01—Abstract
Summary
Summary of the 10-K filed February 27, 2012. Cited figures are marked; the original filing is the authoritative source.
Alliant Energy Corporation (NYSE: LNT), a regulated investor-owned public utility holding company, filed this combined Form 10-K for 2011 with subsidiaries Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL).
The company provides regulated electric service to about 986,000 customers and gas service to about 414,000 customers in Iowa, Wisconsin and Minnesota. Alliant Energy reported 2011 operating revenues of $3,665.3 milliona and net income attributable to common shareowners of $303.6 million, or $2.74 per diluted share, compared with $287.6 million, or $2.60, in 2010. Utility earnings per share from continuing operations were $2.57 in 2011 versus $2.51 in 2010, and the non-regulated and parent segment contributed $0.16 per share versus $0.11.
The filing highlights several forward-looking capital commitments. Alliant Energy expects construction and acquisition expenditures of $1,190 millionb in 2012, and it has forecast $4 billion of capital expenditures over the next four years. Planned projects include WPL's expected purchase of the 600 MW Riverside Energy Center in late 2012, IPL's potential 600 MW natural gas-fired facility in Iowa, and emission control projects at several coal units.
The company also announced a targeted 2012 annual common dividend of $1.80c per share, up from $1.70 in 2011, and announced plans to sell RMT, its renewable energy services subsidiary, during 2012. RMT's 2011 results were hurt by losses on certain solar projects tied to subcontractor problems. Key risks include extensive regulation, environmental compliance costs, uncertain outcomes of EPA rules such as CSAPR (stayed by the D.C.
Circuit in December 2011) and the Utility MACT Rule, and a pending class action lawsuit over the Alliant Energy Cash Balance Pension Plan, where the plan estimates a potential judgment of up to about $17 milliond. Moody's changed the credit outlooks for Alliant Energy, IPL and WPL from stable to negative in September 2011. IPL's Iowa retail base rate freeze runs through 2013, and the company has an Iowa tax benefit rider that returned $61 million to customers in 2011 and is expected to return about $81 million in 2012.
02—Key points
Key Highlights
- 2011 net income attributable to Alliant Energy common shareowners of $303.6 million ($2.74 per diluted share), up from $287.6 million ($2.60) in 2010
- Operating revenues of $3,665.3 million in 2011 versus $3,416.1 million in 2010; electric utility revenues were $2,635.8 million
- Targeted 2012 annual common dividend increased to $1.80 per share from $1.70 paid in 2011, with payments beginning with the Feb. 15, 2012 dividend
- Planned construction and acquisition expenditures of $1,190 million for 2012, with about $4 billion forecast over the next four years
- WPL expects to acquire the 600 MW Riverside Energy Center in late 2012, and IPL is evaluating a new 600 MW natural gas-fired facility in Iowa
- Announced plan to sell RMT, a renewable energy services subsidiary, in 2012; RMT's 2011 losses were driven by subcontractor problems on certain solar projects
- Moody's changed outlooks for Alliant Energy, IPL and WPL from stable to negative in September 2011; S&P moved Alliant Energy and IPL outlooks from positive to stable in January 2012
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 27, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $3.22B$3.26B | −1.2% |
| Operating Expenses | $2.71B$2.70B | +0.2% |
| Operating Income | $513.30M$560.00M | −8.3% |
| Interest Expense | $158.30M$162.80M | −2.8% |
| Net Income | $321.90M$306.30M | +5.1% |
| EPS (Basic) | $2.74$2.60 | +5.4% |
| EPS (Diluted) | $2.74$2.60 | +5.4% |
| Shares Outstanding (Basic) | 110.63M110.44M | +0.2% |
| Shares Outstanding (Diluted) | 110.68M110.52M | +0.1% |
05—Questions
Frequently Asked Questions
How did Alliant Energy's earnings and utility performance change in 2011?
Net income attributable to common shareowners rose to $303.6 million, or $2.74 per diluted share, from $287.6 million, or $2.60, in 2010. Utility earnings per share from continuing operations increased to $2.57 from $2.51. The filing attributes the utility improvement mainly to a $0.20 per share benefit from WPL's 2011 retail electric rate increase and a $0.11 per share benefit from lower purchased electric capacity expenses at WPL related to the Kewaunee PPA, partly offset by higher depreciation and transmission costs.
What major capital projects does the company plan, and how will they be funded?
Alliant Energy expects construction and acquisition expenditures of $1,190 million in 2012, $835 million in 2013, $1,030 million in 2014 and $920 million in 2015 across its consolidated businesses. Major items include the Riverside Energy Center purchase by WPL, a potential 600 MW gas-fired plant by IPL, emission control projects at Edgewater Unit 5, Columbia Units 1 and 2, and Ottumwa Unit 1, and the 100 MW Franklin County wind project. The company says 2012 capital spending will be funded through internally generated cash, debt and capital contributions from its parent, and that it plans to issue up to $550 million, $100 million and $300 million of long-term debt for Alliant Energy, IPL and WPL, respectively, in 2012.
What environmental regulations could materially affect Alliant Energy's costs?
The company says it expects significant future capital investment and operating costs to comply with several EPA rules, including the Utility MACT Rule (mercury and air toxics, with compliance currently expected by April 2015), CSAPR (stayed by the D.C. Circuit in December 2011, with CAIR obligations remaining effective), the Cross-State Air Pollution Rule's successor uncertainty, Section 316(b) cooling water intake rules, coal combustion residual rules and greenhouse gas standards. It states that prudently incurred environmental compliance costs are expected to be recoverable in rates, but it cannot predict the final financial impact. Edgewater, Nelson Dewey and Columbia are also subject to Sierra Club and EPA air permitting claims, where WPL says the outcome could be significant.
What is the status of the RMT business and the company's financial exposure to it?
In February 2012, Alliant Energy announced plans to sell RMT in 2012. RMT's 2011 operating expenses rose to $473 million from $150 million in 2010 due to larger construction management work and costs from subcontractor problems on certain solar projects. Alliant Energy has also guaranteed $554 million of RMT performance obligations and $119 million of surety bonds, and RMT has posted $21 million of bonds to discharge liens from a subcontractor dispute. The company cannot currently predict whether it will find a buyer or the price it might receive.
What are the main pension and litigation exposures disclosed in the filing?
A class action against the Alliant Energy Cash Balance Pension Plan alleges that certain participants who took early distributions were underpaid under ERISA. The plan estimates the final trial court judgment could be up to about $17 million, excluding attorneys' fees and newly asserted claims, and the company says a material loss is not currently probable and reasonably estimable. Separately, the company made $117 million of pension contributions in 2011 and does not expect significant pension contributions in 2012 through 2014, though it notes that discount rate reductions in 2011 are expected to raise retirement plan costs in 2012.
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