01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Alliant Energy Corporation (LNT) is a regulated investor-owned public utility holding company headquartered in Madison, Wisconsin, providing electric service to approximately 1 million customers and natural gas service to approximately 412,000 customers in the Midwest through its two utility subsidiaries, Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL).
In 2010, consolidated operating revenues were $3,416.1 milliona and net income attributable to Alliant Energy common shareowners was $287.6 million, or $2.60 per diluted share, compared with $1.01 per share in 2009, which included a $203 million pre-tax loss on early extinguishment of the Exchangeable Senior Notes. Utility electric margins rose 21% to $1,575.3 million, driven primarily by non-fuel retail rate increases at IPL and WPL that added $213 million of electric revenues. The company is pursuing a strategic plan built on competitive costs, reliable service and balanced generation, including new wind projects (WPL's 200 MW Bent Tree - Phase I, which reached full commercial operation in February 2011), the planned purchase of Riverside Energy Center (600 MW, expected 2013), the planned purchase of WEPCO's 25% interest in Edgewater Unit 5, and environmental compliance projects with estimated capital expenditures of $110 million in 2011, $270 million in 2012 and $260 million in 2013.
Alliant Energy projects total construction and acquisition expenditures of $720 millionb in 2011, $920 million in 2012 and $1,165 million in 2013, and it increased its expected 2011 annual dividend to $1.70 per share. Key risks highlighted in the filing include regulatory outcomes on rate relief (including the IPL Minnesota interim rate refund exposure and the Iowa base rate freeze through 2013), environmental regulation of coal-fired generation and potential greenhouse gas rules, pending Sierra Club and EPA air permitting claims against WPL's Nelson Dewey, Columbia and Edgewater plants (WPL believes an adverse outcome could be significant), a class action lawsuit against the Alliant Energy Cash Balance Pension Plan with a potential judgment of up to $23 million, and dependence on capital market access given a commitment to maintain investment-grade credit ratings.
02—Key points
Key Highlights
- 2010 operating revenues of $3,416.1 million, down from $3,427.3 million in 2009; net income attributable to common shareowners of $287.6 million, or $2.60 per diluted share, versus $1.01 per share in 2009.
- Electric margins increased $272 million, or 21%, in 2010, primarily due to non-fuel retail rate increases at IPL and WPL that increased electric revenues by $213 million.
- Cash flows from operating activities were $984.9 million in 2010 compared with $657.1 million in 2009; construction and acquisition expenditures were $866.9 million.
- Expected 2011 annual common stock dividend increased to $1.70 per share from $1.58 per share, with a stated goal of a 60% to 70% dividend payout of utility earnings.
- WPL's 200 MW Bent Tree - Phase I wind project reached full commercial operation in February 2011; WPL expects to close the Edgewater Unit 5 25% interest purchase in the first half of 2011 at approximately $40 million to $45 million.
- Sierra Club and EPA Clean Air Act claims against WPL's Nelson Dewey, Columbia and Edgewater plants are pending; the company states it cannot predict the outcome and believes an adverse result could be significant.
- The Alliant Energy Cash Balance Pension Plan class action could result in a judgment of up to $23 million, which the Plan is contesting; no liability has been recognized.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $3.26B$3.43B | −4.8% |
| Operating Expenses | $2.70B$3.03B | −10.9% |
| Operating Income | $560.00M$396.20M | +41.3% |
| Interest Expense | $162.80M$154.90M | +5.1% |
| Net Income | $306.30M$129.70M | +136.2% |
| EPS (Basic) | $2.60$1.01 | +157.4% |
| EPS (Diluted) | $2.60$1.01 | +157.4% |
| Shares Outstanding (Basic) | 110.44M110.27M | +0.2% |
| Shares Outstanding (Diluted) | 110.52M110.35M | +0.2% |
05—Questions
Frequently Asked Questions
How did Alliant Energy's earnings change in 2010?
Net income attributable to Alliant Energy common shareowners was $287.6 million, or $2.60 per diluted share, in 2010, compared with $111.0 million, or $1.01 per share, in 2009. The 2009 results included a $203 million pre-tax loss on early extinguishment of the Exchangeable Senior Notes due 2030. The 2010 utility earnings were $277.0 million, or $2.51 per share, compared with $223.8 million, or $2.03 per share, in 2009, primarily due to retail rate increases at IPL and WPL.
What rate changes affected IPL and WPL?
In February 2011, the Iowa Utilities Board authorized a final annual retail electric rate increase of $114 million, or approximately 10%, for IPL, below the interim increase of $119 million, so IPL expects to refund a portion of interim rates collected; $4 million was reserved for this. IPL's Minnesota request for a $14 million increase remained pending, with a decision expected in the third quarter of 2011. WPL received an order in December 2010 authorizing an $8 million, or approximately 1%, annual electric rate increase effective January 1, 2011. IPL's Iowa base rates are frozen through 2013.
What major capital projects does the company plan?
Alliant Energy expects construction and acquisition expenditures of $720 million in 2011, $920 million in 2012 and $1,165 million in 2013. Planned projects include WPL's purchase of Riverside Energy Center (600 MW natural gas, expected in 2013), the purchase of WEPCO's 25% interest in Edgewater Unit 5, and emission controls such as scrubbers and baghouses at IPL's Ottumwa and Lansing Unit 4 and WPL's Columbia Units 1 and 2, with the Columbia controls approved by the PSCW in February 2011.
What legal and regulatory matters could affect investors?
WPL faces Sierra Club complaints and an EPA Notice of Violation alleging Clean Air Act permitting violations at Nelson Dewey, Columbia and Edgewater, with civil penalties of up to $37,500 per day per violation possible; the company believes an adverse outcome could be significant. A class action against the Alliant Energy Cash Balance Pension Plan could lead to a judgment of up to $23 million, and IPL filed a breach of contract lawsuit against Enerfab regarding about $8 million of disputed payments at Lansing. Future EPA rules on greenhouse gases, mercury (Utility MACT) and cross-state air pollution are also expected to require significant capital investment.
What is the company's cash flow and credit position?
Cash flows from operating activities were $984.9 million in 2010, up from $657.1 million in 2009. At December 31, 2010, Alliant Energy and its subsidiaries had $159 million of cash and cash equivalents and $576 million of available revolving credit capacity. Credit ratings were BBB+ (S&P) and Baa1 (Moody's) for Alliant Energy, with IPL and WPL rated investment grade, and the company states it is committed to maintaining investment-grade ratings.
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