We are adding more than 2,700 megawatts to our generating capacity through the addition of combustion turbine units. We are also placing most of this new generation and our existing AmerenCIPS plants into a nonregulated generating subsidiary. Nearly 600 megawatts of new Ameren generation will be available in 2000, with the balance available by 2005.

Ranking 17th in generation capacity in the nation, Ameren gains flexibility from combining the cost-effective use of coal-fired plants to cover baseload periods with natural gas-fired turbines to cover periods of peak energy demand. These new units will bring Ameren total generating capacity to more than 14,000 megawatts.

Thanks to AmerenEnergy, our energy trading and marketing subsidiary, the year also marked significant year-to-year interchange sales gains. Our more than 20 direct connections with power suppliers and the locations of our plants give Ameren a strategic position that is unmatched in the industry. That competitive advantage, coupled with strong performance from Ameren's power plants this summer, helped AmerenEnergy contribute 13 cents per share to the bottom line this year. However, AmerenEnergy did not enhance its performance at the expense of sound risk management. AmerenEnergy in 1999 earned recognition for its "prudent risk assessment models and conservative trading strategy " from Duff & Phelps Credit Rating Co., when they assigned a counterparty rating of "AA-" to AmerenEnergy.

In the fall of 1999, approximately 15,000 of Ameren's large Illinois electric customers became eligible to choose among energy suppliers.We now have under contract a majority of our large Illinois electric customers who have the right to switch to other providers. We also achieved tremendous success outside our service territory, as evidenced by the recent signing of a multi-year contract with Illinois' largest electricity user - Archer Daniels Midland. In August 2000, Archer Daniels Midland will become a 300-megawatt customer of AmerenCIPS. Our utility company will be the sole power supplier for the international agricultural giant's Decatur, Ill.-based world headquarters and the nation's largest corn, soybean and bioproducts processing facility.

In addition, AmerenEnergy, as agent for AmerenCIPS, signed a multi-year contract with Soyland Power Cooperative for more than 375 megawatts of power. As part of the agreement, which took effect Jan. 1, 2000, AmerenEnergy will dispatch 178 megawatts of Soyland generating capacity.

In addition to being the largest supplier of electricity in Missouri with a 44 percent share of the market, we now hold 10 percent of the retail electric market share in Illinois; given our strong position, we believe provider choice in that state opens up opportunities for significant market share gains. In fact, we plan to use Illinois as a springboard for expansion in other midwestern markets as we build our generating capacity and exercise our strong marketing skills.

Linked to Ameren's success with products like its automated bill consolidation service - Ameren Abillity - and its popular Internet-based energy management product, Ameren Abacus, is another promising nonregulated business: In 1999, Ameren acquired California-based Data and Metering Specialties, Inc. (DMS) - a multi-state provider of metering products and services. Coupled with Ameren's position as the company with the world's largest network of automated meters, the creation of AmerenDMS offers a valuable platform for increased revenue as demand for competitive metering services grows.

We also continue to selectively pursue other nonregulated, high-return investment opportunities. We have a promising investment in Gateway Energy Systems, a firm that designs, builds, finances, owns and operates utility systems for large institutional and industrial customers. For Gateway Energy, the year marked the completion of a $20 million steam and compressed air facility for the Fortune 500 chemical manufacturer, Solutia Inc.

CONTINUED FOCUS ON CONTROLLING COSTS, MANAGING REGULATION

We continue to hold employees accountable for expense control through value-based financial measures and incentives. In 1999, we took aggressive steps to reduce our fuel costs through the termination of coal contracts with two coal suppliers for AmerenCIPS plants - resulting in net savings of $131 million through 2010. These net savings will benefit our shareholders.

On the regulatory side, we continue to manage regulatory and legislative uncertainties, with an eye toward shaping electric customer choice legislation as it is implemented in Illinois and considered in Missouri. Ameren is actively taking steps to build a coalition to support restructuring legislation as long as that legislation is fair and equitable to shareholders, customers and employees. We believe that, with momentum building across the nation for choice, the sooner restructuring issues are satisfactorily resolved in Missouri, the better it will be for all stakeholders.

Finally, in 1999, Ameren joined other industrial companies to successfully challenge the Environmental Protection Agency on its stringent new emissions rules. We continue to press for cost-effective, prudent responses to environmental controls. At Ameren, we remain committed to providing clean, low-cost energy, while preserving and protecting the environment.

1999 FINANCIAL PERFORMANCE

In 1999, our company earned $385 million, or $2.81 per share. This compares to 1998 earnings of $386 million, or $2.82 per share. In 1999, we reported a pretax nonrecurring charge of $52 million, or 23 cents per share, due to the payments required for terminating coal contracts to our future benefit. In 1998, we reported a pretax nonrecurring charge of $25 million, or 11 cents per share, from the implementation of a targeted employee separation plan. Excluding these nonrecurring charges and the impacts of weather, we were able to deliver a strong 8 percent increase in earnings per share in 1999 over 1998. Looking ahead, we are targeting annual earnings per share growth of at least 5 percent.

IN SUMMARY

We are committed to making the transition from a highly regulated utility to a growth-oriented energy company that will prosper in emerging competitive markets. Our mission reflects a strategic decision to pursue scale and scope, rather than retreat to a narrowly defined business. And our course is clear: We will aggressively expand and optimize our generating assets. We will leverage our strong marketing skills and quality to expand our customer base, while we selectively invest in nonregulated ventures and innovative products. And, we will continue to control costs and effectively manage our regulatory affairs.

We believe pursuing these strategies paves the way for sustainable growth. Going forward, we intend to be our customers' preferred supplier. We intend to remain a strong investment choice. We intend to be an industry leader. And, most important, we intend to press forward in our efforts to return superior shareholder value to you - our owners.

Sincerely,

Charles W. Mueller
Chairman, President and Chief Executive Officer
February 10, 2000