This MDA includes information relating to Alliant Energy, and IPL and WPL
(collectively, the Utilities), as well as
2020 HIGHLIGHTS
Key highlights since the filing of the 2019 Form 10-K include the following:
COVID-19:
The outbreak of COVID-19 has become a global pandemic and Alliant Energy's
service territories are not immune to the challenges presented by COVID-19.
Despite these challenges, Alliant Energy, IPL and WPL continue to focus on
providing the critical, reliable service their customers depend on, while
emphasizing the health and welfare of their employees, customers and
communities. Alliant Energy, IPL and WPL have not experienced significant
impacts on their overall business operations, financial condition, results of
operations or cash flows for the three and nine months ended
Operational and Supply Chain Impacts - Alliant Energy has modified certain business practices to help ensure the health and safety of its employees, contractors, customers and vendors consistent with orders and best practices issued by government and regulatory authorities. For example, Alliant Energy implemented its business continuity and pandemic plans for critical items and services, including travel restrictions, physical distancing, working-from-home protocols, and rescheduling of planned EGU outages. Alliant Energy also temporarily suspended service disconnects, waived late payment fees for its customers, and modified reconnect service procedures to ensure continuity of service for customers unable to pay their bills and consistency with regulatory orders.
While Alliant Energy has not experienced any significant issues to-date, it continues to monitor potential disruptions or constraints in materials and supplies from key suppliers. In addition, Alliant Energy's construction projects are currently progressing as planned with added safety protocols, and while it continues to monitor its supply chain, there have been no immediate disruptions. Alliant Energy's wind farms under construction during the pandemic were placed in service as previously planned to meet the timing requirements to qualify for the maximum renewable tax credits. In addition, Alliant Energy does not currently expect any material changes to its construction and acquisition expenditures plans disclosed in " Liquidity and Capital Resources " resulting from COVID-19.
Alliant Energy has not experienced, and currently does not expect, an interruption in its ability to provide electric and natural gas services to its customers. Alliant Energy currently expects to incur incremental direct expenses related to certain of these operational changes and does not expect them to have a material impact on its results of operations.
Customer Impacts - COVID-19 has resulted in various travel restrictions and
closures of commercial spaces and industrial facilities in Alliant Energy's
service territories. While the total expected impact of COVID-19 on future sales
is currently unknown, Alliant Energy has experienced higher electric residential
sales and lower electric commercial and industrial sales since the outset of the
pandemic. For the nine months ended
Liquidity and Capital Resources Impacts - In response to the uncertainty of the
impacts of COVID-19, Alliant Energy enhanced its liquidity position in the first
quarter of 2020 by settling
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Alliant Energy, IPL and WPL currently expect to maintain compliance with the financial covenants of the credit facility agreement, and Alliant Energy currently expects to maintain compliance with the financial covenants in AEF's term loan credit agreement. In addition, Alliant Energy currently expects to have adequate liquidity to fulfill its contractual obligations, access to capital markets and continue with its planned quarterly dividend payments.
Credit Risk Impacts - Alliant Energy's temporary suspension of service disconnects and waivers of late payment fees for its customers, as well as broad economic factors, may negatively impact its customers' willingness and ability to pay, which could increase customer arrears and bad debts, and negatively impact Alliant Energy's cash flows from operations. Currently, Alliant Energy does not anticipate any material credit risk related to its commodity transactions.
Regulatory Impacts - In
Legislative Impacts - In
Note 2 for further discussion, including IPL's current estimate and requested regulatory treatment of certain incremental costs and benefits incurred resulting from the windstorm.
Rate Matters: • Final retail electric rates for IPL's 2020 Forward-looking Test Period rate review were effectiveFebruary 26, 2020 . Effective with the implementation of final rates, IPL started to recover a return of and return on its new wind generation placed in service in 2019 and 2020 through the renewable energy rider. IPL currently expects to file a subsequent proceeding with the IUB in the first half of 2021 for its 2020 Forward-looking Test Period retail electric and gas rate reviews, which will compare actual revenues and costs to those initially forecasted by IPL. IPL currently does not expect any rate adjustments from the subsequent proceeding.
• In
its current retail electric and gas base rates, authorized return on common equity, regulatory capital structure and earnings sharing mechanism through the end of 2021. WPL will utilize anticipated fuel-related cost savings in 2021 to offset the revenue requirement impacts of theKossuth wind farm, which was placed in service inOctober 2020 . In addition, WPL will utilize excess deferred tax benefits to partially offset the revenue requirement of the expansion of its gas distribution system inWestern Wisconsin , which is expected to be placed in service in late 2020. A written order from the PSCW is currently expected in the fourth quarter of 2020.
• In the second quarter of 2020, pursuant to a
transmission cost rider for amounts previously collected in rates.
• In
million of 2019 fuel-related cost over-collections to its retail electric
customers.
• In
shortening the term of its DAEC PPA by 5 years. Pursuant to IUB andFERC orders, the buyout payment will be recovered from IPL's retail and wholesale customers beginning in the fourth quarter of 2020 and through the end of 2025.
• Beginning in the third quarter of 2020, IPL began providing retail electric
billing credits that will continue throughJune 2021 , which in aggregate include$27 million of excess deferred tax benefits and$8 million from a partial refund of interim rates implemented in 2019.
• WPL currently expects to file a retail electric and gas rate review with the
PSCW in the second quarter of 2021 for either a single or multiple year forward-looking test period. Customer Investments: • InMarch 2020 , IPL completed the construction of the Golden Plains wind farm
in
• In
distribution system in
completed in 2020.
• In
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• In
to acquire, construct, own, and operate up to 675 MW of new solar generation in the followingWisconsin counties:Grant (200 MW in 2023),Sheboygan (150 MW in 2022),Wood (150 MW in 2022),Jefferson (75 MW in 2022),Richland (50 MW in 2022) and Rock (50 MW in 2023). The 675 MW of new solar generation would replace energy and capacity being eliminated with the planned retirement of the coal-firedEdgewater Generating Station (414 MW) by the end of 2022, which is subject to change depending on operational, regulatory, market and other factors. In addition, WPL currently expects to file a second Certificate of Authority with the PSCW in the first half of 2021 for approximately 325 MW of new solar generation. Estimated capital expenditures for these planned projects for 2020 through 2024 are included in the "Renewable projects" line in the construction and acquisition table in " Liquidity and Capital Resources ." WPL currently assumes that a portion of the construction costs will be financed by a tax equity partner, which is discussed in "IPL and WPL Solar Project Tax Equity Credits" in " Liquidity and Capital Resources ."
• In
environmental-related goals based on its clean energy strategy. By 2030, Alliant Energy expects to reduce carbon dioxide emissions by 50% and water supply by 75% from 2005 levels from its owned fossil-fueled generation. By 2040, Alliant Energy expects to eliminate all coal-fired EGUs from its generating fleet, and by 2050, seeks to achieve an aspirational goal of net-zero carbon dioxide emissions from the electricity it generates. Future updates to sustainable energy plans and attaining these goals will depend on future economic developments, evolving energy technologies and emerging trends in Alliant Energy's service territories.
• In
in
• In
• Alliant Energy's cleaner energy strategy includes IPL's planned development
and acquisition of up to 400 MW of solar generation by the end of 2023 and up to 100 MW of distributed energy resources, including community solar and energy storage systems beginning in 2022. IPL currently plans to file for advance rate-making principles for the up to 400 MW of solar generation in the first half of 2021. Estimated capital expenditures for these planned projects for 2020 through 2024 are included in the "Renewable projects" line in the construction and acquisition table in " Liquidity and Capital Resources ." IPL currently assumes that a portion of the construction costs for the new solar generation will be financed by a tax equity partner, which is discussed in "IPL and WPL Solar Project Tax Equity Credits" in " Liquidity and Capital Resources ." The 400 MW of new solar generation would help replace a portion of the energy and capacity expected to be eliminated with the planned retirement of the coal-firedLansing Generating Station (275 MW) by the end of 2022 and the expected reduction of energy and capacity resulting from the planned fuel switch of theBurlington Generating Station (212 MW) from coal to natural gas by the end of 2021. Both theLansing Generating Station planned retirement and the planned fuel switch of theBurlington Generating Station are subject to change depending on operational, regulatory, market and other factors. Financings and Common Stock Dividends: • InMarch 2020 , Alliant Energy settled$222 million under the equity forward
sale agreements by delivering 4,275,127 shares of newly issued Alliant Energy
common stock at a weighted average forward sale price of
• In
September 30, 2020 ) term loan credit agreement (with Alliant Energy as guarantor), which expires inMarch 2022 , and used the borrowings under this agreement to retire its$300 million variable rate term loan credit agreement that would have expired inApril 2020 .
• In
proceeds from the issuance were used by WPL to reduce borrowings under the single credit facility, which currently expires inAugust 2023 , and for general corporate purposes. InJune 2020 , WPL retired its$150 million 4.6% debentures.
• In
net proceeds from the issuance were used by IPL to retire its$200 million 3.65% senior debentures that would have matured inSeptember 2020 and for general corporate purposes.
• Refer to " Results of Operations " for discussion of expected issuances of
common stock dividends and long-term debt in 2021. RESULTS OF OPERATIONS
Results of operations include financial information prepared in accordance with GAAP as well as utility electric margins and utility gas margins, which are not measures of financial performance under GAAP. Utility electric margins are defined as electric revenues less electric production fuel, purchased power and electric transmission service expenses. Utility gas margins are defined as gas revenues less cost of gas sold. Utility electric margins and utility gas margins are non-GAAP financial measures because they exclude other utility and non-utility revenues, other operation and maintenance expenses, depreciation and amortization expenses, and taxes other than income tax expense.
Management believes that utility electric and gas margins provide a meaningful basis for evaluating and managing utility operations since electric production fuel, purchased power and electric transmission service expenses and cost of gas sold are generally passed through to customers, and therefore, result in changes to electric and gas revenues that are comparable to changes in such expenses. The presentation of utility electric and gas margins herein is intended to provide supplemental information for investors regarding operating performance. These utility electric and gas margins may not be comparable to how other entities define utility electric and gas margin. Furthermore, these measures are not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.
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Additionally, the table below includes EPS for Utilities and Corporate Services,
Financial Results Overview - Alliant Energy's net income and EPS attributable to
Alliant Energy common shareowners for the three months ended
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