* Power companies focusing on regulated businesses
* Ameren sees charge of up to $2 billion in fourth quarter
* Ameren owns about 5,400 MW of merchant generation
By Scott DiSavino
Jan 18 (Reuters) - U.S. power company Ameren Corp said it was considering the sale of one or more of its three natural gas-fired power plants in Illinois as part of a larger plan to exit the merchant generation business.
With electricity prices near decade lows in many regions of the United States, several power companies are looking to spin off merchant units to focus on their regulated operations.
In December, California power company Edison International's Edison Mission Energy filed for bankruptcy protection as its parent stopped supporting the merchant unit.
The gas plants Ameren is looking to sell are the 460-megawatt (MW) Elgin, the 228-MW Gibson City and the 513-MW Grand Tower.
The company had no transactions to announce at this time and there is no timeline or deadline to sell the plants, Ameren spokesman Brian Bretsch told Reuters.
Ameren said in a filing in December its merchant units had experienced decreasing earnings and cash flows from operating activities over the past few years as margins declined primarily due to weaker power prices.
Power prices are near decade lows across much of the nation primarily because of weak natural gas prices due to record shale gas production.
With cheap gas, generators are burning more of the fuel to produce electricity. Gas produced about 30 percent of the nation's electricity in 2012, up from 25 percent in 2011. Ten years ago gas-fired generators produced just 17 of the nation's power, according to federal data.
In addition to the low power prices, Ameren said environmental regulations were also requiring the company to make significant investments in the merchant units.
Bretsch said the company is now focusing investments on its regulated operations - Ameren Illinois, Ameren Missouri and Ameren Transmission.
In the fourth quarter of 2012, the company said Ameren and its Genco merchant unit would record non-cash impairment charges to reduce the carrying values of certain power plants to their estimated fair values.
Ameren said its expected charge is in the range of $1.5 billion to $2 billion, before taxes. Genco's expected charge is in the range of $50 million to $300 million, before taxes.
With the deregulation of the power market in Illinois in the late 1990s and early 2000s, all of Ameren's plants in Illinois are merchant facilities.
Ameren's merchant units own about 5,400 MW of generation in Illinois, not counting units mothballed in 2011, with about 4,200 MW of coal and about 1,200 MW of natural gas.
Bretsch said Ameren mothballed the 154-MW Hutsonville and 474-MW Meredosia coal plants in Illinois in 2011.
Bretsch said Ameren had already retrofitted the emissions control equipment at the 410-MW Duck Creek and the 916-MW Coffeen coal plants and expected both to remain compliant post Jan. 1, 2015.
The company expects to finish upgrading the emissions control equipment at the 1,197-MW Newton coal plant by the end of 2019, Bretsch said.
He said the company did not expect to make any immediate decisions on the 715-MW Edwards and 1,002-MW Joppa, but will continue evaluating the economics and environmental requirements of those coal plants.
Bretsch said Ameren did not plan to shut any of its merchant plants.
In a report Thursday, Phil Adams, an analyst at bond research company Gimme Credit, said the heat rates of Ameren Genco's coal plants were 10,393 British thermal units/kilowatt-hour (Btu/kWh) at Joppa, 10,403 at Newton and 10,747 at Coffeen.
Adams also said the heat rates at the coal plants at another Ameren merchant unit, Ameren Energy Resources, were 10,495 and 10,585. The Gimme Credit report did not name the Ameren Energy Resources coal plants.
Ameren Energy Resources owns the Edwards and the Duck Creek coal plants in Illinois.
With the gas plants, the Gimme Credit report said Ameren was only operating the Grand Tower combined-cycle plant during the peak summer demand season from May-September.