859 nature of environmental litigation. You can only 00:24:30.859 --> 00:24:33.480 impose remedies for violations that were properly 00:24:33.480 --> 00:24:35.619 alleged and proven in court. Which brings us 00:24:35.619 --> 00:24:38.240 directly to the Labadee Energy Center, which, 00:24:38.400 --> 00:24:41.200 despite avoiding that ruling's remedy, remains 00:24:41.200 --> 00:24:43.619 Ameren's most environmentally scrutinized asset. 00:24:44.299 --> 00:24:46.619 And this plant's pollution footprint is staggering, 00:24:46.859 --> 00:24:49.160 largely because it lacks the scrubbers the Rush 00:24:49.160 --> 00:24:51.539 Island plant was mandated to install. That's 00:24:51.539 --> 00:24:54.539 the heart of the issue. Labadee, located in Franklin 00:24:54.539 --> 00:24:57.299 County, Missouri, is the largest coal -fired 00:24:57.299 --> 00:25:00.500 power plant in the state. And its defining characteristic, 00:25:00.740 --> 00:25:03.279 as you noted, is that it is one of the few large 00:25:03.279 --> 00:25:05.720 coal plants that still operates without sulfur 00:25:05.720 --> 00:25:07.900 dioxide scrubbers. And in the national context, 00:25:08.180 --> 00:25:10.299 what does that translate to in terms of pollution 00:25:10.299 --> 00:25:13.329 output? It means Labadee is currently the country's 00:25:13.329 --> 00:25:15.609 highest emitter of sulfur dioxide. A highest. 00:25:15.849 --> 00:25:18.450 The highest. To put that into perspective, a 00:25:18.450 --> 00:25:20.950 public report indicated that even if Ameren managed 00:25:20.950 --> 00:25:24.349 to cut Labadee's SO2 emissions in half, the plant 00:25:24.349 --> 00:25:27.490 would still emit more SO2 than all but two other 00:25:27.490 --> 00:25:31.089 coal plants nationwide. This facility is a massive 00:25:31.089 --> 00:25:34.269 outlier. That level of pollution has a measurable 00:25:34.269 --> 00:25:37.470 tragic human cost. We need to let the public 00:25:37.470 --> 00:25:39.849 health data associated with Labadee sink in. 00:25:40.359 --> 00:25:42.839 This is where the numbers become visceral. Beyond 00:25:42.839 --> 00:25:45.599 SO2, Labadee is also the second largest producer 00:25:45.599 --> 00:25:48.119 of greenhouse gases among the nation's coal plants, 00:25:48.220 --> 00:25:50.700 according to EPA data. But the most shocking 00:25:50.700 --> 00:25:53.259 finding comes from a 2024 study that utilized 00:25:53.259 --> 00:25:55.500 Medicare records. And what did that study conclude 00:25:55.500 --> 00:25:58.240 regarding mortality? It estimated that between 00:25:58.240 --> 00:26:02.059 1999 and 2020, approximately 4 ,000 deaths were 00:26:02.059 --> 00:26:04.160 linked to the fine particulate matter emissions 00:26:04.160 --> 00:26:08.000 emanating from Labadee. To emphasize the scale 00:26:08.000 --> 00:26:10.660 of the societal cost, this was significantly 00:26:10.660 --> 00:26:13.220 more estimated deaths than any other coal plant 00:26:13.220 --> 00:26:15.599 across the seven Midwestern states covered in 00:26:15.599 --> 00:26:18.779 the study. 4 ,000 estimated deaths over 20 years 00:26:18.779 --> 00:26:21.059 linked to the emissions from a single facility. 00:26:21.599 --> 00:26:25.160 That statistic moves this discussion out of regulatory 00:26:25.160 --> 00:26:28.680 fines and into a profound public health crisis. 00:26:29.119 --> 00:26:31.500 that is localized to Ameren's service territory. 00:26:31.700 --> 00:26:34.319 It does. That is the ultimate societal cost of 00:26:34.319 --> 00:26:37.019 maintaining legacy infrastructure without modern 00:26:37.019 --> 00:26:40.099 pollution controls. That gravity cannot be overstated. 00:26:40.180 --> 00:26:42.240 And the plant has a similar regulatory history 00:26:42.240 --> 00:26:45.319 to Rush Island, which suggests a pattern of noncompliance 00:26:45.319 --> 00:26:47.200 regarding upgrades. What were the historical 00:26:47.200 --> 00:26:49.980 violations at Labadee? Labadee received its own 00:26:49.980 --> 00:26:52.140 notices of Clean Air Act violations from the 00:26:52.140 --> 00:26:55.680 EPA in at least 2010 and 2011, cited for undertaking 00:26:55.680 --> 00:26:58.200 major modifications that cause a significant 00:26:58.200 --> 00:27:00.200 net emissions increase without obtaining the 00:27:00.200 --> 00:27:02.900 proper permits. The pattern is identical to Rush 00:27:02.900 --> 00:27:05.039 Island. Even though the specific case against 00:27:05.039 --> 00:27:07.619 Rush Island couldn't legally mandate scrubbers 00:27:07.619 --> 00:27:10.339 on Labadee. Exactly. And the pressure on Ameren 00:27:10.339 --> 00:27:13.480 regarding Labadee continues today. It does. As 00:27:13.480 --> 00:27:16.700 recently as 2023, The Sierra Club included Labadee 00:27:16.700 --> 00:27:19.240 among the 17 deadliest coal plants in the U .S., 00:27:19.240 --> 00:27:21.980 actively calling on the EPA to implement new 00:27:21.980 --> 00:27:24.279 regulations specifically designed to curb these 00:27:24.279 --> 00:27:27.000 harmful emissions. The future of this plant is 00:27:27.000 --> 00:27:29.220 arguably the single largest environmental and 00:27:29.220 --> 00:27:32.200 health liability Ameren currently manages. Finally, 00:27:32.279 --> 00:27:34.880 the story of Ameren's liabilities often involves 00:27:34.880 --> 00:27:37.759 assets they inherited through that long consolidation 00:27:37.759 --> 00:27:40.900 process. Let's look at the problem of manufactured 00:27:40.900 --> 00:27:44.279 gas plant, or MGP, contamination. This takes 00:27:44.279 --> 00:27:47.759 us to Columbia, Missouri. Decades ago, long before 00:27:47.759 --> 00:27:50.779 Ameren existed, a local utility company operated 00:27:50.779 --> 00:27:53.920 a coal gasification plant. This was common technology 00:27:53.920 --> 00:27:56.180 for lighting and heating before widespread natural 00:27:56.180 --> 00:27:58.980 gas use. The plant was eventually demolished. 00:27:59.039 --> 00:28:00.700 But the pollution stayed behind. The process 00:28:00.700 --> 00:28:03.759 of turning coal into gas left behind heavy, long 00:28:03.759 --> 00:28:06.140 -lasting contamination in the soil and groundwater, 00:28:06.400 --> 00:28:09.359 specifically with carcinogenic chemicals. So 00:28:09.359 --> 00:28:12.200 Ameren. through their acquisition trail, inherited 00:28:12.200 --> 00:28:14.819 the cleanup responsibility for a highly toxic 00:28:14.819 --> 00:28:17.539 site that they never operated. What does that 00:28:17.539 --> 00:28:20.220 cleanup process look like? Ameren has been actively 00:28:20.220 --> 00:28:22.940 involved in remediation for years. For example, 00:28:23.039 --> 00:28:25.299 they were removing contaminated soil in June 00:28:25.299 --> 00:28:28.859 2014. However, this is a slow, methodical process, 00:28:28.960 --> 00:28:32.200 and the lingering presence of a dormant, toxic 00:28:32.200 --> 00:28:35.420 site in an urban area creates friction. And that 00:28:35.420 --> 00:28:38.119 friction leads to public criticism. Connecting 00:28:38.119 --> 00:28:40.579 environmental history directly to contemporary 00:28:40.579 --> 00:28:43.500 urban planning. Precisely. The local North Village 00:28:43.500 --> 00:28:45.900 board of directors publicly criticized Emarin, 00:28:46.059 --> 00:28:48.400 citing that the company owned a whole city block 00:28:48.400 --> 00:28:50.880 that is in disrepair and for an aversion to commerce. 00:28:51.319 --> 00:28:54.319 This contamination created a dead zone in a developing 00:28:54.319 --> 00:28:57.039 part of the city. A dead zone, yeah. As of 2019, 00:28:57.400 --> 00:28:59.359 the city of Columbia was considering purchasing 00:28:59.359 --> 00:29:01.779 the cleaned up lot from Emarin to convert it 00:29:01.779 --> 00:29:04.400 into a public park, illustrating just how long 00:29:04.400 --> 00:29:06.619 the shadow of historical environmental liability 00:29:06.619 --> 00:29:09.740 can extend. This entire section really reinforces 00:29:09.740 --> 00:29:12.029 the central tension. You cannot acquire. 100 00:29:12.029 --> 00:29:13.890 years of infrastructure without acquiring 100 00:29:13.890 --> 00:29:15.990 years of environmental debt. It comes with the 00:29:15.990 --> 00:29:18.450 territory. Amiran is operating in a world demanding 00:29:18.450 --> 00:29:22.009 clean energy transitions, grid resilience, and 00:29:22.009 --> 00:29:24.849 investment in future technology. Given the massive 00:29:24.849 --> 00:29:26.869 liabilities they are managing from the past, 00:29:27.049 --> 00:29:30.230 where is their focus for the future? One area 00:29:30.230 --> 00:29:33.329 where utilities are expected to lead is in electric 00:29:33.329 --> 00:29:35.750 vehicle infrastructure. Amiran has certainly 00:29:35.750 --> 00:29:38.490 attempted to move into the EV space, but their 00:29:38.490 --> 00:29:42.579 initial attempts were instructive regarding the 00:29:42.579 --> 00:29:46.220 challenges of utility regulation. In 2016, Ameren 00:29:46.220 --> 00:29:48.799 proposed a pilot program to install EV charging 00:29:48.799 --> 00:29:51.380 stations. This was a clear attempt to get ahead 00:29:51.380 --> 00:29:53.859 of the transition. But state utility regulators 00:29:53.859 --> 00:29:56.759 rejected oversight of the project, leading Ameren 00:29:56.759 --> 00:29:59.660 to cancel it. Why is regulatory oversight so 00:29:59.660 --> 00:30:01.819 critical for a charging station program? It seems 00:30:01.819 --> 00:30:04.259 like a simple investment. It's purely financial. 00:30:04.259 --> 00:30:06.859 When a regulated utility invests substantial 00:30:06.859 --> 00:30:09.279 capital in infrastructure, they need assurance 00:30:09.279 --> 00:30:11.299 from the state public service commission or the 00:30:11.299 --> 00:30:13.400 regulator that they will be allowed to recover 00:30:13.400 --> 00:30:16.240 those investments plus a reasonable profit margin 00:30:16.240 --> 00:30:18.559 through customer rates. Through the rate base. 00:30:18.900 --> 00:30:21.880 Exactly. If the state regulators reject oversight, 00:30:22.220 --> 00:30:25.839 that assurance vanishes. Ameren could not risk 00:30:25.839 --> 00:30:28.519 billions in unrecoverable investments, so they 00:30:28.519 --> 00:30:31.000 canceled the program immediately. That perfectly 00:30:31.000 --> 00:30:32.940 explains the difference between a competitive 00:30:32.940 --> 00:30:36.440 market company and a regulated utility. A utility's 00:30:36.440 --> 00:30:38.839 hands are tied unless they have a clear path 00:30:38.839 --> 00:30:41.519 to cost recovery. It's the core of utility finance. 00:30:41.599 --> 00:30:43.960 However, they successfully navigated the regulatory 00:30:43.960 --> 00:30:48.299 hurdles shortly thereafter. In early 2018, Ameren 00:30:48.299 --> 00:30:50.339 successfully launched the Charge Ahead program. 00:30:50.819 --> 00:30:53.599 So they got it done eventually. They did. This 00:30:53.599 --> 00:30:55.940 program provides significant incentives supporting 00:30:55.940 --> 00:30:58.380 the installation of approximately 1 ,200 charging 00:30:58.380 --> 00:31:01.000 stations and offering incentives for the adoption 00:31:01.000 --> 00:31:03.779 of commercial electric vehicles. So it shows 00:31:03.779 --> 00:31:06.039 their renewed commitment once that regulatory 00:31:06.039 --> 00:31:09.380 certainty was established. Beyond EVs, given 00:31:09.380 --> 00:31:11.460 the immense pressure from shareholders and regulators 00:31:11.460 --> 00:31:14.480 regarding climate change, what is Ameren's general 00:31:14.480 --> 00:31:17.099 future focus in terms of their energy mix and 00:31:17.099 --> 00:31:19.640 carbon targets? Amerit has publicly outlined 00:31:19.640 --> 00:31:22.180 significant long -term carbon reduction goals, 00:31:22.319 --> 00:31:24.619 which, you know, necessitate moving away from 00:31:24.619 --> 00:31:27.619 their reliance on coal assets like Labadee. Their 00:31:27.619 --> 00:31:30.180 integrated resource plan for Missouri, for example, 00:31:30.359 --> 00:31:33.599 includes targets to achieve net zero carbon emissions 00:31:33.599 --> 00:31:37.480 by 2045. That is an extremely ambitious timeline 00:31:37.480 --> 00:31:40.579 for a company with such a heavy reliance on legacy 00:31:40.579 --> 00:31:43.259 fossil fuel plants. How are they planning to 00:31:43.259 --> 00:31:45.380 achieve that? That's not a simple switch. It 00:31:45.380 --> 00:31:48.519 involves three main strategies. First, decommissioning 00:31:48.519 --> 00:31:50.660 the remaining coal fleet, which includes Labadee, 00:31:50.740 --> 00:31:52.680 though the timeline for that plant is constantly 00:31:52.680 --> 00:31:55.779 scrutinized. Of course. Second, massive investment 00:31:55.779 --> 00:31:58.440 in renewable generation, primarily utility scale 00:31:58.440 --> 00:32:02.259 solar and wind. And third, significant upgrades 00:32:02.259 --> 00:32:04.579 to the transmission grid. That's where the Ameren 00:32:04.579 --> 00:32:07.119 Transmission Company comes in. They need a resilient 00:32:07.119 --> 00:32:09.579 grid capable of handling intermittent renewable 00:32:09.579 --> 00:32:12.160 energy from remote locations. And all of that 00:32:12.160 --> 00:32:15.710 costs... Billions. Continuous billions in capital 00:32:15.710 --> 00:32:18.130 expenditure. Let's talk about a physical asset 00:32:18.130 --> 00:32:20.690 that represents their dual nature, the mix of 00:32:20.690 --> 00:32:22.910 high voltage transmission and other technologies. 00:32:23.230 --> 00:32:26.609 The Ameren UE Tower near their St. Louis headquarters 00:32:26.609 --> 00:32:29.950 is a very unique structure. It is a fascinating 00:32:29.950 --> 00:32:32.750 engineering compromise. Built in 2009, it's a 00:32:32.750 --> 00:32:36.210 111 meter tall lattice steel structure that uniquely 00:32:36.210 --> 00:32:39.230 combines an electricity pylon and a radio tower. 00:32:39.799 --> 00:32:42.900 It's an example of maximizing utility on a compact 00:32:42.900 --> 00:32:45.740 urban footprint. What specific electrical function 00:32:45.740 --> 00:32:48.819 does it serve? It carries two 138 kV circuits 00:32:48.819 --> 00:32:51.839 on three crossbars approximately at its mid -height. 00:32:51.980 --> 00:32:54.720 This is medium to high voltage power distribution 00:32:54.720 --> 00:32:57.140 for the St. Louis metropolitan area. But the 00:32:57.140 --> 00:32:59.599 combination of functions actually creates a serious 00:32:59.599 --> 00:33:02.819 operational conflict. It sounds efficient, but 00:33:02.819 --> 00:33:04.740 maintenance must be a nightmare. The conflict 00:33:04.740 --> 00:33:07.079 arises because the tower's height is dictated 00:33:07.079 --> 00:33:09.839 by its function as a radio tower, making it significantly 00:33:09.839 --> 00:33:12.460 taller than it would need to be merely as a pylon. 00:33:12.660 --> 00:33:15.079 The high -voltage infrastructure, the crossbars, 00:33:15.099 --> 00:33:17.359 and power conductors are located at the precise 00:33:17.359 --> 00:33:19.640 elevation where you would want clear access for 00:33:19.640 --> 00:33:21.819 radio equipment maintenance. So when they need 00:33:21.819 --> 00:33:23.640 to work on the antennas, what's the complexity? 00:33:24.059 --> 00:33:26.059 Well, the physical presence of those high voltage 00:33:26.059 --> 00:33:28.380 circuits significantly hampers the installation 00:33:28.380 --> 00:33:31.380 or maintenance of larger antennas using typical 00:33:31.380 --> 00:33:34.599 tools like cranes or pulleys. In many cases, 00:33:34.700 --> 00:33:37.000 Ameren is required to shut down the high voltage 00:33:37.000 --> 00:33:39.920 circuits entirely just to perform routine maintenance 00:33:39.920 --> 00:33:42.589 or upgrades on the radio equipment. So it adds 00:33:42.589 --> 00:33:45.589 immense complexity, cost, and scheduling difficulties 00:33:45.589 --> 00:33:48.490 to simple tasks, all because of that dual -purpose 00:33:48.490 --> 00:33:51.009 design. It's a physical manifestation of the 00:33:51.009 --> 00:33:53.710 compromise inherent in utility management. We 00:33:53.710 --> 00:33:55.970 have taken a deep dive into the Amir Incorporation, 00:33:56.109 --> 00:33:58.750 charting a course from two debt -laden mergers 00:33:58.750 --> 00:34:01.349 in the 1990s through decades of infrastructure 00:34:01.349 --> 00:34:04.369 building, federal dam management, and confronting 00:34:04.369 --> 00:34:07.539 staggering environmental liabilities. So what 00:34:07.539 --> 00:34:09.619 does this all mean when we synthesize this complex 00:34:09.619 --> 00:34:11.699 history for the listener? The central tension 00:34:11.699 --> 00:34:14.380 of Ameren's existence is defined by the incredible 00:34:14.380 --> 00:34:16.500 public trust placed in them as an infrastructure 00:34:16.500 --> 00:34:20.000 provider. I mean, managing nuclear assets, complex 00:34:20.000 --> 00:34:22.340 hydro ecosystems like the Lake of the Ozarks, 00:34:22.420 --> 00:34:25.440 and the entire regional grid. Yet this operation 00:34:25.440 --> 00:34:28.340 is fundamentally built upon a history of aggressive 00:34:28.340 --> 00:34:31.539 consolidation and inherited liabilities, which 00:34:31.539 --> 00:34:34.239 directly collide with modern environmental regulations. 00:34:34.719 --> 00:34:36.940 We saw that collision play out. dramatically 00:34:36.940 --> 00:34:40.179 in the courts. Indeed. What's fascinating here 00:34:40.179 --> 00:34:42.619 is the clear link between the historical debt 00:34:42.619 --> 00:34:45.539 loads of the original companies, the rapid acquisition 00:34:45.539 --> 00:34:48.440 phase of the 2000s, and the resulting regulatory 00:34:48.440 --> 00:34:51.679 challenges. The lawsuits involving Tamayam Sok, 00:34:51.860 --> 00:34:54.480 Rush Island, and especially Labadee show the 00:34:54.480 --> 00:34:56.619 immense financial and operational difficulty 00:34:56.619 --> 00:34:59.360 in navigating compliance with environmental laws 00:34:59.360 --> 00:35:01.960 like the Clean Air Act. These facilities were 00:35:01.960 --> 00:35:04.400 built in an era with different standards, and 00:35:04.400 --> 00:35:06.699 retrofitting or replacing them demands capital 00:35:06.699 --> 00:35:09.039 expenditures that sometimes threaten... the financial 00:35:09.039 --> 00:35:11.480 viability of the asset itself. And that takes 00:35:11.480 --> 00:35:13.780 us back to the stark reality of the Lavity Energy 00:35:13.780 --> 00:35:16.239 Center. The fact that this plant remains the 00:35:16.239 --> 00:35:18.139 country's highest emitter of sulfur dioxide, 00:35:18.579 --> 00:35:21.260 lacking scrubbers, is a highly sensitive topic. 00:35:21.480 --> 00:35:24.480 The estimated link to approximately 4 ,000 deaths 00:35:24.480 --> 00:35:26.800 from fine particulate matter emissions over a 00:35:26.800 --> 00:35:29.360 two decade period cannot be separated from the 00:35:29.360 --> 00:35:31.559 conversation about utility regulation and cost 00:35:31.559 --> 00:35:33.920 recovery. The decisions Ameren makes regarding 00:35:33.920 --> 00:35:35.980 legacy pollution are not just accounting entries. 00:35:36.199 --> 00:35:38.760 They are public health determinants. for the 00:35:38.760 --> 00:35:41.659 entire region. Exactly. We've seen that utility 00:35:41.659 --> 00:35:44.260 regulation has to constantly seek equilibrium. 00:35:44.699 --> 00:35:47.840 It must ensure stable, recoverable investment, 00:35:48.159 --> 00:35:50.539 as shown by the hiccup they faced with the EV 00:35:50.539 --> 00:35:53.199 program when regulators balked at cost recovery. 00:35:53.340 --> 00:35:55.500 While at the same time enforcing regulations 00:35:55.500 --> 00:35:57.820 that address the overwhelming societal costs 00:35:57.820 --> 00:36:00.780 of legacy pollution, it is a balancing act between 00:36:00.780 --> 00:36:03.119 the regulated bottom line and the human cost 00:36:03.119 --> 00:36:05.239 of air quality. Which leaves us with a final 00:36:05.239 --> 00:36:07.599 provocative thought for you, the listener. Given 00:36:07.599 --> 00:36:10.739 the stark data that a single Ameren facility, 00:36:11.159 --> 00:36:13.820 Labadee, has been linked to thousands of estimated 00:36:13.820 --> 00:36:16.300 deaths through its air pollution, and given that 00:36:16.300 --> 00:36:18.320 the utility is legally entitled to recover its 00:36:18.320 --> 00:36:20.219 necessary investments through customer rates, 00:36:20.539 --> 00:36:23.280 how should state and federal regulators structure 00:36:23.280 --> 00:36:26.539 utility economics? Should the cost of installing 00:36:26.539 --> 00:36:28.920 necessary pollution control technology, estimated 00:36:28.920 --> 00:36:31.840 to be astronomical, be prioritized immediately? 00:36:32.400 --> 00:36:34.460 even if it causes a dramatic spike in utility 00:36:34.460 --> 00:36:37.420 rates, thereby passing the full historical cost 00:36:37.420 --> 00:36:39.800 of pollution onto current rate payers. Or should 00:36:39.800 --> 00:36:42.860 those costs be deferred and managed slowly, prolonging 00:36:42.860 --> 00:36:45.139 the exposure risks for the public? The debate 00:36:45.139 --> 00:36:47.599 over Emerson's coal fleet is a perfect defining 00:36:47.599 --> 00:36:50.159 case study of public health versus utility economics 00:36:50.159 --> 00:36:51.260 in the 21st century.