01—Abstract
Summary
Summary of the 10-K filed February 24, 2016. 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, serving approximately 950,000 electric and 410,000 natural gas customers through its utility subsidiaries Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL).
In 2015, Alliant reported operating revenues of $3,253.6 milliona, net income attributable to common shareowners of $378.2 million, and EPS of $3.36 (EPS from continuing operations of $3.38), compared with $3,350.3 million of revenues and $3.46 EPS in 2014. Lower earnings were attributed primarily to higher WPL electric transmission service expense, lower sales from milder temperatures, higher income tax, depreciation, interest and employee benefit costs, losses on the sale of IPL's Minnesota distribution assets, and lower Transportation earnings. The company's strategic plan centers on competitive value, exceptional service and responsible resources.
Major projects include IPL's Marshalltown natural gas-fired combined-cycle unit (cost cap of $920 millionb, expected in service by the second quarter of 2017), WPL's proposed Riverside expansion (estimated capital expenditures of approximately $700 million, with a PSCW decision expected by the second quarter of 2016), and environmental controls at coal-fired units. Alliant's construction and acquisition expenditures were $1,034.3 million in 2015, and anticipated expenditures are $1,165 million for 2016 at the consolidated level.
The company raised $133 millionc in net proceeds through an at-the-market equity program and expects to target a 2016 annual common dividend of $2.35 per share. Key risks highlighted include regulatory outcomes and rate freezes (IPL's Iowa electric base rate freeze and WPL's electric and gas base rate freezes run through 2016), EPA greenhouse gas rules including the Clean Power Plan, which the Supreme Court stayed in February 2016, pending FERC decisions on MISO transmission owner return on equity complaints, commodity price exposure at WPL's retail electric operations, cyber and physical security threats, and the capital market access needed to fund roughly $5 billion of forecasted capital expenditures over four years.
02—Key points
Key Highlights
- 2015 operating revenues of $3,253.6 million, down from $3,350.3 million in 2014; net income attributable to common shareowners of $378.2 million ($3.36 per share), versus $383.1 million ($3.46 per share) in 2014.
- Electric utility revenues were $2,770.5 million and gas utility revenues were $381.2 million, together representing 85% and 12% of consolidated operating revenues.
- Construction and acquisition expenditures were $1,034.3 million in 2015, and the company has forecasted capital expenditures of approximately $5 billion over the next four years.
- Marshalltown (approximately 650 MW, $920 million cost cap) is expected in service by Q2 2017; WPL's proposed Riverside expansion (approximately $700 million) awaits a PSCW decision expected by Q2 2016.
- Dividend: targeted 2016 annual common dividend increased to $2.35 per share ($0.5875 quarterly), versus $2.20 declared in 2015; dividend payout ratio was 65% of 2015 consolidated earnings from continuing operations.
- Retail electric base rate freezes remain in effect through 2016 at IPL (Iowa) and WPL (Wisconsin), with WPL's gas base rates frozen through 2016 as well.
- Alliant issued 2,186,617 shares under its at-the-market program for $133 million net proceeds in 2015; year-end closing stock price was $62.45.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 24, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $3.25B$3.35B | −2.9% |
| Operating Expenses | $2.68B$2.81B | −4.6% |
| Operating Income | $577.00M$543.60M | +6.1% |
| Interest Expense | $187.10M$180.60M | +3.6% |
| Net Income | $388.40M$393.30M | −1.2% |
| EPS (Basic) | $1.68$1.73 | −2.9% |
| Shares Outstanding (Basic) | 225.40M221.70M | +1.7% |
05—Questions
Frequently Asked Questions
What drove the decline in 2015 earnings compared with 2014?
The filing attributes lower earnings from continuing operations primarily to higher electric transmission service expense at WPL, lower electric and gas sales due to milder temperatures, higher income tax, depreciation, interest and employee benefit expenses, losses on the sales of IPL's Minnesota electric and gas distribution assets, and lower earnings at Transportation. These were partially offset by lower retail electric customer billing credits at IPL, lower energy efficiency cost recovery amortization at WPL, and 2014 capacity charges related to the IPL DAEC PPA that did not recur.
What are the company's major capital projects?
IPL is constructing Marshalltown, an approximately 650 MW natural gas-fired combined-cycle unit with a $920 million cost cap, expected in service by Q2 2017. WPL has proposed the Riverside expansion, a natural gas-fired combined-cycle unit in Beloit, Wisconsin, with estimated capital expenditures of about $700 million, pending a PSCW decision expected by Q2 2016. Other projects include environmental controls such as the Edgewater Unit 5 scrubber and baghouse and the Ottumwa Unit 1 SCR, plus electric and gas distribution upgrades.
What regulatory and environmental risks could affect the company?
Key risks include the outcome of pending FERC complaints over MISO transmission owner return on equity, which could reduce transmission costs but also equity income from ATC; EPA greenhouse gas rules, including the Clean Power Plan, which the Supreme Court stayed in February 2016 pending legal challenges; compliance with consent decrees requiring environmental controls and fuel switching or retirements at certain coal units; and the recoverability of costs through rates, including WPL's retail electric exposure to fuel-related commodity prices.
How is the company funding its capital program and dividend?
The company cites operating cash flows of $871.2 million in 2015, available revolving credit capacity of $840 million, IPL's accounts receivable sales program ($145 million of available capacity), and periodic long-term debt and equity issuances. For 2016, Alliant expects to issue about $25 million of common stock through its Shareowner Direct Plan, IPL and WPL expect capital contributions from the parent of about $165 million and $25 million, and up to roughly $400 million of parent and Resources debt financing is anticipated.
What is the status of the Franklin County wind farm and other non-regulated assets?
The 99 MW Franklin County wind farm, owned by Resources, sells its output into the MISO market as a merchant generator. Its carrying value was $130 million at December 31, 2015. The company's impairment test found undiscounted cash flows exceeded carrying value, but a further decline in forward electricity prices of approximately $2 to $3 per MWh could trigger a material impairment, which would likely exceed half of the carrying value.
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