Correction - Fitch Downgrades Union Electric Co.'s IDR to 'BBB+'

Fitch Ratings downgrades Union Electric Co.'s (UE) Issuer Default Rating (IDR) to 'BBB+' from 'A-' and revises the Rating Outlook to Stable from Negative. Fitch also lowers the instrument ratings on UE's outstanding securities as shown in the ratings list at the end of this release.

Current and projected financial ratios do not support the previous ratings. Financial measures have deteriorated over the past several years and, despite a constructive rate decision issued by the Missouri Public Service Commission (PSC) in February 2009, are not expected to improve materially without further rate support. The financial deterioration is largely due to increasing fuel and operating costs as well as a large capital expenditure program that has driven up UE's leverage and interest charges. Although management recently pared its capital spending plans, forecasted expenditures remain at elevated levels, largely to meet environmental standards and to maintain the reliability of UE's distribution network. Management also reduced parent Ameren Corp's common stock dividend, providing some cash flow relief to UE.

Favorably, UE was allowed to implement a $161 million rate increase and a fuel adjustment clause effective Feb. 6, 2009. The fuel clause reduces cash flow volatility and lowers business risk. The adjustment mechanism allows UE to pass through 95% of its fuel and purchased power costs to customers, subject to a PSC prudency review, and can be adjusted three times per year. The higher rates are based on a 10.76% return on equity (ROE), 52% equity ratio and a test year ending March 31, 2008. Rate lag built into the rate decision and further increases in financing and operating costs will prevent UE from earning its authorized ROE and achieving the financial improvement needed to support the previous ratings. Without further rate support, which is not expected anytime soon, the ratio of debt/EBITDA is likely to exceed 4.0 times with the ratio of FFO/debt leverage in the 14% to 18% range.

Fitch downgrades and revises the Outlook to Stable for the following ratings:

--IDR to 'BBB+' from 'A-';

--Senior secured debt to 'A' from 'A+';

--Senior unsecured debt to 'A-' from 'A';

--Subordinated debt to 'BBB+' from 'A-';

--Preferred stock to 'BBB+' from 'A-'.

Fitch also affirms the following ratings:

--Commercial paper at 'F2';

--Short-term IDR at 'F2'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

SOURCE: Fitch Ratings

Fitch Ratings, New York 
Robert Hornick, +1-212-908-0523 
Jill Schmidt, +1-212-908-0644 
Cindy Stoller, +1-212-908-0526 (Media Relations) 
cindy.stoller@fitchratings.com