Ameren Corp. (AEE), owner of Missouri’s largest utility, rose the most in almost five months after announcing its intent to quit owning power plants that sell electricity at market rates, where profits have declined and the outlook is poor.
Ameren rose 3.7 percent to $31.17 at 10:58 a.m. in New York after touching $31.20 for the biggest intraday gain since Aug. 3. Ameren is today’s best-performing utility stock in the Standard & Poor’s 500 Index.
The company intends to quit the so-called merchant generation business and will take a non-cash pretax charge of $1.5 billion to $2 billion this quarter to write down the value of power plants in that segment, according to a filing today. Ameren’s merchant plants are capable of generating about 5,500 megwatts, enough to power 4.4 million average homes.
The decision will lower depreciation expenses by as much as $80 million before taxes next year, the St. Louis-based company said. Ameren didn’t give a date to exit the business.
Ameren said Nov. 9 it expected merchant generation to contribute 10 cents to 2012 profit excluding some items, compared with $2.30 from its regulated utilities in Missouri and Illinois. On that basis, the company is expected to earn $2.44, the average of 10 analysts’ estimates compiled by Bloomberg.
Lower power prices have crimped profit from power sales in competitive markets, while tighter environmental restrictions will add costs, Ameren said today. The company closed two of its Illinois merchant plants last year.
The company’s Genco unit is “more likely than not” to sell one of its three natural gas-fired power plants to improve liquidity, according to the filing.
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