Because it is a holding company, Ameren’s net income and cash flows are primarily generated by its principal subsidiaries: UE, CIPS, Genco, CILCORP and IP.
The following table presents the contribution by Ameren’s principal subsidiaries to Ameren’s consolidated net income for the years ended December 31, 2007, 2006 and 2005:
## Table 0 ##
(a) Includes earnings from a non-rate-regulated 40% interest in EEI.
(b) Includes net income from non-rate-regulated operations and a 40% interest in EEI held by Development Company, corporate general and administrative expenses, gains on sales of noncore assets, and intercompany eliminations.
Below is a table of income statement components by segment for the years ended December 31, 2007, 2006 and 2005:
## Table 1 ##
financing cash flow by $227 million, because 2005 included net borrowings on this note that provided CILCORP with cash.
Positive effects on cash flow included long-term debt issuances that generated $96 million in 2006, compared with no long-term debt issuances in 2005.
The proceeds from this debt were used to redeem $21 million of long-term debt and to reduce money pool borrowings.
In addition, CILCORP borrowed $215 million and CILCO (and CILCO’s subsidiary AERG) borrowed $165 million under the 2006 $500 million credit facility, net of repayments.
In 2006, CILCORP used cash of $33 million for redemptions, repurchases and maturities of long-term debt, compared with $101 million in the 2005 period.
CILCO’s cash used for redemptions, repurchases and maturities of long-term debt was comparable in the two years.
These positive effects on cash in 2006 were partially offset by the absence in 2006 of a $102 million capital contribution received in 2005 from Ameren, which was made to reduce CILCO’s short-term debt.
Also contributing to CILCORP’s and CILCO’s increase in cash used in financing activities for 2006 were increased common stock dividends of $20 million at CILCORP and $45 million at CILCO.
IP had a net source of cash from financing activities in 2006, compared with a net use of cash in 2005.
This was partly because of lower redemptions and repurchases of long-term debt of $70 million in 2006.
More debt was repaid in 2005 to improve IP’s credit profile.
Other positive effects on cash from financing activities included the absence in 2006 of $76 million of common stock dividend payments made in 2005, net borrowings of $75 million on the 2006 $500 million credit facility, and the issuance of $75 million of long-term debt in 2006 compared with no long-term debt proceeds in 2005.
The $75 million was used to reduce money pool borrowings.
Short-term Borrowings and Liquidity Short-term borrowings typically consist of drawings under committed bank credit facilities and commercial paper issuances.
See Note 4 – Credit Facilities and Liquidity to our financial statements under Part II, Item 8, of this report for additional information on credit facilities, short-term borrowing activity, relevant interest rates, and borrowings under Ameren’s utility and non-state-regulated subsidiary money pool arrangements.
The following table presents the various committed bank credit facilities of the Ameren Companies and AERG, and their availability as of December 31, 2007:
## Table 2 ##
(a) Ameren Companies may access this credit facility through intercompany borrowing arrangements.
(b) See Note 4 – Credit Facilities and Liquidity to our financial statements under Part II, Item 8, of this report for discussion of the amendment of this facility.
(c) The maximum amount available to each borrower at December 31, 2007, including for issuance of letters of credit, was limited as follows: CIPS – $135 million, CILCORP – $50 million, CILCO – $75 million, IP – $150 million and AERG – $200 million.
In July 2007, CILCO shifted $75 million of its capacity under this facility to the 2007 $500 million credit facility.
Accordingly, as of December 31, 2007, CILCO had a sublimit of $75 million under this facility and a $75 million sublimit under the 2007 credit facility.
See Note 4 – Credit Facilities and Liquidity to our financial statements under Part II, Item 8, of this report for a discussion of this credit facility.
(d) The maximum amount available to each borrower at December 31, 2007, including for the issuance of letters of credit, was limited as follows: CILCORP – $125 million, CILCO – $75 million, IP – $200 million and AERG – $100 million.
CIPS and CILCO have the option of permanently reducing their ability to borrow under the 2006 $500 million credit facility and shifting such capacity, up to the same limits, to the 2007 $500 million credit facility.
In July 2007, CILCO shifted $75 million of its sublimit under the 2006 $500 million credit facility to this facility.
Ameren can directly borrow under the $1.15 billion facility, as amended, up to the entire amount of the facility.
UE can directly borrow under this facility up to $500 million on a 364-day basis.
Genco can directly borrow under this facility up to $150 million on a 364-day basis.
The amended facility will terminate on July 14, 2010, with respect to Ameren.
The termination date for UE and Genco is July 10, 2008, subject to the annual 364-day renewal provisions of the facility.
This facility was also available for use, subject to applicable regulatory short-term borrowing authorizations, by EEI or other Ameren non-state-regulated subsidiaries through direct short-term borrowings from Ameren and by most of Ameren’s non-rate-regulated subsidiaries, including, but not limited to, Ameren Services, Resources Company, Genco, AERG, Marketing Company and AFS, through a nonstate-regulated subsidiary money pool agreement.
Ameren has money pool agreements with and among its subsidiaries to coordinate and to provide for certain short-term cash and working capital requirements.
Separate money pools are maintained for utility and non-state-regulated entities.
In addition, a unilateral borrowing agreement among Ameren, IP, and Ameren Services enables IP to make short-term borrowings directly from Ameren.
The aggregate amount of borrowings outstanding at any time by IP under the unilateral borrowing agreement and the utility money pool agreement, together with any outstanding external short-
The following table shows how our total fuel expense might increase and how our net income might decrease if coal and coal transportation costs were to increase by 1% on any requirements not currently covered by fixed-price contracts for the five-year period 2008 through 2012.
In addition, coal and coal transportation costs are sensitive to the price of diesel fuel as a result of rail freight fuel surcharges.
If diesel fuel costs were to increase by $0.25/gallon, Ameren’s fuel expense could increase by $13 million annually (UE – $7 million, Genco – $3 million, AERG – $1 million and EEI – $2 million).
As of December 31, 2007, Ameren has price-hedged approximately 75% of expected fuel surcharges in 2008.
## Table 3 ##
(a) Calculations are based on an effective tax rate of 38%.
(b) Includes amounts for Ameren registrant and nonregistrant subsidiaries.
In the event of a significant change in coal prices, UE, Genco and CILCO would probably take actions to further mitigate their exposure to this market risk.
However, due to the uncertainty of the specific actions that would be taken and their possible effects, this sensitivity analysis assumes no change in our financial structure or fuel sources.
With regard to exposure for commodity price risk for nuclear fuel, UE has fixed-priced and base-price-withescalation agreements, or it uses inventories that provide some price hedge to fulfill its Callaway nuclear plant needs for uranium, conversion, enrichment, and fabrication services through 2008.
There is no fuel reloading scheduled for 2009.
UE has price hedges for 87% of the 2010 to 2012 nuclear fuel requirements.
The nuclear fuel markets have undergone significant change.
What was once a buyer’s market has become a seller’s market; with increased potential for supply disruptions.
UE has increased its desired inventories of nuclear fuel (with inherent price hedge) and has increased its forward contract coverage.
New long-term uranium contracts are almost exclusively market-price-related with an escalating price floor.
New long-term enrichment contracts usually have some market-price-related component.
Therefore, nuclear fuel price increases are expected, and price hedging becomes less available.
UE expects to enter into additional contracts from time to time in order to supply nuclear fuel during the expected life of the Callaway nuclear plant, at prices which cannot now be accurately predicted.
Unlike the electricity and natural gas markets, nuclear fuel markets have no sophisticated financial instruments available for price hedging, so most hedging is done through inventories and forward contracts, if they are available.
With regard to the electric generating operations for UE, Genco and AERG that are exposed to changes in market prices for natural gas used to run CTs, the natural gas procurement strategy is designed to ensure reliable and immediate delivery of natural gas while minimizing costs.
We optimize transportation and storage options and price risk by structuring supply agreements to maintain access to multiple gas pools and supply basins.
Through the market allocation process, UE, CIPS, Genco, CILCO and IP have been granted FTRs associated with the advent of the MISO Day Two Energy Market.
Marketing Company has acquired FTRs for its participation in the PJM-Northern Illinois market.
The FTRs are intended to mitigate expected electric transmission congestion charges related to our physical electricity business.
Depending on the congestion and prices at various points on the electric transmission grid, FTRs could result in either charges or credits.
We use complex grid modeling tools to determine which FTRs we wish to nominate in the FTR allocation process.
There is a risk that we may incorrectly model the amount of FTRs we will need, and there is the potential that the FTRs could be ineffective in mitigating transmission congestion charges.
With regard to UE’s natural gas distribution business and CIPS’, CILCO’s and IP’s power and natural gas distribution businesses, exposure to changing market prices is in large part mitigated by the fact that there are cost recovery mechanisms in place.
These cost recovery mechanisms allow UE, CIPS, CILCO and IP to pass on to retail customers prudently incurred costs.
Our strategy is designed to reduce the effect of market fluctuations for our regulated customers.
We cannot eliminate the effects of price volatility.
However, procurement strategies involve risk management techniques and instruments similar to those outlined earlier, as well as the management of physical assets.
With regard to our exposure for commodity price risk for construction and maintenance activities, Ameren is exposed to changes in market prices for metal commodities and labor availability.
See Supply for Electric Power under Part I, Item 1, of this report for the percentages of our historical needs satisfied by coal, nuclear, natural gas, hydroelectric and oil.
Also see Note 13 – Commitments and Contingencies to our financial statements under Part II, Item 8, of this report for further information.
Fair Value of Contracts Most of our commodity contracts qualify for treatment as normal purchases and normal sales.
We use derivatives principally to manage the risk of changes in market prices for natural gas, fuel, electricity and emission allowances.
Price fluctuations in natural gas, fuel, electricity and emission allowances may cause any of these conditions: ?
an unrealized appreciation or depreciation of our contracted commitments to purchase or sell when
## Table 4 ##
(a) Principally fixed price vs.  floating over-the-counter power swaps, power forwards and fixed price vs.  floating over-the-counter natural gas swaps.
(b) Principally coal and SO2 option values based on a Black-Scholes model that includes information from external sources and our estimates.
Also includes interruptible power forward and option contract values based on our estimates.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Ameren Corporation: In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Ameren Corporation and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.
Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for uncertain tax positions as of January 1, 2007, and the manner in which it accounts for defined benefit pension and postretirement obligations as of December 31, 2006.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
14.
Stock Compensation Plans The following table summarizes stock-based compensation expense recognized in continuing operations in the Consolidated Statements of Income in Compensation and benefits (in millions):

<table><tr><td></td><td> 2007</td><td> 2006</td><td> 2005</td></tr><tr><td>Net income:</td><td></td><td></td><td></td></tr><tr><td>UE<sup>(a)</sup></td><td>$336</td><td>$343</td><td>$346</td></tr><tr><td>CIPS</td><td>14</td><td>35</td><td>41</td></tr><tr><td>Genco</td><td>125</td><td>49</td><td>97</td></tr><tr><td>CILCORP</td><td>47</td><td>19</td><td>3</td></tr><tr><td>IP</td><td>24</td><td>55</td><td>95</td></tr><tr><td>Other<sup>(b)</sup></td><td>72</td><td>46</td><td>24</td></tr><tr><td>Ameren net income</td><td>$618</td><td>$547</td><td>$606</td></tr></table>
<table><tr><td> 2007</td><td>Missouri Regulated</td><td>Illinois Regulated</td><td>Non-rate- regulated Generation</td><td>Other / Intersegment Eliminations</td><td>Total</td></tr><tr><td>Electric margin</td><td>$1,984</td><td>$760</td><td>$1,034</td><td>$-65</td><td>$3,713</td></tr><tr><td>Gas margin</td><td>70</td><td>317</td><td>-</td><td>-8</td><td>379</td></tr><tr><td>Other revenues</td><td>2</td><td>3</td><td>-</td><td>-5</td><td>-</td></tr><tr><td>Other operations and maintenance</td><td>-900</td><td>-550</td><td>-313</td><td>75</td><td>-1,688</td></tr><tr><td>Depreciation and amortization</td><td>-333</td><td>-217</td><td>-105</td><td>-26</td><td>-681</td></tr><tr><td>Taxes other than income taxes</td><td>-234</td><td>-121</td><td>-25</td><td>-1</td><td>-381</td></tr><tr><td>Other income and expenses</td><td>35</td><td>19</td><td>6</td><td>7</td><td>67</td></tr><tr><td>Interest expense</td><td>-194</td><td>-132</td><td>-107</td><td>10</td><td>-423</td></tr><tr><td>Income taxes (benefit)</td><td>-143</td><td>-25</td><td>-182</td><td>20</td><td>-330</td></tr><tr><td>Minority interest and preferred dividends</td><td>-6</td><td>-7</td><td>-27</td><td>2</td><td>-38</td></tr><tr><td>Net Income</td><td>$281</td><td>$47</td><td>$281</td><td>$9</td><td>$618</td></tr><tr><td> 2006</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Electric margin</td><td>$1,898</td><td>$824</td><td>$756</td><td>$-61</td><td>$3,417</td></tr><tr><td>Gas margin</td><td>60</td><td>307</td><td>-</td><td>-3</td><td>364</td></tr><tr><td>Other revenues</td><td>2</td><td>2</td><td>1</td><td>-5</td><td>-</td></tr><tr><td>Other operations and maintenance</td><td>-800</td><td>-535</td><td>-283</td><td>62</td><td>-1,556</td></tr><tr><td>Depreciation and amortization</td><td>-335</td><td>-192</td><td>-106</td><td>-28</td><td>-661</td></tr><tr><td>Taxes other than income taxes</td><td>-230</td><td>-137</td><td>-24</td><td>-</td><td>-391</td></tr><tr><td>Other income and expenses</td><td>33</td><td>13</td><td>2</td><td>-2</td><td>46</td></tr><tr><td>Interest expense</td><td>-171</td><td>-95</td><td>-103</td><td>19</td><td>-350</td></tr><tr><td>Income taxes (benefit)</td><td>-184</td><td>-65</td><td>-78</td><td>43</td><td>-284</td></tr><tr><td>Minority interest and preferred dividends</td><td>-6</td><td>-7</td><td>-27</td><td>2</td><td>-38</td></tr><tr><td>Net Income</td><td>$267</td><td>$115</td><td>$138</td><td>$27</td><td>$547</td></tr><tr><td> 2005</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Electric margin</td><td>$1,889</td><td>$829</td><td>$703</td><td>$-45</td><td>$3,376</td></tr><tr><td>Gas margin</td><td>73</td><td>315</td><td>-</td><td>-</td><td>388</td></tr><tr><td>Other revenue</td><td>2</td><td>3</td><td>2</td><td>-3</td><td>4</td></tr><tr><td>Other operations and maintenance</td><td>-785</td><td>-490</td><td>-255</td><td>43</td><td>-1,487</td></tr><tr><td>Depreciation and amortization</td><td>-310</td><td>-190</td><td>-106</td><td>-26</td><td>-632</td></tr><tr><td>Taxes other than income taxes</td><td>-229</td><td>-119</td><td>-17</td><td>-</td><td>-365</td></tr><tr><td>Other income and expenses</td><td>17</td><td>12</td><td>-1</td><td>-11</td><td>17</td></tr><tr><td>Interest expense</td><td>-116</td><td>-86</td><td>-119</td><td>20</td><td>-301</td></tr><tr><td>Income taxes (benefit)</td><td>-206</td><td>-101</td><td>-86</td><td>37</td><td>-356</td></tr><tr><td>Minority interest and preferred dividends</td><td>-6</td><td>-7</td><td>-3</td><td>-</td><td>-16</td></tr><tr><td>Cumulative effect of change in accounting principle</td><td>-</td><td>-</td><td>-23</td><td>1</td><td>-22</td></tr><tr><td>Net Income</td><td>$329</td><td>$166</td><td>$95</td><td>$16</td><td>$606</td></tr></table>
<table><tr><td> Credit Facility</td><td> Expiration</td><td> Amount Committed</td><td> Amount Available</td></tr><tr><td> Ameren, UE and Genco:</td><td></td><td></td><td></td></tr><tr><td>Multiyear revolving<sup>(a)(b)</sup></td><td>July 2010</td><td>$1,150</td><td>$409</td></tr><tr><td> CIPS, CILCORP, CILCO, IP and AERG:</td><td></td><td></td><td></td></tr><tr><td>2006 Multiyear revolving<sup>(c)</sup></td><td>January 2010</td><td>500</td><td>120</td></tr><tr><td>2007 Multiyear revolving<sup>(d)</sup></td><td>January 2010</td><td>500</td><td>60</td></tr></table>
<table><tr><td></td><td colspan="2">Coal</td><td colspan="2">Transportation</td></tr><tr><td></td><td> Fuel   Expense</td><td>Net Income (a)</td><td> Fuel   Expense</td><td>Net Income (a)</td></tr><tr><td>Ameren<sup>(b)</sup></td><td>$17</td><td>$-11</td><td>$23</td><td>$-15</td></tr><tr><td>UE</td><td>7</td><td>-4</td><td>10</td><td>-6</td></tr><tr><td>Genco</td><td>6</td><td>-4</td><td>6</td><td>-3</td></tr><tr><td>CILCORP</td><td>3</td><td>-2</td><td>2</td><td>-2</td></tr><tr><td>CILCO</td><td>3</td><td>-2</td><td>2</td><td>-2</td></tr><tr><td>EEI</td><td>1</td><td>-1</td><td>5</td><td>-4</td></tr></table>
<table><tr><td> Sources of Fair Value</td><td>Maturity Less than 1 Year</td><td> Maturity   1-3 Years</td><td> Maturity   4-5 Years</td><td> Maturity in   Excess of   5 Years</td><td>Total Fair Value</td></tr><tr><td> IP:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Prices actively quoted</td><td>$-</td><td>$-</td><td>$-</td><td>$-</td><td>$-</td></tr><tr><td>Prices provided by other external sources<sup>(a)</sup></td><td>-9</td><td>6</td><td>1</td><td>-</td><td>-2</td></tr><tr><td>Prices based on models and other valuation methods<sup>(b)</sup></td><td>2</td><td>22</td><td>33</td><td>-</td><td>57</td></tr><tr><td>Total</td><td>$-7</td><td>$28</td><td>$34</td><td>$-</td><td>$55</td></tr></table>

Question: Which year the Ameren net income is the highest?
Answer: 2007