01—Abstract
Summary
Summary of the 10-K filed February 23, 2018. Cited figures are marked; the original filing is the authoritative source.
Alliant Energy Corporation is a regulated investor-owned public utility holding company in Madison, Wisconsin, providing electric service to approximately 960,000 customers and natural gas service to approximately 410,000 customers through its two utility subsidiaries, Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL).
For 2017, Alliant Energy reported net income attributable to common shareowners of $457.3 milliona, or $1.99 per share, up from $371.5 million, or $1.64 per share, in 2016. Operating revenues were $3,382.2 million, and cash flows from operating activities were $983.4 million. The increase was primarily driven by base rate increases at IPL and WPL, the effects of Tax Reform, and the absence of 2016 asset valuation charges on the Franklin County wind farm, partially offset by higher depreciation expense.
The company's strategic plan centers on growth and optimization. Key 2017 developments include the enactment of Tax Reform in December 2017, which reduced the federal corporate tax rate from 35% to 21%, the in-service of IPL's 706 MW Marshalltown natural gas-fired combined-cycle generating station in April 2017, and the planned expansion of up to 1,200 MW of wind generation (up to 1,000 MW at IPL and up to 200 MW at WPL). Alliant Energy expects capital expenditures of approximately $5 billionb over the next four years and plans to issue up to $200 million of common stock in 2018.
The 2018 annual common stock dividend target was increased to $1.34c per share, a quarterly rate of $0.335. Regulatory and environmental matters remain significant. IPL's retail electric rate review resulted in an IUB order in February 2018 approving a $130 million annual increase, with final rates expected in the first half of 2018.
Environmental uncertainty persists around the Clean Power Plan, CO2 regulations for new and existing fossil-fueled generating units, and the Consent Decrees at IPL and WPL. The company reported no material legal proceedings and an unqualified audit opinion from Deloitte & Touche LLP.
02—Key points
Key Highlights
- Net income attributable to Alliant Energy common shareowners rose to $457.3 million ($1.99 per share) in 2017 from $371.5 million ($1.64 per share) in 2016.
- Operating revenues were $3,382.2 million in 2017 versus $3,320.0 million in 2016; cash flows from operating activities were $983.4 million.
- Tax Reform was enacted in December 2017, reducing the federal corporate tax rate from 35% to 21%; the net impacts on regulated operations were recorded in regulatory assets and liabilities for future customer benefit.
- IPL's 706 MW Marshalltown natural gas-fired combined-cycle EGU was placed into service in April 2017, with final capital expenditures of $645 million.
- IPL's retail electric rate review was approved by the IUB in February 2018 with a settlement increase of $130 million annually; WPL plans a retail electric and gas rate filing in the second quarter of 2018.
- Alliant Energy expects capital expenditures of approximately $5 billion over the next four years and plans to issue up to $200 million of common stock and up to $1.0 billion of AEF long-term debt in 2018.
- The 2018 targeted annual common stock dividend was increased to $1.34 per share, a 6% increase, with a dividend payout ratio goal of 60% to 70% of consolidated earnings from continuing operations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Alliant Energy kept $0.14.
- Revenue$3.38B100.0%
- Cost of revenue−$480.9M14.2%
- Gross profit$2.90B85.8%
- Operating costs−$2.23B65.9%
- Operating income$671.2M19.8%
- Interest, other & tax−$203.7M6.0%
- Net income$467.5M13.8%
Where FY2017 revenue went
$3.38B- Operating costs: $2.23B, 66% of revenue
- Cost of revenue: $480.9M, 14% of revenue
- Net income: $467.5M, 14% of revenue
- Interest, other & tax: $203.7M, 6.0% of revenue
Kept 14% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 23, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $3.38B$3.32B | +1.9% |
| Cost of Revenue | $480.90M— | — |
| Gross Profit | $2.90B— | — |
| Operating Expenses | $2.71B$2.77B | −2.0% |
| Operating Income | $671.20M$554.10M | +21.1% |
| Interest Expense | $215.60M$196.20M | +9.9% |
| Net Income | $467.50M$381.70M | +22.5% |
| EPS (Basic) | $1.99$1.64 | +21.3% |
| EPS (Diluted) | $1.99— | — |
| Shares Outstanding (Basic) | 229.70M227.10M | +1.1% |
| Shares Outstanding (Diluted) | 229.70M— | — |
05—Questions
Frequently Asked Questions
What drove the increase in Alliant Energy's earnings in 2017?
Income from continuing operations increased $82 million, primarily due to asset valuation charges at AEF related to the Franklin County wind farm recorded in 2016, higher margins from IPL's interim retail electric base rate increase implemented in April 2017, WPL's retail electric and gas base rate increases implemented in January 2017, and the effects of Tax Reform. These were partially offset by higher depreciation expense and higher energy efficiency cost recovery amortization at WPL.
How is Alliant Energy's regulatory environment affecting its business?
IPL is regulated by the Iowa Utilities Board and WPL by the Public Service Commission of Wisconsin, with FERC overseeing wholesale rates and transmission. IPL's retail electric rate settlement of $130 million annually was approved in February 2018, and WPL's 2017/2018 test period includes a provision requiring deferral of earnings if its return on common equity exceeds 10.25%. Risk factors note that timely rate relief and recovery of costs cannot be guaranteed.
What are the company's major capital investment plans?
The strategic plan includes up to 1,000 MW of additional wind generation at IPL and up to 200 MW at WPL by the end of 2020, WPL's West Riverside 730 MW natural gas-fired combined-cycle unit expected in service by early 2020 with WPL's estimated capital expenditures of approximately $640 million, and distribution system investments. Construction and acquisition expenditures are estimated at $1,720 million for Alliant Energy in 2018.
What environmental risks could affect Alliant Energy?
The company faces uncertainty around the EPA's Clean Power Plan, which the Supreme Court stayed in 2016, and CO2 emission standards for new and existing fossil-fueled generating units under Clean Air Act Sections 111(b) and 111(d). Consent Decrees at WPL and IPL require installation of SCR systems and fuel switching or retirement of certain coal-fired units. Alliant Energy targets a roughly 40% reduction in electric generation CO2 emissions from 2005 levels by 2030.
How strong is Alliant Energy's credit profile?
As of the filing date, Alliant Energy's corporate issuer rating was A- from Standard & Poor's and Baa1 from Moody's, with a stable outlook. IPL's senior unsecured long-term debt was rated A- and Baa1, and WPL's was rated A and A2. Downgrades could increase borrowing costs and limit commercial paper access, and the company noted it had a $1 billion single revolving credit facility expiring in August 2022.
06—Continue